Payroll and Benefits Guide Ecuador
Last updated: Mar 03, 2026
Contribution
| Employer Payroll Contributions | |
|
12.15%
|
Social Security
|
|
8.33%*
|
Reserve Fund (IESS), individual savings fund paid into from the second of employment, and is exempt from tax and social security levies.
|
| 20.48% |
Total Employment Cost |
| Employee Payroll Contributions | |
|
9.45%
|
Social Security
|
| 9.45% |
Total Employee Cost |
| Employee Income Tax | Annual |
|
0.00%
|
0-11,902 USD |
|
5.00%
|
11,902.01 USD – 15,159 USD |
|
10.00%
|
15,159.01 USD – 19,682 USD |
|
12.00%
|
19,682.01 USD – 26,031 USD |
|
15.00%
|
26,031.01 USD – 34,255 USD |
| 20.00% | 34,255.01 USD – 45,407 USD |
|
25.00%
|
45,407.01 USD – 60,450 USD |
|
30.00%
|
60,450.01 USD – 80,605 USD |
|
35.00%
|
80,605.01 USD – 107,199 USD |
|
37.00%
|
107,199 USD and Above |
Employer taxes
Employee taxes
Minimum Wage
General
The minimum wage in Ecuador is referred to as unified basic salary (“SBU”) and the minimum wage for economic sectors is 470 USD per month.
MINIMUM WAGE (PER MONTH)
Payroll
Payroll Cycle
The payroll cycle in Ecuador is generally monthly or bi-monthly and employers must make salary payments in Ecuador on the same day of the month.
13th Salary
In Ecuador, it is mandatory to pay a 13th-month and even a 14th-month salary payment. Generally, the 13th-month salary is to be paid in December and the 14th-month salary in March or April.
Authority Payment
|
Authority Payment |
Paid To |
Due Date |
Method |
|
Taxes |
Internal rents service |
According to the ninth digit of the RUC |
Only local accounts are supported |
|
Social Security |
Ecuadorian Institute of Social Security |
Up to 15 of each month |
Only local accounts are supported |
|
Payroll |
Ministry of Labor (Ministerio de Trabajo) |
Until the end of the month |
All 3 forms of payment are accepted |
|
Thirteenth salary |
Ministry of Labor (Ministerio de Trabajo) |
Until December 24 of each year |
All 3 forms of payment are accepted |
|
Fourteenth salary |
Ministry of Labor (Ministerio de Trabajo) |
Until August 15 of each year |
All 3 forms of payment are accepted |
|
Utilities |
Ministry of Labor (Ministerio de Trabajo) |
Until April 15 of each year |
All 3 forms of payment are accepted |
|
Judicial retention |
Superintendency of Banks. Judiciary Council (Superintendencia de bancos) |
Until 3 day of the following month |
Only local accounts are supported |
Working Hours
General
The standard working week in Ecuador consists of 40 hours a week, typically 8 hours per day for a five-day working week.
Overtime
- Maximum Ordinary Hours: The standard work limit is 8 hours per day and 40 hours per week, typically distributed over five days (Monday to Friday). Any work beyond this is classified as overtime.
- Daily Overtime Cap: Overtime work is strictly limited to a maximum of 4 hours per day.
- Weekly Overtime Cap: Overtime work is strictly limited to a maximum of 12 hours per week.
- Absolute Weekly Maximum: Total working time, including overtime, should not exceed 52 hours per week.
- Authorization: Overtime hours must be approved by the local Labour Inspector.
- Exemptions: Employees in managerial or high-level positions (e.g., managers, administrators, or trusted employees) are typically exempt from the statutory working hours and overtime provisions.
Mandatory Overtime Pay Rates
Overtime compensation is mandatory and is calculated as a minimum premium percentage of the employee’s regular hourly wage. The rate depends entirely on the time and day the work is performed.
| Day/Condition | Time Period | Minimum Premium Rate (Supplement) | Total Pay Rate | Notes |
| Supplementary Hours (Tier 1) | 06:00 to 19:00 (Daytime Overtime) | +50% of the regular hourly wage. | 150% | Applies to overtime on normal working days. |
| Extraordinary Hours (Tier 2) | 19:00 to 06:00 (Nighttime Overtime) | +100% of the regular hourly wage. | 200% | Applies to any overtime worked during the legal night shift hours. |
| Weekly Rest Day (Saturday/Sunday) | All hours worked. | +100% of the regular hourly wage. | 200% | Applies to all hours worked on the legally designated rest days (Saturdays and Sundays). |
| Public Holiday Work | All hours worked. | +100% of the regular hourly wage. | 200% | Applies to all hours worked on an official public holiday. |
Important Note on Night Work: Normal, non-overtime night work (between 19:00 and 06:00) is paid with a 25% surcharge on the regular hourly wage. However, if that work is also overtime, the higher 100% extraordinary overtime premium applies.
