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Introduction

You've probably done your research and decided to launch your business in Honduras.

However, you have to figure out how to hire the right people, fund employee benefits, and do the necessary paperwork. What if you knew you didn't need to have everything figured out before achieving your dream of doing business in Honduras? Hiring a Professional Employer Organization (PEO) could solve your problems.

A PEO can help you find the best talent in Honduras, update and automate your payroll, and make sure you abide by payroll laws. Now, you're likely thinking, "What is a PEO, and how can I find one?"

A perfect example of a company rendering reliable PEO services in Honduras is Skuad. Read on to learn more about what a PEO can do for you, why you need to work with one, and what you need to know about employing people in Honduras.

What is a Professional Employer Organization?

A PEO is an outsourcing company that provides HR and payroll services for small and midsize businesses. According to the National Association of Professional Employer Organizations, small businesses that work with a PEO enjoy 7% faster growth than those that do not.

PEOs serve as co-employers that can perform the following essential HR responsibilities on behalf of a company:

  • Payroll
  • Onboarding
  • HR
  • Compliance
  • Employee benefits disbursement
  • Compensation

A PEO also benefits a company financially, as hiring one can help the company save on operational costs. Working with a PEO can help you streamline your HR processes and comply with payroll laws. In addition, it brings an outside perspective that can help diffuse issues regarding internal politics, favoritism, or disputes between in-house employees.

Hiring in a competitive industry can be challenging, as the best talent may choose more established companies first. One of the major strengths of a PEO is helping companies hire employees in a new country. Thanks to its experience with hiring globally, it finds the most qualified talent on your company's behalf.

A PEO can help you start your hiring process quickly, without a legal entity, so you can immediately commence operations with a talented workforce. Partner with Skuad to begin hiring in Honduras.

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What are the benefits of using a PEO in Honduras?

Establishing your own business in Honduras is an opportunity to impact society. You may need professional help to understand the terrain, know the crucial employment laws, and complete your Honduras company registration. All this, and more, is why you need to partner with an Employer of Record (EOR) in Honduras like Skuad.

Partner with a PEO to enjoy these benefits:

  • Save up to 35% on HR operational costs.
  • Spend less time on processing payroll.
  • Comply with payroll laws.
  • Achieve more accurate calculations.
  • Automate your operation.
  • Offer better benefits to workers.
  • Simplify your HR processes.

Hiring in Honduras with a PEO

What to consider before hiring in Honduras

A PEO in Honduras makes your payroll processing much more manageable, improving your onboarding procedure. Before hiring employees in Honduras, consider these critical elements:

  • The widely spoken language, Spanish
  • Societal norms
  • Tax rates
  • Employment laws
  • The availability of skilled individuals
  • The currency exchange rate
  • The economy

Key industries

Like virtually every other part of the world, there are specific vital industries where most people in Honduras work. Besides financial reasons, many prefer working in these industries due to the opportunities for career advancement. If your company is in any of these industries, then it may be relatively easy for you to start doing business in Honduras:

  • Textile manufacturing
  • Agriculture
  • Cigars
  • Sugar processing
  • Coffee
  • Tourism
  • Wood production
  • Seafood exportation

Why you need to use a PEO in Honduras

Challenges of payroll

The most challenging resources to manage in an organization are humans.

Since the outbreak of the COVID-19 pandemic, the demand for international hiring has increased drastically. Consequently, onboarding new employees, keeping track of employee data, and complying with payroll regulations have become more complex. This is why HR responsibilities are becoming more tedious, and professional reinforcements, such as PEOs, are in demand.

Why hire a PEO?

Perhaps the most significant impact a PEO can make is giving you more administrative control. A PEO helps you streamline your major HR processes while you remain in charge of your business operations. Even if you were required to touch on one or two employee-related responsibilities, you would be doing so with ease.

A PEO helps you collect, manage, and access employee data quickly. Partnering with a PEO like Skuad automates your HR processes, especially payroll processing and management, to significantly reduce manual labor while you remain in total control of your precious data. Contact a Skuad agent today to get started.

Hiring in Honduras

Honduras is an employee-focused country. Thus, the employment laws guide your hiring process and protect employees' rights. Before launching your company, pay attention to the following rules and regulations.

Employment contracts

In Honduras, employment contracts are either definite or long term. The duration of definite or fixed-term employment contracts is determined before the employment period begins and does not exceed one year.

The exception to this rule is when there would be a period of technical training during the contract. If such activity exists, the fixed-term contract can last up to five years.

An indefinite employment contract is a long-term association with no predetermined expiration date. Employers in Honduras are strongly advised against discriminating against any current or potential employee. Your agreement should be in writing when employees first join the organization.

In terms of contract renewal, there is no limit to how many times you can renew a temporary employment contract.

Working conditions

Honduras observes a workweek of 44 hours and a workday of eight hours, which can be spread over six working days. However, people in managerial roles can work for up to 12 hours a day.

The standard for a night shift is six hours per night and 36 per week over six days. Night jobs in Honduras are between 7 p.m. and 5 a.m. Workers can have up to 30 minutes of break time within shifts.

There are six working days in Honduras — Monday through Saturday — while Sunday is the rest day. Employees working on a Sunday receive overtime pay.

