How to hire and pay employees in Uruguay
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Before hiring
Before hiring employees in Uruguay, there are a few important things you’ll need to know. Firstly, in Uruguay, employees are entitled to 12 weeks of fully paid maternity leave, which can be split into six weeks before and six after the birth. This is paid by the Institute of Social Security.
It’s also important for employers to know that in Uruguay, the required notice period is something that must be agreed upon by employer and employee in the employment contract.
We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform.
Get an overview of what you need to know when hiring in Uruguay below.
At a glance
CURRENCY
UYU
OFFICIAL LANGUAGE
SPANISH
PAYROLL FREQUENCY
MONTHLY
EMPLOYER TAXES
12.625%
13th / 14th SALARY
A 13th salary called Aguinaldo is mandated by law and is paid in two installments (June and December).
Good to know
- Employees in Uruguay receive a 13th salary called Aguinaldo. It is mandated by law and is paid in two installments: June and December.
- Employees are entitled to 20 days’ annual leave. From the fifth year of service, employees get an extra leave day, and then every four years another day is added, up to a maximum of 25 days.
- In addition to the regular pay during leave, employees are entitled to receive an additional amount called “vacation salary.” Technically this means “amount for the better enjoyment of the annual leave,” equal to 100% of the net vacation daily wage.
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Labor laws in
Uruguay
Working hours and overtime
Employees in Uruguay work eight hours a day, 48 hours per week.
Overtime work on a working day is paid at the rate of two times of regular salary. Work on public holidays or non-working days is paid at two and a half times of an employee’s regular compensation.
Minimum wage
Employment contracts
In Uruguay, the probationary period is three months.
IP protection and non-compete agreements
Non-compete clauses must be agreed upon by employer and employee, and must be limited in scope. The employee must receive appropriate compensation, and the term of the clause after termination of the labor relationship must be no longer than 36 months.
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Benefits and leave in
Uruguay
Vacation time
Employees in Uruguay are entitled to 20 days of annual leave after their first year of service. After five years of work with the same employer, they are entitled to an additional paid vacation day for every four years worked.
The annual leave should be used in the year after which it was accrued.
In addition to the regular pay during leave, employees are entitled to receive an additional amount called “vacation salary” (technically “amount for the better enjoyment of the annual leave”), equal to 100% of the net vacation daily wage. It must be paid by the employer before the start of the vacation leave and in proportion to the duration of the leave.
Sick leave
Employees in Uruguay are entitled to sick pay after the first day of hospitalization or fourth day of illness. This is paid for by the institute of social security (BPS). This pay can be equivalent to 70% of their normal wage for up to a period of one year.
Maternity and paternity leave
Parental leave
Employees are entitled to 12 weeks of fully paid maternity leave, which can be split into six weeks before and six after the birth. This is paid by the Institute of Social Security.
Employees are also entitled to three days of paternity leave after the child's birth.
Holidays
Employer tax
Employers in Uruguay are required to pay 12.625% on top of an employee’s salary in social contributions. This includes:
- Health Insurance: 5%
- Labour Re-conversion Fund: 0.1%
- Pension Fund: 7.5%
- Labour Credit Guarantee Fund: 0.025%
Individual tax
In Uruguay, employees pay between 0% and 36% in taxes depending on their income bracket. They also pay between 18.1% and 23.1% in social security.
Termination in
Uruguay
Employers in Uruguay have the right to terminate employees, but must provide a notice period as well as severance pay.
Terminated employees (except those dismissed for serious misconduct) are entitled to severance payments, the amount of which is equivalent to one month's salary for every year worked, up to a maximum of six months' salary. This includes holiday pay, other benefits, commissions, and aguinaldo.
The notice period must be agreed upon in the employment contract.
Start hiring employees in
Uruguay
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.
We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.
With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.
Disclaimer: The information provided in this resource is for general educational purposes only and shall not be construed as legal advice. While Oyster strives to provide current and accurate information, Oyster makes no warranties or representations as to the correctness of the content provided and accepts no liability or responsibility for any errors or omissions in the content provided. By using this resource you acknowledge and agree that you do so at your own risk. The content of this resource is subject to change without notice.
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