Employer of Record in Guatemala: how to hire compliantly without an entity.
Employ Latam is an employer of record in Guatemala. We become the legal employer for your hire, so you can employ full-time staff there without setting up an entity. Locally compliant contracts, monthly payroll, statutory benefits, taxes. Below: what the law actually requires, in plain English.
- Country
- Guatemala
- ISO code
- GT
- Region
- North America
- Phone code
- +502
- Employ Latam coverage
- Full EOR + contractor payments
Last updated July 2026
Overview
Guatemala is one of the 18 countries where Employ Latam can hire, onboard, and pay employees on your behalf. You don't need a local entity to bring on talent here: we handle the compliant contract, statutory contributions, and payroll, while you manage the day-to-day work.
Guatemalan labor law is protective of employees, with mandatory 13th-month payments, defined severance for terminations without cause, and social security contributions split between employer and employee. Hiring compliantly means accounting for all of these from day one, not just the base salary.
Country at a glance
| Item | Detail |
|---|---|
| Currency | Guatemalan quetzal (GTQ) |
| Working week | 48 hours per week |
| Standard workday | Set by employment contract within the statutory 48-hour week |
| Probation period | Up to 2 months |
| Notice period | Typically 3.5 weeks |
| 13th-month salary | Mandatory |
| Payroll cycle | Monthly |
Cost and compliance basics
- Minimum wage: GTQ 3,343.01 per month (2024 figure).
- Social contributions: employers contribute 10.67% (work injury 3%, health and long-term care 4%, old age/invalidity/survivors 3.67%); employees contribute 4.83% (work injury 1%, health and long-term care 2%, old age/invalidity/survivors 1.83%).
- Corporate tax: 25%.
- Top personal income tax rate: 7%.
- VAT: 12%.
- Overtime: paid at a 50% premium over the regular hourly rate.
- Severance (without cause): typically 27 weeks.
- Annual leave: 15 statutory days.
- Public holidays: 11 days per year.
- Maternity leave: 12 weeks.
- Paternity leave: 0.3 weeks.
- Retirement age: 60.
These figures apply to standard full-time employment. Collective bargaining agreements or specific sectors can adjust some terms, so contracts should always be checked against the applicable rules for the role.
Employment contracts and worker types
Guatemala's Labor Code recognizes a few standard contract types, each with different rules on duration and termination. Getting the classification right matters: misclassifying a worker as a contractor when the relationship is really employment exposes a company to back pay, statutory contributions, and severance claims.
Most full-time roles in Guatemala use an indefinite contract. Fixed-term and task-based contracts exist but are meant for genuinely temporary or project-bound work, not as a way to avoid statutory obligations. Employ Latam issues locally compliant employment contracts under each of these structures, with statutory contributions handled from day one.
| Contract type | Typical use | Max duration | Probation allowed |
|---|---|---|---|
| Indefinite | Standard full-time employment | No fixed end date | Yes, up to 2 months |
| Fixed-term | Seasonal work, temporary coverage, specific projects with a known end date | Set by contract, tied to the task or project | Yes, up to 2 months |
| Task or project-based | Work defined by completion of a specific task rather than a calendar date | Ends when the task is complete | Yes, up to 2 months |
| Independent contractor | Genuinely autonomous, non-subordinate services | No fixed term (commercial agreement, not labor contract) | Not applicable |
A few points worth flagging for hiring managers:
- Probation is capped at 2 months across contract types. During this period, termination is generally simpler, but statutory contributions still apply.
- Indefinite contracts are the default assumption under Guatemalan labor law. If a fixed-term contract keeps getting renewed for the same ongoing work, labor authorities may treat it as indefinite regardless of what's written.
- Contractors carry real risk. Guatemala applies a subordination test: if the company sets hours, provides equipment, supervises the work closely, or the person works exclusively for one client, the relationship looks like employment no matter what the agreement is titled.
- The standard work week is 48 hours. Overtime is paid at a 50% premium over the regular hourly rate.
- 13th-month salary (bono 14 and aguinaldo, effectively a mandatory year-end bonus) is required, and should be budgeted into total employment cost alongside base salary and employer contributions.
Employer social contributions run 10.67% of salary (3% work injury, 4% health and long-term care, 3.67% old-age, invalidity, and survivors), while employees contribute 4.83% (1% work injury, 2% health and long-term care, 1.83% old-age, invalidity, and survivors). These are handled as part of payroll, not billed separately.
