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Employer of Record in Honduras

Employer of Record in Honduras

Skuad’s Honduras Employer of Record (EOR) solution helps you to expand into the country with absolute ease in a hassle-free manner. With Skuad, you don’t need to set up an entity in the country as we can be your legal employer and manage all the human resource (HR) functions for your remote teams, such as payroll, taxes, onboarding process, training, visa, and permits. To learn more, get in touch with Skuad experts today.

Honduras at a Glance

Capital: Tegucigalpa

Currency: Honduran lempira (HNL)

Population: 9,746,115 as of 2019

Languages spoken: Spanish (official) and Amerindian dialects

GDP: 2,574.91 billion USD ‎(2019)

Employment in Honduras

Things You Must Know Before Hiring In Honduras

Before hiring or extending your business to Honduras, you must know that its labor laws are more employee-centric. Before entering into any employment contract with the locals, take these entitlements and regulations into consideration. Skuad’s EOR solution reduces compliance risks as well. 

Here are a few details to keep in mind before starting expansion in Honduras.

To learn more about Honduras’s employment policies to ensure your expansion efforts fall within the legal requirements, book a demo with Skuad experts today.

Contractors vs. Full-time Employees 

Honduras treats contractors differently from full-time employees, like many other countries. Contractors are hired for a specific task that is not long-term. These can be renewed. Full-time employees offer more stability and save training costs and time. It depends on the nature of the work. Full-time employees are preferred if the company chooses to have a long-term presence.

You must classify the employees correctly to avoid paying any fee/penalty for misclassification. Your internal hiring strategy should follow the decision to hire a full-time employee or a contractor. The following checklist might help you in the process.

1.  Nature of work

2.  Level of control over the performance

3.  How you will compensate your global team

4.  Employees’ contribution toward the company goals and objectives

What should an employee contract entail?

When negotiating and finalizing an employment contract with a prospective employee in Honduras, it is essential to understand the norms there and the significance of an apt job offer. The 13th- and 14th-month bonus salary need to be a part of your budget and specified in the employee contract. The salary package should highlight the bonus offered as well.

The employment contract should be in writing and should include all essential details such as employee compensations, benefits, paid leaves, probation period, termination, and other such clauses. 

Advantages of Hiring Contractors

  • Flexibility: Since contractors are hired on a short-term basis, you are free to determine the scope of their work temporarily. If new needs arise, new contracts can be drafted in the short term.
  • Independence: Short-term contractors usually work independently and on their own timeline. They do not require close supervision, and your resources can be transferred elsewhere, as needed. 
  • Cost: Hiring contractors may be cheaper in the long run although their individual rates are higher than those of full-time employees. This is because such employees are not entitled to employment benefits such as bonuses and tax compensations.

Advantages of Hiring Full-time Employees

  • Loyalty and organizational commitment: Full-time employees are likely to be more loyal as they exclusively work for your company. As their individual success depends on the performance of your firm, they are likely to invest more effort into their work. 
  • Knowledge: All employees undergo training when they join a firm. The skills and knowledge gained by a full-time employee, however, stay within the organization. 
  • Legal freedom: Since full-time employees are defined as such in their contracts from the outset, misclassifications and the repercussions thereof can be avoided completely. When hiring full-time employees, you determine the terms of the contract and entitlements, and these are not liable to change unless mutually decided by both parties. 

Whether your organization requires contractors or full-time employees, Skuad’s EOR solution can cater to all your hiring requirements in Honduras. Learn more by talking to Skuad experts.

Hiring in Honduras

With a reliable and experienced EOR firm, you can get your company up and running in a matter of weeks to a few months. 

Some of the popular job portals include Encuentra24, Career Jet, CompuTrabajo, and LinkedIn.

Skuad can help you set up and also manage various HR functions whilst you can concentrate on expansion and growth. 

The hiring process can be extremely tedious. Here’s a look at how the hiring process takes place, right from putting out an advertisement to the onboarding process.

1. Job Title, Description, and Role

This includes what the employee is expected to do in terms of responsibilities and output. A job description must state the contribution an employee is expected to make to the company. This section needs to be very detailed.

2. Job Advertisement

Advertising in a foreign country can get taxing. One needs to adhere to all the local laws before placing an advertisement online or through traditional methods in newspapers.

3. Interview Process

Interview norms can be different in various countries; hence, one needs to be aware of the style. Scheduling interviews across time zones using a different technology (Google Meet, Zoom) can be a hassle. One needs to know what questions are permitted legally and which ones are not.

4. Reference Check

A reference and background check is a must. It needs to be in writing that the prospective employee consents to the same. Reaching out to previous employers and companies and a basic financial and criminal check is essential.

5. Job Offer

A formal job offer would include the starting salary, workplace location, job role, termination rules, and leave policies.

