To effectively expand your workforce to Honduras, discover which benefits are mandatory and how extra perks attract local talent. 

International businesses are attracted to Honduras for its ease of access to the U.S., abundant natural resources, and investment opportunities. Honduras offers tax exemptions in certain regions and low tariffs due to the Dominican Republic-Central American Free Trade Agreement (CAFTA-DR). 

Honduras’s appeal lies in its services sector, along with agriculture, mining, and manufacturing. According to the Statista report on Honduras’s economic sectors and GDP, the services sector, consisting of finance and tourism, contributed 57.37% to GDP. The Central American country’s GDP was $34.4 billion in 2023 and, as per the World Bank, is projected to grow between 3.5% and 4.5% into 2026. 

If you’re interested in doing business in Honduras, the next step is to hire a competent workforce. Honduras offers skilled and bilingual employees with competitive labor costs, lowering operational expenses for many businesses. 

This guide can help foreign employers with professional expansion in Honduras by examining the relevant labor laws. Following the Honduras labor law, your workforce must receive mandatory benefits such as specific working hours, annual leave, and severance pay. It is important to adhere to the employment legislation to attract Honduras’s top talent while protecting your business against legal penalties. 

Furthermore, discover how the services of an Employer of Record (EOR) in Honduras can support compliance and efficient expansion. 

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Honduras Employment Laws

The Honduran Labor Code (Código del Trabajo) covers various employment laws, such as the notice periods for contract termination, fair dismissals, workday hours, maternity leave, and minimum wages. 

To effectively hire a workforce, employers are encouraged to consider the following labor acts and social security regulations: 

Social Security Regulations

The social security scheme in Honduras is overseen by the Honduran Social Security Institute (Instituto Hondureño de Seguridad Social, IHSS). This program provides pension contributions and benefits for teachers, military personnel, and public sector employees. 

The contributions include sickness, maternity, death, disability, and old age benefits. Honduras has a Social Housing Fund that employees contribute to at a rate of 1.5% of their gross income. 

Minimum Wage

The minimum wage in Honduras was updated by the Executive Agreement in January 2025. Minimum wages in the country depend on the company’s number of workers and economic activity. For example, companies in the mining sector with 50 employees must pay their workforce a monthly minimum wage of 12,368.68 Honduran Lempiras (HNL).

13th Month Pay

Honduran employees are entitled to 13th and 14th month pay. The 13th month’s pay is issued in December, and the 14th month’s pay is in July. 

How Legal Counsel Can Keep You Compliant

Client companies can guarantee compliance and prevent fines for breaking the Honduras labor law by seeking legal counsel. Professionals experienced in the Labor Code will keep you aligned with pertinent employment regulations and updated on labor reforms. 

Whether you’re a small business or a large company, hiring the services of an EOR in Honduras provides a simple yet effective solution. A Honduran EOR handles payroll, tax withholding, onboarding, and offboarding, but they also assume liability as the legal employer of your workforce. This allows you to hire employees and operate in Honduras without establishing a legal entity. Ultimately, an EOR protects your business from issues of non-compliance. 

Mandatory Employee Benefits in Honduras 

An important part of operating a business and hiring a workforce in Honduras is providing mandatory employee benefits. These provisions range from overtime pay and social security contributions to issuing severance when terminating an employment contract.

A closer look at the statutory employee benefits in Honduras can help you present a compliant contract to attract and retain potential employees. 

Social Security Contributions

The social security tax for Honduran employees is 2.5% for sickness and maternity with an income of HNL 11,109.36. For employees with a ceiling wage of HNL 11,336.00, a 1% contribution is paid toward death, old age, and invalidity benefits.

Employers must make INFOP contributions of 1% that are not required by employees.

Annual Paid Leave

Honduran employees are paid annual leave if they have completed one year of service with the same employer. Annual leave is based on an employee’s length of service. Workers who have completed one year of service receive 10 days of paid leave, whereas employees who have worked for three years receive 15 days of paid leave. 

Working Hours

Based on the Honduras labor laws, employees work for eight hours per day and a total of 44 hours per week. Night shifts are set at 36 hours every week.

Overtime Pay

Work outside of the standard hours is considered overtime and is paid at a rate of 25% of the regular wage for daytime and 50% of the standard wage for overtime at night. For employees who work overtime on nighttime shifts, they are entitled to an overtime rate of 75% of their standard monthly wages. 

Employees receive 11 days of public holiday leave. Several Honduran public holidays include:

  • January 1, 2025: New Year’s Day
  • March 10, 2025: Public Sector Holiday
  • April 17, 2025: Maundy Thursday
  • April 18, 2025: Good Friday
  • May 1, 2025: Labor Day
  • September 15, 2025: Independence Day
  • October 1-3, 2025: Semana Morazánica
  • December 25, 2025: Christmas Day

Employees in Honduras receive 26 weeks of sick leave under the labor code. After three days of observation, employees can extend this leave to 52 weeks. They will be paid 66% of their salary funded by the employer and the Honduran Social Security Institute (IHSS). 

Maternity Leave

Female employees receive 10 weeks of maternity leave upon presenting proof of pregnancy by a medical certificate. Employees can take four weeks before the due date and six weeks after childbirth. Women receive their standard salary for this period, with 66% funded by the IHSS and 34% by the employer. 

Paternity Leave

The Honduran Labor Code does not make provision for paternity leave.

Severance Pay

If an employee is terminated without “just cause” in Honduras, severance pay must be issued by the employer. The amount of severance depends on the employee’s length of service. If an employee has worked for six months, they receive 10 days of pay. Employees who have completed more than one year of work are paid one month’s salary for each year of service.

Supplementary Employee Benefits in Barbados

Supplementary employee benefits, or “perks,” are benefits that are not required by law but employers are encouraged to offer to attract top talent. In addition to helping businesses find the best possible workforce, the extra or non-mandatory employee benefits in Honduras support employee retention and workplace satisfaction.

To help you recruit and retain employees, a few of these optional perks are discussed below: 

  • Private Health Insurance: Many Honduran employers offer their workforce additional private medical insurance to supplement the coverage they receive through the public healthcare system. Private insurance can reduce waiting periods, include dental care, and provide access to specialist treatment. 
  • Additional Leave: Annual leave and maternity leave are statutory benefits; however, employers can provide attractive extras such as extending annual and maternity leave and providing male employees with paternity leave. 
  • Flexible Working Hours: Offering your workforce time off or the option to work from home to support better work-life balance. 

Optimize Employee Benefits with Remote People

Honduras has a growing economy with foreign direct investment inflows of just over $1 billion in 2023 alone. The Central American country is favored for international business expansion because it offers attractive investment sectors and a large pool of talented employees to choose from. 

Establishing your business and hiring a professional workforce in Honduras means relying on the local labor laws to guide you through the employment relationship. This includes the addition of mandatory employee benefits and optional perks to attract the best employees with sought-after skills. 

The simplest and most efficient way to expand your business is with the expertise of a Honduran EOR. An EOR will maintain compliance with the Honduran Labor Code and assist in drafting a legal employment contract with the stipulated benefits. 

Fortunately, the EOR services by Remote People assist with payroll, compliance, and benefits solutions in Honduras. Remote People works with you to optimize employee benefits, ensuring that compliance matters are addressed. They ensure that employees are provided statutory and non-mandatory benefits to appeal to the best talent while helping you build a competitive workforce. 

Reach out to Remote People today to learn about their EOR services and how they can make hiring and expansion in Honduras more efficient, compliant, and cost-effective.