As of March 2024, the estimated population of Ecuador is 18.1 million.
The currency in Ecuador is the United States Dollar (USD). The currency symbol is $.
Employment contracts made for an indefinite term with stable and permanent work are considered permanent contracts in Ecuador. Such contracts can be concluded in writing or orally. All employees are entitled to statutory employment rights.
Employment contracts can be made expressly (written or oral) or tacitly in Ecuador. Written contracts can be executed by public instruments or by private instruments. Certain types of contracts must necessarily be made in writing, such as those in a particular profession, those where remuneration exceeds five times the general minimum wage, those on probation, etc. Such contracts must include the following information: Type of work and the way in which it is to be executed: if by units of time, by units of work, by task, etc. The amount and form of payment of the remuneration Duration of the contract Place where the work must be carried out Written contracts must be signed by both parties and registered with the regional labor inspector within 30 days.
Temporary contracts in Ecuador can be eventual, occasional, or seasonal. Eventual contracts are used to address circumstantial demands that arise within the employer's regular activity, such as replacing an absent employee (on vacation, medical leave, or maternity leave) or meeting a temporary spike in production or service demand. Occasional contracts are used to meet extraordinary or emergent needs that are not connected to the employer's habitual activity at all. This modality may not exceed 30 days in a year. Seasonal contracts are used for work that is cyclical or periodic by nature, where the same employer and the same worker or group of workers have historically engaged on a recurring basis tied to the rhythm of the business (for example, harvest cycles or seasonal peaks). These contracts carry a stability right, which means workers have the right to be called back each season, and failure to call them back constitutes unjustified dismissal. There are no provisions for hiring temporary employees through employment agencies in Ecuador.
An employment contract can include a probationary period of a maximum duration of 90 days. This must be included in the written employment contract. During probation, either party can terminate the contract freely. No more than 15% of the total workforce can be on probation at a time. However, employers that start their operations in the country, or existing ones that expand or diversify their industry, activity, or business, will not be subject to this restriction of 15% during the 6 months after the start of operations, expansion, or diversification of the activity, industry or business. No notice is required by either party to terminate during probation, and no severance or termination bonus (desahucio) is payable upon such termination.
Standard working hours are 8 hours per day or 40 hours per week. For underground work, the maximum working hours are 6 hours a day. The working day for adolescents may not exceed 6 hours a day for 5 days a week. 2 days' paid weekly rest is mandatory. Collective agreements can determine higher or lower working hours. Employees who stop working 8 hours a day without justification will lose a proportional part of remuneration. When work is interrupted due to accidental or unforeseen causes, force majeure, or other reasons beyond the control of employers and employees, employers have the right to increase working hours by 3 hours a day to recover the lost time without liability for overtime pay. The Ministry of Labor established a new framework for special work schedules. Employers and employees may agree to spread the standard 40-hour workweek over 5 days, with shifts of up to 10 hours per day. Any hours worked beyond 40 in a week must be paid at the overtime rates. The arrangement must be documented in the employment contract or in a contract amendment. While Ministry authorization is still required for special work schedules, it is not required to implement the efficient-workday arrangement itself.
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In Ecuador, employees are entitled to 15 days of paid annual leave after 1 year of service. Those who have worked for more than 5 years with the same employer are entitled to 1 additional day of leave per extra year of service; the employer may choose between granting these additional days or paying them in cash. Additional leave accrued due to seniority is capped at 15 days, unless otherwise agreed in an individual or collective contract. Employees under 16 years of age are entitled to 20 days of annual leave, while employees aged 16 to under 18 are entitled to 18 days. Employees may accumulate unused leave for up to 3 consecutive years to be taken in the fourth year. Exceptions apply for technical roles or positions of trust. In all cases of termination, employees must receive compensation for any accrued but unused leave on a proportional basis according to their length of service.
Employees are entitled to sick leave if they have paid 6 months of continuous contribution before the onset of non-occupational disease. They must inform their employers and labor inspector in writing within the first 3 days of their sickness, along with a medical certificate from a doctor from the Directorate of General Individual and Family Health Insurance of the Ecuadorian Institute of Social Security (IESS). The benefits are paid for a maximum of 185 days. The employer covers the first 3 days, and the IESS pays the remaining. The benefit is paid from the fourth day as 75% of the last remuneration. Employers must pay sickness benefits at 50% of their wages to employees who are not entitled to IESS sickness benefits. Such benefits are paid for a maximum of 2 months.
All female employees in Ecuador have the right to 12 weeks of paid maternity leave, 2 weeks before delivery, and 10 weeks after. Employees are entitled to 15 months of optional unpaid leave after paid maternity leave has ended to care for their biological or adopted children. Adoptive employees are entitled to adoption leave for 30 days from the date of leaving the adoption entity. Employees who adopt newborn children are entitled to the same paid and unpaid leave as those provided to biological parent employees. Employers are prohibited from dismissing pregnant employees and those on maternity leave and during the breastfeeding period, except in cases such as liquidation or disability that makes them unable to work.
