Honduras may be known for its beautiful sandy beaches, ancient Mayan ruins and lush rainforests, but its workforce also has much to offer. From talented engineers to ambitious salespeople, Honduras has a lot to offer, and we are getting more requests than ever about this talented country. While there are numerous reasons to hire in-country, it is important to remember that Honduran labor law tends to be favorable to the employee, rather than the employer. Before extending an offer letter to an employee in Honduras, take into account this atmosphere, and the collective bargaining agreements and labor unions that may affect an employment relationship.
When negotiating an employment contract with the right candidate in Honduras, it is imperative that you understand the nuances of an appropriate offer. For instance, know that a typical benefits package will add approximately 40% to your total employee cost – and plan accordingly. This uptick in cost is due in part to the 13th and 14th month bonus, a mandatory annual expense that should be factored into your budget. In your offer letter, be sure to clearly state whether the annual salary amount offered is inclusive of the 13th and/or 14th month bonus. Certain benefits, such as stock options, shouldn’t be offered if you plan to use a PEO or employee leasing service.
As you can imagine, in a country known for its ample recreational opportunities, vacation time is also an important piece of HR mandate in Honduras. The minimum vacation time offered to any employee on a Honduran payroll is as follows:
- o 10 days vacation after the 1st year of employment
- o 12 days after the 2nd year
- o 15 days after 3 years tenure
- o 20 days after 4 years tenure with the company
These are the statutory minimums: executives often negotiate for additional time at the outset of their agreement, based on what they received at with their previous employer.
If your employee spends more time taking holiday than closing deals, and you find yourself in the unfortunate situation of having to end an employment relationship in Honduras, bear in mind that the required notice of termination ranges from 24 hours within the first 2 months of employment, to 2 months notice, depending on the length of service. Accrued bonuses, vacation, severance and termination notices must be paid immediately when dismissing the employee. Severance payments can range anywhere from 10 days severance for 3 to 6 months of employment, all the way up to a payout of 1 month/year worked. There may be ways to get around notification periods and severance pay if there is just cause, but the cost of the inevitable labor lawsuit would be significant and most clients pay out rather than risk worse consequences.
The bottom line? Honduras is an attractive country with much to recommend it – a talented, ambitious, friendly workforce, relatively inexpensive labor and the capacity to positively impact your company’s bottom line.