Employment Laws in Guatemala

Overview of Labor Laws in Guatemala

Guatemala labor laws entirely shape the work environment for businesses operating there. These laws also apply to remote employees and were put in place to safeguard the rights of employees working in the country. 

Employers must adhere to these employment laws in Guatemala to ensure fair labor practices.

The key aspects of these laws surround Guatemala national holidays, working hours, social security contributions, employee benefits, and, most importantly, the minimum wage in Guatemala.

Employment Contracts in Guatemala

A contract is an employment agreement the employer offers their employees upon joining. 

These come in a well-documented format outlining the terms and conditions of the employment that both the employer and employee agree to. 

To operate smoothly as a foreign business in Guatemala, the first thing you should remember is employment contracts and what they stand for. 

Types of Employment Contracts

Understanding the three contract types will help you align with the laws of Guatemala and maintain compliance. They are: 

• Indefinite Contracts:
  These are the most common and are typically used for long-term employment. They provide security and stability to employees because, under Guatemala labor laws, they require valid justification for termination. 
  
  With these contracts, employers are often obligated to offer severance pay upon termination without just cause. 

• Fixed-Term Contracts:
  Fixed-term contracts are offered to individuals applying for temporary positions or jobs with a specified end date. As per Guatemala labor laws, these contracts must exclusively mention the duration of employment. 
  
  Employers should be cautious about repeatedly renewing these contracts, as multiple renewals could result in their reclassification as indefinite contracts under labor regulations.

• Specific Task-Based:
  Contracts tied to the completion of a particular project or assignment are deemed specific task-based contracts. Once the designated task is completed, the contract automatically ends. 
  
  Guatemalan labor laws mandate that employees clearly define the task's scope and requirements within the task order to clarify and prevent disputes.

Contractual Obligations for Employers

Employers in Guatemala must ensure employment contracts are clear and compliant with Guatemala labor laws governed by the labor code. 

It should have the following contents:

• Basic information (ID, job title, department, date of employment)
• Remuneration and benefits (Base salary, currency, payment frequency, additional benefits)
• Job duties and responsibilities (Job position, primary work location, remote work arrangements if required)
• Terms and termination agreements (Contract type, grounds for termination, severance pay if offered)
• Intellectual property (Clear ownership of confidential info and trade secrets)
• Additional clauses (Process for resolving disputes, internal mediation, or referral to labor courts)

Trial Period and Registration Requirements

According to Guatemala labor laws, an employment relationship starts with a trial period, often deemed as a probation period. 

It usually does not exceed two months. In this time frame, the company is within its right to terminate the relationship without paying any severance. 

As an employer, ensure you provide a detailed termination notice in writing as evidence of communicating the requirements with the employee. 

Ensure your employee reads it thoroughly and signs a copy of this written notice.

When an employee wants to terminate the working relationship within this trial period, the same rule applies. 

Note that the employee has the legal right to seek compensation without written evidence from both parties. 

Working Hours and Leave Policies

Employment laws in Guatemala were created to promote a healthy and fair work environment for employees while ensuring compliance and structure for employers. 

Here’s a detailed overview of the working hours per day, paid and unpaid leave policies, and special leave provisions sanctioned by Guatemala labor laws. 

Standard Working Hours

According to the Labor Code, Article 122, a standard working week in Guatemala cannot exceed 44 hours. 

For night shift workers, working hours are capped at 36 hours per week. 

An ordinary working day is usually 8 hours a day (between 6 am and 6 pm), and an ordinary night shift cannot exceed 6 hours a shift (between 6 pm and 6 am). The maximum working hours for those working on a mixed shift is 7.  

Night hours should not exceed day hours in these shifts. 

Public Holidays in Guatemala and Vacation Policies

Employers have to provide leave to employees during Guatemalan holidays. However, with requested authorization to work on seventh days (Sundays), employers can ask their employees to work. 

Every employee has the right to receive a period of vacation that is remunerated after every year of continued service for the same employer. 

The minimum duration of a paid leave for vacation is fifteen working days.

Special Leave Provisions (Maternity, Paternity, Bereavement)

Guatemala laws also mandate special leave provisions for the following:

• Paid maternity leave: New mothers are entitled to 30 days of paid leave before the birth and 54 days post-birth. If this absence is not covered by social security, the employer has to pay for the complete absence.

• Paid paternity leave: New fathers are entitled to three days of paid leave post-birth.

• ‍Bereavement leave: As per the employment laws in Guatemala, employers are obligated to provide 3 days of paid bereavement leave to employees who have lost an immediate family member.

