Honduras

A. Hiring of employees (onboarding)

1. Mandatory employer requirements

Employers in Honduras must meet the minimum requirements provided for in the labor legislation, such as:

• Employment contract: The parties (employer and employee) must sign the employment contract, which must include at least the following: employee’s general information (complete name, identification card number, domicile, profession, nationality, etc.), employment rights, benefits, obligations, and prohibitions; service/activity scope, salary, contract type and duration, work location(s), working hours/schedule; date, place and signature; and any other provisions, terms and conditions necessary for the execution/realization of the work.
• Employment internal regulations (bylaws): Employers must obtain approval for the internal regulations from the Ministry of Labor and Social Securities (labor authority). Internal regulations include the statutory obligations that rule the employment conditions. The requirement does not apply to companies with fewer than 10 employees.
• Health and safety regulations: Employers must provide the health and safety regulations that prevent risks and occupational disease.
• Social security compliance: Employers are required to register with the social security offices and perform the labor/employment compliance such as social security, private contributions and professional formation.

It is not required to establish a legal entity in Honduras to hire someone.

2. Probation periods

The probation period is the initial stage of any employment contract (the first 60 days), during which the employee is entitled to all the benefits except for notice and the indemnity for dismissal. During the probation period, the parties may terminate the employment relationship without liability.

The probation period must be agreed upon in writing, otherwise the services will be deemed to be regulated by the general rules of the employment contract.

3. Hiring checks

Medical examination
There is no legal/statutory requirement to perform a medical examination upon hiring. The contract cannot be terminated because of medical results. If terminated, the employer will be held liable and must pay an indemnity for dismissal.

Medical, reference and/or education checks can be done prior to hiring.

Criminal background check
There is no legal/statutory requirement to perform criminal background checks upon hiring. Nevertheless, it is a common practice to perform criminal and police background checks prior to hiring employees.

Reference and education checks
There is no legal/statutory requirement to perform reference and/or education checks. Nevertheless, it is a common practice to perform hiring checks during the recruitment process. If the employment contracts are cancelled because of the reference and education check results, the employer will be held liable and must pay an indemnity for dismissal.

4. Diversity & inclusion

The following diversity & inclusion provisions must be considered during onboarding:

• Equal work must correspond to equal pay, without any discrimination. No differences in salary can be established for reasons of age, sex, nationality, race, religion, opinion, union policy or activities.
• Public administration entities and private companies are obliged to hire a minimum number of people with disabilities according to the following table:
  • 20 to 49 workers: One person with a disability;
  • From 50 to 74 workers: two people with disabilities;
  • 75 to 99 workers: three people with disabilities; and
  • For every 100 workers, four people with disabilities.
    

5. Types of employment contracts

The types of employment contracts are:

• Fixed-term;
• Open-ended; and
• Project based.

The employment contract needs to be concluded in writing. The employer can be held liable in case of the non-existence of the contract except in the following cases:

• Domestic service;
• Temporary work not exceeding 60 days;
• Projects of which the value does not exceed approximately US$10 and if the term for delivery is no longer than 60 days; and
• Agricultural or livestock work, unless they are industrial or commercial enterprises derived from agriculture or livestock.
  

6. Specific rules for executives

Executives do not constitute a separate category from an employment law perspective.

Nevertheless, the labor legislation does recognize special conditions and obligations for personnel considered to be trustworthy, which includes executives. Trustworthy personnel has different conditions regarding maximum working hours, and overtime, among others.

7. Language requirements

The use of the Spanish language is mandatory and all employment contracts must be drafted in Spanish. An English translation may be provided as well.

8. Equal pay

The principles of equity applicable to ensure the continuity of working conditions are part of Honduran labor law.

The law provides for equal pay for women and non-compliance with these provisions will entitle the affected female employees to go to the Labor Authority and proceed with inspection processes.

If as a result of the inspection performed by the Labor Authority there is indeed a violation related to equal pay, the Labor Authority may impose sanctions which may consist of indemnities and fines.

9. Remote work

There is no specific permanent legislation in Honduras concerning remote work. Nonetheless, remote work is recognized as a form of working for labor and employment purposes. Therefore, the existing labor provisions will apply in an analogous manner to remote work.