For companies that want to test a role or a market before committing to a full hire, a fixed-term or task-based contract through an EOR is often the lower-risk path, since Employ Latam carries the compliance obligation rather than the client company.
Hiring a contractor in Guatemala
Many teams start with a contractor in Guatemala before they hire an employee. We draft the contractor agreement, collect the contractor's local tax ID, pay them in local currency or USD, and withhold tax where Guatemala requires it. You approve invoices and pay one USD invoice.
Contractor or employee
Before you start, we review the role and tell you whether it looks more like a contractor or an employee. How Guatemala law draws the line is covered above.
When to convert
A contractor who works only for you, keeps set hours and uses your tools is effectively an employee under most Latin American labor law. We can move them onto an employment contract with us: same person, same pay.
Contractor payments from $29 per contractor per month.
Payroll, taxes, and the 13th-month salary
Payroll in Guatemala runs monthly, in Guatemalan quetzales (GTQ). Employers withhold employee social security contributions and income tax at source, then remit both to the relevant authorities alongside the employer's own contributions. Employ Latam handles this calculation and filing each pay cycle so the employee receives a net salary and the employer sees one consolidated invoice.
Guatemala requires two extra statutory payments beyond the monthly salary: aguinaldo (Christmas bonus) and bono 14 (a mid-year bonus), each typically equal to one month's salary. Together these function like a "14th and 15th month" on top of base pay, and both are mandatory as of 2026. Employers should budget for these when setting total cost of employment, since they are not optional or negotiable line items.
Key payroll facts:
- Monthly minimum wage: GTQ 3,343.01 (2024 figure, varies by sector in practice)
- Statutory work week: 48 hours
- Overtime premium: 50% over the regular hourly rate
- Corporate tax rate: 25%
- Top personal income tax rate: 7%
- VAT rate: 12%
Employer and employee contributions
| Contribution | Employer rate | Employee rate |
|---|---|---|
| Work injury | 3% | 1% |
| Health and long-term care | 4% | 2% |
| Old age, invalidity, survivors | 3.67% | 1.83% |
| Total social security | 10.67% | 4.83% |
These percentages apply to gross monthly salary and are remitted to the Guatemalan Social Security Institute (IGSS). The employer share is a direct cost on top of gross pay and should be factored into any total employment cost calculation, alongside the two mandatory bonuses.
Other statutory items relevant to payroll planning:
- Statutory annual leave: 15 days
- Public holidays: 11 days per year
- Maternity leave: 12 weeks
- Paternity leave: 0.3 weeks (roughly two days)
- Maximum probation period: 2 months
- Retirement age: 60 years
None of these figures are negotiable downward in an employment contract. Employ Latam builds them into the locally compliant employment contract and statutory contributions are handled as part of the payroll run, so the customer sees a single monthly cost broken into salary, employer contributions, and any accrued bonus provisions.
Mandatory benefits, vacation, and parental leave
Guatemala's labor code sets a clear floor for employee benefits. As the employer of record, Employ Latam builds every contract around these minimums and handles the statutory contributions on both sides of the payroll.
Every full-time employee is entitled to a 13th-month salary, known locally as an annual bonus, paid as mandated by Guatemalan labor law. Employers also contribute to the Guatemalan Social Security Institute (IGSS), which covers work injury, health and long-term care, and old-age, invalidity, and survivors' benefits.
Social security contributions:
| Category | Employer pays | Employee pays |
|---|---|---|
| Work injury | 3% | 1% |
| Health / long-term care | 4% | 2% |
| Old age, invalidity, survivors | 3.67% | 1.83% |
| Total | 10.67% | 4.83% |
The standard work week is 48 hours. Overtime is paid at a 50% premium over the regular hourly rate. Probation periods can run up to 2 months, and the typical notice period is 3.5 weeks. Severance for termination without cause typically runs around 27 weeks, calculated based on tenure and salary.
Leave entitlements
| Leave type | Entitlement | Paid by |
|---|---|---|
| Annual leave | 15 days per year | Employer |
| Sick leave | Set by IGSS medical certification; varies by case | IGSS (social security) |
| Maternity leave | 12 weeks | IGSS (social security) |
| Paternity leave | 0.3 weeks (2 days) | Employer |
| Public holidays | 11 days per year | Employer |
Maternity leave is funded through IGSS once the employee is registered and contributing, though employers must ensure the registration happens correctly and on time so there's no gap in coverage. Paternity leave is short by international standards, just two days, and is paid directly by the employer.
The minimum wage sits at GTQ 3,343.01 per month as of 2024, and any locally compliant employment contract must reflect at least this floor, adjusted for the employee's sector where applicable.
