Engage In Guatemala

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About Guatemala

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Overview

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Employment Relationship

Permanent Employment

All individual work contracts are considered to be made for an indefinite period unless expressly stated otherwise. An employee who performs activities that are permanent or continuous in a company must be signed to an indefinite-term agreement. Such contracts can be terminated at any time by giving a notice to the other party. Consequently, fixed-term contracts and contracts for specific works are exceptional and can only be concluded in cases where the accidental or temporary nature of the service so requires.

Fixed-Term or Specific-Purpose Contracts

The Labor Code presumes that an employee is hired under an indefinite contract unless otherwise explicitly stated. Thus, fixed-term contracts are the exception and are permitted only for services of a temporary nature. The Labor Code does not establish a limit to the duration of fixed-term contracts. The limit of a fixed-term contract depends on the duration of the temporary task or the expiration date of the occurrence of any event or circumstance. There is no statutory provision in the Labor Code for the maximum number of successive standard fixed-terms contracts (the initial contract plus renewals and/or extensions). There is also no statutory limit on the maximum cumulative duration of successive standard fixed-term contracts. Fixed-term contracts can be terminated before their expiry only in for just causes. If a party terminates the contract before its term without any just cause, it is liable to pay damages to the other party. 

Temporary Employment Contratcs

The Labor Code of Guatemala offers no general regulation of temporary work agency employment. However, Article 5 of the Labor Code defines an intermediary as a person who hires one or more workers to perform activities for a third party (patrono). The third party is jointly liable with the intermediary for the management of said employees, in reference to their labor rights and obligations granted under the Constitution, Labor Code, internal manuals, and other applicable regulations.  There are no restrictions on the number of renewals and extensions of temporary work assignments. Restrictions and renewals depend on what the parties agree upon privately.

Probationary Period

According to the Labor Code, for contracts of indefinite duration, the first 2 months are considered a probationary period (although the parties can mutually agree to a shorter probation). During this period, either party can terminate the employment contract with or without cause, without any responsibility on their part. A probationary period cannot be extended.

Working Hours

Per the labor law, regular working hours are eight per day and 44 per week (the standard workweek is six days). In case of mixed work day (day and night work), working hours cannot exceed seven hours per day and 42 hours per week. In case of night work, working hours cannot exceed six hours a day or 36 hours a week. The total working hours, including overtime, may not exceed 12 hours a day. Employees who work beyond the standard working hours are entitled to overtime pay at 150% of the regular hourly rate. Work performed beyond the limits provided by the contract between the parties is also considered overtime work and must be remunerated as such.

Holidays / PTO

Statutory Holidays

  • New Year’s Day - January 1
  • Holy Thursday, Friday, and Saturday
  • Labor Day - May 1
  • Mother’s Day - May 10 (private companies)
  • Army Day - June 30
  • Independence Day - September 15
  • Revolution Day - October 20
  • All Saints Day - November 1
  • Christmas Eve - December 24 (half-day, after 12:00 p.m.)
  • Christmas Day - December 
  • New Year’s Eve - December 31 (half-day after 12:00 p.m.)

Paid Annual Leave

In Guatemala, the labor law grants an employee 15 consecutive working days of paid annual leave after completion of 12 months of continuous service with the same employer. The employee must have worked at least 150 days in the year of service to be entitled to leave. Annual leave pay must be issued to the employee before the start of the leave. Workers must enjoy their vacation period without interruptions and are only obliged to divide them into two parts at most. Leave days are not cumulative from year to year. Employees cannot apply unused leave to the following year. However, at the termination of the contract employees can claim compensation in cash for leave that has been omitted in the last five years. 

Sick Leave

Guatemala's labor law stipulates that an employment contract is suspended during an employee's sickness. Workers are entitled to paid sick leave for up to 6 months, provided that the insured employee has at least 4 months of contributions in the 6 months before the sickness begins. The benefits are provided by the Guatemalan Social Security Institute (Instituto Guatemalteco de Seguridad Social) from the fourth day of the temporary suspension of work. Two-thirds of a worker's average earnings is paid as a sickness benefit up to a maximum of 180 days (the benefit may be extended for 39 weeks). The maximum combined benefit for multiple periods of incapacity is 52 weeks in a 24-month period. The Guatemalan Social Security Institute also sets a maximum monthly benefit.

Maternity Leave

Under the Labor Code of Guatemala, pregnant female employees are entitled to a maximum of 12 weeks (84 days) of maternity leave, including 30 days of prenatal leave and 54 days of postnatal leave.  An employee is entitled to receive her full salary while on maternity leave from the Guatemalan Institute of Social Security, provided she has paid contributions for 4 months in the 6 months preceding the prenatal leave and she is not engaged in any other paid work during the period of leave. If an employee is not registered with the Social Security Institute, the employer pays the full salary.

