Employer of Record (EOR) in Honduras

Employment Laws and Regulations in Honduras

Employment Contracts

The Código del Trabajo (Decree 189-59) governs all employment relationships in Honduras. The Secretaría de Trabajo y Seguridad Social (STSS) is the primary regulatory authority (Honduras Labour Code). Written employment contracts are mandatory for all employment relationships except domestic work, seasonal jobs lasting fewer than 60 days, or work valued under HNL 200.

Contracts must be executed in triplicate: one copy for the employer, one for the employee, and one filed with the Ministry of Labor. The contract must include the employee’s name and nationality, job description, compensation and payment frequency, working hours and schedule, start date, and the location of work (Chambers and Partners).

Honduras permits three contract types: indefinite-term contracts (favored by law), fixed-term contracts (maximum 1 year, or up to 5 years for roles requiring technical training), and project-based contracts. Hourly employment contracts were repealed in April 2022. All contracts must be in Spanish, though bilingual versions are permitted.

Working Hours and Overtime

The Código del Trabajo establishes different working hour limits depending on the shift type. A standard daytime shift (6:00 AM to 6:00 PM) allows a maximum of 8 hours per day and 44 hours per week. Night shifts (7:00 PM to 5:00 AM) are limited to 6 hours per day and 36 hours per week.

Mixed shifts that span both day and night hours allow 7 hours per day and 42 hours per week (Legal 500).

Employees are entitled to a minimum 30-minute meal and rest break during each workday, which does not count as working time. A mandatory paid rest day must follow every 6 consecutive workdays, typically on Sunday. Overtime is capped at a maximum of 9 extra hours per week.

The following table summarizes the overtime and premium pay rates established by the Código del Trabajo. Employers must compensate work beyond the standard shift limits at the applicable multiplier, and public holiday work commands the highest premium at double the ordinary wage.

Managerial and supervisory staff may be exempt from overtime limits under certain conditions. Overtime interacts with the 13th and 14th month salary calculations only if overtime pay is included in the base salary definition specified in the employment contract.

Minimum Wage

Honduras operates a tiered minimum wage system that varies by economic sector and company size. Rates are set by a tripartite commission composed of government, employer, and worker representatives. The most recent adjustment took effect on January 1, 2025, with increases ranging from 5.5% to 7.5% depending on sector (WageIndicator).

Monthly minimum wages range from approximately HNL 9,053 for agriculture and forestry to HNL 18,036 for financial services and real estate. Maquiladora and free-zone companies received a separate 7.5% adjustment, bringing their minimum to approximately HNL 12,930 per month.

Probation Period

The Código del Trabajo allows a maximum probation period of 60 days for standard employees. The probation must be stipulated in writing in the employment contract to be valid. During probation, either party may terminate the relationship with only 24 hours’ notice and no severance obligation (Chambers and Partners).

A proposed reduction from 60 to 45 days is under Congressional review as of April 2026 but has not yet taken effect. Domestic workers have a shorter probation ceiling of 15 days.

Leave Entitlements

The Código del Trabajo sets out mandatory leave entitlements that cover annual vacation, sick leave, maternity and paternity leave, and several types of special leave. These apply to employees on indefinite-term, fixed-term, and project-based contracts alike.

Annual Leave

Employees earn paid annual leave based on their length of continuous service with the same employer. After completing 1 year of service, the entitlement is 10 working days. This increases to 12 days after 2 years, 15 days after 3 years, and 20 days after 4 or more years of service (Honduras Labour Code).

Leave must be taken within 3 months of the anniversary date. Vacation pay is calculated on the average ordinary salary from the preceding 6 months. Carryover is generally not permitted, though exceptions exist when the nature of the work prevents extended absence, allowing accumulation for up to 2 years.

Sick Leave

Employees are entitled to up to 26 weeks of sick leave, extendable to 52 weeks in cases of serious illness. A medical certificate from an IHSS-affiliated physician is required to activate the benefit.

The employer pays 100% of salary for the first 3 days of absence. From the fourth day onward, the IHSS covers 66% of the employee’s salary, and the employer typically supplements the remaining 34% to maintain full pay, depending on the collective or individual agreement in place.