Retirement age is 60, relevant for structuring long-tenure contracts and any pension-related planning discussions with employees nearing that age.
None of this requires the customer to set up a local entity or track IGSS filings themselves. Employ Latam runs payroll in local currency, handles the statutory contributions, and keeps the contract compliant with Guatemala's labor code.
Severance, termination, and notice periods
Guatemala's Labor Code gives employees on indefinite contracts significant protection against dismissal without cause. Understanding the rules before you terminate saves you from costly disputes.
Termination types
Without cause. The employer can end an indefinite contract at any time but owes severance equal to one month's salary per year of service, with a minimum of one month. Proportional vacation pay and any unpaid bonus installments are also owed.
With just cause. Documented misconduct (serious absenteeism, malpractice, insubordination) can justify termination without severance. You need a paper trail. If the employee disputes the dismissal, a labor court decides whether cause was valid.
Trial period. The first two months of an indefinite contract are a trial period. You can terminate without cause and without severance during this window.
Fixed-term and task-based contracts. These end automatically on the agreed date or project completion. No severance is owed if the contract runs its natural course. Repeatedly renewing fixed-term contracts risks reclassification as indefinite, which creates full severance exposure.
Notice periods
Guatemala does not set a statutory minimum notice period for employer-initiated termination without cause. In practice, the employer either gives working notice or pays in lieu. For employee resignations, the notice period is whatever the contract specifies.
Severance table
| Tenure | Notice period | Severance owed (without cause) |
|---|---|---|
| Under 1 year | None required by law; pay in lieu common | 1 month's salary (minimum floor) |
| 1 to 3 years | None required by law | 1 month per year of service |
| 3 to 5 years | None required by law | 1 month per year of service |
| 5 or more years | None required by law | 1 month per year of service |
All calculations use the employee's ordinary monthly salary. Proportional aguinaldo installments and accrued vacation must be settled at the same time.
What you also owe at termination
- Proportional aguinaldo (13th-month bonus) for the months worked in the current cycle
- Accrued but unused vacation pay
- Any outstanding salary up to the last day worked
Guatemala has no severance fund equivalent to Brazil's FGTS. There is no account to draw from. The full amount comes directly from the employer at the time of separation.
How Employ Latam handles this
We calculate the exact termination liability before you act, run the final payroll in Guatemalan quetzales, and handle the statutory paperwork. You decide to end the engagement; we handle the numbers and the process.
Plans start from $349 per employee per month.
Recent regulatory changes
Guatemala's labor framework has stayed relatively stable over the past two years, with no wholesale rewrite of the Labor Code. Most movement has come from periodic minimum wage adjustments and steady enforcement of social security contribution schedules through the Instituto Guatemalteco de Seguridad Social (IGSS). Employers hiring in Guatemala should treat these as routine compliance maintenance rather than structural change, but each still affects payroll setup and budgeting.
The monthly minimum wage stands at GTQ 3,343.01 as of 2024, and it is reviewed on a near-annual cycle, so employers should expect a fresh adjustment announcement each year-end. Social security contributions remain split between employer (10.67%) and employee (4.83%), covering work injury, health and long-term care, and old-age/invalidity/survivors insurance. These rates have held steady through the period but are set by IGSS and can shift with little lead time.
| Date | Change | Impact on employers |
|---|---|---|
| Jan 2024 | Minimum wage set at GTQ 3,343.01/month for non-agricultural sector | Payroll floors updated; base salary calculations for new hires must reflect current wage |
| 2024 (ongoing) | IGSS contribution rates confirmed at 10.67% employer / 4.83% employee, itemized across work injury, health, and old-age/invalidity/survivors | No rate increase, but employers must keep itemized contribution reporting accurate for audits |
| 2025 | Continued enforcement emphasis on 13th-month (aguinaldo) and 14th-month (bono 14) bonus payments | Employers must budget for both statutory bonuses in addition to base salary; late payment penalties apply |
| 2025 | Corporate tax rate held at 25%, VAT held at 12% | No change to employer tax planning, but confirms stability for financial forecasting |
| 2026 (current) | Statutory leave entitlements (15 days annual leave, 12 weeks maternity, 0.3 weeks paternity) remain unchanged | Employers should not assume expansion of leave; benchmark against current figures when drafting contracts |
No major severance or notice period reform has occurred in this window. Typical severance without cause remains around 27 weeks (a figure last updated in 2019), and notice periods stay near 3.5 weeks, both still calculated based on tenure and contract terms rather than a fixed statutory formula. Employers relying on older reference materials should confirm these numbers haven't shifted before finalizing termination clauses.
