Employer of Record Guide in 

El Salvador

Vacation Leave

• Standard Entitlement: 15 calendar days after one year of continuous employment
• Accrual: Increases by one day per year of service, up to a maximum of 30 days
• Vacation Bonus: Additional 30% of regular salary when taking vacation
• Payout Rules: Unused vacation must be paid out upon termination

Sick Leave

• Paid Sick Leave: Up to 75% of regular salary for up to 52 weeks
• Funding: Paid by the Salvadoran Social Security Institute (ISSS) after the third day
• Employer Responsibility: First 3 days paid by employer at 75% of salary
• Medical Certification: Required from ISSS-approved doctors

Maternity Leave

• Duration: 16 weeks total (4 weeks before birth, 12 weeks after)
• Pay: 75% of average salary, paid by ISSS
• Job Protection: Guaranteed return to same or equivalent position
• Nursing Breaks: 1 hour per day for nursing mothers for up to 10 months

Paternity Leave

• Duration: 3 days of paid leave
• Eligibility: All male employees upon birth or adoption of a child
• Pay: 100% of regular salary, paid by employer

Bereavement Leave

• Duration: 3 days for immediate family members
• Pay: 100% of regular salary
• Qualifying Events: Death of spouse, children, parents, or siblings

Personal & Family Leave

• Study Leave: Employees have the right to time off for education (unpaid unless specified in contract)
• Medical Appointments: Reasonable time off for medical appointments
• Civic Duties: Time off for voting, jury duty, and other civic obligations

Summary

Termination Types

Termination With Cause (Despido Justificado):

• No severance required
• Must involve serious misconduct as defined in the Labour Code
• Examples: theft, fraud, repeated absences, insubordination

Termination Without Cause (Despido Injustificado):

• Requires severance payment
• Must provide written notice
• Employee may challenge termination before labour courts

Notice Period Requirements

El Salvador does not require advance notice for termination, but severance payments serve as compensation in lieu of notice.

Severance Pay

Without Cause Termination:

• 1 month to 1 year: 30 days of salary
• 1-3 years: 45 days of salary
• 3-6 years: 60 days of salary
• 6-10 years: 75 days of salary
• Over 10 years: 90 days of salary

Additional Payments:

• Proportional 13th month bonus
• Unused vacation pay plus 30% bonus
• Any outstanding wages

Probationary Periods

• Standard Period: 30 days for most positions
• Skilled Positions: Up to 200 days for highly technical roles
• During Probation: Either party may terminate without severance

Final Pay Requirements

Employers must issue final payment within 15 days of termination, including:

• Final salary
• Severance pay (if applicable)
• Proportional bonuses
• Unused vacation pay

Anti-Discrimination Laws

Employees cannot be terminated for reasons related to:

• Pregnancy or maternity
• Union membership or activities
• Filing labour complaints
• Race, gender, religion, political beliefs, or disability

National Statutory Holidays

Regional/Local Holidays

Each municipality may declare additional local holidays, typically related to patron saints or local celebrations. These vary by location and may not be paid holidays unless specified in employment contracts.

Holiday Pay Rules

• Working on Holidays: Employees who work on statutory holidays receive double pay
• Holiday Premium: If a holiday falls on a regular work day, employees receive their regular salary plus holiday premium
• Substitute Days: If a holiday falls on a non-working day, no substitute day is typically provided

Religious Observances

El Salvador recognises Catholic holidays as national holidays. Employers should accommodate other religious observances where reasonable, though these are not mandated by law.

Required Documents for Employment

• Employment Contract: Must include job title, salary, working hours, benefits, and termination conditions
• Offer Letter: Should align with final contract terms
• Government Forms:
  • Social Security registration (ISSS)
  • Pension fund registration (AFP)
  • Tax registration (DUI - Documento Único de Identidad)
• Banking Information: For salary deposits
• Identification: DUI (national ID) or passport for foreign workers

Work Permits & Visas

Foreign Workers:

• Must obtain work permits from the Ministry of Labour
• Requires proof of qualifications and clean criminal record
• Employer must demonstrate that no qualified Salvadoran worker is available
• Process typically takes 30-60 days

Background Checks

• Criminal Background: Commonly requested and legally permitted
• Employment Verification: Standard practice for professional positions
• Education Verification: Required for positions requiring specific qualifications
• Consent Required: Employee must provide written consent for background checks

Data Protection & Privacy

• El Salvador has basic data protection requirements under the Labour Code
• Employee consent required for collecting and storing personal information
• Employers must protect employee data and limit access to authorised personnel
• Cross-border data transfers should comply with local privacy expectations

Employment Contract Requirements

Mandatory Clauses:

• Job description and responsibilities
• Salary and payment terms
• Working hours and schedule
• Vacation and leave entitlements
• Termination procedures
• Confidentiality and non-compete clauses (if applicable)

Onboarding Timeline

What the EOR Handles

Borderless AI manages:

• Employment contract preparation and compliance
• Government registrations (ISSS, AFP, tax)
• Payroll processing and tax withholdings
• Labour law compliance monitoring
• Work permit assistance for foreign employees

Worker Classification: Employee vs. Contractor

El Salvador has strict rules distinguishing employees from independent contractors:

Employees:

• Work under employer supervision and control
• Use company tools and equipment
• Follow set schedules and procedures
• Receive benefits and social security coverage
• Protected under labour laws

Independent Contractors:

• Operate autonomously with minimal supervision
• Use their own tools and resources
• Set their own schedules and methods
• Invoice for services and handle their own taxes
• Not covered by labour protections

Misclassification Risks: Can result in penalties, back payments of social security contributions, and labour court claims.

Unionisation & Collective Bargaining

• Union Rights: Workers have the right to form and join unions
• Collective Agreements: Can override individual employment terms in unionised workplaces
• Strike Rights: Legal but subject to specific procedures and limitations
• Employer Obligations: Cannot discriminate against union members or interfere with union activities

Cultural Norms & Workplace Expectations

Communication Style:

• Formal and respectful, especially with supervisors
• Personal relationships are important in business
• Direct confrontation is generally avoided

Work-Life Balance:

• Family obligations are highly valued
• Extended lunch breaks are common (1-2 hours)
• Punctuality expectations may be more flexible than in North American contexts

Hierarchy:

• Clear organisational hierarchies are expected
• Decision-making typically flows from top to bottom
• Respect for authority and seniority is important

Remote Work Considerations

Remote work is not specifically regulated under Salvadoran labour law, but general employment protections still apply:

• Equipment: Employers should provide necessary work tools
• Working Hours: Standard hour limits and overtime rules still apply
• Health & Safety: Employers retain some responsibility for workplace safety
• Communication: Clear policies needed for availability and performance expectations

Anti-Discrimination & Equal Opportunity

El Salvador's Labour Code prohibits discrimination based on:

• Gender, race, or ethnicity
• Political beliefs or union membership
• Pregnancy or family status
• Disability (with reasonable accommodation requirements)

Equal Pay: The law requires equal pay for equal work, though enforcement can be inconsistent.