Employer of Record in Guatemala: how to hire compliantly without an entity.
Employ full-time employees in Guatemala 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 a practical hiring destination in Central America. It has a stable legal framework, a young workforce, and no major labor law overhauls in recent years. The core rules come from the Labor Code (Código de Trabajo), which covers all employees working in Guatemala regardless of nationality.
Country at a glance
| Currency | Guatemalan quetzal (GTQ) |
| Working week | Monday to Friday (Saturday optional by sector) |
| Standard workday | 8 hours/day, 44 hours/week |
| Probation period | 2 months (indefinite contracts only) |
| Notice period | Defined in the contract; employer termination without cause triggers severance instead |
| 13th-month salary | Yes. Paid in three installments: April 30, August 15, December 20 |
| Payroll cycle | Not nationally mandated; monthly and bi-weekly are most common |
What to know before you hire
Most employees in Guatemala work under indefinite-term contracts. Fixed-term and task-based contracts exist but carry risk: repeated renewals of a fixed-term contract can be reclassified as indefinite, triggering full severance obligations.
All written contracts must be in Spanish and specify job duties, salary, hours, location, and termination terms. The 2-month probation period applies only to indefinite contracts. During that window, either party can end the relationship without cause or penalty.
Key cost items to plan for:
- Employer IGSS contribution: 12.67% of salary, covering health, occupational risk, and pension
- Employee IGSS withholding: 4.83% of salary
- Income tax (ISR): Progressive, up to 7% on salaries; employer withholds and remits
- 13th-month (aguinaldo): One month's salary per year, paid in three tranches
- Minimum wage (2025): GTQ 3,347 to GTQ 3,973 per month (roughly USD 430 to 510), depending on sector
Severance for without-cause termination is 1 month's salary per year of service, with a minimum of 1 month. Guatemala has no unified severance fund like Brazil's FGTS. Employers carry that liability directly.
Foreign nationals need both a work permit and a residence permit before starting employment. The work permit is valid for one year and renewable. Employers sponsor the application through the Ministry of Labor, and the process requires proof that no qualified local candidate was available.
Employ Latam handles the locally compliant contract, runs payroll in GTQ, manages IGSS contributions, and can have a new hire onboarded in 72 hours. No local entity required on your side.
Employment contracts and worker types
Guatemala's Labor Code requires written contracts for almost all employment relationships. The contract must be in Spanish and cover job duties, salary, working hours, location, and termination terms. Verbal agreements are only valid in narrow cases involving short casual work, and even then they carry legal risk.
Contract types at a glance
| Contract type | Typical use | Max duration | Probation allowed |
|---|---|---|---|
| Indefinite-term | Ongoing roles, permanent hires | No end date | 2 months |
| Fixed-term | Temporary or seasonal work | Defined by justification; repeated renewals risk reclassification | No |
| Task-based | Project with clearly defined scope | Ends automatically on task completion | No |
| Part-time | Roles under 8 hours/day or 44 hours/week | Indefinite or fixed | 2 months (if indefinite) |
Indefinite-term contracts are the default and the most common structure. Fixed-term and task-based contracts are only legally sound when the temporary nature of the work is genuine. If you renew a fixed-term contract repeatedly without clear justification, Guatemalan courts will treat it as indefinite, which changes your termination obligations significantly.
The 2-month trial period
Only indefinite-term contracts include a trial period. During the first two months, either party can end the relationship without cause and without severance. After that window closes, termination without cause triggers a severance obligation of one month's salary per year of service (minimum one month), plus proportional vacation and bonus payments.
Contractor vs. employee
Guatemala does not have a formal freelancer or independent contractor classification equivalent to some other LATAM markets. If the work looks like employment (fixed hours, ongoing relationship, single client, supervision), courts will treat it as employment. Misclassifying a worker as a contractor exposes you to back-paid IGSS contributions, severance, and penalties.
Key obligations that attach to every employment contract
- Written contract in Spanish, signed before work starts
- IGSS enrollment from day one (employer contributes 12.67% of salary; employee contributes 4.83%)
- Payroll in Guatemalan quetzales at the agreed frequency
- Aguinaldo (13th-month bonus) paid in three installments across the year, prorated by service time
- 15 days paid vacation after the first year of service
Guatemala has no unified severance fund like Brazil's FGTS. Severance is paid directly by the employer at the time of termination.
