Table of Contents

Guatemala

Table of Contents

Currency

Guatemalan Quetzal (GTQ)

Payroll Frequency

Monthly

Employer Taxes

12.67%

About Guatemala

Once a central part of the Mayan civilization, modern Guatemala got its independence from Spain in 1821. It is a Central American country bordered by Mexico to its north and El Salvador to its south. Guatemala is the most populated nation in Central America with agriculture accounting for 13.5% of the GDP. The country primarily exports products like sugar, vegetables, coffee, and bananas. Unfortunately, over half their national population lives below the poverty line and about 23% live in extreme poverty. With a population of 15.4 million, Guatemala has several ethnic groups including Mestizo and European (60%), Maya (39.3%), and non-Mestizo and Non-Maya. Spanish is the main language followed by Mayan languages. Religion in Guatemala includes Roman Catholic, Indigenous Mayan beliefs and Protestant Christianity. Guatemala is also known for its rich biodiversity and ecosystems, including several species that are endemic to the region. Resulting from political instability, lack of economic opportunities, and natural disasters, Guatemalans have a history of both legal and illegal immigration to neighboring countries.

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.