Employer of Record in Guatemala
Skuad’s Employer of Record Guatemala (EOR) solutions make business expansion to Guatemala easy and hassle-free. Our unique HR platform allows companies to hire exceptionally talented employees in Guatemala, without having to set up a separate legal entity. It streamlines the process of hiring and onboarding a remote team by handling payroll management, taxation, and other legal compliances. To learn more about Skuad, Book a demo today.
Guatemala at a Glance
Population: 18,230,717 (2021, according to United Nations’ latest data)
Currency: Quetzal (GTQ)
Capital: Guatemala City
Languages spoken: Twenty-five languages are spoken in Guatemala; however, the official and the most spoken language is Spanish. Further, there are 22 Mayan and two native languages, Garifuna and Xinca.
Gross Domestic Product (GDP): USD 77.07 billion, growing at an average annual rate of 7.55%
Learn more about expanding your business into Guatemala by partnering with Skuad.
Employment in Guatemala
The primary employment law in Guatemala is the Guatemala labor law. It is crucial to understand the details of this law if a business wants to expand into the country. The labor code explains the process of issuing employment contracts. To know more about the process of expansion in Guatemala, let’s begin by discussing a few points related to Guatemala’s employment laws.
To ensure your expansion endeavors are in compliance with the Guatemalan employment laws, Contact Skuad today.
Contractors vs. Full-time Employees
Guatemala has made progress in the past few years. It has an economic growth rate of 4.5% as of 2021. The country’s promising economic trajectory attracts foreign investors who are looking to expand their business. However, to hire employees in Guatemala, one must know the labor laws of the country and those governing part-time and full-time employees.
Contractors can be of two types: fixed-term or temporary workers and part-time workers. Fixed-term or temporary contracts are considered exceptions. There are no fixed working hours for such workers and the employer is liable to pay the employees the statutory payment once the contract expires.
Part-time workers have the same rights as all other workers. Employers can have a greater number of workers by employing part-time workers and paying for the time worked. A higher rate of productivity can be incurred if the company hires part-time workers. Students get a chance to earn while working for four to six hours. The main debate about part-time workers concerns the minimum wage that is paid to them irrespective of the duration of time they work, still an unresolved issue in the country.
On the other hand, full-time employees enjoy all the benefits prescribed by the employment laws of the country. Employers will have to pay a fixed salary for full-time workers and will have a definite term for paid holidays and days off that does not apply to part-time workers. Hiring companies in Guatemala can incorporate flexible working modes such as work from home, shift work, and part-time work, but there is no provision for part-time or contract-based employees to ask for these working arrangements.
Talk to Skuad experts to decide whether to hire full-time employees and or contractors in Guatemala for your expansion efforts.
Hiring in Guatemala
To hire employees in Guatemala, employers need to comply with Guatemala's employment laws. The most spoken language in Guatemala is Spanish; if the employer is not familiar with the language, they should hire a translator as most of the candidates who may apply for the company’s open position will most likely speak Spanish.
In case the employer wants to publish an advertisement about recruitment, the document must be translated to Spanish for a wider reach. Local newspapers, social media platforms, job search engines, and classifieds are the most appropriate places to post the advertisement. Some general job posting boards are,
For background checks, the employer can inquire on their own. However, according to Guatemalan law, an employer cannot use police records to restrict anyone from working. Guatemala’s labor laws also prohibit any discrimination based on gender, race, ethnicity, language, age, religion, political belief, economic situation, place of their education, illness including HIV/AIDS, and disability.
To hire employees, employers need to create fixed- or indefinite-term employment contracts. Three copies of the contract should be made in writing and provided to the employee, employer, and Directorate General of Labor within 15 days from hiring. The contract should be written in the official language, Spanish, and should contain the terms such as the workplace, responsibilities of the worker, date, compensation, benefits, termination rules, entitlement, and other related elements. The employers can hire the employees after all the paperwork and should make sure that they follow all rules related to HR in compliance with the local laws in the country.
With Skuad’s EOR solution, you can expand your business without worrying about HR compliance in the country.
Probation & Termination
The standard probation period in Guatemala is two months. During the probationary period, both parties can end the contract with no consequences.
