Hiring top talent in Nicaragua may seem like a drawn-out and complex process. But hiring global employees doesn’t always have to come with a headache. Working with an Employer of Record (EOR) platform, like Borderless, makes hiring employees efficient, streamlines payroll, and guarantees compliance.
This article will guide you through the reasons and benefits of using an EOR to hire employees in Nicaragua.
Why Hire Talent in Nicaragua?
Nicaragua is home to great remote talent. The country has a young, educated workforce that is proficient in English. Not only does a bilingual workforce make it easy to connect with employees, but it also helps with business expansion and international networking.
Managua, the capital of Nicaragua, and Leon, the second largest city, both have high populations of skilled workers who specialize in IT and telecommunications.
Nicaragua’s time zone also makes it easy for employers in the United States and Canada to work during the same time throughout the day.
Affordable salaries are perhaps the biggest reason why employers hire from Nicaragua. This way, employers have the opportunity to reduce costs while hiring exceptional talent.
How to Legally Hire Employees from Nicaragua
There are a few ways employers can hire talent from Nicaragua. For one, employers could draft independent contractor agreements; however, these come with risks of misclassification and don't grant employee status to the new hire.
A longer route involves setting up a physical business entity. Doing this is costly, time-consuming, and complex, especially when it comes down to complying with local labor laws and regulations.
A third, popular, and stress-free route involves using an Employer of Record (EOR) platform. An EOR is a third-party organization that acts as a broker for hiring talent outside the country where the employers operate.
Using an EOR to hire employees in Nicaragua makes the process seamless and compliant.
What Does an Employer of Record Do?
An EOR provides an efficient and compliant way for organizations looking to recruit and hire talent from abroad. They take care of tedious administrative tasks associated with employment contracts, onboarding, tax documentation and filing, payroll processing, intellectual property protection, and termination.
With labor laws constantly changing across the world, using an EOR guarantees that you maintain strict compliance, no matter where you hire talent.
Contracts and Documentation
Each country has specific requirements for what must be included in an employment contract, and Nicaragua is no different. Employment contracts in Nicaragua must be in the local language (Spanish), and must include benefits, salary, and termination requirements.
Nicaragua also mandates that employers pay a 13th month bonus, which is to be paid out in the first ten days of every December. The employment contract must include the specifics of this bonus.
The majority of employment contracts in Nicaragua are indefinite contracts. However, fixed-term contracts are permitted with certain limitations.
Working with an EOR will ensure that the right contract is in place, containing all the necessary information and complying with employment law. An EOR will also make sure all the correct documentation is collected, such as work permits, banking information, and more.
Insurance and Benefits
Using an EOR to hire employees in Nicaragua will guarantee that employees have proper insurance coverage and the necessary benefits required by local laws and regulations. This includes healthcare and unemployment benefits.
An EOR will also take care of supplemental benefits for employees, like dental, vision, life insurance, and retirement savings plans. With global hiring becoming more and more competitive, it pays to offer employees attractive additional benefits.
Paid Time Off, Leave, and Public Holidays
Employers hiring in Nicaragua need to be aware of paid time off allowances, types of leave, and public holidays. Employees in Nicaragua are entitled to 15 days of paid time off every six months. It’s typical for employees to take 15 days off at once, but, if agreed by the employer and employee, arrangements can be made otherwise.
Employees are also entitled to sick leave. However, the amount of time they can take off and the pay they’re entitled to depends on the illness or injury and the length of leave.
New mothers are allowed to take 12 weeks of maternity leave. Employers pay 40% of this while Social Security pays 60%. However, if the employee isn’t covered by Social Security, the employer pays the full amount. Nicaragua doesn’t have paternity leave.
Employees in Nicaragua are entitled to take the day off during the country’s 10 public holidays. For 2023, public holidays in Nicaragua are as follows:
- January 1: New Year’s Day
- April 6: Holy Thursday
- April 7: Good Friday
- May 1: Labour Day
- July 19: Sandinista Revolution Anniversary
- September 14: Battle of San Jacinto
- September 15: Independence Day
- November 2: All Soul’s Day
- December 8: Immaculate Conception
- December 25: Christmas Day
Navigating paid time off, leave, and holidays in Nicaragua can be challenging. While there are guides and practices for employers to manage PTO on a global team, an EOR will ensure everything is properly tracked and calculated.
Tax Obligations
Employers with less than 50 employees are to contribute 21.5% of wages to social security. However, if an employer has more than 50 employees, the rate goes up to 22.5%. Keeping up with paying and filing taxes can be a lengthy, complicated process. Fortunately, an EOR will handle all the logistics and ensure that all taxes are filed compliantly.
Employer Responsibilities
While the EOR takes care of all legal and HR procedures, like contracts, payroll, and taxes, the employer also has some responsibilities. The employer needs to take on responsibilities as if they were hiring a local candidate; this includes recruitment, interviewing, and onboarding. Once the employee is onboarded, it’s the employer’s responsibility to maintain the subordinate working relationship.
It’s also up to the employer to be aware of the working culture in Nicaragua and connect with employees. This will create a positive and welcoming work environment that encourages communication and inclusivity, ultimately helping with employee performance and retention.
Advantages of Using an Employer of Record
Using an EOR in Nicaragua will save time, reduce costs, and minimize compliance risks. Setting up an entity in a foreign country comes with a lot of stress. An EOR is already set up to hire employees abroad, making it a seamless and efficient process.
EORs have local knowledge and extensive experience in maneuvering through intricate HR processes, so employers won’t need to worry about any potential compliance or legal issues.
Other than minimizing the stress of hiring globally, working with an EOR is cost-saving and ensures a positive employee experience with streamlined HR support.
Choosing the Right Employer of Record
When it comes to choosing the right EOR, employers must do their due diligence in order to find the right partner. Employers should take various factors into consideration.
- Experience and expertise: When working with an EOR in Nicaragua, you want to make sure they have local knowledge of employment laws and experience in the country. Working with an EOR with a positive reputation in Nicaragua ensures compliance.
- Range of services: Keep in mind the range of services offered by EORs and see if they are right for you. Look for different services related to hiring staff, like administering benefits, filing taxes, compliance and governance, and legal support.
- Data security: In a remote work environment, protecting intellectual property is vital. When choosing an EOR vendor, make sure it has a specific agreement which outlines the ways it aims to keep sensitive information secure.
Borderless — The EOR For You
If you’re looking to hire an employee in Nicaragua, an EOR is the right solution. With Borderless, we make the hiring process a breeze. While you connect with your employees, we’ll do the heavy lifting to guarantee compliance and make hiring a seamless, stress-free process.
Book a demo to see how we can streamline hiring employees from Nicaragua.
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.
