Employer of Record (EOR) in Uruguay

Employer of Record (EOR) in Uruguay
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Employer of Record in Uruguay

Skuad’s Employer of Record Uruguay (EOR) solutions make business expansion to Uruguay easy and hassle-free. Our unique HR platform allows companies to hire exceptionally talented employees in Uruguay, 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.

Uruguay at a Glance

Population: 3,485,357 (2021, according to United Nations’ latest data)

Currency: Uruguayan Peso (UYU)

Capital: Montevideo 

Languages: Spanish (official language), Uruguayan, Portuguese, Italian, Russian, German, and Plattdeutsch.

Gross Domestic Product (GDP): USD 56.05 billion in the year 2019; expected to reach USD 56.70 by the year 2021.

Learn more about expanding your business into Uruguay by partnering with Skuad.

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Employment in Uruguay

What You Should Know Before Employing in Uruguay?

The International labor organization (ILO) governs employment laws in Uruguay. The Uruguay labor laws state the process of establishing employment relations in the country. Let us take a sneak peek into Uruguay employment laws to understand the entitlements such as employee benefits, working hours, paid time-offs, national holidays, etc.

Employment contract law, Uruguay A written contract is not mandatory in Uruguay, though it has now become a normal practice to formalize a contract in writing. There are two types of employment contracts:
  • Indefinite duration contract
  • Temporary duration contract
  • For both the above employment agreements, the employers hire workers every month and pay a fixed price. When the contract of temporary duration expires and the workers continue to work, then the contract will become a permanent one.
Uruguay Compensation laws The minimum wage for workers in Uruguay is 17,930 Uruguayan pesos per month. In the commercial sector, the workers work for 44 hours a week, and workers in the industrial sector work for typically 48 hours a week. Employers have to pay for any extra hours of work as compensation to the employees. Employees also get Aguinaldo, also called the 13th salary which is the annual bonus. The bonus should be equivalent to one month’s salary of the work that should be paid in two installments one in June and another in December.
Standard working hours Article number 54 of the constitution limits the working hours of workers to 8 hours daily. Work limit hours for industries is 48 hours per week and for commerce workers, it is 44 hours per work. Employers must compensate for any extra work done by the employees.
Forms of wages There is a minimum national wage set for different activity groups. However, there is still scope for negotiation, and wages can be determined through collective negotiation as well. The different forms of wages include:-
  • National minimum wage
  • Complimentary annual salary
  • Vacation salary
Employee health benefits Uruguay Private institutions offer health insurance for the employees and provide comprehensive health care. There are various medical benefits like basic medical care, immediate care, and specialist care. All of this is regulated by the Ministry of Public Health.
Paid time off After the first year of work, every worker in Uruguay has a 20 day annual leave from the second year. From the fifth year of continuous service, one extra paid time off is added and every four years one leave day is added up to a maximum of 25 days. The Worker is also entitled to a vacation salary along with their regular salary.
Holidays in Uruguay The holidays in Uruguay are:-
  • 1st Jan - New Year Day
  • Feb or Mar - Carnival
  • Thursday before Easter Sunday - Maundy Thursday
  • 19th April - Landing of the 33 patriots Day
  • 1st May - Labor Day
  • 19th June - Never Again Day
  • 18th July - Constitution Day
  • 25th August - Independence Day
  • 12th October - Day of the Races
  • 2nd November - All Souls Day
  • 25th December - Christmas Day

To ensure your expansion endeavors are in compliance with the Uruguay employment laws, Contact Skuad today.

Contractors Vs. Full-time employees

Employment contracts in Uruguay are duration-based. The two types of employment contracts are Indefinite duration contract and Temporary duration contract. When the workers continue to work after the expiry of the temporary duration, the contract becomes permanent. There is no legal regulation. However, Uruguay’s doctrine and jurisprudence understand that a Full-time contract is only permitted for objective or material reasons when the task to be performed is of limited duration. Learn more from Skuad experts about the nitty-gritty involved in hiring fixed-time contractors or temporary contractors.