The termination of employment in Guatemala must be fair, and the employer must provide just cause for doing so. The termination action letter must be given in writing and the employer must provide a notice period to the employee
The notice period given in the contract should be followed. In case there is no mention of the same, the notice period should be allotted based on the period served by the employee.
Apart from providing a just cause for termination in writing, no other approval is required. However, there are a few special cases when the employer will require judicial permission. Some of these are listed below.
- Pregnant or nursing women cannot be dismissed without a fair cause.
- Employees participating in worker’s union formation cannot be dismissed.
- The contracts of the leaders of the workers union committee cannot be terminated without just cause.
- Termination cannot be carried out in case of collective conflict that is under collective bargaining.
The employer must have just cause to terminate any employee. According to the labor law, the just causes on which an employer can dismiss the employee include the following.
- When an employee violates the terms and conditions of an employment contract
- In case of misconduct with the employer or co-workers
- If an employee reveals trade secrets to a third party
- The employee is arrested for some reason
If the employer contravenes any of the requirements and fulfills one of the causes given above, the dismissal comes into effect as soon as they receive a written termination letter. At the time of termination, the employer needs to provide the following to the employee.
- Any salary that is due up to the date of the employee’s service
- Proportional bonus ( year-end)
- Proportional annual bonus
- Encashment of the amount of vacation that is owed to the employee
In case the employer does not provide just cause for the employee’s dismissal, according to the law, they must pay a severance amount equivalent to the employee’s one-month salary for each year of service. The Guatemala labor law known as “economic advantages” states that for the additional benefits given to the employee, such as a car, mobile bill, life or health insurance, or food services, the employer has to pay a severance amount equivalent to an additional 30% of the employee’s salary.
Skuad’s high-tech, centralized EOR solutions for Guatemala can ensure your business’s expansion endeavors fall within the ambit of the local laws for probation and termination. To learn more, get in touch with a Skuad expert today.
EOR Solution in Guatemala
Business expansion is a long-drawn process that calls for extensive planning, especially when expanding to a foreign country. It is complicated and can take up to several months to complete but by choosing the EOR route for hiring employees in Guatemala, you can fast-track the expansion process. Employer of Record Guatemala (EOR) solutions by Skuad can make expansion to Guatemala much simpler and a lot quicker for business. Our global outreach and a tech-enriched HR platform ensure compliance with local labor laws by managing employment responsibilities such as monthly payroll, work permits, employment contracts as well as taxation for your employees in Guatemala. To learn more, Book a demo with Skuad today.
Types of Visas in Guatemala
Many students study in Guatemala, people need a work visa to work in Guatemala, and others who just want to explore the beauty of the country obtain tourist visas. The different types of visas required for various purposes include the following.
- Business visas
- Tourist visas
- Student visas
For work and employment for foreign nationals who would like to work in Guatemala, there are two types of work visas. The permits are for,
- Expatriates who have spouse and children with a Guatemala citizenship
- Foreign nationals who have a valid job offer letter from a company in Guatemala
The Guatemala work visa requirements for these two cases differ from each other. In the first case, the visa has to be applied for on its own, and in the second category, a work visa is applied for by the company.
Guatemala Work Visa Requirements
Foreign nationals must provide all the above documents to obtain a temporary residence permit. The applicant should provide the documents to the general directorate of migration and wait for the approval. After approval, the applicant must submit the application and related documents to the Ministry of Labor of Guatemala. The applicant will have to wait for another 10 to 15 days for the final approval. Once the applicant obtains a temporary residence permit and work permit, they can travel to Guatemala.
Talk to us and get more information and guidance related to types of visas and work visa requirements in Guatemala. Skuad can handle all your visa requirements and ensure the expansion process is not delayed.
As mentioned above, a work permit in Guatemala enables a foreign national to stay and work there. However, the worker needs to have a temporary residence visa and work permit visa. The employer should employ a team of workers that comprises 90% of Guatemalans. Note that this is not applicable in the case of high-level employees such as directors, administrators, and managers. The types of visas and Guatemala’s work visa requirements are already given in the previous section.
To obtain a work permit upon securing a work visa, the following must be kept in mind.
- The procedure for attaining a Guatemala work permit for foreigners starts when the applicant is legally within the territory of Guatemala on a tourist visa.
- The migrant worker’s temporary residence visa is granted for a period of one to five years and a work permit visa is given for one year, which can be extended.
