Global HR Compliance in Uruguay

Understanding Uruguay’s labour legislation is crucial for companies planning to hire an international workforce. Our comprehensive guide will help you navigate the complexities of employment laws essential for global business expansion.

Why Hire Talent Internationally in Uruguay

Companies turn to international hiring in Uruguay to gain strategic advantages they can’t achieve through domestic hiring alone:

Build Local Market Presence

Hiring in-country professionals helps businesses establish immediate credibility with Uruguayan clients, navigate local regulations, and adapt commercial strategies to the market’s pace and culture.

Tap Into Skilled, Stable Talent

Uruguay offers a highly educated workforce with strengths in tech, finance, and back-office services. For businesses seeking skilled professionals in a stable, business-friendly environment, it’s a compelling destination.

Balance Cost and Quality

While Uruguay is not a low-cost labour market, it offers value through high productivity and strong employee retention. Hiring here can be more sustainable than relocating talent or maintaining large teams in higher-cost jurisdictions.

Accelerate Market Entry

With the right partner, businesses can hire and operate in Uruguay without waiting to establish a legal entity. This shortens time-to-market and provides flexibility to test and scale as needed.

Challenges in International Employment

Before entering a foreign market or hiring global talent, it is vital to understand:

• Local Hiring Practices: The methods and legal requirements of employing and compensating local workers regularly.
• Compensation and Benefits: The complexities involved in providing commission-based sales representatives monthly wages, bonuses, and benefits.

Global Employer of Record Solutions

Acumen International offers a Global Employer of Record solution, enabling seamless employment of your workforce in Uruguay:

• Employment and Payroll Management: We act as the legal employer, handling all payroll and benefit provisions without the need to establish local entities.
• Comprehensive Compliance: Ensure full compliance with Uruguay’s employment regulations, safeguarding against legal risks.

Benefits of Partnering with Acumen International

• Single Provider Solution: Streamline your global employment processes by eliminating the need to collaborate with multiple local staffing agencies and legal advisors.
• Expertise in Local Compliance: Our in-depth understanding of Uruguayan labour laws ensures that your employment practices meet all regulatory requirements.
• 24/7 Professional Support: Our team of English-speaking experts is available 24/7 to assist with any employment-related queries, regardless of time zones.
• Tailored Labor Solutions: We provide customized employment solutions that are legally compliant and catered to your specific business needs.
• Local and Global Network: With our qualified local partners, rest assured that your workforce adheres to all local tax, social security, and immigration laws.

Navigating the employment landscape in Uruguay can be complex, but with Acumen International, you gain a trusted partner who simplifies global hiring. Our expertise and tailored solutions ensure that your international workforce strategy is executed with precision and compliance.

Global Payroll Calculator for Employment Cost Estimations

The Global Payroll Calculator (GPC) offers an advanced solution for instantly calculating employment costs across 190 countries, streamlining your global hiring strategy and ensuring cost-effective decisions.

Key Features & Benefits

• Instant Cost Calculations: Quickly determine total employment costs, factoring in real-time tax rates and benefits for local and foreign talent in 190 countries.
• Precision & Clarity: Achieve precise payroll calculations with detailed breakdowns of all payroll variables, ensuring transparency and preventing unexpected costs.
• Cross-Country Comparisons: Utilise GPC’s capability to perform instant comparisons between countries, helping you identify the most advantageous locations for hiring.

Core Capabilities

• Total Employment Cost Analysis:
  • Monthly and yearly costs.
  • Gross-to-net and net-to-gross calculations.
  • Detailed breakdowns, including employer liability and employee taxes.
• Full Tax Breakdown:
  • Comprehensive coverage of social contributions, personal income tax, and automated tax caps.
  • Employer and employee tax splits with allowances and holiday entitlements.
• Built-in Compliance:
  • Ongoing validation against trusted government sources.
  • Updates in real-time to reflect the latest tax and labour laws.

Unique Solutions for Global Expansion Challenges

• Express Global Employment Support: Backed by 20+ years of expertise, GPC is integrated with global EOR solutions to support your international workforce management.
• Robust Methodology: Standardises diverse data into a clear, unified format, enhancing decision-making clarity across multiple jurisdictions.

With Global Payroll Calculator, you gain a powerful tool at your fingertips, designed to optimise your global employment strategies and ensure that your international operations are cost-effective and compliant. Enjoy a free trial to experience firsthand how GPC can transform your global payroll processes.

Guide on  Hiring and Firing International Talent in Uruguay 

Employment Agreements in Uruguay

Permanent  employment contracts  

The employment  contract  does  not  need to  fulfill  any  formal  requirements,  it  reaches  the  agreement of  the  will  of  the  two  contracting  parties.

Fixed-term  contracts

Seasonal  duties,  substitutions  or  specific  jobs  can  be  performed  through  fixed-term  employment  agreements  in  writing.  Upon  the expiry  of  a  definite-term  agreement,  the relationship could become indefinite if  services  are  still  being  rendered.  There  is  no  legal  regulation  regarding  maximum  number  of  successive  standard  FTCs  and  maximum  cumulated  duration  of  successive  standard  FTCs.

Collective agreement  

Collective  bargaining  is  governed  in  Uruguay  by  the  Collective  Bargaining  Act. The  Collective  Bargaining  Act  governs salary council negotiations and  bargaining  at  all  labor  law  levels.  Within  the  collective bargaining framework,  wage  collective  bargaining  agreements  are  made  between  employers  and  unions  in  which  wages are agreed and  other  aspects  such  as  working  conditions,  additional  benefits,  etc.

Employment Termination and Severance Pay in Uruguay

An employee can  resign  at  any  moment.