Foreign nationals
Hiring a non-Guatemalan adds a work-permit step. The employer sponsors the application through the Ministry of Labor, and the worker also needs a residence permit. Work permits are valid for one year and renewable. Factor four to eight weeks into your hiring timeline for permit processing.
Payroll, taxes, and the 13th-month salary
Guatemala's payroll obligations are straightforward once you know the structure. There is no unified severance fund like Brazil's FGTS. Contributions flow through the IGSS (Instituto Guatemalteco de Seguridad Social), which covers health, occupational risk, and pensions.
Contribution rates
| Contribution | Employer rate | Employee rate |
|---|---|---|
| IGSS: health and maternity | 7.00% | 2.83% |
| IGSS: occupational risk | 3.00% | 0.00% |
| IGSS: disability, old age, and survival (pension) | 2.67% | 2.00% |
| Total IGSS | 12.67% | 4.83% |
| Income tax (ISR) withheld | Employer withholds | Progressive, up to 7% |
Payroll runs in Guatemalan quetzales (GTQ). Minimum wage in 2025 sits between GTQ 3,347 and GTQ 3,973 per month depending on sector.
The 13th-month bonus (aguinaldo)
Guatemala's aguinaldo equals one full month's salary, prorated by time worked during the year. It is not paid in a single December lump sum. The law splits it into three installments:
- April 30: covers January through April
- August 15: covers May through August
- December 20: covers September through December
Each installment equals roughly one-third of a month's salary (4/12, 4/12, and 4/12 of the annual amount). A new hire who joins mid-year receives a prorated share of each installment based on days worked in that period.
Budget for the aguinaldo from day one. It is a statutory obligation, not a discretionary bonus.
Income tax withholding
Employers are responsible for calculating and remitting ISR on behalf of employees each payroll cycle. The rate is progressive and caps at 7% on employment income. This is low compared to most of the region, but the withholding obligation sits firmly with the employer.
Payroll frequency
The law does not mandate a single payroll frequency. Contracts typically specify monthly, bi-weekly, or weekly cycles. Whatever frequency is agreed, it must be stated in the employment contract and followed consistently.
What this means for total cost
On a gross monthly salary, expect to add roughly 12.67% for IGSS contributions plus the annualized cost of the aguinaldo (approximately 8.33% of annual salary spread across the year). There is no additional severance fund contribution, but termination without cause triggers a separate severance payment of one month's salary per year of service.
Mandatory benefits, vacation, and parental leave
Guatemala's Labor Code sets a clear floor for employee entitlements. Every worker you hire must receive these benefits, regardless of contract type. Missing any of them creates liability, so it helps to know them before you make an offer.
Leave entitlements
| Leave type | Entitlement | Paid by |
|---|---|---|
| Annual leave | 15 days after 1 year of service; rises to 20 days after 5 years and up to 30 days with longer tenure | Employer |
| Sick leave | IGSS covers from day 4 onward, up to 52 weeks; first 3 days are unpaid | IGSS (social security) |
| Maternity leave | 84 days (typically 30 pre-birth, 54 post-birth) | IGSS |
| Paternity leave | 1 day | Unpaid |
| Public holidays | 13 to 14 days per year, including Holy Week, Independence Day (Sept 15), and Christmas | Employer |
Work on a public holiday requires either double pay or a compensatory day off. That obligation sits with you as the employer of record.
13th-month bonus (bono 14)
Guatemala has two mandatory annual bonuses, not one. The aguinaldo (Christmas bonus) and the bono 14 (mid-year bonus) each equal one month's salary, prorated by time worked. Payment deadlines are fixed:
- Bono 14: paid by July 15, covering January to June
- Aguinaldo: paid by December 20, covering July to December
Budget for these from day one. They are not discretionary.
Social security contributions
Every employee must be enrolled in IGSS (Instituto Guatemalteco de Seguridad Social). Contributions cover health care, occupational risk, and pension.
- Employee contribution: 4.83% of gross salary
- Employer contribution: 12.67% of gross salary
IGSS is what funds paid sick leave and maternity leave. If an employee is not enrolled, the employer bears those costs directly.
Other statutory obligations
- Minimum wage (2025): GTQ 3,347 to GTQ 3,973 per month depending on sector, roughly USD 430 to USD 510.
