Employer of Record in Uruguay: how to hire compliantly without an entity.
Employ Latam is an employer of record in Uruguay. 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
- Uruguay
- ISO code
- UY
- Region
- South America
- Phone code
- +598
- Employ Latam coverage
- Full EOR + contractor payments
Last updated July 2026
Overview
Uruguay is one of the more stable places to hire in Latin America, with clear labor rules and a payroll structure that's predictable once you know the moving parts. Employers pay into the social security system on top of gross salary, and employees see their own contributions deducted at source, so net pay and total employer cost are two different numbers you need to plan for separately.
The 13th-month salary (aguinaldo) is mandatory and typically paid in two installments during the year. Annual leave is generous relative to some neighboring countries, and overtime is expensive: hours worked beyond the standard schedule carry a 100% premium over the regular rate, so managing hours matters for cost control. Severance for terminations without cause is calculated by tenure and can run substantial for longer-serving employees.
Employ Latam handles the local contract, statutory contributions, and payroll runs in local currency, so you don't need a legal entity in Uruguay to bring someone onto your team.
Country at a glance
| Category | Detail |
|---|---|
| Currency | Uruguayan peso (UYU) |
| Working week | Standard schedule set by law and collective agreements; varies by sector |
| Standard workday | Varies by sector and collective agreement |
| Probation period | Varies by contract terms; commonly used but not fixed by a single statutory figure |
| Notice period | No statutory minimum notice period required |
| 13th-month salary | Mandatory (aguinaldo), paid in installments |
| Payroll cycle | Monthly |
Key statutory figures:
| Item | Figure |
|---|---|
| Monthly minimum wage | 24,572 UYU |
| Statutory annual leave | 20 working days |
| Maternity leave | 14 weeks |
| Paternity leave | 2.4 weeks |
| Public holidays | 5 days |
| Retirement age | 60 years |
| Typical severance (without cause) | 17.3 weeks |
| Overtime premium | 100% over regular rate |
| Employee social contributions | 19.5% (health 4.5%, old age/invalidity/survivors 15%) |
| Employer social contributions | 12.5% (health 5%, old age/invalidity/survivors 7.5%) |
| Corporate tax rate | 25% |
| Top personal income tax rate | 36% |
| VAT rate | 22% |
Employment contracts and worker types
Uruguay's Labour Code presumes every employment relationship is indefinite unless you explicitly document otherwise. That default protects workers and creates real risk for companies that rely on informal arrangements or misclassified contractors.
Contract types at a glance
| Contract type | Typical use | Max duration | Probation allowed |
|---|---|---|---|
| Indefinite | Standard ongoing hire | No limit | Up to 90 days |
| Fixed-term | Time-bound project or specific task | Generally up to 1 year; renewing converts it to indefinite | Up to 90 days |
| Part-time | Reduced-hours role | No limit | Up to 90 days |
| Seasonal | Recurring work tied to a season (agriculture, tourism) | Duration of the season | Up to 90 days |
| Internship | Young workers combining training with work under Youth Employment Law | Set by program terms | Not applicable |
What goes in the contract
Verbal agreements are technically valid in Uruguay, but written contracts are strongly recommended and operationally necessary. A compliant contract must state:
- Job title and duties
- Gross salary and currency
- Working hours and location
- Probation period, if used (maximum 90 days; termination during probation carries no severance obligation)
- Applicable wage council (consejo de salarios) agreement for the sector
Sector wage councils set minimum pay and conditions by industry. Those council agreements take precedence over individual contract terms, so the contract must sit at or above those floors.
Registration before day one
Before the worker starts, the employer must register them with the Banco de Previsión Social (BPS). There is no grace period. Late registration creates back-contribution liability and can expose the company to MTSS inspection.
Contractor vs. employee
Uruguay does not have a formal freelancer or gig classification equivalent to some other LATAM markets. If the work looks like employment (fixed hours, supervision, integration into the business), authorities will treat it as employment. Misclassified contractors can claim full employment rights retroactively, including severance and unpaid social security contributions. If the person is doing ongoing work for your company, an employment contract is almost always the right structure.
Fixed-term contracts: the renewal trap
A fixed-term contract that is renewed or extended without a genuine new justification converts automatically to an indefinite contract under Uruguayan law. If you need the person long-term, start with an indefinite contract. Using fixed-term contracts to avoid severance obligations is a known audit trigger.