Maternity Leave

Female employees are entitled to 10 weeks (70 calendar days) of paid maternity leave: 5 weeks before the expected delivery date and 5 weeks after childbirth. The employee receives 100% of salary during the leave period, funded by a combination of IHSS (66%) and the employer (34%) (Consortium Legal).

Job protection is guaranteed throughout the maternity leave period. Dismissal of a pregnant employee is prohibited except for documented just cause unrelated to the pregnancy. A medical certificate confirming the pregnancy and expected delivery date must be submitted to activate the leave.

Paternity Leave

Under recent legislative reforms, Honduras now provides one of Central America’s most generous private-sector paternity leave entitlements. Fathers are entitled to 6 working days before childbirth and 10 working days after childbirth, all at full pay. The leave must be requested at least 14 weeks in advance (BDS Asesores).

Other Statutory Leave

The Código del Trabajo provides additional paid leave entitlements beyond annual vacation, sick leave, and parental leave.

• Bereavement leave: 3 consecutive paid days following the death of an immediate family member.
• Marriage leave: 5 consecutive paid days following the employee’s marriage.
• Union duties: Up to 6 paid days per year for employees performing authorized union activities.
• Judicial summons: A half-day of paid leave to attend court proceedings when legally summoned.

Under the Código del Trabajo, Honduras requires employers to provide the full range of leave entitlements summarized in the table below. Annual leave accrues from the first year of service, and all leave types apply regardless of whether the employee is on a fixed-term or indefinite contract.

Statutory Employee Benefits

Honduran law requires employers to provide several mandatory benefits on top of leave entitlements and social security contributions. These directly affect total compensation costs.

• Health insurance (IHSS): Both employers and employees contribute to the IHSS, which covers health services, maternity care, disability benefits, and old-age pensions. The employer portion (8.5%) is significantly higher than the employee share (5.0%). Coverage is capped at a monthly salary ceiling of HNL 11,903.
• Pension contributions (IHSS IVM + RAP): The IHSS Invalidez, Vejez y Muerte (IVM) regime provides the public pension. The RAP (Régimen de Aportaciones Privadas) supplements this as a mandatory private pension for companies with 10 or more employees, with both employer and employee contributing 1.5% each up to a HNL 9,382 monthly ceiling.
• Vocational training (INFOP): Employers contribute 1.0% of total payroll to the Instituto Nacional de Formación Profesional, which funds vocational training programs. This is an employer-only obligation with no salary ceiling.
• Professional risk insurance: Employers carry professional risk insurance at rates between 0.2% and 3.4% depending on the industry risk classification. This covers workplace accidents and occupational diseases. Only the employer contributes.
• 13th and 14th month salary: Both the aguinaldo (December) and decimocuarto mes (June) are mandatory annual bonuses equivalent to one month’s salary each. These add 16.67% to annual compensation costs. See H3 4.5 for full details.

Honduras does not mandate meal allowances, transportation subsidies, or housing fund contributions. These are available only if specified in the employment contract or a collective bargaining agreement.

Recent Regulatory Updates (2026)

Several employment law changes took effect in 2025 and 2026 that directly affect employer obligations and payroll calculations in Honduras.

The most notable reform is the Part-Time Employment Law, approved by the National Congress and published on March 30, 2026. This law defines part-time work as 18 to 32 hours per week in the private sector and guarantees part-time workers proportional access to all labor rights and social security benefits, including vacation, bonuses, and weekly rest (KPMG).

The 2025 minimum wage adjustment brought increases of 5.5% to 7.5% across all sectors, effective January 1, 2025. The IHSS contribution ceiling increased from HNL 11,336 to HNL 11,903 per month, directly affecting employer payroll calculations. The SAR also updated the 2026 progressive income tax table, raising the exempt threshold by 4.98% to HNL 228,324.32 annually, reflecting end-of-2025 inflation (SAR Honduras).

A proposal to reduce the probation period from 60 to 45 days remains under Congressional review as of April 2026 and has not yet been enacted into law.