6. Onboarding Process

The onboarding process includes everything from filing relevant employee documents and setting up the preferred mode of payment and provident funds.

An EOR service such as Skuad can save you time, labor, and resources while hiring, allowing you to focus on the business side of expansion in Honduras. Talk to Skuad experts to know more.

Probation & Termination in Honduras

Probation Period

According to the labor law in Honduras, the maximum probation period in Honduras is two months or 60 days. 

Termination 

An employee contract can be mutually terminated on valid grounds. In the case of a contract being terminated on unfair grounds, a severance is to be paid.

Notice Period in Honduras

The notice period is determined according to what was agreed between the two parties in the employment contract. In case, there was no period agreed upon, the following will apply by law.

  • If an employee serves less than three months, a 24-hour notice is required.
  • If an employee served more than three months but less than six months, a week’s notice is mandatory.
  • If the service period is more than six months but less than one year, a notice of two weeks is required.
  • If the employee serves more than one year but less than two years, a one-month notice is necessary.
  • If an employee has served the company for more than two years, a two-month notice must be served.

Severance Pay

Severance is paid if an indefinite contract is terminated on unfair grounds.

  • In the case of three to six months of employment: 10 days’ wages
  • In the case of six months to one year of employment: 20 days wages
  • In the case of one year or more of employment: One months’ salary for every additional year of employment, capped at 25 months

To ensure your expansion endeavors adhere to the laws regarding probation and termination in Honduras, talk to Skuad experts and book a demo today.

EOR Solution in Honduras

When a company acts as an EOR service, it becomes the legal entity to carry out the hiring process globally. Skuad can help company owners to expand into different countries without setting up a legal entity.

 We help you manage monthly payroll, contracts, work permits, taxation, and work permits in Honduras for your overseas talent base.

Outsourcing Employment through an Employer of Record

When you decide to expand into Honduras, you need to be clear on certain things, such as the route you want to take in terms of employment. It needs to be decided whether you wish to build an in-house team or hire the services of an EOR firm to set up and manage all HR functions and the complete employee life-cycle, from recruitment to payroll, risk management, and termination.

Skuad has an integrated, high-tech HR platform and tremendous industry experience. We can offer tailor-made EOR solutions for all your expansion needs in Honduras. To avail yourself of our services, speak to Skuad experts today.

Types of Visas in Honduras

Honduras’ work visas are decided upon the duration and nature of visit and work. 

Employees need a special stay permit or a work contract. A temporary residence permit for the employee is also required. A special stay permit has a validity period of one to five years. After its expiry, employees must make an application for a temporary residence permit.

Visa-exempt nationals can travel to the country without an entry visa and stay there for 30 days. Foreign nationals can also perform work-related activities for 30 days without a permit, so long as their work is not remuneration-related. A visa consular or a consulate visa needs to be obtained by visa nationals entering the country for business purposes. The Ministry of Foreign Affairs, Honduras will issue an authorization before the Honduran consular post can issue a Consulted visa.

Visa and visa-exempt nationals can extend their stay for up to 90 days for 120 days consecutively. Foreign nationals who make multiple trips to Honduras are allowed a maximum stay of 180 days in a year.

A checklist comes in handy when applying for a Honduras visa. Here is a list of everything you will need to apply.

  • A valid passport with a minimum year-long validity 
  • Four passport-size photographs
  • Police verification from the country of origin
  • A medical certificate issued six months before the application
  • Passport copies
  • Police verification certificate issued by the Honduras Police Department
  • Residence card fee payment proof
  • Registrations fee payment proof

There are a few other requirements such as a vaccination requirement in Honduras. All foreign nationals entering Honduras from countries with a prevalence of yellow fever must have a vaccination certificate valid for six days. 

Talk to us and get more information and guidance related to types of visas and work visa requirements in Honduras. Skuad can handle all your visa requirements and ensure the expansion process is not delayed.

Work Permit

The steps to apply for a work permit in Honduras are as follows.

  1. Entering the country
  2. Getting the employment contract approved and a statement of compliance application from the Labor Ministry
  3. Obtaining a temporary residence approval 
  4. Getting the residence card application
  5. Attaining the approval of the residence card and collecting it

Other important details to note regarding work permits in Honduras are given below. 

  • The time taken to issue a work permit in Honduras is usually one to two weeks. The Ministry of Foreign Affairs takes about 10 days to approve the application. For the entire process to be complete, it can take time between five to 16 months.
  • Foreign nationals from countries such as Nicaragua, El Salvador, and Guatemala can travel to Honduras without any documentation as they are signatories of Central America 4 (CA-4).
  • Citizens of the United States of America and the European Union (EU) do not need to obtain a work visa for short-term business-related activities. 