- The institution of immigrants in Guatemala may charge an amount of approximately USD 500, although the cost depends on the duration of time the worker is granted a residence permit.
- The residence visa may be granted within two months, and after the expiry of the visa, the worker may apply for a permanent residence visa if they want to continue their work in Guatemala indefinitely.
- People looking for a Guatemala work permit without a job offer must provide the valid application and documents required for obtaining a work permit on their behalf.
A foreign national who has arrived with a job offer letter and has obtained a residence visa may apply for a work permit to the labor ministry of Guatemala. The documents that the applicant will require are as follows.
- The form provided by the labor ministry with the signature of the representative of the employing company
- Passport of the worker
- Migrant or residence visa
- A statement with the declaration of the number of foreign nationals employed by the hiring company
- A statement declaring that the worker can read, write, and speak Spanish
To know more about work permits in Guatemala and how you can avail of our EOR services to secure them for your employees, talk to a Skuad expert today.
Payroll & Taxes in Guatemala
Both employers and employees in Guatemala have to contribute a certain amount as tax. For instance, both have to pay for social security but the rate of taxation differs. Employers need to contribute 10.67% of their salary, while employees have to give 4.83% of their wages. Employers have to pay corporate income tax too. Employers can pay taxes on either revenue from income or profit from their income. Business companies do not need to set up their payroll, they can choose to avail of payroll outsourcing in Guatemala through Skuad, and stay compliant with all the key legislations under the local laws.
Steps to Set Up Payroll in Guatemala
Guatemala Employer Payroll Taxes
- The employers have to contribute 1.00% toward the Workers Recreational Institute.
- For a professional training institute, the employers have to pay 1.00% tax.
- The social security tax rate for employers is 10.67%; thus, the total employment cost is 12.67%.
Guatemala Employee Payroll Taxes
- The employees must pay 4.83% for social security.
- The total employee cost is 4.83%.
Learn more about payroll and taxation policies in Guatemala by booking a demo with Skuad.
Incorporation: How to Set Up a Subsidiary in Guatemala
To avail of the benefits of business expansion, it is essential to be aware of the process of incorporating a holding company in Guatemala. This takes place in several steps.
- The first step is to choose the local office location depending on the type of business in Guatemala and research if there are any specific laws in the region for incorporation.
- The next step is to choose the business entity, including whether your business will be a public limited company, limited liability company, branch, or representative office. The entity you choose can affect your business activity; therefore, it is crucial to predetermine the type of entity.
- There are extensive business opportunities in Guatemala, but compliance with the subsidiary laws is critical to establish a successful business entity. Therefore, knowledge of the laws regarding your chosen type of business entity is also relevant.
You can set up your business in the most uncomplicated way through Skuad’s Guatemala EOR solution. By partnering with Skuad and consulting our team of experts, your process of business expansion into Guatemala will be carried out without a hitch. We can ensure your business entity complies with all the local laws and requirements for incorporation!
Professional Employer Organization (PEO)
A professional employer organization (PEO) in Guatemala can handle all HR-related functions such as payroll, HR compliance, employee benefits, risk management, and taxes. A PEO is like a co-employment organization while an EOR firm acts as the legal employer.
Another point of distinction is that a PEO works for organizations that have already registered for every country and state where the company’s employees exist. However, as the legal employer, an EOR service takes up responsibility and liability for the company. It enables companies to expand their business globally without a legal entity.
Organizations planning to expand into new territories are better suited with a global EOR which becomes the legal employer on behalf of the organization. Instead of associating with a PEO, a co-employment partner, organizations have more to gain by utilizing the services of a EOR solution. The EOR solution safeguards organizations from unexpected policy changes, loss of control, and potential risks as the EOR bears every legal liability for the organization. In addition to these, the EOR handles payroll, tax, and employment law compliances. To know more about Skuad's EOR solution, Contact Skuad today.
Conclusion: What Gives Skuad’s Guatemala Solutions an Edge?
The complexities of business expansion can be simplified with an effective EOR solution. As you decide to expand your business into Guatemala, talk to Skuad experts and learn how our self-serve, high-tech HR solutions platform can help your business thrive in the long run. Our extensive expertise in the laws and regulations associated with the Guatemalan labor code can help you save additional efforts, time, and money!