How Employ Latam handles this
We issue a locally compliant employment contract matched to the correct contract type for your hire. Statutory contributions are handled, BPS registration runs before the start date, and payroll runs in Uruguayan pesos. Onboarding is live in 72 hours. You focus on the work.
Pricing starts from $349 per employee per month, varying by country and team size.
Hiring a contractor in Uruguay
Many teams start with a contractor in Uruguay 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 Uruguay 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 Uruguay 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 Uruguay runs monthly, in Uruguayan pesos, and includes a mandatory 13th-month salary (aguinaldo) paid in two installments, typically in June and December. Employers withhold employee social contributions and income tax at source, then remit both the withheld amounts and their own employer contributions to the Banco de Previsión Social (BPS).
The minimum wage is set at 24,572 UYU per month as of 2026. Most professional roles are paid well above this floor, and salary bands are often shaped by sector-specific collective bargaining agreements (Consejos de Salarios), which can set higher minimums or additional benefits by industry.
Employee income tax (IRPF) is progressive, with a top marginal rate of 36%. Employer corporate tax sits at 25%, and VAT is 22%, though neither of these applies directly to payroll calculations for an individual employee.
Employer and employee contributions
| Contribution | Employer rate | Employee rate |
|---|---|---|
| Old age, invalidity, survivors (pension) | 7.5% | 15% |
| Health / long-term care | 5% | 4.5% |
| Total social contributions | 12.5% | 19.5% |
Pension contributions are calculated up to a monthly ceiling of 288,826 UYU; earnings above this cap are not subject to the pension contribution rate. Health and long-term care contributions apply on top of these amounts and fund Uruguay's national health insurance system (FONASA).
Other payroll considerations
- Aguinaldo (13th-month salary): mandatory, calculated as one-twelfth of total annual salary, paid in two installments.
- Overtime: paid at a 100% premium over the regular hourly rate.
- Annual leave: 20 working days statutory minimum, accruing with tenure.
- Public holidays: 5 statutory holidays per year.
- Maternity leave: 14 weeks, paid through social security.
- Paternity leave: 2.4 weeks.
- Retirement age: 60 years, relevant for pension contribution planning and end-of-career transitions.
Severance for termination without cause is calculated based on tenure, averaging around 17.3 weeks of pay, and notice periods are not fixed by statute in the same way, most terminations proceed without a mandated advance notice window.
Employ Latam calculates gross-to-net pay, files BPS contributions, and issues the aguinaldo installments on schedule, so payroll stays compliant without you tracking each rate change.
Mandatory benefits, vacation, and parental leave
Uruguay's labor code sets clear minimums for leave, contributions, and end-of-employment payments. Employ Latam builds every contract around these rules so the employee gets a locally compliant agreement and the employer's statutory contributions are handled correctly from day one.
Leave entitlements
| Leave type | Entitlement | Paid by |
|---|---|---|
| Annual leave | 20 working days per year | Employer |
| Sick leave | Varies by tenure and medical certification | Social security (BPS), after qualifying period |
| Maternity leave | 14 weeks | Social security (BPS) |
| Paternity leave | 2.4 weeks | Social security (BPS) |
| Public holidays | 5 days | Employer |
Salary and contributions
Employees in Uruguay receive a mandatory 13th-month salary (aguinaldo), paid in two installments across the year. The monthly minimum wage is set at 24,572 UYU as of 2026.
Both employer and employee contribute to social security:
- Employer contributions: 12.5% total (7.5% old age, invalidity, and survivors; 5% health and long-term care)
- Employee contributions: 19.5% total (15% old age, invalidity, and survivors; 4.5% health and long-term care)
- Old age, invalidity, and survivors contributions are capped at 288,826 UYU per month
Overtime is paid at a 100% premium over the regular hourly rate.
Termination and severance
Uruguay does not require a statutory notice period for standard dismissals without cause. Severance, however, is due and typically runs around 17.3 weeks of pay for employees without cause, though the exact amount depends on tenure and salary history. Employ Latam calculates the applicable severance for each employee before termination so employers aren't caught off guard by the final payout.
Retirement
The statutory retirement age in Uruguay is 60 years, tied to the country's social security system (BPS). Employer and employee contributions toward old age, invalidity, and survivors coverage accrue throughout employment and feed into this system.
