Last updated on: February 25th, 2022
The Labor Law in Ecuador is regulated mainly by the Work Code, 2005 (last amended in 2012). The Law governs the terms and conditions of employment such as working hours, holidays and rest periods, wages, overtime, and other employment conditions.
Hours & Pay Regulations
Every employee after completion of 1 year of service with the same employer shall be entitled to 15 uninterrupted calendar days of annual leave, which shall include non-working days. Employees who have provided services of more than 5 years to the same employer shall have the right to enjoy 1 extra day of vacation for each extra year of service or will receive remuneration for the corresponding extra days.
Additional vacation days for seniority will not exceed 15 calendar days unless the parties agree to extend the benefit. The choice of providing additional vacation days for seniority or payment in money shall be up to the discretion of the employer.
Vacation pay is calculated by dividing the remuneration during the year of service by 24.
The basis for calculating vacations is salary + overtime + commissions + other permanent ancillary remuneration.
If the employee is terminated without having taken a vacation, they will be entitled to payment for the proportionate number of days of vacation accrued during the time worked. Annual leave is a right of the employee and cannot be compensated in money, and an employment contract shall not end until the employee has taken the annual leave unless it is postponed. The employee shall receive in advance remuneration corresponding to the period of annual vacation.
Employees can take 15 days of vacation in a fractional way, under an agreement between employer and employee.
Vacations that are taken before mandatory rest days (Saturdays, Sundays, or holidays), those rest days must be considered to be counted with the total days of vacation taken by the employee. Vacations that are taken after days of weekends or obligatory holidays, these days of forced rest are not counted.
Postponement of Annual Leave
In the case of technical tasks for which it is difficult to replace the employee for a short duration of time, the employer may deny the vacation in a year, such vacation can be moved to the following year. In this case, if the employee does not get to enjoy the vacation prior to the end of service, they shall be entitled to the remuneration corresponding to the vacation not enjoyed, with a 100% premium.
An employee can accumulate the annual leave for up to 3 years and enjoy them in the 4th year.
Compensation for Annual Leave
If the employee is not granted the vacation, they will be entitled to the equivalent of the remunerations that correspond to the time of vacation not enjoyed, without any additional premium. Art 69-76 of the Work Code, 2005 (last amended in 2012).
As of January 1, 2022, the minimum wage in Ecuador is the US $ 425.
Christmas Bonus: On 24th December employees are entitled to a bonus equivalent to a twelfth of all wages earned in the year, not including social benefits.
Discharge Bonus: “Desahucio” bonus (Discharge Bonus), equivalent to 25% of the remuneration received by the employee for the last month of regular work multiplied by the years of service (complete years only).
Temporary disability is considered to be that which prevents the employees from going to work, due to an accident or professional illness while receiving medical, surgical, hospital, or rehabilitation care, and in the case of observation periods due to professional illness, duly prescribed work stoppage.
Employees who have 180 days of continuous contribution to the Ecuadorian Social Security Institute (IESS) within 6 months prior to the onset of illness, or 189 days of continuous contribution within 8 months prior to the onset of illness are entitled to sick leave.
The employee who suffers from a non-professional illness must communicate this matter, in writing, to the employer and the respective Labor Authority, within the first 3 days of the illness. If they do not comply with this obligation, it will be presumed that there is no such disease.
If an employee suffers from a non-professional illness, they must verify with a medical certificate, preferably from a physician from the National Medical Social Directorate of the IESS. The employer may not untimely terminate or dismiss the employee during the time that they suffer from a non-professional illness that disables the employee from work, as long as that does not exceed 1 year.
Employees who are covered are paid by the employer for the first 3 days and the rest of the days are covered by IESS. The employer is only obliged to pay 50% of the remuneration during the first 3 days of disability. From the fourth day and for a period of up to 26 weeks (six months) the employee will receive the following amounts from the IESS:
- The first 70 days of disability, the Institute must pay 75% of the average wages or salaries for the last 90 days prior to the month in which the disability occurs; and,
- The rest of the time they pay 66% of this average.
Employees who are not entitled to benefit from the IESS shall be entitled to 50% of the remuneration in case of non-professional illness, for a duration of up to 2 months each year, with proof of a medical certificate stating the need for rest. Art. 181, IESS Statute, Work Code, 2005 (last amended in 2012) Arts. 42(19), 174 to 179, 368.
Pregnant employees are entitled to a 12-week paid leave (84 days) for maternity. They are distributed as follows:
- 2 weeks prior to the estimated due date
- 10 weeks after the birth of the child
In the case of multiple births, this time is extended for 10 more days (total 94 days).
Birth of Child with Disabilities
- 174 days (additional 90 days) in case the child is born with a special ability or severe congenital.