Employer decision 

The  employer  has  the right to  dismiss  its  workers  and  is  obliged  to  pay  compensation.  Dismissals  may  be direct,  when  the  employer  expressly  or  tacitly  manifests  its  will  to  terminate  the  employment  relationship, or  indirect  when  the  employer  breaches  the  employment  contract  in such  a  way  that  the  worker  is  considered dismissed  and  stops  working.

Mutual agreement 

Parties  are free  to  agree on  termination  under  any  conditions  as  far  as  they  respect  public  policy.

Unfair Dismissal in Uruguay

There  is  no  rule  establishing  the  way  in  which  a  labour  relationship  should  be  terminated.  There  are  rules  which relate  to  severance  payments  but  not  as  the  procedure  to be  followed  when  terminating    employment. Certain  categories  of workers  have    special  protection  against  dismissal  (maternity,  sickness,  professional  disease  or  labour  accident,  sexual  harassment).  This  protection  entails  the employer paying  a  special  severance  indemnity  which  is  higher  than  the  regular  severance  pay.

Notice Period

Parties  may  terminate  an  agreement  on  notice.  No  minimum  period  of  notice  is  required.

Severance payments

Dismissal  is  always  allowed,  provided  this  special  indemnity  is  paid.

• Sickness:  Double  severance  indemnity  for  an  employer who  dismisses  an  employee  during  sick  leave  or  after  30  days  of  his  return  to  work.
• Professional  illness  or  labour  accident:  Triple  severance  indemnity  for  an  employer  who  dismisses  an  employee  during  a  professional  illness  leave  or  labour  accident  or  after  180  days  of  his  return  to  work.
• Pregnancy  or  maternity  leave:  severance  indemnity  plus  6  months salary  for  an  employer  who  dismissed  an  employee  due  to  pregnancy  or  after  a  period  of  6  months  of  her  reincorporation  to work.
• Sexual harassment: An employee who suffers  from sexual harassment  can terminate the employment agreement and claim the general severance indemnity plus  6 monthly salaries.

Employee Benefits and Contributions

Mandatory benefits required by law to be provided by an employer: Public  holidays  entitlement,  annual  leave,  special  time  off  entitlement,  maternity  and  paternity  leave,  and Aguinaldo  annual  bonus   entitlement.

Probationary period

No statutory regulation regarding the length of probationary period exists  in Uruguay. Common practice is to stipulate a 3-month  trial period as a clause of the employment agreement.

Overtime

There  are  no  restrictions  on overtime  work  in  Uruguay.  Overtime  must  be  paid  at  double  the  normal  rate  when  it  is  on  a  working  day.  The  rate  is  two  and  a half  times when it is a non-working day.

Working Hours

The  law  establishes  allowed  working  hours  as  follows:

• Not more  than  8  hours  per  day
• Not  more  than  48  hours  per  week  in  industry  and  44  hours  per  week  in  commerce.

Annual Leave

Every  employee  is  entitled  to  20  days  of  paid  holiday  every  year.  For  every  5  years  of  work  with  the  same  employer,  they  are  entitled  to  1  additional  day  per  year.

During the first year of employment  , the employee is not entitled to any holiday—during that first year  , they accumulate the right to take a holiday in the following year.

Special  Leave 

Special  time  off  applies  to  all  workers  who  meet  established  requirements  and  is  granted  in  addition  to  annual  paid  leave.  They  cannot  be  substituted  by  salary  or  complementary  items,  they  do not  generate  right  to  vacation  salary,  and  it  is  possible  to  agree  benefits  that  surpass  the  minimum  established  in  the  law.

Employers  must  provide  three  days  of leave  for  newly  married  employees  (provided  the  employee  gave  at  least  30  days  of  notice)  and  three  days  of bereavement  leave.  Additionally,  employees  are  entitled  to  a  day  off  when  they  give  blood  and  full  pay  if  they  are    called    to  testify  in  a  trial.

Sick Leave

While  employers  are  not  required  to  provide  paid  sick  leave,  employees  are  entitled  to  sick  time  compensation  through  institute  of  social  security  (BPS).  Workers  who  for  medical reasons  are  unable  to  work,  whether  due  to  illness  or  an  accident  at  work,  may  be  entitled  to  sickness  benefit.  The  BPS  may  grant  up  to  1  year  of  coverage  for  a worker’s illness,  with  another  maximum  extension,  or  2  years  alternated  within  the last  4  years,  for  the  same  ailment.

Parental Leave

Maternity  rights  and  leave

Financial  assistance is provided to the female worker during the period in which the worker is on pre-  and post-natal leave, covering  6 weeks before the expected date of delivery (42 days before) up to  8 weeks after childbirth (56 days after).

Premature  Labor  –  Postpartum  leave  is extended  until  completing  14  weeks.

Overdue  Labor  -  Postpartum  leave  will  NOT  be  reduced.

Parental  Allowance  for  Newborn  Care 

Both  the  father  and  the  mother  may  benefit  from  this  subsidy,  with  the  possibility  of  alternating  its  use.  During  the  period  of  reduction  of  working  hours,  50%  of  the  subsidy  to  which  s/he  was  entitled  is  paid,  and the  payment  is  made  month  by  month.  This  option  starts  from  the  day  after  the  end  of  the  Maternity  Benefit  and  up  to  6  months  of  age  of  the  child.

Paternity  rights  and  leaves 

Male  workers  are  entitled  to three days  of  leave  for  the  birth  of  a  new  baby  paid  by  employer.  In  addition,  fathers  receive  10  days  of  leave  paid  by  BPS.

Acumen International can help you fast-track your possibilities of entering and expanding your business in Uruguay by providing you with our Employer of Record solutions, which allow you to jumpstart your global operations almost immediately, cost-effectively, and compliantly.