Wages and Overtime Rules

Guatemala minimum wage laws are different for employees working in different industrial sectors. 

These laws legally safeguard a Guatemalan employee’s rights to promote fair compensation in the workplace.

Minimum Wage in Guatemala 

According to the updated Minimum Wage, here’s a detailed tabular depiction of the monthly minimum wages of different sectors:

Overtime Compensation Regulations

Guatemalan employees working overtime are entitled to get paid 1.5 times the average hour value they earned as compensation. It should be paid immediately in the preceding week.

Additional Employee Benefits (13th and 14th Salaries)

According to the Guatemala labor laws, employers must compensate their employees with a 13th and 14th-month bonus. Also known as Bono 14, every bonus equals one month's salary. The 14th-month bonus must be paid in July, and the second one should be paid in December.

Termination and Severance Rules

If you are hiring in Guatemala, make sure you make an employee checklist citing every possible relevant detail to ensure they have a seamless resignation process. 

The Guatemala labor laws mandate several regulations surrounding employment termination to protect employee rights. 

Both employees and employers must be wary and follow them, especially in the case of severance payments. 

Termination Notice Requirements

The statutory notice period for terminating an indefinite contract depends on the employee's service length. It ranges from one week for employment under 6 months to one month for five or more years. 

Severance Pay Policies

Under Guatemala labor laws, employees terminated for a valid cause are not eligible for severance pay. However, employers are required to prove the justification to avoid legal penalties. 

Employees indirectly terminated or done so without cause should receive severance equal to one month's salary for every year of service, calculated proportionally for partial years. 

There is no severance pay for employees terminated during the probation period.

Grounds for Dismissal Without Compensation

Misconduct warranting action may include:

• Immoral acts
• Inappropriate behavior toward supervisors or colleagues
• Damaging employer property
• Repeated absences (e.g., two full or six partial days in a month)
• Ignoring safety protocols
• Failing to follow productivity-related instructions
• Breaching contract terms
• Violating internal policies or guidelines.

Employer Obligations and Payroll Contributions

Employers in Guatemala have to follow strict payroll contribution rules to remain compliant with Guatemala labor laws. It includes social security and taxes. (As per Guatemalan social security institute)

Failing to adhere to this will incur penalties for the hiring company. 

Social Security and Tax Contributions

Like most U.S. countries offering employee benefits like healthcare, social security, and the like, Guatemala labor laws also enforce certain beneficial regulations. 

As per the laws governing minimum wage, Guatemala mandates employees to pay 12.67% of total wages in social security. 

Employers must cover the difference for part-time employees to ensure their contributions match those of full-time employees and remain compliant.

As for taxes, employers are obligated to withhold the income tax till the relationship with the employee ends. 

Penalties for Non-Compliance

Non-compliance with Guatemala labor laws can result in penalties depending on the violation's severity:

• Labor Code Violations: 

Fines range from GTQ 500 to GTQ 10,000 per breach, with repeated offenses attracting higher fines or legal action.

• Occupational Safety Issues:

Non-compliance can result in fines of GTQ 1,000 to GTQ 50,000, workplace closure, or, in severe cases, criminal charges.

• Social Security Law Breaches: 

Employers failing to register workers, contribute, or offer benefits may face fines and legal consequences.

• Anti-Discrimination Violations: 

Discriminatory practices can lead to fines, compensation payouts, or legal penalties.

Let Skuad Help You Expand Globally

Guatemala's labor laws, although straightforward, can be complicated if you navigate them alone. Handling contracts, payroll, compliance, and marketing can become overwhelming. This is where a top-tier EOR platform like Skuad makes it easier for you. 

Partnering with experts in Skuad can help your business comply with Guatemela labor laws without needing a local entity. Skuad handles everything from contracts to payroll and benefits, allowing you to focus on growing your business globally.

Simplify your hiring process with Skuad.

Book a demo today!

FAQs

1. Does Guatemala have labor laws?

Guatemala has strict labor laws regarding minimum wage, working hours, paid leave, termination and severance policies, tax and social security considerations, and more. 

2. What's the minimum wage in Guatemala?

The minimum wage in Guatemala varies across different industries. The average minimum wage is 3384.59 GTQ/Month. 

3. What is the notice period in Guatemala?

The notice period for a Guatemalan employee of less than six months is one week, and for one who has worked a minimum of 5 years is one month. 

4. What is the average workday in Guatemala?

According to Guatamela labor laws, the average Guatemalan workday is 44 hours/ week (8 hours a day).