Overview
Payroll Cycle
Employer Contributions
Employee Contributions
Minimum Wage
Hiring
Hiring Employees
Hiring Contractors
Hiring Expats
Background Checks
Employment Contracts
Onboarding
Employee Benefits
Social Security
Healthcare and Insurance
Leave Policy
Public Holidays
Work Permit and Work Visa
Probation Period
Notice Period
Termination and Severance
Personal Income Tax
An Employer of Record in Uruguay offers comprehensive support in various areas, including managing the payroll cycle, handling employer and employee contributions, ensuring compliance with minimum wage regulations, facilitating the process of hiring employees and contractors, assisting with the recruitment of expatriates, conducting background checks, drafting employment contracts, facilitating onboarding procedures, managing employee benefits, administering social security programs, coordinating healthcare and insurance coverage, implementing leave policies, considering public holidays, assisting with work permit and work visa processes, overseeing probation periods, notice periods, termination, and severance procedures, as well as providing guidance on personal income tax obligations.
| Overview | |
| Continent | Americas |
| Country | Uruguay |
| Capital | Montevideo |
| Time zone | UTC−03:00 |
| Total Time zones | 1 |
| Working hours per week | 44-48 |
| Working week | Monday–Saturday |
| Typical hours worked | 8 |
| Personal Tax filing deadline | Residents: Between June and August, depending on the ID number. |
| Financial Year | 1st January to 31st December |
| Date format | dd/mm/yyyy |
| Currency | Uruguayan Peso (UYU) |
| VAT | the standard rate is 22% |
Employer Payroll Contributions in Uruguay
| Employers | % of Gross Salary |
| Health Insurance | 5% |
| Labor Re-conversion | 0.1% |
| Pension | 7.5% |
| Labor Credit Guarantee | 0.02% |
| Total Employment Cost | 12.62% |
Employee Payroll Contributions in Uruguay
| Employees | % of Gross Salary |
| Pension | 15% |
| Health Insurance | 3% to 8% |
| Labor Re-conversion | 0.1% |
| Total Employee Cost | 18.1% to 23.1% |
Minimum Wages in Uruguay
| Minimum Wage | |
| Minimum Wage | The minimum wage in Uruguay is 17930 UYU per month. |
Payroll Cycle in Uruguay
| Payroll | |
| Payroll Cycle | Monthly |
| 13th Salary | The 13th salary is referred to as ‘Aguinaldo’ and is mandatory by law. This will be paid in two separate installments in June and December. |
Personal Income Tax in Uruguay
| Income Tax | |
| 0-379,596 UYU | 0% |
| 379,596 - 542,280 UYU | 10% |
| 542,280 - 813,420 UYU | 15% |
| 813,420 - 1,626,840 UYU | 24% |
| 1,626,840 - 2,711,400 UYU | 25% |
| 2,711,400 - 4,067,100 UYU | 27% |
| 4,067,100 - 6,236,220 UYU | 31% |
Employment in Uruguay
Entering into Employment Relationships
In Uruguay, employment relationships are typically established for an indefinite period, although specific-term labor relationships may be allowed in cases where there are objective justifications for such arrangements.
Regulations Governing Employment
Uruguay does not have a single Labor Code or General Labor Law. Instead, labor relations and employment conditions are governed by various laws and decrees, which comply with the standards set by the International Labor Organization (ILO). These regulations establish minimum conditions that employers cannot reduce. While not legally binding, decisions made by Labor Courts have practical implications and serve as a source of guidance.
Collective Relationships
Collective bargaining agreements specific to each field of activity are applicable in Uruguay. These agreements, formed between unions and employers' associations, cover all employees and employers within a particular industrial activity. They are approved by the Executive Power through decrees.
Discrimination in the Hiring Process
Uruguay enshrines the principle of equal treatment and opportunities for both sexes in employment through Act No. 16.045. This legislation prohibits any form of discrimination that violates the principle of equal treatment, regardless of the sector.
Employment Applications
In Uruguay, it is recommended not to discriminate against job candidates based on their political opinions, religious, philosophical or moral beliefs, ideology, trade union affiliation, sex, racial or ethnic origin, health, or sexual life. While there are no specific regulations regarding employment applications, these guidelines should be followed.
Usage of Employment Contracts
There are no specific formalities required for labor contracts in Uruguay. Employment relationships can be established through written or oral agreements, both of which are valid to demonstrate the existence of an employment relationship.
Undetermined-Term Labor Contracts
By default, labor contracts in Uruguay are considered to be of indefinite duration, implying a permanent employment relationship.
Fixed-Term Labor Contracts
If the parties intend to establish a specific term for the employment contract, it must be included in a written contract. The reasons justifying the specific duration of the relationship, such as filling a temporary vacancy or engaging in seasonal activities, should also be stated. In the absence of objective justifications, the relationship will be considered permanent, and termination by the employer will entitle the employee to severance pay.
Probation Period
A probation period can be validly established in Uruguay, during which the employer can terminate the employment relationship without having to provide severance pay. Although not presumed, a probation contract must be agreed upon by both parties. Despite the lack of legal regulation, probation periods are universally accepted.
Part-Time Employment Relationships
Part-time employment relationships are valid in Uruguay and afford employees the same rights and benefits as those employed on a permanent basis, including overtime pay, severance pay, and paid vacations.
Youth Employment
Uruguay has enacted Act No. 19.973 to promote decent work for young people, offering various instruments to create opportunities, facilitate access to the labor market, and support youth entrepreneurship. The law introduces different types of contracts:
- Temporary subsidy for hiring unemployed young people: Private employers can receive a temporary employment subsidy when hiring new workers between the ages of 15 and 29 who have been continuously or discontinuously unemployed for specific durations.
- First Labor Experience Contracts: This contract applies to individuals aged 15 to 24 who lack formal working experience exceeding 90 calendar days. The duration of this initial employment cannot exceed one year.
- Labor Practices for Graduates: These practices are limited to individuals aged 29 or younger who have completed their education and seek their first job related to their degree. The duration of the practice should align with the level of training and studies completed.
- Protected Employment Programs: These programs target unemployed individuals under 30 years old from vulnerable socio-economic backgrounds. The duration of employment corresponds to the program's tasks and must not be less than six months or exceed 12 months.
- Companies Training Practices: Companies can engage in training practices to enhance employees' skills. The terms and conditions of employment for young individuals participating in these practices should be mutually agreed upon between the educational institution and the company, subject to oversight by the Ministry of Labor and Social Security. The training practices should not exceed 120 working hours or represent more than 50% of the total workload of the educational course.