B. Termination of employees (offboarding)

1. Kinds of dismissal

There are two kinds of dismissal:

• Direct dismissal, which can be for serious cause (no employer liability) or without serious cause (employer liability).
  • Direct dismissal for serious cause will not imply the employer´s liability. The employee will only benefit from acquired rights (vacations, 13th and 14th months’ salaries).
  • Direct dismissal without serious cause will imply the employer´s liability. In case of a fixed-term contract the employee will only benefit from acquired rights (vacations, 13th and 14th months’ salaries), indemnification and the lost wages related to the duration of the contract. In case of an open-ended contract, the employee will only benefit from acquired rights (vacations, 13th and 14th months’ salaries), and indemnification.
• Indirect dismissal: The employee has legitimate grounds for terminating the employment contract without notice and liability, while preserving the right to legal benefits and severance pay. The Labor authority must authorize/verify the facts in order to invoke grounds for notifying indirect dismissals.
  

2. Dismissal motivation

The dismissal must be motivated, as per the Labor Code and the Employment Internal Regulations (bylaws) or other authorized internal policies. Also, the dismissal must be notified in writing following the dismissal procedure authorized through the bylaws and internal policies approved by the labor authorities. Otherwise, the dismissal will not be considered valid or for serious cause and it will imply employer´s liability.

The consequences of an unmotivated or poorly motivated dismissal will be the payment of an indemnification, work rights and labor compensations. Also, the dismissal, whether it is motivated or not, enables the employee to proceed with the submission of a labor lawsuit for the payment of labor compensation or work reinstatement.

3. Notice period

In case of an open-ended contract, the employer or employee can terminate it by providing notice.

During the notice period, the employee who is to be dismissed is entitled to one day of paid leave per week in order to seek new employment.

Notice will be given as per the following criteria:

• 24 hours, if the employee has worked continuously for less than three months;
• One week, if the employee has worked for three to six months;
• Two weeks, if the employee has worked for six months to one year;
• One month, if the employee has worked for one to two years; and
• Two months, if the employee has worked for over two years.

The employer or employee can forego the notice period with payment of an indemnity in lieu of notice. For the calculation, the notice terms mentioned above must be considered by paying the equivalent salary.

4. Severance pay

In case of a dismissal without due cause or legal motivation, or in case of indirect dismissal, the employer will have the legal obligation to pay indemnification (severance pay). The severance pay includes the notice period/indemnity in lieu of notice and the severance assistance.

The severance assistance must be paid as per the following schedule:

All dismissals, whether with due cause/legally motivated or not will incur the payment of acquired rights.

5. Seniority Premium

Employers must make mandatory payments equivalent to 4% per month of the employee's regular salary, with a maximum of 3 times the minimum wage. The contributions made must be credited in the employee´s name to the individual account in the Private Contributions Regime (Regimen de Aportaciones Privadas -RAP- in Spanish). This contribution is known as Labor Reserve.

In case of the employee’s dismissal without serious cause, they are entitled to receive the amount contributed to the labor reserve account. The labor reserve and its returns will be deducted from the amount to be received by the employee as severance pay.

In case of the employee’s dismissal with serious cause, they will receive the amount contributed to the labour reserve account with its returns, in the form of a seniority premium.

In case of the employee’s resignation, they are entitled to the seniority premium.

6. Dismissal formalities

The dismissal must be notified in writing following the dismissal procedure authorized through the bylaws and internal policies approved by the labor authorities.

7. Special dismissal protection

Workers who are pregnant or nursing have special dismissal protection. Pregnant or nursing women are protected against dismissal if there is no due cause (legal motivation) previously authorized by the labor court.

In case of unlawful dismissal the employer will pay additional indemnities such as maternity leave and nursing leave.

8. Legal means of employees

Employees have the right to challenge the dismissal before the labor authorities and the labor courts. The prescription period is two months from the termination of the contract or from the date disciplinary proceedings were imposed. The dismissal challenged before the labor authorities interrupts the prescription period.

9. Specific rules for executives

There are no specific rules for executives.

10. Collective dismissals

There are no specific rules on collective/mass dismissals, unless agreed otherwise in a collective labor agreement. In that case, the union is responsible for the obligations arising from the collective labor agreement and for the fulfilment of its terms.

Get in touch
 

Hadizabel Izaguirre
Honduras
hizaguirre@deloitte.com | +504 2276-9500