Hiring international employees can be an attractive option for growing companies. Countries like Honduras 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 Honduras.
Costs to Consider When Hiring Around the World
The basic hiring costs in Honduras include the following:
- Employee’s gross salary
- Taxes and benefits
- Thirteenth and sometimes fourteenth-month salaries
- 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 Honduras
Salary
Honduras offers an increasingly educated workforce with many new graduates in key industries like technology and engineering. The country’s economy has steadily grown, creating favorable conditions for doing business. Also, it boasts a strategic location close to Mexico and other countries in the region.
The minimum monthly salary in Honduras ranges from HNL 8134.08 to HNL 15,753.50 (about USD 330 to 640) depending on the industry and company size.
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 Honduras add up to about 15% of the employee's gross salary. These include:
- 5%: Healthcare
- 3.5%: Pension and Disability
- 1.5%: Complementary Individual Welfare Fund
- 4%: Employment Insurance (up to three monthly salaries)
- 1%: Professional Training
Employers and employees both contribute to taxes and funds. So, employers must also withhold:
- 0-25%: Individual Income Tax
- 2.5%: Healthcare
- 2.5%: Pension and Disability
- 1.5%: Complementary Individual Welfare Fund
Mandatory Bonuses
Like in many other countries in the region, employers in Honduras 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 Honduras.
- Public holidays: There are 10 public holidays in Honduras.
- Paid time off: Full-time employees are entitled to 10 days of paid vacation after their first year of employment. The number increases at two, three, and four years of service, reaching 12, 15, and 20 days, respectively.
- Sick leave: Honduras employees can take up to six months of sick leave. Employers pay in full for the first three days and 50% thereafter. Social security covers the rest of the pay.
- Parental leave: New mothers can take four weeks of maternity leave before the birth of their child and six weeks afterward. They receive full pay; social security will usually cover some of the cost and employers must cover the rest.
- Other leaves: Employers must provide two days of paid leave if an employee has certain public or family obligations. These leaves cannot exceed 15 days per year.
Overtime Pay
The standard working hours in Honduras are eight hours per day for up to six days per week. Workers receive overtime at 125% to 175% of their pay, depending on the time of day.
Severance Pay
If an employee is fired without just cause, the employer must pay severance according to tenure. This ranges from ten days to eight months of standard pay.
Additional Costs of Hiring Honduran Talent
Today’s talent market is extremely competitive. Employers may also want to offer a benefits package to hire top Honduran talent, which can help both search and retention. Here are some benefits you might consider offering Honduran employees along with other possible costs.
Benefits
Offering the right benefits package can help you stand out from the competition. In Honduras, 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 coffee for meetings.
If you hire one or two employees in Honduras, 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. Daily rates for coworking spaces in Honduras start at about USD 10.
However, you might be hiring an entire team to work on larger projects such as software development. If that’s the case, it can be wise to rent an office space to facilitate collaboration among your staff in Honduras.
Average Cost of Hiring One Employee in Honduras (Annual in USD)
Below is an estimate based on a salary of $100,000 for an employee in Honduras. This salary is for ease of calculation only. It will change as per your hiring goals including the employment contract, the candidate’s experience, and the type of position.
- Salary: $100,000
- Employer Taxes: $15,000
- Healthcare
- Pension and Disability
- Complementary Individual Welfare Fund
- Employment Insurance (up to three monthly salaries)
- Professional Training
- Annual Bonuses: $16,667
- TOTAL: $131,667 + Benefits (discretionary)
Note that these totals do not include other standard costs like soft benefits commonly offered in Honduras.
A Global EOR Can Help You Manage International Payroll
With so many costs, 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 Honduras.
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.