To know more about work permits in Honduras and how Skuad can secure them for you, speak to our experts today and kick-start your expansion.

Payroll & Taxes in Honduras

Payroll in Honduras

Employees receive salaries bi-weekly or monthly. Employees are entitled to 13th and 14th salaries, and these are paid in June and December. Each salary is equivalent to a months’ salary.

The payroll options offered in Honduras are listed below.

  • Remote payroll: Where the parent company follows their payroll, the onboarded employees can be paid accordingly, but that should comply with the existing labor laws in Honduras.
  • Internal payroll: If the companies wish to establish an internal payroll at the time of expanding to Honduras, they can proceed accordingly. Usually, this payroll method is adopted only by big companies that have a huge number of employees and are capable of carrying out a compliant payroll.
  • Local payroll processing company: This payroll is applicable if you prefer to keep the money in the local economy; however, you may still have to handle the required compliances following the local law.
  • Global payroll outsourcing: A global payroll outsourcing service such as Skuad can handle payroll and compliance, working as an EOR firm for your organization.

Health Insurance Benefits

The government of Honduras ensures that its citizens have access to health care benefits and services for free. The service is funded by contributions from the following monthly wage rate 

  • Employee: 2.5% of monthly wage
  • Employer: 5% of the employee’s monthly wage
  • Government: 0.5% of the employee’s monthly wage

Some employers may choose to provide their employees with private healthcare benefits as well.

To understand how payroll and taxes are managed in Honduras and expedite your expansion process, talk to Skuad experts and book a demo

Incorporation: How to Set Up a Subsidiary in Honduras

A legal subsidiary or entity needs to be set up in Honduras if the business is carried out independently or by partnering with an EOR service. Skuad can be your one-stop solution to all your overseas expansion needs.

When setting up a legal entity in Honduras, one needs to do thorough research and analysis. First, you must research the location of the entity, as this would be affected by subsidiary laws and affect fees. Another consideration with location is the type of business it is. If it is an industrial business, location and proximity to elements such as water play a huge role. If it is for a professional purpose, choosing a location in the business district would be preferable.

The next step is to identify the type of subsidiary that best suits your business goals. Honduras’ legislation allows different types of subsidiaries. There are four main types of legal entities to choose from.

  • Proprietorship
  • Partnership
  • Private limited liability company (LLC)
  • Public liability company (PLC)

Each entity has its pros and cons. However, a proprietorship is the easiest to set up. 

Setting up a subsidiary can be a time-consuming job at hand. From running in a new location to becoming aware of Honduras laws, it can take up to several months to set up. No matter which company you set up, there are endless formalities that need to be completed. Instead, companies can use Skuad’s EOR solution to form a subsidiary in Honduras. It will simplify the process so that you can focus on business expansion and strategizing. Talk to us to learn more.

Professional Employer Organization (PEO)

A professional employer organization (PEO) can help you manage all HR-related services in a well-structured, comprehensive manner. This includes a complete employee life-cycle, right from payroll, taxation, compliance, recruitment, and training to employee benefits and risk management. 

An EOR firm provides the same services as a PEO. Still, there are some key differences between the two. 

  • A PEO is a co-employment organization wherein the company outsources the HR functions completely, while an EOR firm is a legal employer. An employer will be held liable for the penalties imposed on any unwarranted employment-related actions executed by the PEO. An EOR service takes care of all compliance-related liabilities.
  • If a parent company chooses to partner with a PEO, they need to set up an entity or a subsidiary legally in Honduras. However, if they choose to partner with an EOR service, there is no need for an entity setup. 

A PEO is useful when a foreign company intends to establish its legal presence in the country where it has employees. However, an EOR is more suited to the needs of an employer who wishes to hire employees in a country without setting up a legal presence.

While Professional Employer Organization in Honduras can assist you with HR management, Skuad’s Employer of Record Honduras solutions can help you in growing and benefit from the business opportunities in Honduras by assuming all the legal responsibilities of being an Employer of Record, that too without going through the hassle of setting up a separate legal entity. To learn more, Contact Skuad.

Conclusion: What Gives Skuad’s Honduras Solutions an Edge? 

Conducting business in Honduras is an attractive prospect due to its steady economic growth over the past few decades and promising business opportunities. With growing industrial and agricultural sectors, it also has a flourishing professional sector. The World Bank has stated that the country has a promising potential with accelerated growth in the future, considering it has the second-highest growth rate in Central America at present. 

As it is part of Free Trade agreements (FTAs), the country has direct business links and easy access to Canada, Peru, Mexico, the United States of America, the United Kingdom, South Korea, and the EU. 

If you think Honduras is a good business destination to expand your company and scale up your profit, book a demo with Skuad experts today! 

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