Located in northwestern South America, Ecuador borders Peru and Colombia and includes the Galápagos Islands in the Pacific. Originally home to several Amerindian groups, it was colonized by Spain in the 16th century and gained independence in 1820 as a sovereign nation. Most of its population of 16.4 million citizens are considered mestizos, followed by people of European, native American and African descent. Spanish is the official language spoken by the majority of its people. Ecuador has a biodiversity that is reflected in its native plants and animals, including those that reside on the Galápagos Islands, a popular destination for both tourists and researchers alike. The Andes mountain range as well as the Amazon river, both play a critical role in Ecuador’s climate and ecology. As its name indicates, Ecuador’s location at the equator also means there is very little variation in daytime and nighttime hours during the year. Ecuador’s economy is primarily dependent on petroleum and agricultural products and is currently considered a developing, although upper-middle-income, economy.
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.
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.
