This page outlines country-level details about the onboarding process when hiring employees, and touches upon the applicable rules when terminating employment contracts.
The employer must affiliate all its employees with the social security authorities (Instituto Ecuatoriano de Seguridad Social-IESS) from their first day of work.
All employment contracts must be registered with the Ministry of Labor online through “SUT” (Unified Worker System). This system also helps the employer to keep written records of all signed contracts.
Foreign entities wishing to hire employees in Ecuador must incorporate an Ecuadorian subsidiary or open a branch office. Additionally, entities or individuals hiring employees must obtain a Tax Payer Identification number in order to comply with social security and tax obligations.
Open-ended employment contracts may include a 90-day trial period during which time the parties may freely terminate the contract. Upon expiration of the trial period, the contract becomes indefinite.
Under the current legislation, once a worker is hired, employers are responsible for the employee’s entry occupational exam, annual and exit medical exams, based on the risks to which they are exposed in their work. Such exams must not result in a cost to the employee. Employment cannot be conditional upon passing a medical exam.
Criminal background check
Employers cannot discriminate against applicants for their judicial past. Ecuadorian criminal records are in the public domain through the Ministry of Government website.
Reference and education checks
Reference and education checks are permissible. In addition, an employee may be dismissed when he/she has induced an employer to sign an employment contract by means of false certificates.
Employers with more than 25 employees are obligated to reserve at least 4% of their payroll for individuals with disabilities.
Employers with more than 50 workers must hire young workers (between 18 and 26 years of age) for at least 10% of their payroll, taking into account the net increase in workers generated each fiscal year.
Companies with more than 100 workers are obliged to hire interns for at least 4% of their workers who hold a professional degree.
The Ecuadorian Labor Code regulates a variety of employment contracts:
The law does not provide any specific measures for executives hired as employees.
The only language applicable to all employment and HR-related documents (such as employment contracts, settlement minutes, internal work regulations, policies, etc.) is Spanish.
There are no specific equal pay measures at the moment.
The Ecuadorian Labor Code included specific regulations about remote work in 2020, as a result of the COVID-19 sanitary crisis.
Remote work is defined as the performance of paid activities or service provision that utilize informatic and communication technologies as support for the contact between the employer and employee, without the need for the employee to be physically on a specific workplace.
The employer must report to the Ministry of Labor if the employee will be working remotely when registering the work contract for new hires or adding an addendum to the work contract for current employees.
The law refers to 3 types of remote workers:
The employee and employer may agree that the work is performed in a specific place (such as the house of the employee or a personal office) but it will not be considered remote work if the place is an office or place that the employer has arranged, even if it is outside of the main office of the employer. On the other hand, if the type of work can be performed from anywhere, they can agree that there would not be a specific place where the employee must work.
The employer must provide the equipments, work elements and supplies needed for the work activities.
The salary must comply with the legal regulations and cannot be paid less than the Minimum Wage (In 2022 $425, in 2023 $450 for a full-time employment)
An individual employment contract may be terminated for any of the following reasons:
An open-ended employment contract can be terminated based on the following concepts:
The employer may justifiably dismiss an employee on the following grounds:
The employer may dismiss an employee without reason (terminación por despido intempestivo), without a notice period and the obligation to inform the employee of the specific reasons for his/her dismissal.
No notice period is required in case of dismissal without reason. The employer may dismiss the employee with immediate effect. In case of justified dismissal, an administrative procedure has to be followed, during which the employer must deposit one month’s salary to suspend the labor relationship.
If the administrative petition for the justified dismissal (Visto Bueno) is authorized by the Ministry of Labor, the employer is required to pay the employee only the pending amount of the employee´s salary.
If the employer decides to dismiss an employee without reason, it must indemnify for unlawful dismissal (indemnización por despedio intempestivo), in accordance with the employee´s seniority and the following range:
|0-3 year||Three months’ salary|
|3 years or more||One month’s salary for each year of service, but not exceeding 25 months’ salary|
The employer must pay an additional legal severance indemnity (bonificación por desahucio) equivalent to 25% of the last salary that the employee earned, multiplied by the number of years he/she worked for the employer.
When an employer wishes to justifiably dismiss an employee (Visto Bueno), it must file an administrative petition requesting the termination of the employment contract based on one or more of the grounds listed above. The termination must be authorized by the Ministry of Labor.
Once a petition to justifiably dismiss an employee has been filed by the employer, the administrative procedure known as “Visto Bueno” begins. The employer is entitled to request the suspension of the labor relationship in its initial petition, while the administrative investigation is underway. To suspend the labor relationship, the employer must deposit the equivalent of one month’s salary of the employee. The employer has a one-month term to file this petition from the occurrence of the offence by the employee.
The Labor Inspector must notify the employee of the petition and the suspension of the labor relationship, once the petition has been filed and the deposit has been made. Throughout this procedure, a labor inspector will carefully analyze the evidence and arguments that both the employer and employee have filed. Afterwards, the inspector will authorize or deny, through a grounded resolution, the employer’s petition to dismiss the employee.
This administrative procedure may lead to a subsequent judicial proceeding. The resolution issued by the Labor Inspector can only be challenged through a Labor Judge. The inspector’s resolution must be filed as evidence in this judicial proceeding.
In case of unjustified dismissal, no special process or summons apply. The dismissal may be directly notified by the employer to the employee either in writing or orally.
Some employees enjoy special protection by the law against dismissal, as follows:
During the 3 years following his or her termination date, an employee can submit claims based on employers’ obligations.
No specific dismissal rules apply for managing directors (Mandatarios) provided they are not bound by an employment contract. Managing directors are bound by the Civil Code and are thus not considered employees, and the respective Labor Code provisions and dismissal rules do not apply.
Collective dismissal is not regulated by Ecuadorian labor law. If an employer needs to dismiss employees collectively, regular dismissal provisions should be applied.