- 184 days (100 additional days) in case of multiple births and that at least one of the children was born with a special capacity or severe congenital.
If the child dies at the time of delivery or within a few days, the employee will be entitled to 3 days of paid leave from the date and time of death.
The absence from work will be justified by presenting a medical certificate granted by a physician of the Ecuadorian Social Security Institute, and, failing that of this, by another professional; certificate stating the probable date of delivery or the date in which such an event has occurred.
Inability to work due to illness due to pregnancy or to childbirth.- In case a woman remains absent from her work for up to 1 year as a result of an illness that, according to the certificate originates in pregnancy or childbirth, and renders the employee incapable of work, the employment contract may not be terminated. Remuneration will not be paid for time exceeding 12 weeks, without prejudice to the fact that in a collective bargaining agreement a longer period is indicated.
Pay – Employees must receive their full salary for maternity leave. IESS requires that the employee shall have at least 12 continuous contributions prior to childbirth and that the employer has not registered arrears during the mentioned period. In these cases, the IESS will pay the employee a cash allowance of 75% of the average remuneration, the last 3 contributions paid to IESS, for the period of 12 weeks (the remaining 25% must be covered by the employer).
Breastfeeding Break – Employees are entitled to 2 hours of breastfeeding leave, during the 12 months after giving birth. In other words, a working day will last 6 hours until the child is one year old. Art 152, 154, 155 of the Work Code, 2005 (last amended in 2012).
Employees are entitled to 3 days of leave with full remuneration, in the event of the death of their spouse or partner in a common-law union or of their relatives within the second degree of consanguinity or affinity. Art 42 (30) of the Work Code, 2005 (last amended in 2012).
Employers must grant adoptive parents a paid leave of absence for 15 days, from the date the child is legally delivered to them. During the period of this leave, the employer must pay full compensation. Art 152 of the Work Code, 2005 (last amended in 2012).
If the child is born by normal delivery, the father is entitled to 10 days of paid leave. If the child is born by cesarean section or in case of multiple births, the father is entitled to 15 days of paid leave. If the child is born prematurely or under conditions of special care, the father is entitled to 18 days of paid leave. If the child is born with a degenerative, terminal, or irreversible disease, or with a degree of severe disability, the father will be entitled to 25 days of paid leave.
If the mother dies during childbirth or while on maternity leave, the father may make use of the entire leave, or the remaining part of the period of leave that would have corresponded to the mother, if she had not passed away. Art 152 of the Work Code, 2005 (last amended in 2012).
After the end of paid paternity leave or the conclusion of maternity, leave employees are entitled to an optional unpaid leave for up to 9 additional months, to take care of the children within the first 12 months of the minor’s life. This leave also applies to adoptive parents. Art 152 of the Work Code, 2005 (last amended in 2012).
Employees are entitled to 25 days of paid leave to attend to their children hospitalized (for any reason), or with degenerative pathologies. Art 152 of the Work Code, 2005 (last amended in 2012)
When the Ecuadorian employee is called to service in ranks, for the reasons determined in the law of Compulsory Military Service in the National Armed Forces, the employee is entitled to absence. The employer is required to pay the salary, in the following proportion:
- During the first month of absence from work, a 100 hundred percent salary is paid.
- During the second month of absence from work, 50 percent of salary is paid.
- During the third month of absence from work, 25 percent of salary is paid.
Art 43 of the Work Code, 2005 (last amended in 2012).
Employees must be granted the paid time necessary to exercise their right to vote in elections established by law, provided that said time does not exceed 4 hours. Art 42(9) of the Work Code, 2005 (last amended in 2012).
Employees with more than 5 years of experience in total out of which at least 2 years of service in the same company who has obtained a scholarship for studies abroad, in fields related to work activity, will be entitled to a leave of absence up to 1 year, but shall be entitled to payment for 6 months.
Applies to employers with 15 or more employees and the number of scholarship holders does not exceed 2%. Upon returning after studies, the particular employee shall serve for a period of at least 2 years in the same company. Art 42 (27) of the Work Code, 2005 (last amended in 2012).
Employers shall provide female employees with paid time off for a duration as may be required and necessary to process and access administrative or judicial measures in case of gender violence. Art 42 (10) of the Labor Code.
Employees shall be entitled to miss or take time off work to carry out commissions of the association to which they belong, provided that they give notice to the employer prior to such time off. Commissioned employees shall be on leave for the necessary time and they will return to the position they occupied retaining all rights derived from their respective contracts, but they will not earn the remuneration corresponding to the lost time during such time off. Art 42 (11) of the Work Code, 2005 (last amended in 2012).
Employers who hire employees over 15 years of age and under 18 years of age who have not finished their basic instruction, shall be granted 2 hours per day of leave from work, in order to attend school. Art 135 of the Work Code, 2005 (last amended in 2012).