No matter where you’re from, Ecuador’s labor laws are different from the laws in your home country (unless you’re from Ecuador, that is). Here’s the difference between hiring employees and contractors in Ecuador.
If you want to successfully hire in
Ecuador
, you have two options:
Laws about hiring contractors are significantly more simple in
Ecuador
. Onboarding talent takes days, not weeks or months. Both you, the company, and your talent have more flexibility. And in many cases, since you’re remote, the talent you’re hiring is better classified as a contractor, anyway. Of course, it’s not possible in every case, but it’s what we built Panther for.
This is the long route. You can either establish a physical presence with an entity and register as an employer, or you can use an Employer-of-Record (EOR) solution. Odds are, you’ll find using an EOR to be the easier route. Still, using an EOR in
Ecuador
is expensive—it can often be $500 per month per employee—and sometimes prone to lengthy onboarding times.
Hiring contractors is normally the easier, faster, more flexible choice—but don’t just take it from us. Below are the specific benefits and drawbacks to hiring contractors in
Ecuador
.
Hiring employees takes months, at the minimum. When you hire with Panther’s locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.
It costs just $0 to sign up for Panther, then $49 per month to hire your contractors with Panther. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.
Hiring contractors in
Ecuador
means you’re generally not on the hook for things like health insurance and paid time off. This makes hiring flexible for you, and it gives your talent more options.
Hiring employees is a bigger commitment, and can open you up to increased liabilities and regulations. When you hire contractors overseas, your biggest risk is misclassification—but laws surrounding contractor classification are often significantly more straightforward.
The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.
Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.
If you’re hiring contractors in
Ecuador
, you can pay them with Panther in a single click. You won’t need to worry about complicated wire transfers, fees, or currency conversions. We’ll take care of it all. Just make a click and your contractor will get paid in their currency of choice. This is a valuable bonus for talent in countries where the local currency is particularly weak—most people appreciate the ability to receive their payment in stronger currencies.
If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Ecuador than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Ecuador.
Employees receive 15 days of paid leave annually. After five years of continuous service, an additional day is given per year.
There are 12 public holidays.
Employees who have 180 days of continuous contribution to the Ecuadorean Social Security Institute (IESS) within 6 months prior to the onset of illness, or 189 days of continuous contribution within 8 months prior to the onset of illness.
Employees who are covered are paid by the employer for the first three days and covered by IESS for the remainder.
New mothers are entitled to maternity leave of 12 weeks; 2 weeks before birth and 10 weeks after birth. Payment is shared by the social security and the employer. Social security pays 75%, the employer pays 25%. 10 days are added for additional births.
New fathers are entitled to 10 days of paternity leave, 15 days for cesarean or multiple births, or 18 days for babies who are premature or require special care. 25 additional days are added for severe disability or illness.
No statutory regulations.
Hospitalization Leave: each parent is entitled to 25 days’ leave if their child is hospitalized.
None.
1 day of paid leave for the death of a 1st or 2nd-degree relative.
Contracts can be terminated with just cause without severance (with approval from labor authority) for Lack of discipline, dishonesty, serious offense against the employer, serious incompetence, or Non-compliance with regulations. Otherwise, 30 days notice is required.
There is no statutory notice period, it is usually something that is agreed upon in the employment contract.
If employees are not given notice, they are entitled to receive one paycheck for every year employed by the company, with a maximum of 25 months of payments. Additionally, a sudden dismissal bonus is offered at 25% of monthly wages for each year employed. For over 20 years of employment, the employee is entitled to a retirement pension.
3 months.
Employees work 5 days per week. Normal working hours are 8 hours per day and 40 hours per week.
Regular overtime hours are paid at the rate of 150% of the regular pay. Work performed on Saturday, Sunday, or holidays are paid at a rate of 200% of the regular pay.
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