Testimonial
Manuel Ramos
TERAO ASIA
Managing Director
We think INS Global is a good solution about starting business in new and complex markets. Understanding the market doesn’t mean you need to set up a company immediately.
5/5
A reputable Employer of Record in Ecuador can provide a low-cost, fast, and efficient entry into the country.
Employer of Record (EOR) can help cut through the bureaucratic red tape that characterizes international incorporation. As a result, you can assemble a team and begin operations abroad in just a few days.
INS Global helps you hire professionals, transfer workers, issue contracts, onboard new hires, ensure compliance with tax and labor laws, manage payroll, and administer workers’ benefits, all through a single online platform. With INS Global handling international HR administration and local regulatory compliance, you can focus on core business activities without distractions.
We stay up-to-date with the local labor laws and regulations in Ecuador on your behalf. As a result, you minimize the risk of legal issues, penalties, and fines due to non-compliance.
Setting up a legal entity in a new country is a lengthy and expensive process involving legal fees and administrative overhead. But partnering with an EOR in Ecuador helps companies avoid these expenses.
EORs have local expertise and labor market knowledge for hiring work talents in new markets. This quick and efficient hiring helps you scale your operations and seize growth opportunities more effectively.
Expand into various international markets by leveraging a global network with local expertise. Integrate your operations in Ecuador with those in 100 other countries worldwide.
Free up valuable time and resources by offloading administrative and compliance obligations to an EOR. Ecuador can be a tough market to enter, but an EOR gives you the support you need to pursue your expansion goals.
Incorporating an entity or establishing a branch office in Ecuador involves significant time, expenses, and administrative complexities.
In contrast, partnering with an EOR is a faster and more cost-effective expansion solution. EOR services like INS Global allow businesses to enter the market quickly, minimize financial risks, and focus on their core operations without the burden of legal and administrative intricacies.
Manuel Ramos
TERAO ASIA
Managing Director
We think INS Global is a good solution about starting business in new and complex markets. Understanding the market doesn’t mean you need to set up a company immediately.
When working with INS Global’s Employer of Record in Ecuador, the process follows these 4 simple steps:
While both service type provides HR support and compliance assurance, the main difference between an Employer of Record (EOR) and a Professional Employer Organization (PEO) is the level of legal responsibility they assume. Knowing the differences is the best way to pick the service that best suits your needs.
EORs and PEOs both offer HR outsourcing solutions, but an EOR is fully liable for employment and compliance matters, such as payroll, tax compliance, and employment contracts. It does this by signing a contract directly with employees, becoming their legal employer.
In contrast, a PEO typically shares employer responsibilities with the client company, maintaining a co-employment relationship. Here, the contract is kept between the employee and the client company, with the PEO signing an agreement with the client company to manage HR services.
In general, an EOR provides the most comprehensive solution for businesses seeking entry into Ecuador without the complexities of shared responsibility.
Employment contracts in Ecuador are required for fixed and indefinite employment relationships. Employers should write the contract in Spanish, the country’s official language. Verbal contracts are recognized, but best practice always recommends written agreements to avoid later misunderstandings and ensure clarity.
The standard probationary period in Ecuador is 3 months, and the notice period preceding termination is 30 days.
The labor law in Ecuador allows for sudden dismissal without justification but involves making a severance payment.
In an indefinite-term contract (the standard employment contract), the employee is entitled to severance payments on termination as follows:
However, the employer is not required to make a severance payment for dismissals due to just cause, such as a repeated lack of punctuality or abandonment of work.
The statutory working hours in Ecuador are as follows:
Saturday and Sunday are mandatory rest days. When work activity cannot be suspended on Sunday or Saturday, an employer can agree upon 2 other consecutive rest days with the employee. Employees requested to work on rest days are also eligible for 200% standard salary for those days.
The maximum overtime hours are 4 hours per day and 12 hours per week. Employees who work overtime are entitled to additional benefits as follows:
However, an employer is exempt from overtime payment when overtime is necessary to solve accidents caused by the employee and for employees in a position of trust or managerial positions.
An 8-hour working day must have a rest break of up to 2 hours after the first 4 hours worked.
The Ecuadorean Government revises the minimum wage regularly, but the current figure is 450 USD per month.
Employees in Ecuador are eligible for the following 13 paid public holidays:
A worker in Ecuador is entitled to paid annual vacation as described below:
The employer is obligated to pay the employee 50% of their standard remuneration for the first 2 months of sick leave unless the employee is entitled to government social security payments.
Parental leave in Ecuador is described below:
The Ecuadorean Institute of Social Security (IESS) is the government institution responsible for managing the country’s social security program. The program covers aspects such as healthcare, retirement, disability, unemployment, and family benefits.
Employees contribute 9.45% of their salary, while employers contribute 12.15% of their total payroll to the social security system.
