Hiring international employees can be an attractive option for growing companies. Countries like Uruguay 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 mandatory and variable costs of hiring in Uruguay.
Costs to Consider When Hiring Around the World
The basic hiring costs in Uruguay include:
- Employee’s gross salary
- Taxes and benefits
- Thirteenth-month salary
- 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 Uruguay
Salary
Nestled close to giants like Brazil and Argentina, Uruguay stands out as one of the safest and most technologically advanced countries in the region. Its home internet penetration rate is 88% while all public schools have full connectivity.
The minimum wage in Uruguay is $U 21,107 per month (about USD 541).
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 Uruguay add up to 12.625% of the employee's gross salary. These include:
- 7.5%: Retirement Fund (for salaries not exceeding $U 236,309 per month)
- 5%: Health Insurance
- 0.1%: Labor Restructuring Fund
- 0.025%: Labour Credit Guarantee Fund
Employers and employees both contribute to taxes and funds. So, employers must also withhold:
- 0-36%: Personal Income Tax
- 15%: Retirement Fund (for salaries not exceeding $U 236,309 per month)
- 3-8%: Health Insurance
- 0.1%: Labor Restructuring Fund
Mandatory Bonuses
Like in many other countries in the region, employers in Uruguay must pay a thirteenth-month bonus to all employees. This is paid in two installments over the year.
Paid Leave
There are several types of paid leave entitlements according to employment laws in Uruguay.
- Public holidays: There are five public holidays in Uruguay.
- Paid time off: Full-time employees are entitled to 20 days of paid vacation per year.
- Sick leave: Uruguayan employees can take up to a year of paid sick leave. The first two days are covered by the employer. Afterward, social security takes over payments.
- Parental leave: New mothers are entitled to 14 weeks of paid maternity leave. Their salary is fully paid by Uruguayan social security, including the thirteenth-month bonus and vacation pay. New fathers can take three days off as paternity leave.
- Study leave: Employees can take between six and twelve days for studies, depending on the number of hours they work per week.
- Care and other leaves: There are several types of care leaves in Uruguay, which employees can take to care for sick family members. There is also marriage leave, bereavement leave, and some additional allowances.
Overtime Pay
The standard work week in Uruguay is between 44 and 48 working hours per week, depending on your industry. Employees receive double pay for overtime and 250% if it’s performed on holidays.
Severance Pay
Often, employees are entitled to severance payments, depending on their length of service. Employers must pay one month of salary for each year of employment, up to six months of salary in total.
Additional Costs of Hiring Uruguayan Talent
Today’s talent market is extremely competitive. To hire top Uruguayan 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 Uruguayan employees along with other possible costs.
Benefits
Offering the right benefits package can help you stand out from the competition.
In Uruguay, 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 Uruguay at USD 404 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 Uruguay, 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 Uruguay start at about USD 7.00.
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 Uruguay.
Average Cost of Hiring One Employee in Uruguay (Annual in USD)
Below is an estimate based on a salary of $100,000 for an employee in Uruguay. 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: $10,579
- 7.5%: Retirement Fund (for salaries not exceeding $U 236,309 per month)
- 5%: Health Insurance
- 0.1%: Labor Restructuring Fund
- 0.025%: Labour Credit Guarantee Fund
- Annual Bonuses: $16,667
- Total: $127,246 + Benefits (discretionary)
Note that these totals do not include other standard costs like soft benefits commonly offered in Uruguay.
A Global EOR Can Help You Manage International Payroll
With so many costs to consider, hiring globally may feel overwhelming. An Employer of Record (EOR) can help. An EOR like Borderless can help you compliantly hire and pay employees in Uruguay.
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.