What this means for hiring
- Build 13th-month salary and the 20-day vacation entitlement into your total cost of employment from the start.
- Maternity and paternity leave are funded through social security, not directly by the employer, but the employer must coordinate the leave and keep the position protected.
- Severance without cause is a real, non-trivial cost; factor it into any termination decision.
- Employ Latam handles the contribution filings, contract terms, and leave tracking so you don't need a payroll team in Montevideo to stay compliant.
Severance, termination, and notice periods
Uruguay uses a straightforward indemnity model for indefinite-term contracts. When you terminate without cause, you owe notice (or pay in lieu) plus a severance calculation based on tenure. Get either wrong and the Ministry of Labour and Social Security (MTSS) can pursue the difference.
Notice periods and severance at a glance
| Tenure | Notice period | Severance owed (without cause) |
|---|---|---|
| Under 1 year | 15 days | 1 month's salary (minimum) |
| 1 to 3 years | 30 days | 1 month per year of service |
| 3 to 5 years | 45 days | 1 month per year of service |
| 5 to 10 years | 60 days | 1 month per year of service, capped at 6 months |
| Over 10 years | Up to 6 months | Capped at 6 months' salary |
Notice can be worked or paid out. Most employers pay in lieu and end the employment immediately.
What gets added on top
Severance is not the only cost. At termination you also owe proportional amounts for any accrued but unpaid:
- Aguinaldo (13th-month pay, calculated on the portion of the year worked)
- Vacation bonus (one month's salary, proportional)
- Unused annual leave (20 working days per full year, prorated)
Run these calculations before you make a termination offer. Underpaying any of them creates a liability.
Termination with just cause
Uruguay's Labour Code allows immediate termination without notice or severance when the employee commits a serious fault: theft, repeated insubordination, or conduct that materially harms the business. The burden of proof sits with the employer. Document the incident thoroughly and keep records. Wrongly classified just-cause terminations are treated as without-cause dismissals, and the employee can claim full indemnity through MTSS.
Fixed-term and probationary contracts
Fixed-term contracts end automatically at the agreed date. No severance is owed if the contract was genuinely time-bound and not renewed repeatedly. Renewing a fixed-term contract without a legitimate project reason risks automatic conversion to indefinite status.
Probationary periods run up to 90 days. Terminating during probation carries no indemnity obligation. Once probation ends and the employee moves to indefinite status, the full severance rules apply from day one of employment, not from the end of probation.
How Employ Latam handles this
We run the termination math, prepare the locally compliant documentation, and process final payroll in Uruguayan pesos. You decide to end the employment; we handle the mechanics. Pricing starts from $349 per employee per month.
Recent regulatory changes
Uruguay's labor framework is stable compared to many LATAM markets, but 2024 to 2026 brought incremental updates to wages, contribution ceilings, and leave entitlements that employers need to track. None of these changes require a local entity to manage, but they do change payroll math and onboarding paperwork.
| Date | Change | Impact on employers |
|---|---|---|
| Jan 2024 | Employee and employer social contribution rates confirmed at 19.5% and 12.5% respectively, itemized between health/long-term care and old-age/invalidity/survivors funds | Payroll calculations must split contributions by fund, not just apply a flat rate |
| Mid 2024 | BPS (Banco de Previsión Social) contribution ceiling adjustments applied to old-age/invalidity/survivors contributions | Employers with higher-earning staff must recheck whether salary exceeds the monthly contribution ceiling before calculating employer-side costs |
| Jan 2026 | Monthly minimum wage set at 24,572 UYU | Base salary floors in offer letters and contracts must reflect the updated figure |
| Jan 2026 | Contribution ceiling for old-age/invalidity/survivors set at 288,826 UYU per month | Affects total employer cost for higher-salary hires; contributions above this ceiling are not owed |
| 2026 | 13th-month salary (aguinaldo) reconfirmed as mandatory | Employers must budget for the mid-year and year-end aguinaldo installments in total compensation planning |
| 2026 | Maternity leave confirmed at 14 weeks, paternity leave at 2.4 weeks | Leave policies and payroll continuity plans must reflect current entitlements |
| 2026 | Corporate tax rate held at 25%, top personal income tax rate at 36%, VAT at 22% | No shift in employer tax exposure, but useful for cost modeling alongside payroll |
None of these changes altered notice period norms (still effectively 0 weeks as a statutory minimum, though contracts commonly specify longer) or severance formulas (17.3 weeks typical for termination without cause), which remain the reference points for offboarding budgets.