Ecuadorian residents are taxed on their worldwide income at progressive rates starting from 0% to 37%. The rates are given below:
Annual Income (USD) | Tax Rate |
0 – 11,31 | 0% |
11,310 – 14,410 | 5% |
14,410 – 18,010 | 10% |
18,010 – 21,630 | 12% |
21,630 – 31,630 | 15% |
31,630 – 41,630 | 20% |
41,630 – 51,630 | 25% |
51,630 – 61,630 | 30% |
61,630 – 100,000 | 35% |
100,000 and over | 37% |
A flat income tax rate of 25% applies to non-residents.
Ecuador levies a 12% value-added tax (VAT) on certain goods and services.
The standard corporate income tax rate in Ecuador is 25%.
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Foreign companies can either set up a local entity in each country or use the services of a local PEO (Professional Employment Organization) to hire the staff directly.
In general, you can have employees based abroad using an Employer of Record in Ecuador in weeks. Meanwhile, incorporating a new subsidiary to be the employer of record can take from 4-12 months.
The employer of record is the legal entity liable for the staff employed in a specific country. In practice, a foreign company can either open a subsidiary to become the employer of record of its abroad employees or use a PEO to act as the employer of record.
The price of professional EOR services in Ecuador is a percentage of the worker’s monthly compensation. This price covers all HR-related tasks required to ensure compliance with local employment laws.
Yes. An Ecuador-based EOR is a safe, legitimate, and efficient way to handle employer responsibilities there without having to establish a specific corporate structure. EORs ensure your safety by working with local legal professionals and offering top-notch HR assistance.
An EOR service agreement ensures your team members will are paid accurately and on time each month. In addition, your workers can access all Ecuadorean employee benefits and be protected by law.
Independent contractors who interact with their clients within an Ecuadorean EOR framework will retain control of their work and may be eligible for many of the benefits of regular employees.
Yes. Our team of expert recruitment consultants can find the best local talent in Ecuador for your needs by utilizing their wide professional networks, in-depth knowledge of regional business resources and benchmarks, and commitment to ethical hiring practices.
Yes. An Employer of Record can help you find workers in various cities or regions within Ecuador. An EOR handles headhunting, interviews, and candidate selection in specific cities or regions in Ecuador, depending on your needs or preference.
While some PEO or EOR service providers have minimum hiring requirements or a limit on the number of employees you may hire at once, INS Global gives you the freedom to employ however many or few employees you need to achieve your goals.
Using a PEO service in Ecuador eliminates the need for a local address. But the option for your employees to work in a shared workspace whenever convenient is a good idea.
Absolutely. We can manage the necessary visa and work permit processes for foreigners. Also, we can handle situations where the local employment laws, tax laws, or employee benefits differ for Ecuadoreans and foreigners.
E
OR and PEO solutions are ideal for enterprises of all sizes, from SMEs to multinational corporations. These solutions ensure the efficient and secure employment of foreign or local workers. In addition, our services allow you to scale employment demands to meet work operations.
The legal expertise of PEO and EOR services can help businesses that don’t have their own structures or those seeking to avoid cost-scaling difficulties during international expansion.
Staffing firms and umbrella corporations are third-party options for hiring independent freelancers in Ecuador.
Most independent contractors in Ecuador are self-employed or run small enterprises. These contractors must be hired in accordance with a work agreement rather than an employment contract, according to the country’s law.
Hence, independent contractors can provide a CV, portfolio, verified references, and perhaps a signed NDA.
The cost of hiring in Ecuador should factor in direct expenses like salary, recruiting service fees, signing bonuses, and other indirect expenses, including incentive programs, foreign employee tax management, and social security contribution payments.
Employers in Ecuador manage payroll for all workers, usually at the end of every month. Employers are responsible for withholding amounts corresponding to employees‘ income tax and social security fund contributions.
The Ecuadorean Government revises the minimum wage regularly, but the current figure is 450 USD per month.
In Ecuador, several visa types are available for foreign employees who wish to work there. Here are some common visa types for employees in Ecuador:
Employers in Ecuador are responsible for organizing and withholding employees’ income tax payments and social security fund contributions every month. Ecuadorean employers contribute 12.15% of their total payroll to the social security system.
The standard corporate income tax rate in Ecuador is 25%.
Employees in Ecuador are entitled to a state pension, a 13th-month bonus, profit sharing, public holidays, paid leave (sick leave, annual leave, and parental leave), and health insurance.
Unilateral changes to an employee‘s contract are not permitted in Ecuador. Both parties must agree upon changes to an employee‘s working conditions. So working contracts should be in writing, with all amendments signed by the employer and employee together.
In addition to public and private healthcare, the Ecuadorian Social Security Institute (IESS) provides healthcare services to individuals who are affiliated with the social security system.
In an indefinite-term contract (the standard employment contract), the employee is entitled to severance payments on termination as follows:
In Ecuador, labor regulations are primarily regulated and overseen by the Ministry of Labor (Ministerio de Trabajo).
Employees in Ecuador are eligible for paid leave on the country‘s 9 nationally recognized public holidays. These may also include local or regional holidays.
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