Uruguay, officially known as the Oriental Republic of Uruguay, is a country in South America that borders Argentina and Brazil. It has a workforce of 1.7 million people (2023), and a GDP of 77.24 billion US dollars (2023).

With a stable economy based on agriculture, construction, manufacturing, and tourism, Uruguay has low levels of poverty and equality. Employees in Uruguay are covered under the Ministry of Labor and Social Security, which dictates mandatory employee benefits in Uruguay.

In this help guide, we’ll provide a thorough explanation of Uruguayan labor law, with information on mandatory employee benefits such as working hours, maternity/paternity leave, sick pay, overtime hours, and annual paid leave. We’ll also offer advice on how Remote People can help hire employees in Uruguay and simplify Uruguay’s labor laws as a whole.

Uruguay Employment Laws

Employers must adhere to Uruguay Labor Code (Código de Trabajo) when hiring employees in Uruguay. This legislation dictates employee benefits in Uruguay, including working conditions and employee entitlement.

Uruguay was the first country in the world to introduce an 8-hour work day in 1915. It offers advanced labor law benefits to employees, making it an attractive country for employment for both Uruguayans and people across the world to this day.

Mandatory Employee Benefits in Uruguay

There are many mandatory employee benefits in Uruguay as detailed in the Uruguay Labor Code which must be adhered to by employers hiring in Uruguay. We’ve included these in detail in the sections below:

Social Security Contributions

Uruguay’s Social Security system (BPS) is funded by tax contributions from employees, employers, and the Uruguay government. To work in Uruguay, people must enroll in the Social Security Bank and commit to the following contributions from their monthly salary:

Contribution Type Percentage
Retirement Contributions 15%
National Health Insurance 3% (increases to 5% to cover spouse/partner without health coverage)
Additional National Integrated Health System When compensation exceeds 2.5 Benefits and Taxes Basic Units
Labor Reconversion Fund 0.125%

Social security in Uruguay offers a range of different benefits. This includes maternity/paternity cover, unemployment benefits, disability payments, industrial accident compensation, and death risks. This includes the following:

Type Details
In Cash Unemployment payments, maternity cover, family benefits, retirement funds, and old age pension
In Benefits Orthodontic care, prosthetics, and eyeglasses
In Services Maternal/childcare benefits and mutual affiliation

Worker’s Compensation

Part of the BPS, Worker’s Compensation in Uruguay is a system that provides financial help to employees experiencing workplace injuries or occupational diseases.

Employers must insure their workers with the Banco de Seguros del Estado (BSE), an insurance company sponsored by the state. However, employers may also choose private companies to insure employees against work injuries and illnesses as required.

The BSE covers all temporary and permanent medical expenses/compensation, even in the occurrence of death as a result of an incident in the workplace. Employers must use preventative measures and issue safety assessments/guidance to minimize the risk of workplace accidents.

National Minimum Wage

Employers must pay their employees the national minimum wage as set by the National Wages Council. Standards for the minimum wage are regularly reviewed to ensure they are consistent with the economic state of the country.

The national minimum wage in Uruguay is €527.5 per month.

Annual Paid Leave

Employees in Uruguay are entitled to 12 days of paid annual leave. They are eligible for this employee benefit if they have been employed by the same company for a minimum of 1 year.

The amount of annual paid leave allocated is based on the employee’s length of service. Employees who have worked for the same company for over 5 years are generally entitled to a maximum of 14 days annual leave.

Working Hours

The Ministry of Labor and Social Security (MTSS) in Uruguay states that employees cannot work more than 8 hours per day. Employees are also limited to a maximum of 44 working hours per week unless working in the commerce/industrial sectors industry.

Employees working in commerce or industrial jobs can work 48 hours per week, with a 6-day week of 8 hours per day.

Overtime Pay

Overtime pay in Uruguay is generally paid at a rate of 1.5 times an employee’s typical hourly wage. Working hours are considered overtime if they exceed the standard 44-hour working week.