Paternity Leave

The Labor Code of Guatemala provides two days of fully paid paternity leave for the birth of a child. No qualifying conditions are stipulated in regard to the entitlement to paternity leave.

Termination of Employment

Notice Period

In Guatemala, the length of a statutory notice period for termination of an indefinite contract is based on the employee's duration of service. One-week notice for service under six months Ten days' notice for more than six but less than 12 months of service Two weeks' notice for more than one year but less than five years of service One-month notice for five or more years of service The notice period listed above applies to workers who wish to terminate a contract for an indefinite period without just cause once the trial period has elapsed. These notice periods are not binding on employers and are superseded by a notice period stipulated in an employment contract. If an employer has to terminate an employee due to just cause or misconduct, a written dismissal notice must be provided to the employee before termination.

Severance Benefits

The Labor Code stipulates that an employee dismissed for just cause is not entitled to severance pay. The employer has the burden of proving that the dismissal was justified. Employees dismissed without cause or indirectly are entitled to severance pay equal to one month of salary per year of service. Severance must be paid proportionally when the employee works for a part of a year. Employees are not eligible for a severance payment if dismissed during a probationary period.

Social Security

Pension

In Guatemala, the Social Security Institute (Instituto Guatemalteco de Seguridad Social) administers pensions and social benefits to employees of firms with at least three workers, individuals employed in freight or passenger transport enterprises with at least one worker, and public-sector employees not covered by a specialized system.  The retirement age is 60 years. Employees who reached retirement age and have paid at least 240 contributions are entitled to old age pension. Those with less than 240 contributions but with at least 12 contributions are entitled to old-age settlement benefit as a lump sum. There is a Economic Contribution Program for the Elderly, where the government pays social pension to those who have turned 65 years old, have low income or disability and no other pension. The pension is paid as GTQ 400 per month. This scheme is funded through contributions from high income individuals and companies. 

Dependents/Survivors Benefit

A widow or disabled widower entitled to a survivors pension will receive 50% of the old-age or disability pension the deceased received or was entitled to receive. The minimum monthly widow(er)'s pension is GTQ 170 (Guatemalan quetzales). Each eligible child younger than age 18 (no age limit if disabled) will receive 25% of the old-age or disability pension the deceased received or was entitled to receive; 50% if both parents are deceased. The minimum monthly orphan's pension is GTQ 85; GTQ 170 if parents are deceased. A dependent parent will receive 25% of the old-age or disability pension the deceased received or was entitled to receive. The minimum monthly dependent parent's retirement is GTQ 85. The minimum combined monthly survivor pension is GTQ 340. The maximum combined survivors pension is 100% of the old-age or disability pension the deceased received or was entitled to receive.

Invalidity Benefit

In Guatemala, the social insurance system provides benefits for disabled workers, whether their injury is occupational or non-occupational. To be eligible for benefits, the insured must have contributed for at least 36 months in the last 6 years immediately before disability. There are 2 types of disabilities recognized for benefits, depending on the degree of disability:  Total disability – If the insured is unable to obtain a remuneration greater than 33% of what is usually received in the same region by a healthy worker, with similar capacity, category and professional training.  Severe disability – If the insured is unable to obtain remuneration and permanently need the help of another person to perform the acts of ordinary life. The disability pension is initially granted for 1 year and continued depending on annual evaluation. The disability pension is not payable abroad. It ceases at the regular retirement age and is replaced by an old-age pension. It also ends if the pensioner recovers the ability to work. Benefits are also provided for work-related and non-work-related accidents or occupational diseases. For cash benefits, the insured must have at least 3 months of contributions before the work injury or occupational disease began. For medical benefits, there is no minimum qualifying period if the insured is in covered employment; unemployed persons must have at least 3 months of contributions in the last 6 months before the work injury or occupational disease began. 

Taxation of Compensation and Benefits

Personal Income Tax

Immigration

Types of Visas

Business visa – issued to foreigners who will act individually or in duly accredited representation of foreign entities of a lucrative nature, who will travel for lawful business purposes. Student visa – students must provide proof of studies in officially recognized educational centers. A visa is valid for 365 days and is eligible for extension upon demonstrated evidence of continuity of studies. Extensions are provided by the General Directorate of Migration. Tourist visa – issued to foreign nationals who enter Guatemala for recreational purposes not exceeding 90 days, extendable for the same time only once. It can be issued for single or multiple entry. Diplomatic visa – issued to diplomatic agents and other foreigners holding a diplomatic passport, issued by their respective Government or International Organization.

Work Permit

A foreign national who wishes to work in Guatemala is required to obtain both a work permit and residence permit. Most non-immigrant visas for temporary workers offer renewal periods. The initial stay can be two or three years, depending on the type of work, and can usually be renewed once. The work permit is valid for renewable periods of one year. A request for an extension must be filed 15 days before the expiration of the period for which the work permit is issued.

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