Work Permits and Visas in Honduras

Work Permit Requirements

Who Needs a Work Permit

All foreign nationals intending to work in Honduras must obtain a work permit (Permiso de Trabajo) from the Secretaría de Trabajo y Seguridad Social, regardless of the nature or duration of the employment. Honduras is a member of the CA-4 agreement (Central America-4, along with Guatemala, El Salvador, and Nicaragua), which allows free movement for tourism and short business visits. CA-4 citizens can enter Honduras with a national ID card rather than a passport, but formal employment still requires a work permit (Instituto Nacional de Migración).

Honduras enforces a 90% Honduran workforce requirement, meaning that at least 90% of any company’s employees must be Honduran nationals. Foreign workers are limited to 10% of the total headcount.

Eligibility and Required Documents

To qualify for a standard work permit, the applicant must have a valid job offer from a Honduran employer (or an EOR acting as the legal employer). The following documents are typically required: a valid passport with at least 6 months’ remaining validity, the signed employment contract, a criminal background certificate from the home country, professional credentials and educational certificates, a medical fitness certificate, and proof of the employer’s legal registration in Honduras. All foreign documents must be apostilled and translated into Spanish by an authorized translator.

Processing Time and Validity

Standard work permit processing takes 60 to 90 days from submission of the complete application. The initial permit is typically valid for 1 to 5 years at the discretion of the issuing authority. Factors that cause delays include incomplete documentation, backlog at the Secretaría de Trabajo, and additional verification requirements for certain nationalities.

Renewal Process

Work permit renewals must be initiated before the current permit expires. The employee must submit updated documentation, including a current employment contract and proof of continued employment. Processing typically takes 4 to 6 weeks.

The employee may continue working during the renewal process as long as the application was filed before expiry.

Common Visa Types for Foreign Workers

Honduras offers several visa and permit categories for foreign workers, issued by the Instituto Nacional de Migración (INM) and the Secretaría de Trabajo y Seguridad Social. The EOR can sponsor standard work permits directly. Investor and pensioner visas are filed individually through the INM.

Honduras does not currently offer a dedicated digital nomad visa. Remote workers typically enter on a tourist visa (90-day stay) or apply for a temporary residence permit. The following visa types do not authorize employment in Honduras.

• Tourist visa: Allows a 90-day stay for tourism and short business meetings. Does not permit paid employment from a Honduran source.
• Student visa: For enrolled students at Honduran educational institutions. Does not permit employment.
• Transit visa: For passing through Honduras en route to another destination. Does not permit employment.

How an EOR Handles Work Permits

An EOR in Honduras acts as the legal employer and can sponsor work permit applications through the Secretaría de Trabajo y Seguridad Social on behalf of the foreign employee. The EOR prepares and files the application, manages document authentication and translation, and ensures the employer meets the 90% Honduran workforce rule.

The employee is responsible for providing personal documents (passport, criminal record certificate, educational credentials) and completing any required medical examinations. The EOR handles the employer-side documentation, including the signed employment contract and proof of business registration.

Work permit processing adds 60 to 90 days to the standard onboarding timeline outlined in H3 1.4. For temporary residence applications, the timeline extends to 3 to 6 months. The EOR monitors permit expiration dates and initiates renewals before the current authorization lapses.

Payroll, Taxes, and Social Security in Honduras

Employer Contributions

Employers in Honduras contribute to four mandatory programs: IHSS (health and pension), INFOP (vocational training), RAP (private pension), and professional risk insurance. The total cost runs between 11.2% and 14.4% of gross salary, depending on the industry risk classification. Salary ceilings on the IHSS and RAP components cap the actual cost for higher-paid employees.

Employee Contributions

Employees in Honduras contribute to the IHSS and RAP, with income tax (ISR) withheld separately. The total employee social security burden is 6.5% of gross salary before income tax, with the same salary ceilings as the employer side for IHSS and RAP.

Income Tax

Honduras applies a progressive income tax (Impuesto Sobre la Renta, ISR) to individual employment income. The SAR (Servicio de Administración de Rentas) updated the 2026 progressive table by applying a 4.98% inflation adjustment to all thresholds, effective from the first salary payment in January 2026. Individuals earning up to HNL 228,324.32 annually (approximately HNL 19,027 monthly) are exempt from income tax (SAR Honduras).

