Table of Contents

Nicaragua

Table of Contents

Currency

Nicaraguan Cordoba (NIO)

Payroll Frequency

Weekly, Monthly

Employer Taxes

21.50 / 22.50 %

About Nicaragua

Nicaragua is a Central American nation with a multi-ethnic population of 6 million, speaking primarily Spanish, as well as indigenous languages. It is also home to the second-largest rainforest in the Americas. The biodiversity is reflected in its warm tropical climate and active volcanoes, making it an increasingly popular tourism destination. Protecting the environment is a strong focus of its government which recently made news by being one of the few nations not to sign the Paris Climate Accord because it was not strict enough (although it eventually became a signatory in 2017). Nicaragua has been struggling to overcome the aftermath effects of autocracy, natural calamities, and political war, which has left the nation as one of the poorest in the Western hemisphere. The nation also has a high rate of poverty and underemployment. Agriculture and textile account for Nicaragua’s 50% of exports while coffee, gold, and beef are the country’s most export products.

Employment Relationship

• Permanent Employment

According to Nicaragua's labor law, an employment contract is presumed to be permanent or for an indefinite period when there is no term indicated in the written agreement. Permanent employment agreements can include a trial period of 30 days, during which either party has the right to terminate the contract without notice. After completing the trial period, a permanent employee can terminate the agreement by giving their employer notice of 15 days. Employers that terminate a permanent employee without a just cause are liable to pay severance benefits.

• Fixed-Term or Specific-Purpose Contracts

In Nicaragua, a person is considered employed under a standard fixed-term contract: When both parties stipulate a deadline When the execution of the task or service is planned within a certain period For seasonal and cyclical work A written employment agreement must explicitly mention that it is concluded for a fixed term. The law does not have a provision regarding the maximum duration of fixed-term contracts but stipulates that such a contract can be renewed twice. If a fixed-term labor agreement continues to exist for at least 30 days after its expiration date, it is considered renewed for another period. If the second extension ends and the employment relationship continues, the labor contract is considered permanent.

• Temporary Employment Contratcs

There are currently no statutory regulations regarding temporary employment under Nicaragua's law. The Labor Code states that a temporary contract with a duration of under ten days can be made verbally.

Probationary Period

In Nicaragua, the employer and the employee may agree on a probationary period of no more than 30 days for contracts of indefinite duration. Either party may terminate the employment without any responsibility during the probationary period. It is prohibited to include a probationary period in fixed-term employment contracts. 

Working Hours

According to the Labor Code of Nicaragua, ordinary working hours must not exceed eight hours per day or 48 hours per week. Night work is limited to 7 hours a day or 42 hours in a week. The ordinary workday of mixed work (day and night) is limited to 7.5 hours a day or 45 hours per week. In unhealthy or dangerous workplaces, regular working hours must exceed 6 per day. Employees under 18 years of age may not work more than 6 hours a day or 30 hours a week. Employees and employers can extend working hours by a maximum of 2 hours a day by providing extra time off. 

Holidays / PTO

• Statutory Holidays

New Year’s Day (January 1), Holy Thursday and Friday (dates may vary), May Day (May 1), Liberation Day (July 19), Battle of San Jacinto (September 14), Independence Day (September 15), Immaculate Conception (December 8), Christmas Day (December 25).

• Paid Annual Leave

Under Nicaragua's law, all employees are entitled to 15 days of vacation for every 6 months of uninterrupted work with the same employer. Annual leave is paid at the standard wage rate of the employee. Persons who work for the State and its institutions have the right to enjoy holidays with full salary from Saturday Ramos through Easter Sunday, from December 24 through January 1, and 16 more days during the year.  Employers are obligated to prepare the vacation schedule and share it with their employees. The employee has the right to choose which holidays to take following the above schedule. In the case of the labor contract termination, the employee has the right to be paid wages for the unused annual leave in proportion to the time worked.

• Sick Leave

There is no statutory sick leave under the Labor Code of Nicaragua. Employment contracts and work policies govern short-term sick leave. Pending the internal company practice, a worker can be granted permission to leave due to sickness or attend a personal medical consultation. Interruption of work due to illness does not affect the right to annual leave. Insured employees are entitled to a sickness benefit paid for 52 weeks as 60% of eight weeks' average wage. The National Unified Health System provides this benefit from the fourth day of sickness. The first three days are unpaid, except in cases of illnesses that require hospitalization or accidents (the benefit is paid starting with the first day).

• Maternity Leave

Under Nicaragua's law, female employees are entitled to 4 weeks of rest before and 8 weeks after the delivery of their child (10 weeks in the case of multiple births). If delivery occurs before the date indicated by the doctor, the unused leave is added to the postnatal rest period.  Employees who have paid at least 16 weekly contributions towards social security within 39 weeks preceding the presumed delivery date are entitled to maternity allowance from the National Unified Health System. The maternity allowance is equal to 60% of the average weekly remuneration. The employer is obligated to pay the remaining 40% of the employee's average weekly remuneration. If the employee is not insured by the state social insurance system, the employer is obligated to pay the employee's entire average weekly remuneration during maternity leave.

• Paternity Leave

Under Nicaraguan law, the father or partner in a notarized union with their spouse is entitled to 5 calendar days of leave with pay and without loss of any social benefits in the event of their partner's childbirth.

Termination of Employment

• Notice Period

In Nicaragua, the law does not oblige employers to observe a notification period for termination. However, termination pay shall be given to employees dismissed without just cause. The amount of this benefit depends on their tenure and is paid as 1 month's salary for each year of service for the first 3 years and 20 days of salary for each year of service from the fourth year of service. The termination benefit amount cannot be less than a month's pay or exceed 5 months' salary. Employees with indefinite term contracts must give a notice period of 15 days to their employer when they decide to terminate their employment agreement.

• Severance Benefits

The Labor Code of Nicaragua states that severance pay is required in the case of dismissal without cause of employees with indefinite term contracts.  The benefit amount depends on the employee's tenure. Severance is paid as 1 month's salary for each year for the first 3 years of service and 20 days of salary for each service year from the fourth year. Severance pay cannot be lower than a month's salary or more than 5 months' salary. Employers are also required to pay a proportional part of the benefits owed to employees, such as holiday allowances and a 13th-month bonus.