Any individual, whether a national or a foreigner, can establish a business in El Salvador. Beyond the obligations for the process of forming a company, the business owners must be aware of and adhere to the labor rights of employees, employers, collaborators, and suppliers.

Our partner, Raquel Santos, emphasizes the importance of labor law in establishing order within the professional environment. This ensures that all parties involved know their rights, responsibilities, and how to maintain a conducive atmosphere.

“Meeting labor obligations enhances work efficiency and prevents misunderstandings within the company or, if they arise, guides how to address them according to previously agreed terms,” says Santos.

According to our Head of the Labor and Migration Department, companies should be aware that the Ministry of Labor and Social Welfare is the government entity responsible for overseeing the application of labor laws, codes, and regulations.

When hiring new employees, our specialist affirms that labor regulations typically recognize the following types of contracts, regardless of the sector in which the company operates:

1. Permanent employment
2. Fixed-term employment
3. Professional services contracts
4. Probationary contracts
5. Interim contracts

“With regard to working hours, the standard work time for daytime shifts is 8 hours per day and 44 hours per week, while for nighttime shifts, it is 7 hours per day and 39 hours per week,” notes our lawyer.

Regarding salary payments, our expert categorizes it as follows: Commerce and Services, $365.00; Industry, $365.00; Maquiladoras, Textiles, and Apparel, $359.00; Sugar Mills, $365.00; Coffee Industry, $272.00; and Agricultural Sector, $242.00.

“In the private sector, payroll is usually processed at the end of each month, whereas in private enterprises, it’s done every 15 days. However, some private organizations make monthly payments,” mentions our partner.

In the section on vacations and leave, Santos describes that after one year of service, employees are entitled to 15 days of paid vacation. In the case of pregnant women, the employer is obligated to grant a 16-week maternity leave, 10 of which are taken compulsorily after childbirth.

“Employees can request sick leave based on a doctor’s recommendations. Bereavement leave is granted for the loss of a parent, child, partner, or another dependent person,” emphasizes Santos.

Furthermore, according to El Salvador’s labor legislation, deductions are made from employees’ salaries for both Social Security and the national pension fund (AFP).

“The employer’s mandatory contribution percentages are: ISSS (Social Security), 7.50%; and AFP, 8.75%. Meanwhile, the employee is required to contribute 3% to ISSS and 7.25% to AFP.”

Additionally, our partner lawyer points out that any employee who has served continuously for at least one year is entitled to an annual bonus, while workers who have provided services for less than a year are entitled to a bonus proportionate to their tenure.

If you have more questions about this or other topics, you can contact us through our social media channels or by visiting our offices located at Calle Cuscatlán, #4312, Colonia Escalón, San Salvador, El Salvador.