What is a PEO? 

A PEO, also known as a professional employer organization in El Salvador, is an outsourced agency providing HR services. PEOs provide payroll, hiring, benefits, and other time-consuming and burdensome tasks the HR department is responsible for. 

When you partner with a PEO, you enable your core business activities to continue to grow while gaining a strategic partner to help you expand your team globally. As a company leader, you want to focus on growth initiatives, not administrative tasks. 

A PEO opens the door to top talent all over the world, including El Salvador. PEOs require little effort from leaders, meaning you don’t have to worry about converting currencies or labor laws in El Salvador. The PEO is your legal requirement to hire in the country and it takes on all the associated risk.

‍Click here to learn more about Skuad’s PEO services.

What are the benefits of using PEO services in El Salvador? 

There are many benefits to working with a PEO, such as global insight or sourcing top talent. Businesses that work with PEOs have more doors opened than those that don’t. A PEO is a sound decision for any growing and ambitious organization. 

Hire top talent from El Salvador 

You want to hire the best for your organization and that means you have to look outside your immediate location. Sometimes, those candidates are located in another country, such as El Salvador. 

El Salvador is expected to have 2.9% economic growth in 2022 and another 1.9% in 2023. Working with a PEO allows you to have access to top talent in this thriving country. 

Position your company as a global competitor 

Working with a PEO in El Salvador helps you position your company in competitive global markets. A globally competitive company is one that people want to work for! 

Why wouldn’t you want to position yourself globally and attract qualified candidates? 

Save on unnecessary costs 

It would be a significant cost to establish an entity and hire workers in El Salvador. You can eliminate that cost by working with a PEO. 

But you’ll also save on other costs. Such as those associated with hiring and managing an internal HR team. Or the cost of training them continuously to remain up to date on employment laws in El Salvador. 

Not to mention, you would have to travel to El Salvador and hire a legal team in the country. Working with a PEO is much more cost-effective for growing organizations! 

Gain insights into global markets 

You’ll gain insight into global markets, such as those in El Salvador, with a PEO. 

This not only helps you better position your organization, but to prepare for the future. Understanding the market will help you make more strategic decisions about your company to ready it for future growth. 

Avoid setting up a new entity in El Salvador 

If your company decides to start business in El Salvador without using a PEO service provider, you only have one option to do so. And that is to set up a new entity. 

Establishing a new entity in El Salvador is a time consuming and costly process. When working with a PEO, you can have new hires working for your organization in a month or less. You also avoid the need to hire a legal team, travel to El Salvador, and the fees associated with El Salvador company registration processes. 

Working with a PEO frees up your time to focus on more revenue-generating activities. Expanding globally has never been easier than it is with a PEO! 

Do you want to learn more about our PEO services? Contact Skuad today and get your questions answered! 

Improve cultural awareness 

Global companies must be culturally aware to succeed. Working with a PEO helps you to improve your cultural awareness. PEOs are experts in the countries they work in, so you can easily communicate with your workers without offending them. 

For example, did you know it’s expected that you will spend time forming a relationship before conducting business in El Salvador? Or that using a title before your last name based on your education is common? 

Maintain 100% compliance 

El Salvador has strict employment laws that businesses must follow. The workweek is capped at 44 hours. Anything over six hours in a single day is considered overtime. Overtime is paid at 200% of basic salary.

Minimum wage varies based on the industry you work in. For example: 

• $242.50 a month for retail workers
• $237.00 for industrial laborers
• $202.80 for apparel assembly workers
• $113.70 for agricultural workers

Employment laws in El Salvador are complex. When you hire global employees, you must understand the labor laws associated with the country they reside in. This is a complicated process that will take time and resources to achieve. 

Or you can let a PEO provider manage all that for you. PEOs maintain 100% compliance with all employment laws. They act on your company’s behalf to hire qualified talent in El Salvador. 

Payroll 

Employees are paid in USD. Companies can choose from four options to conduct payroll. Those are remote, internal, local, or EOR/PEO. 

El Salvador income tax rates: 

• Income between $0 and $4064.00 is exempt
• Income between $4,064.00 and $9,142.86 pays $212.12 plus 10% on anything over $4,064.00
• Income between $9,142.86 and $22,857.14 pays $720.00 plus 20% 
• Income over $22,857.14 pays $3,462.86 plus 30% 

Employer contributions: 

• 7.50% to social security
• 7.25% to AEP (the pension fund)

Employee contributions: 

• 3.00% to social security
• 7.25% to AEP (the pension fund)

Paid Leave 

El Salvador celebrates 8 public holidays. Employees are entitled to 15 vacation days paid at 150% of normal wages. 

Medical leave is paid for up to 26 weeks. Employers pay for the first three days of medical leave and the rest is covered by social security. 

Maternity leave is for 12 weeks before birth and 6 weeks after. Pregnant employees cannot be assigned physical work after their fourth month of pregnancy. The leave time is extended in case of pregnancy-related illnesses. Employees are paid 75% of normal wages by the social security agency during maternity leave. 

Paternity leave can be taken for three days within the first 15 days after birth. 

‍Of course, you can navigate the employment laws in El Salvador easily with the help of Skuad. Check out our services for more information.

What does it cost to build a team in El Salvador? 

You could start working in El Salvador with a large investment or for a fraction of that investment. The cost of building a team varies greatly depending on the path you choose. You can either incorporate in El Salvador or work with a PEO. 

Incorporating in El Salvador

Setting up a business in El Salvador is much more complicated than it appears on paper.  Employers must sign a deed with a notary public, register with several agencies, and structure the business before starting operations. 

The El Salvador corporate tax rate is 30%. Employers pay $2,000 in shared capital during the first year. To accurately structure your business, you would need to hire a lawyer in El Salvador to help understand the nuances of the employment laws. 

Or…you could work with a PEO and save yourself the headache. 

PEO services in El Salvador  

When working with a PEO, you can start doing international business in El Salvador in days to weeks. Skuad has an easy to use platform that allows you to cancel your account at any time. Did we mention you can start for free? 

Skuad’s PEO plans start at $19 a month per worker. You can also get EOR in El Salvador services starting at $199 a month per worker. Enterprise clients need to speak to a representative to discuss custom pricing. 

Book a demo today 

Are you ready to start doing business in El Salvador? At Skuad, we are ready to help you expand operations quickly and easily! Book a free demo today to see how easy our platform is.