Hiring in Uruguay

The first step towards the hiring process is posting a job advertisement. The employers must provide all the information like job role, responsibilities of the workers, wages, etc. The two most popular job boards in Uruguay are -

The hiring companies in Uruguay can also opt for advertisements in local newspapers. Personal recommendations also work well, if the company is well-established.

The International Labor Organization (ILO) and Ministry of Labor regulate the Uruguayan employment compliance laws. There are legal requirements for recruiting workers in Uruguay. The constitution of the country protects the workers that include the right to labor. According to Uruguayan law, everyone is equal and must get an equal opportunity to work. The employer must make sure that each of the applicants gets an equal opportunity to show their skills.

After selecting the candidate, the employer has to prepare an employment agreement for further processing. The contract can be of a fixed-term or indefinite term depending on the employment needs. The employer must include all the vital information related to employment like the working hours, job role, employee benefits, salary, terms of termination, etc. The employer must mention the salary in the Uruguayan currency i.e. Uruguayan pesos.

When the hiring process is complete, the employer must register the employees with Banco de Previsión Social. It is Uruguay’s social security institute. The employers must keep in mind that the employees sign the employment contract before their first day of work. Likewise, there are many other laws that employers have to follow.

To hire employees in Uruguay, employers must follow the HR compliance laws of the country. Experience a positive hiring process by partnering with Skuad.

Probation & Termination

The standard probation period in Uruguay is three months. During the probationary period in Uruguay, the employers observe the performance of the employees. The employers can check the suitability of the candidate for the position during this time.

Employers have the right to terminate workers, but they must provide a notice period of 1.5 weeks and also a severance payment. However, employers may need to provide additional payment for terminating workers in the following situations.

  • Terminating a pregnant woman
  • Dismissal due to illness
  • Accident during work
  • Firing worker for Union related matters

The termination rules may differ for different work sectors other than the above. If an employer terminates an employee, they have to fulfill a few requirements like

  • Severance payment that is equivalent to one month’s salary for every year employed for up to six months salary
  • A portion of Aguinaldo. 
  • Employers must provide the unemployment papers within ten days of terminating the employee

Employers need not provide the above benefits if the employee exhibits improper behavior or misconduct. However, employers must be able to prove it true. The terms for termination of employment in Uruguay should be compliant with the HR policies of Uruguay.

Learn all about the standard probation period, Uruguay, probationary period, Uruguay, and termination of employment, Uruguay, from Skuad experts today.

EOR Solution in Uruguay

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 Uruguay, you can fast-track the expansion process. Employer of Record Uruguay (EOR) solutions by Skuad can make expansion to {country} 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 Uruguay. Contact Skuad to know more.

Types Of Visas In Uruguay

Whether for relocating employees or hiring new employees, the employers and employees must make sure that they have a working visa that complies with the country’s labor laws. There are different visas that Uruguay offers for people willing to enter the country. These varied visas are as follows -

  • Tourism visas that are operational for 90 days
  • Business visas which have a validity of 90 days
  • Student visas are single-entry visas and are valid for 30 days
  • Family reunification visas, which is also a single entry visa and have a validity of 30 days
  • Work visas, having a validity of 30 days and are single-entry visas
  • Humanitarian and emergency visas are valid for 30 days and are single-entry visas.

The different types of work visas state the duration of the time an employee can work. For example, if the visa is an immigrant visa, temporary residence visa, or permanent visa. However, the Uruguay work visa requirements are the same. To obtain an Uruguay work visa, the applicant must be at least 18 years old.

Know more about the process of visas in Uruguay, Talk to Skuad experts today!

Work Permits Uruguay

People with temporary or permanent visas can work in Uruguay. Anyone who completes the visa application process and provides all the documents mentioned in the above section can get work permits in Uruguay. Uruguay work permits for foreigners can be obtained by presenting the documents required for work visa processing to the consulate. However, if the worker wants to stay for a long time, they must apply for a temporary residence visa. People willing to work in Uruguay can also apply for an Uruguay work permit without a job offer, but they must apply for the work permit themselves and not on any company’s behalf. They will need the following documents.