Leave
Annual Leave (vacation)
Full-time employees’ standard paid leave entitlement is 15 days per year following the completion of 1 year of service. After five years of continuous employment, an additional day is given per year (capped at an additional 30 days).
PTO Carryover
In Ecuador, statutory annual leave generally cannot be freely carried over. Vacation should be taken in the year it’s due, but limited accumulation is allowed (up to 3 years, by agreement, except for the mandatory 15 days that should be taken annually). Employers cannot forfeit accrued statutory leave, and unused vacation must be paid out on termination.
- SGF does not allow for carryover.
Public Holidays
Public holidays that fall on the weekend are usually lost.
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 2 January 2026 | Friday | Bridge Day (Extended New Year) | |
| 16 February 2026 | Monday | Carnival (Shrove Monday) | Standard holiday |
| 17 February 2026 | Tuesday | Carnival (Shrove Tuesday) | Standard holiday |
| 3 April 2026 | Friday | Good Friday | Standard holiday |
| 1 May 2026 | Friday | Labour Day | Standard holiday |
| 25 May 2026 | Monday | Battle of Pichincha | Standard holiday |
| 10 August 2026 | Monday | First Cry of Independence | Standard holiday |
| 9 October 2026 | Friday | Independence of Guayaquil | Standard holiday |
| 2 November 2026 | Monday | All Souls’ Day | Standard holiday |
| 3 November 2026 | Tuesday | Independence of Cuenca | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
Sick Days
Employees who have 180 days of continuous contribution to the Ecuadorean Social Security Institute (IESS) within six months prior to the onset of illness or 189 days of continuous contribution within eight months before the start of illness. Employees are entitled to sick leave of up to two months at 50% of their salary.
Employees who are covered are paid by the employer for the first three days and by IESS after that.
All sick absences require a professional medical certificate provided to the employer within 48 hours of the start date of the sick period.
Maternity Leave
New mothers are entitled to maternity leave of 12 weeks, two weeks before birth and ten weeks after birth.
Social Security and the employer share maternity payments; Social Security pays 75% and the employer pays 25%. Ten days are added for additional births.
New mothers are also entitled to nine months of shortened working days, six hours instead of eight.
Paternity Leave
In Ecuador, fathers are entitled to ten days of paid paternity leave, increasing to 15 days in the case of multiple/complicated births. Fathers are entitled to 18 days of paid paternity leave in the unfortunate circumstance of premature birth.
Parental Leave
In Ecuador, following the end of paid paternity leave, adoption leave or the conclusion of maternity leave employees are entitled to an optional unpaid leave for up to nine additional months to take care of the children within the first year of their life.
Other Leave
Depending on collective agreement/employment contract terms, an employee may be allowed additional leave types if approved between the employer and employee for the following:
- Bereavement leave: employees who have suffered the loss of an immediate family member are entitled to up to 3 days of paid bereavement leave.
- Childcare leave: employees are entitled to 25 days of leave should their child be hospitalized.
- Adoption leave: employers must grant adoptive parents 15 days of paid leave of absence from the date the child is legally delivered to them.
- Military leave: when an employee is called to partake in Compulsory Military Service in the National Armed Forces, the employee is entitled to paid absence. The employer is required to pay the salary, in the following proportion:
- During the first month of absence from work, a 100% salary
- During the second month of absence from work, 50% of the salary
- During the third month of absence from work, 25% of the salary
PAID MATERNITY LEAVE (DAYS)
Termination
Termination Process
The termination process varies according to the employment agreement and collective agreements in place and is based on the type of contract and reason for termination.
Unilateral termination by employer without just cause is permissible but subject to approval by the Ministry of Labor and mandatory severance.
Termination with just cause (e.g., misconduct) requires documentation and legal process. No severance is payable if the cause is validated.
Mutual agreement (desahucio) must be in writing, with notice and/or compensation.