What this means for hiring
- Minimum wage and contribution ceiling updates apply automatically when Employ Latam runs payroll. You don't need to track BPS bulletins yourself.
- Aguinaldo and leave entitlements are built into contract templates from day one, so there's no retroactive scramble when a legal update lands mid-year.
- Overtime at 100% over the regular rate is unchanged, but it's worth flagging in offer letters for roles with variable hours.
We help you hire, you focus on the work. Employ Latam tracks BPS and MTSS (Ministerio de Trabajo y Seguridad Social) updates internally and adjusts contracts and payroll runs as changes take effect, so your team in Uruguay stays compliant without added overhead on your end.
Frequently asked questions
- How much does it cost to employ someone in Uruguay beyond their salary?
- Budget for employer social contributions of 12.5% on top of gross salary, plus the mandatory 13th-month salary spread across the year. Severance for terminations without cause adds further cost depending on tenure, averaging around 17.3 weeks of pay. Employ Latam factors all of this into a single predictable monthly invoice, so you see the full cost of employment upfront.
- What is the most common employment contract in Uruguay?
- The indefinite-term contract is the default and by far the most common structure. Uruguay's Labour Code presumes indefinite employment unless a fixed-term or project basis is clearly documented and justified. For most ongoing hires, starting with an indefinite contract is both legally safer and operationally simpler than trying to structure around fixed terms.
- What is the total employer cost on top of gross salary in Uruguay?
- Employers pay 12.5% in social contributions on top of gross salary, covering pension (7.5%) and health/long-term care (5%), up to the monthly pension contribution ceiling of 288,826 UYU. Beyond statutory contributions, budget for the 13th-month aguinaldo, which effectively adds another month of salary spread across the year. Total employer cost typically runs 15 to 20% above gross salary once aguinaldo accrual is included.
- How much is severance pay in Uruguay if an employee is let go without cause?
- Severance without cause in Uruguay typically runs around 17.3 weeks of salary, though the exact figure depends on the employee's tenure and pay history. There is no statutory notice period required beforehand. Employ Latam calculates the correct severance amount for each termination case and manages the payout as part of the offboarding process.
- How much severance is owed for terminating an employee without cause in Uruguay?
- The base calculation is one month's salary per year of service, with a minimum of one month and a cap of six months. On top of that, you owe proportional aguinaldo, vacation bonus, and any unused leave accrued up to the termination date. Uruguay sets no statutory notice period, so no notice payment is owed by law.
- What are the most recent labor law changes in Uruguay?
- The most notable recent updates are the January 2026 minimum wage increase to 24,572 UYU per month and the adjustment to the BPS contribution ceiling, now set at 288,826 UYU per month for old-age, invalidity, and survivors contributions. Social contribution rates (19.5% employee, 12.5% employer) and core leave entitlements, including 14 weeks of maternity leave and 2.4 weeks of paternity leave, remain stable through 2026. Employers should recheck salary bands against the new wage floor and ceiling when budgeting for Uruguay hires.
We handle the contract, payroll, taxes, and benefits in Uruguay so you can hire that person this month.
Statutory figures for Uruguay, 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 Uruguay
Checked against official sources on .
No rule changes recorded since we began logging them.
What a hire in Uruguay costs
Employers in Uruguay pay statutory contributions of 12.5% on top of gross salary. At the average monthly wage of UYU 47,939, that adds UYU 5,992 a month.
| Salary | Gross per month | Employer contributions | Total per month | Total per year |
|---|---|---|---|---|
| Minimum wage | UYU 24,572 | UYU 3,072 | UYU 27,644 | UYU 331,722 |
| Average monthly wage | UYU 47,939 | UYU 5,992 | UYU 53,931 | UYU 647,175 |
Employer contribution rate: ISSA Country Profiles, as of Jan 2024
Minimum wage: National government, as of Sept 2026
Average monthly wage: ILOSTAT, as of Jan 2024
Amounts in UYU. Totals per year are twelve monthly salaries plus contributions.
What the contributions pay for
- Pension, invalidity and survivors7.5%
- Health and long-term care5%
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 Uruguay? 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 Uruguay hires can start within 1 to 3 business days once docs are in.
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