  • Visa application form
  • Recent passport photograph
  • Passport with a validity of at least 6 months
  • A copy of the applicant’s passport’s main page

Apart from the above documents, the worker might require documents specific to the job role or the activity they will engage in the country. Learn more about work permits in Uruguay with Skuad’s global HR solutions.

Payroll & Taxes in Uruguay

There are various payroll options an employer can consider for setting up payroll in Uruguay. The several options are -

  • Internal payroll- For setting up internal payroll the size of the company must be huge and must contain a large number of staffs.
  • Remote - It means adding the workers of Uruguay to the payroll of the parent company situated in another country. Although it requires one platform for managing payroll, still the company has to follow different regulations for different countries.
  • Payroll processing company Uruguay - This will help the company delegate the task of payroll to another company, however, the employer still has to be aware of the HR compliance laws of the country.
  • Payroll outsourcing Uruguay - With an effective payroll outsourcing company like Skuad you can comply with the regulations of the country while handling all the payroll-related matters seamlessly as the employer of record can manage payroll through an integrated platform of Skuad.

How to set up payroll in Uruguay?

The first step would be to set up a local subsidiary that will help the company in hiring employees, setting up payrolls, work legally in the country and provide benefits and compensation to the employees. It requires a lot of time and effort to set up a subsidiary in Uruguay while complying with the country’s laws. Skuad’s platform can help you set up subsidiaries in the country and run payroll while completely complying with the country’s laws.

Uruguay payroll tax rates

Different countries have different taxation policies and the employees, and employers must comply with the regulations. Given below are the employees' and employers' tax rates in Uruguay.

Uruguay employer payroll taxes

Health Insurance 5%
Labor re-conversion fund 0.1%
Pension fund 7.5%
Labor credit guarantee fund 0.025%
Total employment cost 12.625%

Uruguay employer payroll taxes

Pension fund 15%
Health Insurance 3% - 8%
Labor re-conversion fund 0.1%

Talk to us and know more about payroll and taxes in Uruguay!

Incorporation - How to Set Up a Subsidiary in Uruguay?

If you wish to expand into Uruguay, the first step would be to set up a subsidiary without which the company cannot make a legal presence in the country. There are several factors that you must consider to expand your business in Uruguay. The steps for setting up a subsidiary in Uruguay are -

  • The foremost step in incorporating a holding company in Uruguay choosing the location. The employer must choose the location according to the type of business. He/she must ensure compliance with the local area rules (if any). It is always better to partner with a third party who knows the local laws better.
  • Choose the type of entity for your business. The options are public limited company, (LLC) Limited Liability Company, free trade zone company, branch, or representative office.
  • Every entity has different laws, the employer must select the entity according to the business requirements.

There are immense business opportunities in Uruguay. Because of the flourishing economy of the country, many businesses find it attractive to expand into Uruguay. However, it is essential to know the various laws for incorporation.

Know more about setting up a subsidiary in Uruguay with Skuad’s potent EOR solution.

Professional Employer Organization (PEO)

A professional employer organization, Uruguay manages all HR-related functions, such as compliance policies of the country, employee benefits, payroll management, taxes, and risk management. A PEO firm acts as a co-employer while an EOR firm acts as a legal employer.

Businesses willing to expand into another country must establish a legal presence in the country. Collaborating with a PEO firm will require the companies to set up a legal entity separately, however, when you partner with an EOR team you can legally start working and hiring employees in the country as it is already a legal employer.

A PEO can take over the responsibilities and liabilities of the company and handle all HR-related matters. An EOR company allows organizations to set up legal entities in different countries and mark their presence in the global market.

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.


Expand your business into Uruguay while complying with all the labor laws of the country with Skuad’s effective EOR solution. Handle the complexities of business expansion with ease and create a profitable business enterprise by making a global presence. Talk to Skuad experts and learn about every aspect of business expansion.

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