Minors are permitted to earn a living in Honduras. The daily working hours allowed for children depend on their age:

  • 14 to 16 years old: four hours
  • 16 to 18 years old: six hours

Employees within these age brackets are entitled to two hours of break time on workdays.

Minimum wage

Honduras ranks among the top 25 countries globally in terms of minimum wage. Since 2016, employees have begun to earn between HNL 22.44 per hour or HNL 5,681.73 per month and HNL 36.68 per hour or HNL 8,803.70 per month.

Payroll compliance

The government of Honduras issues penalties for noncompliance, especially on payroll. Violation of labor laws, especially in the payment of the minimum wage, may lead to fines of up to HNL 1,000. This may increase by 150% if an employer continually fails to comply.

Maternity leave

Female workers in Honduras enjoy maternity leave for up to 12 weeks: six weeks both before and after birth. This paid leave covers 66% of their average wages over the previous quarter.

Employees can extend their maternity leave in case of health complications, albeit without pay, if it exceeds 12 weeks. If a worker has no social security insurance coverage, their employer covers it. Parental leave covers only mothers in Honduras.

Sick leave

If employees in Honduras have health-related issues, they are entitled to sick leave. They must support this request with a medical report before receiving the benefits.

Employees typically get 26 weeks of sick leave, through which they receive 66% of their previous quarter's salary, or 50% if they have no dependents. Employers can extend this period to a calendar year in cases of chronic health issues.

Social security and tax

In Honduras, social security insurance is covered by the insured person, the employer, or the government. The Honduras income tax rate is 25%. Likewise, the Honduras corporate tax rate is 25% for employers.

  • Family allowances: The government alone pays.
  • Unemployment: Employers with less than 10 workers on staff pay 1.32% of the employee's monthly wages, while those with more than 10 on staff pay 1.98%.
  • Injury at work: The employer alone pays at least 50% of the employee's salary, depending on the severity of the injury.
  • Health care and maternity: The employee contributes 2.5% of their salary, and the employer pays 5%, while the government adds 0.5%.
  • Collective capitalization: The employee pays 1.6%, while the employer contributes 2.6% of the monthly salary.
  • Disability and aging: The employee contributes 2.5% of their salary, and the employer pays 3.5%, while the government adds 0.5%.

Employee benefits

Everyone working for an establishment in Honduras is entitled to benefits approved by the government.

Annual leave

This is paid leave enjoyed by employees in Honduras. Annual leave is usually between 10 and 20 days.

To qualify for this benefit, you must have worked with your current company for at least a year. Similarly, employees must have worked for up to 200 days within a calendar year to be eligible to partake in this benefit. The duration depends on how long the person has been an employee of the company:

  • One year: 10 days
  • Two years: 12 days
  • Three years: 15 days
  • At least four years: 20 days

Holidays

Honduras celebrates certain days, and the government approves public holidays to mark such days. Employees are entitled to paid days off during these periods. Here's a list of the holidays observed in Honduras:

  • New Year's Day
  • Semana Santa (Holy Week in English)
  • Americas Day
  • Labor Day
  • Independence Day
  • Francisco Morazán's Day (also called Soldier's Day)
  • Discovery of America Day
  • Armed Forces Day
  • Christmas Day

Workers receive a 100% bonus wage and another rest day if a national holiday falls on a Sunday.

Overtime

Employees are permitted by law to work for only up to 12 hours per day. This means that no person should work more than four hours of overtime. In addition, those willing to work overtime can do so only on four out of the six standard working days.

Termination

Contract termination for fixed-term employment is on the stipulated date of the contract's expiration.

On the other hand, either party can terminate a long-term employment agreement if both parties agree and a termination notice states the reasons for the termination. Thus, employers must tender a statement before terminating an indefinite employment contract. The notice period depends on how long the employee has been working for the company.

  • Three months of service: one day's notice
  • Six months: seven days
  • One year: 14 days
  • Two years: one month
  • More than two years: two months

The law permits a probation period of up to 60 days.

Severance

Severance covers only long-term employment contracts. Workers are entitled to this compensation if the business owner terminates their employment agreement unfairly or without reason.

These rules apply to severance:

  • Three to six months of service: 10 days' wages
  • Six to 12 months: 20 days' wages
  • More than 12 months: 30 days' wages

Launch your business with the full backing of a trusted PEO

Making a strategic business plan is vital. Fortunately, you don't need to have everything figured out before taking this giant step. It's about time to get your company on the right track with a PEO like Skuad.

Working with Skuad streamlines your employee management and compensation process by integrating your payroll with HR.

Our platform also leverages technology to help you complete your payroll processing faster. You can collect vital data and pay employees through various payment methods with just a click. You no longer need to worry about payroll compliance in Honduras.

Skuad is a Professional Employer Organization in more than 160 countries, including Honduras, with extensive knowledge of employment laws to ensure your compliance.

Wouldn't you like to see a demonstration of what your payroll process could become? Book a Skuad demo today to learn how our experts can help you launch your business in Honduras.

The official currency of Honduras is the Honduran Lempira (HNL). One U.S. dollar is currently valued at 24.56 Lempiras on the foreign exchange market.

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