- Standard hours: 8 hours per day, 44 hours per week. Night shifts follow a 36-hour week.
- Income tax (ISR): Progressive rates up to 7% on salaries. Employers withhold and remit on behalf of employees.
Guatemala has no severance savings fund equivalent to Brazil's FGTS. Severance on termination without cause is calculated and paid at the time of separation: one month's salary per year of service, plus proportional bonuses and unused vacation.
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 Code has been stable for several years. No major overhauls passed in the past 24 months. The changes that did take effect are narrower: annual minimum wage adjustments and continued enforcement of existing IGSS contribution rules. That stability is useful context when planning a hire, but it does not mean compliance is simple. The rules that exist are enforced, and the penalties for misclassification or underpayment accumulate quickly.
What changed in the past 24 months
| Date | Change | Impact on employers |
|---|---|---|
| January 2024 | Minimum wage increased to GTQ 3,347/month (agricultural and non-agricultural sectors) and GTQ 3,973/month (export/maquila sector) | Payroll baselines must be updated; affects IGSS contribution calculations |
| January 2025 | Minimum wage held at 2024 levels pending government review; no new decree issued at time of writing | Budget assumptions remain the same; monitor for mid-year adjustment |
| Ongoing 2023–2025 | IGSS employer contribution rate held at 12.67% of gross salary | No change to payroll cost structure; rate covers health, occupational risk, and pension |
| Ongoing 2023–2025 | Ministry of Labor increased audit activity on fixed-term contract renewals | Repeated renewals without genuine project justification risk reclassification to indefinite contracts |
What has not changed
The core Labor Code provisions remain intact. Severance at one month per year of service, 84 days of paid maternity leave covered by IGSS, the 13th-month bonus (aguinaldo) paid across three installments in April, August, and December, and the 44-hour standard workweek all apply exactly as they did before 2023. There is no severance fund equivalent to Brazil's FGTS. Employers carry the full severance liability directly.
What to watch
The government has signaled interest in reviewing paternity leave entitlements, which currently sit at one unpaid day. No bill has passed. If you are building a benefits package to attract candidates, offering supplemental paternity leave voluntarily is low-cost and increasingly expected by professionals in Guatemala City and Quetzaltenango.
Work-permit processing times have also lengthened slightly at the Ministry of Labor. Plan for 30 to 45 days for new foreign-national hires rather than the 15 to 20 days sometimes quoted in older guides.
Frequently asked questions
- Do I need a local entity to hire someone in Guatemala?
- No. Through an employer of record, you can hire in Guatemala without setting up a local company. Employ Latam acts as the legal employer, handles the contract, payroll, and statutory contributions, and keeps you compliant with the Labor Code from day one.
- What is the most common employment contract in Guatemala?
- The indefinite-term contract is the standard structure for ongoing roles in Guatemala. It has no fixed end date and includes a two-month trial period during which either party can exit without cause. Fixed-term and task-based contracts are legally valid but must reflect a genuine temporary need; otherwise, Guatemalan labor courts will reclassify them as indefinite.
- What is the total employer cost on top of gross salary in Guatemala?
- The main recurring employer cost above gross salary is the IGSS contribution at 12.67%. Add to that the aguinaldo, which works out to approximately 8.33% of annual salary when annualized. There is no ongoing severance fund contribution in Guatemala, unlike countries such as Brazil or Colombia, though a lump-sum severance payment applies if you terminate an employee without cause.
- How long is paid maternity leave in Guatemala?
- Mothers are entitled to 84 days of paid maternity leave, typically split as 30 days before the expected birth date and 54 days after. Payment comes from IGSS, not directly from the employer, provided the employee is properly enrolled. Paternity leave under the Labor Code is currently just one unpaid day, which is notably limited compared to other countries in the region.
- 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.
- What are the most recent labor law changes in Guatemala that affect payroll?
- The main change in the past two years is the minimum wage adjustment that took effect in January 2024, bringing the floor to GTQ 3,347 per month for most sectors and GTQ 3,973 for the export and maquila sector. The IGSS employer contribution rate stayed at 12.67%, and the core Labor Code provisions on severance, leave, and the aguinaldo bonus remain unchanged. No structural reforms to the Labor Code passed in 2023 or 2024, so employers who are already compliant do not need to restructure their arrangements.
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