The net taxable income calculation allows a deduction of HNL 40,000 annually for medical expenses, in addition to IHSS and RAP contributions. Employers are responsible for withholding the correct ISR amount from each monthly salary payment and remitting it to the SAR.

Payroll Cycle

Most employers in Honduras process payroll on a monthly basis, with salary payments due by the last business day of each month. Some industries, particularly maquiladoras and agriculture, use biweekly (quincenal) pay cycles. Payments must be made via bank transfer to the employee’s Honduran bank account; cash payments are restricted and discouraged under current labor regulations.

Employers must provide employees with a detailed pay slip (colilla de pago) showing gross salary, all deductions (IHSS, RAP, ISR), and net pay. Social security contributions (IHSS and RAP) must be remitted to the respective institutions within 10 business days of the payroll period. ISR withholdings are filed monthly with the SAR.

Annual employer declarations are due by April 30 of the following year.

13th Month Salary and Bonus Pay

Honduras mandates two annual bonus payments, and both are legally required with no room for negotiation.

The 13th month salary (aguinaldo) is equivalent to one month’s base salary and must be paid in December, typically between December 10 and 20. The aguinaldo is tax-exempt. For employees who have worked less than a full year, the payment is calculated pro-rata based on the number of months worked.

The 14th month salary (decimocuarto mes) is also equivalent to one month’s base salary and is paid in June. Like the aguinaldo, it is typically tax-exempt and prorated for employees who have not completed a full year of service. Together, the 13th and 14th month salaries add 16.67% to the annual compensation cost, effectively meaning employees in Honduras receive 14 months of pay per year.

Cost of Hiring Through an EOR in Honduras

EOR Service Fees

EOR services in Honduras typically run $300 to $600 per employee per month. That flat fee covers employment contracts, payroll processing, tax withholding, social security registration and contributions, benefits administration (including 13th and 14th month salary management), leave tracking, and compliance monitoring. The employee’s salary and employer-side social contributions are billed separately at cost.

Total Employment Cost Breakdown

The total cost of employing someone through an EOR in Honduras includes gross salary, mandatory employer contributions (capped at the IHSS and RAP ceilings), prorated mandatory bonuses, and the EOR service fee. The table below uses a USD 5,000 monthly gross salary. Because IHSS and RAP contributions hit their cap at relatively low salary levels, the effective social contribution rate drops for higher-paid employees.

Figures converted at 1 USD ≈ 25.25 HNL, April 2026.

At a USD 5,000 gross salary, the total monthly employer cost is approximately $6,479, or 29.6% above gross. A distinctive feature of Honduras’s system is that the low IHSS and RAP salary ceilings (HNL 11,903 and HNL 9,382 respectively) mean social contribution costs are capped at modest levels for higher-salary employees. The 13th and 14th month salary prorations represent the largest additional cost component at 16.7% combined.

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Benefits of Using an EOR in Honduras

For companies hiring in Honduras, an employer of record solves the practical problems of local compliance. The tiered minimum wage system, mandatory 13th and 14th month salary payments, and the 90% Honduran workforce rule all create obligations that are hard to manage from abroad.

• Speed to market: An EOR can onboard employees in Honduras within 1 to 2 weeks, compared to 2 to 4 months for entity incorporation. This allows companies to secure talent quickly without waiting for a Sociedad Anónima (S.A.) or S. de R.L. to be established.
• Compliance assurance: Honduras’s labor code includes specific requirements for contract format, language, probation terms, overtime caps, and the 90% Honduran workforce rule. An EOR manages all of these obligations, reducing the risk of penalties from the Secretaría de Trabajo.
• Cost efficiency: Setting up a local entity in Honduras involves legal fees, notary costs, commercial registry charges, and ongoing maintenance expenses. For teams of 1 to 15 employees, the EOR fee of $300 to $600 per month is typically less than the fixed costs of maintaining a subsidiary.
• Local expertise: Honduras’s tiered minimum wage schedule (varying by sector and company size), the IHSS contribution ceiling system, and the distinction between the IHSS and RAP pension structures require specialized local payroll knowledge. The EOR’s local team ensures accurate calculations and timely filings.
• Flexibility to scale: Companies can increase or decrease their Honduras headcount without the legal complexity of opening or closing a local entity. If a market test does not succeed, the EOR handles compliant offboarding and final settlements.
• Risk mitigation: The EOR assumes legal employer liability for compliance with Honduran labor law. Errors in severance calculations, social security filings, or tax withholding become the EOR’s responsibility rather than the client company’s.
• Employee experience: Employees hired through an EOR receive the same statutory protections as any Honduran employee: compliant contracts, full IHSS coverage, RAP pension contributions, 13th and 14th month bonuses, and all leave entitlements. This ensures a positive employment experience that supports retention.