Employ Latam tracks these figures directly and updates contracts and payroll calculations as IGSS and Ministry of Labor guidance changes, so employers don't need to monitor Guatemalan regulatory bulletins themselves.
Frequently asked questions
- Do I need a local entity to hire employees in Guatemala?
- No. Employ Latam acts as the employer of record, so we hold the local employment relationship on your behalf. You avoid the cost and time of setting up a Guatemalan entity while still offering a locally compliant employment contract, with statutory contributions and payroll handled for you.
- Can I hire a contractor in Guatemala instead of an employee?
- You can, but only if the relationship is genuinely independent: the person controls their own hours, uses their own tools, and isn't exclusively dependent on your company. If you're setting schedules, providing equipment, or directing day-to-day work, Guatemalan authorities are likely to reclassify the relationship as employment, which triggers back pay for statutory contributions and severance. For anything resembling a full-time, ongoing role, an employment contract through an EOR is the safer route.
- When are aguinaldo and bono 14 paid in Guatemala?
- Aguinaldo is typically paid in December and bono 14 in July, each generally equal to one month's salary, though exact timing and proration rules can vary by employment agreement and tenure. Both are mandatory statutory bonuses in Guatemala as of 2026, separate from the regular monthly payroll cycle. Employers should treat them as fixed, recurring costs rather than discretionary bonuses.
- How many vacation days are employees in Guatemala entitled to?
- Employees in Guatemala are entitled to 15 days of paid annual leave per year under the statutory minimum. This applies after the completion of a standard work year and is a floor, not a cap: employers can offer more, but not less. Employ Latam builds this into every employment contract by default.
- How much severance is owed for terminating an employee without cause in Guatemala?
- The minimum is one month's salary, regardless of tenure. After the first year, the amount equals one month's salary for each full year of service. You also owe proportional aguinaldo for the current bonus cycle and any accrued vacation pay, all settled at the time of termination.
- Has Guatemala's minimum wage changed recently, and how often should employers expect updates?
- Guatemala's monthly minimum wage was set at GTQ 3,343.01 as of 2024, following a pattern of near-annual government review. Employers should expect a new wage decree around year-end each year rather than a fixed multi-year freeze. Employ Latam applies the current wage floor automatically when structuring new employment contracts, so hiring managers don't need to track the announcement themselves.
We handle the contract, payroll, taxes, and benefits in Guatemala so you can hire that person this month.
Statutory figures for Guatemala, each traced to a named source with its reference year. Sourced from OECD, the World Bank, the ILO, ISSA and national statutes.
Latest reference period: 2026
Figures are statutory reference values maintained internally and refreshed against primary sources. They are a starting point for planning, not legal advice — we confirm the exact numbers for your role before you hire.
What changed in Guatemala
Checked against official sources on .
No rule changes recorded since we began logging them.
Corrections to this guide
- Corrected 11 October 2026Notice period: 3.5 weeks → None · sourceAn employer owes no statutory notice when dismissing someone on an indefinite contract. The notice periods in Código de Trabajo art. 83 are what a worker owes when resigning; dismissal without just cause triggers indemnización (art. 82) instead.
What a hire in Guatemala costs
Employers in Guatemala pay statutory contributions of 10.67% on top of gross salary. At the average monthly wage of GTQ 3,846, that adds GTQ 410 a month.
| Salary | Gross per month | Employer contributions | Total per month | Total per year |
|---|---|---|---|---|
| Average monthly wage | GTQ 3,846 | GTQ 410 | GTQ 4,256 | GTQ 51,072 |
Employer contribution rate: ISSA Country Profiles, as of Jan 2024
Average monthly wage: ILOSTAT, as of Jan 2025
Amounts in GTQ. Totals per year are twelve monthly salaries plus contributions.
What the contributions pay for
- Health and long-term care4%
- Pension, invalidity and survivors3.67%
- Work injury3%
Components: ISSA Country Profiles, as of Jan 2024
On top of this: the 13th salary where the law requires one, paid leave, and notice and severance if the employment ends (all in the tables above), plus our employer of record fee, from $349 per employee per month. Every quote we send breaks each of these out for the actual role.
Found someone in Guatemala? Let's employ them.
We'll send a fully-loaded cost breakdown for the role within a few hours, then draft a locally compliant employment contract. Most Guatemala hires can start within 1 to 3 business days once docs are in.
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