Ecuador grants fathers 15 days of paid and 15 days of unpaid paternity leave. Employees are entitled to 15 months of optional unpaid leave after paid maternity leave has ended to care for their biological or adopted children. In case of premature birth, the leave is increased by eight days and when the child is born with a disease - degenerative, terminal or irreversible, or with a degree of severe disability, the parent can take paid leave of up to 25 days. In the event of the death of the mother during childbirth or while enjoying maternity leave, the father may make use of all, or where appropriate, of the remaining part of the maternity leave that would have corresponded to the mother if she had not died.
In Ecuador, employers are not required to give advance notice to terminate an employment contract; however, termination without just cause constitutes dismissal without cause and triggers statutory severance, as well as an additional bonus equivalent to 25% of the employee’s last monthly remuneration for each year of service.
Severance benefits are paid to employees whose contract is terminated untimely, as follows: Up to 3 years of service - 3 months of remuneration More than 3 years of service - 1 month of remuneration for each year of service up to a maximum value of 25 months of remuneration In case of sudden dismissal without notice, employees are entitled to a sudden dismissal bonus equal to 25% of their last monthly remuneration for each year of service with the employer.
All employers in Ecuador must register their employees with the Ecuadorian Institute of Social Security (IESS), which provides pension benefits. There is no fixed age for retirement. The retirement pension is granted from the month a member ceases employment and fulfills the following requirements: Age Years of contributions Any age 40 or more 60 years or older 30 or more 65 years or older 15 or more 70 years or older 10 or more Retirement pension is the average of 5 best years of income on which contributions are paid. This average is multiplied by the annual coefficient corresponding to the number of years of contributions. The pension coefficient increases by 0.0125 for each additional contribution year beyond 40 years. In addition to their regular pension, retirees receive an additional month's pension as a Christmas bonus in December. A fourteenth pension is paid in September of each year for pensioners from the Sierra and Amazon regions and in April for those of the coast and insular region. The amount is equal to a unified minimum wage in force in the year of payment.
The Ecuadorian Institute of Social Security (IESS) provides survivors' pension to widowed spouses, cohabitants, children under 18 years of age or disabled, and in absence of these, to financially dependent parents of a deceased member. The members must have been recipient of old age or invalidity pension or active member with at least 60 contributions. The surviving spouse of legal cohabitant receives 60% of the pension the deceased was entitled to. If there are children, they receive the remaining 40% of the pension divided proportionally. In the absence of these, parents of the deceased receive 40% of the pension the deceased was entitled to. The right to pension ceases upon death, remarriage or reaching 18 years of age. In case of death due to work injury or occupational disease within 180 days of the accident or beginning of disease, employers are liable to pay survivors pension to the heir of the deceased. This pension is paid as 60% of the pension the deceased was entitled to. If there are children, they receive the remaining 40% of the pension divided proportionally. In the absence of these, parents of the deceased receive 40% of the pension the deceased was entitled to.
The Ecuadorian Institute of Social Security (IESS) provides disability pension to insured members who are permanently incapable of seeking temporary or definitive job proportionate to their ability, strength and training due to non-occupational reasons. To be eligible for this benefit, insured member must have paid at least 60 monthly contributions of which six must be immediately prior to disability. Unemployed insured members can avail disability benefit if their disability occurs within 2 years of being unemployed, provided they have paid a minimum of 120 contributions. Disability pension is granted after medical approval from IESS qualifying physician and rehabilitation efforts. After this, a temporary subsidy is granted for up to a year. If the condition does not improve after that, an economic analyst proceeds to calculate the benefit and pension for life. Pension is calculated as average of 5 best years of income on which contributions are paid. This average is multiplied by the annual coefficient corresponding to the number of years of contributions. In case of disability due to work injury or occupational illness, benefits are paid by employers. The employer will be obliged to pay for medical treatment and supply and renew normal use of prosthetic and orthopedic devices, the use of which is deemed necessary due to the injury suffered by the victim.
Income tax in Ecuador is applied on the income obtained by natural persons, undivided estates and companies, whether national or foreign. The tax year is from January 1 to December 31. Resident taxpayers are considered persons who stay in Ecuador for more than 183 days in a 12-month period. They are taxed on their income from Ecuador and abroad. Non-residents are taxed on their income from sources in Ecuador. Income tax rates for residents are progressive from 5% to 37%. Non-residents are taxed at a flat rate of 25% on their income.
Foreign nationals wanting to work in Ecuador are granted a temporary residence visa valid for up to 2 years, provided they submit proper documentation. Foreign employees who wish to work in public sector require special permission from the Ministry of Labor, while those working in private sector do not require any special permission.
