Hiring international employees can be an attractive option for growing companies. Countries like Guatemala offer more cost-effective skilled talent than the US and Canada along with other benefits.
While salaries are important, there are many other costs to keep in mind when it comes to global hiring. For example, employers are typically required to make mandatory social security contributions. They may also provide staff with additional benefits like healthcare when competing for top talent.
This article will walk you through the fixed and variable costs of hiring in Guatemala.
Costs to Consider When Hiring Around the World
The basic hiring costs in Guatemala include:
- Employee’s gross salary
- Taxes and benefits
- Vacation pay and other leaves
- Overtime pay
- Severance pay
Plus, you may want to add certain optional costs like benefits, bonuses, and extras.
Mandatory Costs of Hiring an Employee in Guatemala
Salary
Guatemala is home to youthful, vibrant talent, thanks to heavy government investment in upskilling workers. The country is particularly popular for outsourcing call center employees but is also growing as a nearshoring destination for IT talent.
The minimum wage in Guatemala is GTQ 3,416.38 per month (about USD 438).
However, salaries for skilled workers and sophisticated IT talent will vary greatly. You can get an idea of average salaries by doing some market research or partnering with a local staffing agency.
Mandatory Taxes and Benefits
Payroll costs in Guatemala add up to 12.67% of the employee's gross salary. These include:
- 10.67%: Social Security
- 1%: Workers Recreational Institute
- 1%: Professional Training Institute
Employers and employees both contribute to taxes and funds. So, employers must also withhold:
- 4.83%: Social Security
- 5–7%: Personal Income Tax
Mandatory Bonuses
Like in many other countries in the region, employers in Guatemala must pay thirteenth and fourteenth-month bonuses to all employees. These are paid in July and December each year.
Paid Leave
There are several types of paid leave entitlements in Guatemala.
- Public holidays: There are 11 public holidays in Guatemala.
- Paid time off: Full-time employees are entitled to 15 days of paid vacation after their first year of service.
- Sick leave: Guatemalan employees can take up to six months of sick leave paid at two-thirds of their regular salary. This payment is made by the social security fund if the employee has been contributing to it for the past three months.
- Parental leave: New mothers are entitled to 84 days of maternity leave. They can take 30 days before and 54 days after the child’s birth. This time is paid in full, either by the employer or the social security fund. New fathers can take two paid days off.
- Bereavement leave: 3 days
- Marriage leave: 5 days
- Other leaves: Employers shall also offer paid leave when employees are summoned to court or to perform union duties. Employment contracts may also include other types of leaves.
Overtime Pay
The standard work week in Guatemala is between 40 and 44 hours per week. Employees can work an additional 4 hours per day at 150% of their standard rate. Overtime work on holidays is paid at a rate of 200%.
Severance Pay
If an employee is terminated without just cause, the employer may owe up to 12 months of salary as severance pay.
If layoffs are beyond the employer's control, a negotiable severance package will cover between two days and four months of pay.
Additional Costs of Hiring Guatemalan Talent
Today’s talent market is extremely competitive. To hire top Guatemalan talent, employers may also want to offer a benefits package, which can help both search and retention. Here are some benefits you might consider offering Guatemalan employees along with other possible costs.
Benefits
Offering the right benefits package can help you stand out from the competition.
In Guatemala, many employers offer private health insurance for employees and their families. Prices for this vary greatly, depending on the type and extent of coverage. However, one report puts the average cost of private health insurance in Latin America at USD 309 per year.
For highly competitive roles, you may also want to consider added vacation time, flexible schedules, extra pension benefits, and so on.
Bonuses and Extras
Finally, you’ll want to think about smaller expenses like gifts for special occasions, comped meals, or coffees for meetings.
If you hire one or two employees in Guatemala, they’ll likely do remote work. Even so, you may want to pay for a coworking space or provide funding to set up a home office. Monthly rates for coworking spaces in Guatemala start at about USD 140.
However, you might be hiring an entire team to work on larger projects such as software development. If so, it can be wise to rent an office space to facilitate collaboration among your staff in Guatemala.
Average Cost of Hiring One Employee in Guatemala (Annual in USD)
Below is an estimate based on a salary of $100,000 for an employee in Guatemala. This salary is for ease of calculation only. It will change depending on your hiring goals, the employment contract, the candidate’s experience, and the type of position.
- Salary: $100,000
- Employer Taxes: $12,670
- 10.67%: Social Security
- 1%: Workers Recreational Institute
- 1%: Professional Training Institute
- Annual Bonuses: $16,667
- TOTAL: $129,337 + Benefits (discretionary)
Note that these totals do not include other standard costs like soft benefits commonly offered in Guatemala.
A Global EOR Can Help You Manage International Payroll
With so many costs to consider, it may feel overwhelming to start hiring globally. An Employer of Record (EOR) can help. An EOR like Borderless can help you compliantly hire and pay employees in Guatemala.
If you’d like to begin global hiring but aren’t sure where to start, book a demo with Borderless. We’ll walk you through every step, so you can reap all the benefits without the added headaches.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