Termination and Offboarding in Honduras

Notice Periods

The Código del Trabajo establishes mandatory notice periods that increase with the employee’s length of service. Notice must be given in writing and must specify the reason for termination. The employer may waive the notice period but must pay the equivalent salary in lieu of notice (Article 120, Honduras Labour Code).

Termination for just cause (despido justificado) does not require notice or severance. Mutual agreement terminations follow the terms agreed by both parties. Fixed-term contracts end automatically at the specified date without a notice obligation unless the contract stipulates otherwise.

Severance Pay

Severance pay (auxilio de cesantía) is mandatory when an employer terminates an employee without just cause (despido injustificado). The Código del Trabajo defines the severance formula based on the employee’s length of service, with a maximum cap of 25 months’ salary. Employees dismissed for just cause or those who voluntarily resign are not entitled to severance (Articles 120–127, Honduras Labour Code).

Calculation Method

Severance is calculated as one month’s salary for each year of continuous service, using the average monthly salary from the last 6 months of employment as the base. The base includes regular wages but may exclude bonuses depending on the terms of the employment contract. For partial years, the amount is prorated.

An alternative calculation method divides the monthly salary by 18 to determine the daily severance rate, then multiplies by the applicable number of days.

Caps and Exceptions

The maximum severance payment is capped at 25 months’ salary for standard employers and 15 months for micro-enterprises. Employees dismissed for just cause (despido justificado) receive no severance. Employees who voluntarily resign also forfeit severance rights, though they remain entitled to proportional vacation pay, prorated 13th and 14th month salary, and any accrued but unpaid benefits.

Fixed-term contracts that expire at the agreed date do not trigger severance obligations. If a fixed-term contract is terminated early without just cause, standard severance rules apply based on actual service time.

Grounds for Termination

The Código del Trabajo distinguishes between justified dismissal (despido justificado) and unjustified dismissal (despido injustificado). Just cause grounds include serious misconduct (theft, fraud, violence), repeated unjustified absences (2 consecutive days or 3 non-consecutive days in one month), intentional damage to company property, breach of confidentiality, and deception during hiring such as false qualifications (Chambers and Partners).

Unjustified dismissal triggers the full severance obligation, prorated 13th and 14th month payments, proportional vacation pay, and any other accrued benefits. The employer must provide written notice specifying the grounds and legal basis for termination.

Protected categories include pregnant employees (who cannot be dismissed during pregnancy or maternity leave except for documented just cause), union members and board members (union immunity), and employees with pending labor grievances. Dismissal of protected employees without following the required legal process can result in reinstatement orders and back-pay awards from labor courts.

EOR vs. Other Hiring Models in Honduras

EOR vs. Setting Up a Local Entity

Setting up a Sociedad Anónima (S.A.) or Sociedad de Responsabilidad Limitada (S. de R.L.) in Honduras means dealing with commercial registry fees, notarial costs, tax registration, and ongoing annual maintenance. The process typically takes 2 to 4 months and costs $5,000 to $15,000 upfront. An EOR skips all of that by being the ready-made legal employer.

For companies hiring fewer than 15 employees, the EOR model is almost always more cost-effective. The ongoing EOR fee for a 10-person team ($3,000 to $6,000/month) is comparable to the fixed costs of maintaining a Honduran subsidiary, while eliminating the legal exposure of direct employer liability.