If a Mutual Termination Agreement is suggested the benchmark for redundancy is Severance Pay the calculation: One month’s salary for each year of service. The minimum is three months’ salary. Note: Some sources indicate this might be 1.25 months’ salary per year of service for unjustified dismissal. For mutual agreements, the “voluntary resignation” severance or a negotiated amount is more common. It can be established in the MTA that the parties have agreed to the termination and will no longer pursue judicial claims, but this is not a 100% guarantee. For the MTA to be legally binding and a release from liability for both ICT and end-client, it must be judicially ratified/approved in the country if it comes from a different jurisdiction.
| Salary payment interval / date | Final payment on termination | Bank account payment requirement |
|---|---|---|
| Pay cycle is generally monthly or bi-monthly, with payments on the same day each period. | On termination, employer must pay wages, severance (“indemnización por despido intempestivo”) and unused leave where applicable. The law does not clearly specify a universal “within X days after termination” deadline. | Law allows wages to be paid via various methods (cash, cheque, bank transfer). |
Notice Period
In Ecuador, the notice period is stipulated in the employee’s employment contract/collect agreement; it is not a statutory obligation.
Severance Pay
Severance pay is equivalent to a one-month salary payment for each year of service, pro-rated for any part-year worked. The minimum financial compensation is three monthly payments (at the regular salary rate), and the maximum is 25 monthly payments.
Additionally, the employer can offer a sudden dismissal bonus of 25.00% of monthly wages for each completed year of service.
The primary severance payment (“indemnización por despido intempestivo”) is owed only in cases of unjustified dismissal. In other cases like voluntary resignation or mutual agreement, a smaller “desahucio” payment (25% of monthly salary per year) is due, along with other accrued proportional benefits. Specific protected groups receive significantly higher compensation or the right to reinstatement if unlawfully dismissed.
Severance Calculation (Resolution No. 002-2025 of the National Court of Justice):
- For workers with less than 3 years of service: The severance compensation will be equivalent to three months’ salary.
- For workers with more than 3 years of service: One month’s salary for each year of service. This payment is capped at a maximum of 25 months’ salary.
Probation Period
The probationary period in Ecuador is dependent on the type of role and is stipulated within the employment agreement. In general, probation periods are up to three months.
Minimal Statutory Termination Costs
Severance Pay:
Primary severance payment (“”indemnización por despido intempestivo””) is owed only in cases of unjustified dismissal.
Severance Calculation
(Resolution No. 002-2025 of the National Court of Justice):
For workers with less than 3 years of service:
The severance compensation will be equivalent to three months’ salary.
For workers with more than 3 years of service: One month’s salary for each year of service. This payment is capped at a maximum of 25 months’ salary
Immigration
Ecuador has a very lenient visa policy and citizens from most countries can enter and stay without a visa – but only for up to 90 days.
The temporary resident visa for Ecuador is a type of long-stay visa. It is issued to foreigners who want to live, study, work, or retire in Ecuador. They can be issued for up to two years and can be renewed before they expire. The types of Ecuador temporary resident visas include:
- The Ecuador Work Visa is for foreigners who have found a job with a company in Ecuador
- The Ecuador Student Visa is suitable for foreigners who have been accepted into a university or other academic program in Ecuador and wish to pursue their studies there
- For foreigners who want to retire in Ecuador and have the necessary financial means to do so, an Ecuador Retirement visa
The visa documentation must be legalized by the Ecuadorian Embassy or Consulate and may need to be translated into Spanish.
Once the foreigner has lived in Ecuador for more than 21 months under a temporary resident visa, an application can be made for a permanent resident visa for Ecuador.
VAT
General
The standard rate of VAT in Ecuador is 15%.
Version History
Employee tax: Income tax brackets changed
Questions & Answers
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Payroll and Benefits Guide
in Ecuador
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 2 January 2026 | Friday | Bridge Day (Extended New Year) | |
| 16 February 2026 | Monday | Carnival (Shrove Monday) | Standard holiday |
| 17 February 2026 | Tuesday | Carnival (Shrove Tuesday) | Standard holiday |
| 3 April 2026 | Friday | Good Friday | Standard holiday |
| 1 May 2026 | Friday | Labour Day | Standard holiday |
| 25 May 2026 | Monday | Battle of Pichincha | Standard holiday |
| 10 August 2026 | Monday | First Cry of Independence | Standard holiday |
| 9 October 2026 | Friday | Independence of Guayaquil | Standard holiday |
| 2 November 2026 | Monday | All Souls’ Day | Standard holiday |
| 3 November 2026 | Tuesday | Independence of Cuenca | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
Can my employer have me work as many overtime hours as needed or is there a limit on working hours?
Hi, overtime hours are capped daily and weekly for employees. There is a maximum of 4 overtime hours per day and 12 overtime hours per week.
If I am transferring an employee from another entity can I still recognize their years of service?
It’s potentially feasible, but it hinges on the setup of the current employer, the terms of the contract, and the nature of the industry. We recommend consulting with a local legal advisor to thoroughly understand the implications of transitioning seniority.