Last updated on: July 26th, 2023
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
Duration of Annual Leave – 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.
Additional Duration of Annual Leave – 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 annual leave for seniority will not exceed 15 calendar days unless the parties agree to extend the benefit. The choice of providing additional annual leave for seniority or payment in money shall be up to the discretion of the employer.
Calculation of Annual Leave – When employees take annual leave prior to mandatory rest days such as Saturdays, Sundays, or holidays, those rest days should be included in the calculation of total annual leave taken. However, when annual leave is scheduled after weekends or mandatory holidays, the days of rest and holidays are not counted towards the total leave duration.
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 annual leave for a year, and the annual leave shall be moved to the following year. If the employee is unable to take their annual leave before leaving the company, they will receive compensation for the unused annual leave time along with a 100% premium.
Annual Leave Pay – Annual Leave 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.
Termination of Employment – If the employee is terminated without having taken annual leave, they will be entitled to payment for the proportionate number of days of annual leave accrued during the time worked.
Cash in Lieu of Annual Leave – 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 leave.
Taking Annual Leave – Employees can take the 15 days of annual leave in a fractional way, under an agreement between employer and employee.
Annual leave that is taken before mandatory rest days (Saturdays, Sundays, or holidays), must be considered to be counted with the total days of annual leave taken by the employee. The days of rest, such as weekends or obligatory holidays, are not taken into account when scheduling annual leave.
Holiday Accrual – An employee can accumulate annual leave for up to 3 years and enjoy them in the 4th year.
Compensation for Annual Leave – In the event that the employee is unable to take their annual leave, they have the right to receive compensation equal to their regular wage, without any additional premium. Work Code, 2005, Art 69-76.
Effective January 1, 2023, the minimum wage in Ecuador is $450 per month.
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).
Duration of Sick Leave: An employee is entitled to sickness leave up to 182 calendar days of which the first 3 days are paid by the employer and from the fourth day they are covered by IESS.
Eligibility Criteria for Sick leave: 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.
Sick Leave Pay: 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.
Medical Certificate – Employees are required to notify their employer of their illness or incapacity as early as possible. Employees are required to provide their employer with a medical certificate issued by a healthcare professional recognized by the IESS. The medical certificate must state the nature of the illness, the estimated duration of the incapacity, and any limitations or work restrictions.
Revalidation Process of Private Medical Certificate – The insured is obliged to go to the nearest IESS medical unit to request revalidation of the medical certificate issued by a private doctor within 8 days after the granting of the medical rest.
The IESS doctor will authorize medical rest and will send the documents to the administrative records for automatic payment benefits.
Non-professional illness – 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.
Sick leave coinciding with Annual Leave: if an employee falls sick during their scheduled annual leave, they have the right to convert their annual leave into sick leave. The employee is required to provide a medical certificate to their employer as evidence of their illness. The medical certificate should indicate the period of sickness and the employee’s inability to take their annual leave as originally planned. 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 calendar 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 calendar days (total 94 calendar days).
Birth of a Child with Disabilities
- 174 calendar days (additional 90 calendar days) in case the child is born with a special ability or severe congenital issues.
- 184 calendar days (100 calendar additional days) in case of multiple births and that at least one of the children was born with a special capacity or severe congenital issues.
If the child dies at the time of delivery or within a few days, the employee will be entitled to 3 working 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; a 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 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 paid breastfeeding break, 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.
Employees are entitled to 3 working 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.
Employers must grant adoptive parents a paid leave of absence for 15 calendar 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.
If the child is born by normal delivery, the father is entitled to 10 calendar days of paid leave. If the child is born by cesarean or in case of multiple births, the father is entitled to 15 calendar days of paid leave. If the child is born prematurely or under conditions of special care, the father is entitled to 18 calendar 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 calendar 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.
Employees are entitled to unpaid childcare leave for up to 9 months to take care of the children within the first 12 months after the end of paid paternity leave or maternity leave. This leave also applies to adoptive parents. Art 152 of the Work Code, 2005.
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.
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% salary is paid.
- During the second month of absence from work, 50% of the salary is paid.
- During the third month of absence from work, 25% of the 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.
Employees who have accumulated more than 5 years of total work experience, including at least 2 years of service within the same company, and have secured a scholarship for overseas studies directly related to their field of work, will be granted a leave of absence for up to 1 year. However, during this leave, they shall receive payment for 6 months.
This policy is applicable to employers with 15 or more employees, and the total number of scholarship recipients must not exceed 2% of the workforce. Upon completion of their studies abroad, the employee benefiting from the scholarship shall commit to serving a minimum period of 2 years within the same company upon their return. Work Code, 2005 , Art 42 (27).
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 unpaid 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.
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.