As many companies shift gears towards a remote-first work environment, employers are increasingly hiring international employees. Often, this is because countries like Nicaragua offer highly skilled talent at lower costs compared to many other countries.
Salaries are essential when budgeting for hires in Nicaragua, but there are numerous other costs to consider. From overtime and severance to social security contributions, hiring overseas employees requires more than calculating your new employee’s wage.
Employers should also keep supplementary benefits like coworking passes or gym memberships in mind. This can help with employee retention and satisfaction.
Overall, it can be challenging to determine total costs on your own. This article will guide you through the costs of hiring employees in Nicaragua.
Mandatory Costs
When hiring employees in Nicaragua, you’ll need to consider numerous mandatory costs. These include wages, taxes, benefits, overtime pay, and severance pay. Adherence to these costs will ensure you are compliant with local labor laws and regulations.
Salary
The minimum wage in Nicaragua depends on the industry. The agricultural sector’s minimum wage is NIO 5,196.34 (USD 142.13) per month. On the other side of things, the financial services sector’s minimum wage is NIO 11,628.95 (USD 318.09) per month.
The average salary in Nicaragua is approximately NIO 18,900 (USD 516.97) per month. For those in the technology industry, the average salaries are upwards of NIO 20,000 (USD 550) per month. If you’re looking to hire in tech, it’s wise to offer a higher salary to remain competitive in today’s job market.
Another thing to keep in mind is that the 13th month bonus in Nicaragua is mandatory. This is an additional month’s salary that is to be paid in the first ten days of December.
Despite the higher salaries of those in the technology sector and the 13th month bonus, the salaries in Nicaragua are still significantly lower than many other countries. Providing a salary of USD 1000 per month easily allows for a comfortable life in Nicaragua.
Taxes and Benefits
Employers are required to pay 20-22.5% of an employee’s salary, which goes towards pension, disability, and healthcare, and unemployment insurance.
Types of Paid Leave
Employees in Nicaragua are entitled to take numerous types of paid leave. Often, these entitlements vary depending on how long they have worked for the employer.
Vacation and Public Holidays
When it comes to annual paid time off, employees are entitled to 15 days after six months of employment, which is fully paid by the employer. Nicaragua also has 10 public holidays in which employees are not required to work.
Parental Leave
Employers need to consider the cost of parental leave when hiring in Nicaragua. New mothers are entitled to 12 weeks of fully paid maternity leave, which is also paid by the employer.
Sick Leave
Regarding sick leave, employers also need to be aware of additional costs they may face. Employees are entitled to take 26 days of sick leave. The first three days of sickness are unpaid. From the fourth day onward, employees receive 60% of their salary, but it is paid by social security. Overall, employers do not need to worry about this as an extra cost when hiring in Nicaragua.
Overtime Pay
The standard work week in Nicaragua consists of eight-hour days over five days. If an employee works overtime, they are to be paid a minimum of 200% of their regular hourly wage. So, when you hire an employee from Nicaragua, keep in mind that your employee working overtime may be costly.
Severance Pay
Severance pay in Nicaragua is outlined in the employment contract. Employees are entitled to no less than one month’s salary, but no more than five month’s salary.
Supplemental Costs of Hiring in Nicaragua
In addition to statutory benefits, employers may also provide supplemental benefits. Offering additional benefits can help attract top talent, motivate staff, and increase retention.
Benefits
Making sure your new employees are happy and healthy is vital. You can support their health by offering a strong benefits package. While many employers choose to offer private health insurance for their employees, doing so comes at an extra cost.
The price will significantly vary depending on the type of private health insurance and coverage.
An EOR, like Borderless, will typically offer benefits packages, often includingmedical, dental, vision, and life insurance along with a retirement savings plan.
Bonuses and Extras
While the 13th month bonus is mandatory, there are other bonuses that employers offer, such as signing bonuses and performance based bonuses. Additionally, employers may want to consider offering employees a lunch stipend or gym memberships. The average price of a gym membership in Nicaragua is around NIO 1022 (USD 28) per month.
Employers also need to take workspace costs into account when hiring employees in Nicaragua. Since new hires will typically be working remotely, they’ll need to set up a home office or access a coworking space.
Providing a home office stipend can be hugely beneficial. It can go towards a company laptop, ergonomic office chairs, or keeping your system secure, like with antivirus software.
Coworking offices have become the go-to for many employers. Not only do coworking spaces provide employees with a designated space to work, but they also encourage collaboration and networking. The costs of coworking spaces in Nicaragua vary by region.
For example, Managua has many coworking offices available, like Impact Hub Coworking and Casa Bloom Coworking. The prices for monthly coworking office passes range anywhere from NIO 4388 (USD 120) to NIO 7314 (USD 200) per month. In Granada, Selina Coworking offers a dedicated desk for a mere NIO 2925 (USD 80) per month.
Work With Borderless
Hiring employees in Nicaragua may feel overwhelming, especially with so many different costs to be aware of. Working with an Employer of Record (EOR) can help take the stress out of global hiring and budgeting.
An EOR like Borderless will do the heavy lifting, guaranteeing you compliantly hire and pay employees in Nicaragua. To get started, book a demo today.
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.