The entity model becomes more attractive at 15+ employees, where the per-employee cost of maintaining the entity drops below the cumulative EOR fees. It is also required for companies bidding on Honduran government contracts or those needing to own local real estate or intellectual property directly.

EOR vs. Hiring Independent Contractors

Hiring contractors in Honduras carries real misclassification risk. Labor authorities look at the substance of the relationship, not the contract label. If the worker has fixed schedules, uses employer-provided tools, works exclusively for one company, or is integrated into operations, the arrangement can be reclassified as employment.

That means back-payment of all social security contributions, severance, 13th and 14th month bonuses, and fines.

Independent contractors are only appropriate when the worker genuinely controls their schedule, uses their own tools, serves multiple clients, and delivers project-based results without ongoing managerial oversight. For any long-term, full-time role, the EOR model is the safer and more compliant option.

Remote People also offers contractor management in Honduras for companies that need to engage genuine independent contractors with compliant service agreements, invoicing, and payment processing.

EOR vs. PEO (Professional Employer Organization)

Honduras has no dedicated PEO licensing or regulatory framework. PEO services operate under general employment law, with the PEO acting as a co-employer alongside the client company. The key difference from an EOR: a PEO requires you to already have your own legal entity in Honduras. An EOR does not.

Because Honduras lacks a formal PEO regulatory framework, co-employment arrangements carry additional legal ambiguity. The PEO model is most useful for companies that already operate a Honduran entity and want to outsource HR administration, payroll, and benefits management. For companies entering Honduras for the first time, the EOR model is the more practical choice.

Public Holidays in Honduras

Honduras observes 11 paid national holidays in 2026, including the three-day Semana Santa (Holy Week) and the October Semana Morazánica commemorative period. Employees who work on a public holiday are entitled to double their ordinary daily wage under the Código del Trabajo. Payroll teams should account for these holidays when planning monthly salary calculations and project timelines.

The three October holidays (October 3, 12, and 21) are traditionally grouped into the Semana Morazánica commemorative period. Public-sector employees typically receive the full week off, while private-sector observance varies by employer. Semana Santa (Holy Week) is a major observance that effectively shuts down most business activity from Thursday through Saturday.

How to Get Started with an EOR in Honduras

Getting started with an employer of record in Honduras takes about 1 to 2 weeks from agreement to first day. Here are the steps.

• First, define your hiring needs: Determine the role, compensation package, and start date for your Honduras employee. Research the applicable minimum wage tier for your sector and company size, and confirm whether the role requires a work permit for a foreign national.
• Second, select an EOR provider: Choose an EOR with direct operations in Honduras, local legal expertise, and experience managing the IHSS, RAP, and INFOP contribution systems. Verify that the provider can handle both the 13th and 14th month salary obligations and sector-specific payroll requirements. Review pricing and service scope.
• Third, sign the service agreement: Execute the EOR service agreement, provide employee details, and confirm the compensation structure including gross salary, benefits, and any supplemental allowances. The EOR drafts a compliant employment contract in Spanish under the Código del Trabajo.
• Fourth, employee registration and onboarding: The EOR registers the employee with the IHSS, RAP, INFOP, and SAR. Payroll is configured, bank account details are collected, and the employee receives orientation materials and equipment.
• Fifth, ongoing management: The EOR processes monthly payroll, withholds taxes and social contributions, manages leave accrual, pays the aguinaldo in December and decimocuarto mes in June, and handles any compliance changes such as minimum wage adjustments or tax table updates.

Ready to build your team in Honduras? Contact Remote People to get started. We handle employment contracts, payroll, tax compliance, social security, and full Honduras labor law compliance so you can focus on your business.

Where companies hiring in Honduras expand next

Teams hiring in Honduras frequently expand across Central America and nearby markets, leveraging nearshoring to the US and shared Spanish-language talent. Most teams start with operations in Guatemala — SICA-region proximity and shared Central American labor practices. El Salvador typically follows, with aligned SICA employment frameworks. Hiring in Costa Rica is a natural addition for SICA-wide workforce mobility, and an EOR partner in Panama completes the regional picture with shared Central American labor norms.