Nicaragua – Employer of RecordReading Time: 4 minutes
Globalization Partners provides employer of record services for clients that want to hire employees and run payroll without first establishing a branch office or subsidiary in Nicaragua. Your candidate is hired via Globalization Partners’ Nicaragua PEO in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. The individual is assigned to work on your team, working on your company’s behalf exactly as if he or she were your employee to fulfill your in-country requirements.
Table of Contents
- Nicaragua Holidays
- Bonus in Nicaragua
- Working Hours in Nicaragua
- Vacation in Nicaragua
- Sick Leave in Nicaragua
- Maternity/Paternity Leave in Nicaragua
- Termination/Severance in Nicaragua
- Nicaragua Taxes
- Health Insurance in Nicaragua
- Additional Benefits in Nicaragua
- Employment Contracts in Nicaragua
- Why Globalization Partners
Our Global Employer of Record Platform™ and Global PEO service enables clients to run payroll in Nicaragua while HR services, tax, and compliance management matters are lifted from their shoulders onto ours. As a Global PEO expert, we manage employment contract best practices, statutory and market norm benefits, and employee expenses, as well as severance and termination if required. We also keep you apprised of changes to local employment laws in Nicaragua.
Your new employee is productive sooner, has a better hiring experience and is 100% dedicated to your team. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. Globalization Partners allows you to harness the talent of the brightest people in 170 countries around the world, quickly and painlessly.
Nicaragua is located on the Central America isthmus and borders Honduras, Costa Rica, the Pacific Ocean, and the Caribbean Sea, and has the two largest freshwater lakes in Central America.
When negotiating terms of an employment contract and offer letter with an employee in Nicaragua, it may be useful to keep the following in mind:
Nicaragua celebrates nine national holidays:
- New Year’s Day
- Holy Thursday
- Good Friday
- Liberation Day
- Battle of San Jacinto
- Independence Day
- Indigenous Resistance Day
- Immaculate Conception
- Christmas Day
Bonus in Nicaragua
Employers are expected to pay one month’s salary as a Christmas bonus.
Working Hours in Nicaragua
The work week should not exceed 48 hours or eight hours per day.
Vacation in Nicaragua
Employees are generally entitled to 15 calendar days of paid leave every six months. Such leave should be taken all at once, but alternate arrangements may be made.
Sick Leave in Nicaragua
If an employee becomes ill or injured at work, s/he has up to one year to recover, with a pension from the Social Security Institute.
If the employee has a non-work related illness or injury, s/he is generally entitled to 26 weeks of leave, but this is often increased to one year. The first three days are unpaid, unless the company has established a practice of paying for those days.
Maternity/Paternity Leave in Nicaragua
Female employees are generally entitled to four weeks of maternity leave before the birth and eight weeks after. The Social Security Institute pays 60% of her salary and the employer pays the remaining 40%. If the employee is not covered by Social Security, the employer pays the entire amount.
There is no statutory paternity leave.
Termination/Severance in Nicaragua
Employees may be terminated for just cause, but the employer must request authorization for termination from the Labor Inspection Department ahead of time. If the employer terminates without authorization, the employee can sue. Proportional vacation pay and annual bonus pay are due to the employee on termination.
The employee is entitled to indemnification for years of service if it is an indefinite term contract and either the employee resigned with 15 days notice or the employee is dismissed with just cause. In general, the employee is entitled to pay as follows:
- up to three years of service: one month’s salary for each year or fraction of a year
- four to six years: 20 days’ salary for each year
- 7+ years: five months of salary
Employers contribute 18.5% of wages to social security, subject to an income cap. Employees contribute 6.35%, also subject to an income cap.
Health Insurance in Nicaragua
Nicaragua has a public/private healthcare system. Most routine visits are covered by the government. And while there is no private insurance like in the U.S., the major hospitals offer a program that works a lot like insurance.
Additional Benefits in Nicaragua
Common employee benefits include:
- supplementary health insurance
- life and disability insurance
- discounts to company stores
- transportation allowances
- meal allowances
Employment Contracts in Nicaragua
Fixed term contracts are permitted.
It is legally required to put a written employment contract in place in Nicaragua, in the local language, which spells out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in Nicaragua should always state the salary and any compensation amounts in Nicaraguan córdobas rather than a foreign currency.
This information is provided as generally accepted information and is not intended as advisory services.
Why Globalization Partners
Establishing a branch office or subsidiary in Nicaragua to engage a small team is time-consuming, expensive and complex. Nicaraguan labor law has strong worker protections, requiring great attention to detail and an understanding of local best practices. Globalization Partners makes it painless and easy to expand into Nicaragua. We can help you hire your candidate of choice, handle HR matters and payroll, and ensure that you’re in compliance with local laws, without the burden of setting up a foreign branch office or subsidiary. Our Nicaragua PEO and Global Employer of Record Platform provides you peace of mind so that you can focus on running your business.
If you would like to discuss how Globalization Partners can provide a seamless employee leasing or PEO solution for hiring employees in Nicaragua, please contact us.