Employer of Record Guide in 

Uruguay

Vacation Leave

• Standard Entitlement: 20 working days per year after one year of service
• Accrual: Vacation rights accrue from the first day of employment
• Timing: Must be taken within 18 months of earning the right
• Payment: Vacation pay includes a 100% premium (double pay during vacation)

Sick Leave

• Coverage: Provided through social security system
• Duration: Up to one year for the same illness
• Payment: Percentage of salary paid by social security after initial days
• Employer Obligation: May need to pay initial days depending on circumstances

Maternity Leave

• Duration: 14 weeks total (6 weeks before birth, 8 weeks after)
• Payment: Covered by social security system
• Job Protection: Position must be held during leave period
• Flexibility: Some timing adjustments possible with medical approval

Parental Leave

• Paternity Leave: 10 days for fathers
• Parental Leave: Additional shared leave options available
• Adoption: Similar rights apply for adoptive parents
• Payment: Covered through social security contributions

Bereavement Leave

• Duration: Typically 3-5 days depending on relationship to deceased
• Payment: Usually paid leave for immediate family members
• Documentation: Death certificate required

Personal & Family Leave

• Marriage Leave: Several days for employee's wedding
• Study Leave: Time off for educational purposes (may be unpaid)
• Medical Appointments: Reasonable time for medical care
• Family Emergencies: Short-term leave for family crises

Summary

Termination Types

Termination With Cause (Despido con Notificación):

• Requires serious misconduct or breach of contract
• No severance payment required
• Must follow proper notification procedures
• Employee may challenge the cause through labour courts

Termination Without Cause (Despido sin Notificación):

• Employer may terminate without specific reason
• Requires severance payment
• Must provide proper notice or payment in lieu

Notice Period Requirements

Notice periods in Uruguay depend on length of service and type of termination:

Severance Pay

Calculation Method:

• One month's salary for each year of service
• Minimum payment equivalent to one month's salary
• Based on average salary of last 6 months
• Additional payments may apply for specific circumstances

Maximum Limits:

• Severance payments are capped at a certain number of months' salary
• Limits may vary based on collective bargaining agreements

Probationary Periods

• Duration: Typically 90 days for most positions
• Extension: May be extended in certain circumstances
• Termination: Either party may terminate with minimal notice during probation
• Benefits: Reduced severance obligations during probationary period

Final Pay Requirements

Employers must provide final payment including:

• Outstanding salary
• Proportional vacation pay with premium
• Proportional 13th-month salary
• Any other accrued benefits

Timeline: Final payments must be made within specific timeframes as required by labour law.

Anti-Discrimination & Retaliation Laws

Employees cannot be terminated for:

• Union activities or membership
• Filing labour complaints
• Pregnancy or family status
• Discrimination based on protected characteristics
• Exercising legal labour rights

National Holidays

Uruguay observes several national holidays throughout the year:

Holiday Pay Rules

• Payment: Employees receive regular pay for statutory holidays
• Work Requirements: If required to work on holidays, employees receive premium pay
• Eligibility: All employees entitled to holiday pay regardless of tenure
• Tourism Holidays: Some holidays may be moved to create long weekends for tourism purposes

Bridge Days

Uruguay sometimes declares "bridge days" (días puente) to create extended weekends, particularly when holidays fall on Tuesdays or Thursdays. These are typically announced by government decree.

Required Documents for Employment

Employment Contract:

• Must be in writing for contracts exceeding 30 days
• Include job description, salary, working hours, and conditions
• Specify probationary period if applicable
• Include termination clauses and procedures

Government Registration:

• Social security registration (BPS)
• Tax identification number
• Work permit (for foreign employees)
• Health insurance enrolment

Employee Documentation:

• Identity document (cédula de identidad)
• Proof of address
• Educational certificates (if required for position)
• Medical examination (for certain positions)

Language Requirements

• Official Language: Spanish is the official language
• Contracts: Employment contracts should be in Spanish
• Workplace Communication: Spanish proficiency generally required
• Documentation: All official documents must be in Spanish or officially translated

Background Checks & References

• Employment Verification: Previous employment references commonly requested
• Criminal Background: May be required for certain positions (banking, security, childcare)
• Educational Verification: Academic credentials verification for professional positions
• Credit Checks: Limited use, primarily for financial sector positions

Data Protection & Privacy

Uruguay has comprehensive data protection laws:

• Personal Data Protection Act: Governs collection and use of personal information
• Employee Consent: Required for data collection and processing
• Data Security: Employers must implement appropriate security measures
• Cross-Border Transfers: Restrictions on transferring personal data outside Uruguay

IP Assignment & Confidentiality

• Intellectual Property: Work-related creations typically belong to employer
• Confidentiality Agreements: Common for sensitive positions
• Non-Compete Clauses: Limited enforceability, must be reasonable in scope and duration
• Trade Secrets: Protection available under commercial law

Probation Period Setup

• Standard Duration: 90 days for most positions
• Documentation: Must be clearly specified in employment contract
• Evaluation: Regular performance reviews recommended
• Termination: Simplified termination procedures during probation

Onboarding Timeline

What the EOR Handles

Borderless AI manages:

• Employment contract preparation and execution
• Government registrations and compliance
• Social security and tax enrolments
• Payroll setup and processing
• Benefits administration
• Ongoing compliance monitoring

Worker Classification: Employee vs. Contractor

Uruguay has strict rules distinguishing employees from independent contractors:

Employee Characteristics:

• Work under employer direction and control
• Use employer-provided tools and equipment
• Work set hours at employer's location
• Receive regular salary and benefits
• Subject to disciplinary measures

Independent Contractor Characteristics:

• Provide services independently
• Use own tools and equipment
• Set own working hours and methods
• Invoice for services provided
• Bear business risks and expenses

Misclassification Risks:

• Penalties and back payments of social security contributions
• Retroactive employment benefits
• Labour court proceedings
• Regulatory sanctions

Unionisation & Collective Agreements

Uruguay has a strong tradition of unionisation and collective bargaining:

• Union Membership: High rates of union membership across sectors
• Collective Bargaining: Sector-wide agreements common
• Wage Councils: Tripartite negotiations set minimum wages by sector
• Strike Rights: Constitutional right to strike with certain limitations
• Union Security: Various forms of union security arrangements

Cultural Norms & Workplace Expectations

Communication Style:

• Formal business relationships initially
• Personal relationships important for business success
• Direct but polite communication preferred
• Hierarchy respected but not rigid

Work-Life Balance:

• Family time highly valued
• Long lunch breaks common
• Flexible scheduling appreciated
• Vacation time fully utilised

Professional Development:

• Education and training valued
• Professional certifications respected
• Continuous learning encouraged
• Career advancement through merit

Remote Work Considerations

Remote work regulations in Uruguay include:

Legal Framework:

• Remote work law enacted covering rights and obligations
• Equal treatment with office-based employees
• Right to disconnect outside working hours

Employer Obligations:

• Provide necessary equipment and tools
• Ensure safe working conditions
• Maintain communication and supervision
• Respect employee privacy

Employee Rights:

• Same benefits as office workers
• Reimbursement for work-related expenses
• Training and development opportunities
• Health and safety protections

Cross-Border Considerations:

• Tax implications for remote work from other countries
• Social security coverage requirements
• Immigration and work permit issues
• Data protection compliance across borders

Note: Remote work arrangements should be clearly documented in employment contracts and comply with both Uruguayan law and any applicable international regulations.