Employees are limited to 8 hours of overtime per week, with the employee’s consent. This limit may be exceeded in special circumstances if agreed between the employer and employee and with authorization from the MTSS.

Paid Public Holidays

Uruguay celebrates public holidays per year, with New Year’s Day, Labor Day, Constitution Day, Independence Day, and Christmas Day being paid public holidays.

Here is a full list of Uruguay’s public holidays:

  • New Year’s Day (January 1)
  • The Three Wise Men Day (January 6)
  • Carnival/Shrove Monday (February 16)
  • Carnival/Shrove Tuesday/Pancake Day (February 17)
  • Maundy Thursday (April 2)
  • Good Friday (April 3)
  • Landing of the 33 Orientals (April 19)
  • Labor Day (May 1)
  • Battle of Las Piedras (May 18)
  • Jose Artigas’ Birthday Memorial (June 19)
  • Constitution Day (July 18)
  • Independence Day (August 25)
  • Day of Cultural Diversity (October 12)
  • All Souls’ Day (November 2)
  • Christmas Day (December 25)

Paid Sick Leave

Employees are entitled to sick leave when working in Uruguay.

The employer generally pays the first 3 days of sick leave. If an employee is sick for more than 3 days, the BPS pays up to 70% of the employee’s income. 

Uruguayan employees are entitled to 12 months of sick leave. This can be increased to 24 months in special circumstances.

Maternity Leave

Female employees in Uruguay can take up to 14 weeks of paid maternity leave. This is generally split into the following:

  • 6 weeks prior to the birth of the child
  • 8 weeks after the birth of the child

Maternity leave is paid solely by the BPS.

Paternity Leave

Male employees in Uruguay are entitled to 13 days of paternity leave to assist their partner who has had a baby.

Generally, the employer is responsible for paying for the first 3 days of paternity leave. The BPS will then pay the remaining 10 days.

Severance Pay

Severance pay is determined by individual employers who must follow the Labor Code when setting our employee termination. 

The exact amount of severance pay received is generally calculated based on salary and length of service. Typically this is calculated as follows: each year of work equals 1 monthly salary, up to a maximum of 6 months.

Employees may be excluded from severance pay if they have violated their contract and have been dismissed as a result. In this situation, an employer is not legally obliged to provide severance pay.

Employment Contracts

The Labor Code of Uruguay allows fixed-term and indefinite employment contracts. Fixed-term contracts have a set duration, while indefinite employment contracts do not set an end date for employment.

All contracts are usually written in Spanish, however, translations must be made available for non-Spanish-speaking employees. Employment contracts must clearly dictate the following:

  • Employee job title
  • Salary
  • Working hours
  • Probation period
  • Notice period

Unemployment Insurance

Employees working in any profitable activity are entitled to unemployment insurance, which covers them financially if they become unemployed. 

To qualify for unemployment insurance, Uruguayan employees generally must have been employed for 12 months prior to the date unemployment arose.

Union Membership

The Uruguay constitution protects the right of employees to form, join, and participate in trade union activities.

Unions protect employees’ rights and help to negotiate agreements/benefits for employees when discussing employment contracts. 

In Uruguay, there is typically a small membership fee that is paid monthly to join a union.

Supplementary Employee Benefits in Uruguay

Introducing supplementary employee benefits when doing business in Uruguay can help to attract potential candidates and improve employee retention rates. 

Some examples of supplementary employee benefits that employers should consider include:

  • Monetary bonuses based on performance
  • Enhanced maternity/paternity plans
  • Private healthcare/dental care
  • Life insurance policies
  • Private pension plans
  • Additional benefits such as transportation costs, housing, and food expenses

Optimize Employee Benefits with Remote People

Navigating employee benefits in Uruguay can be challenging for employers, especially since much of the country’s employment legislation is written in Spanish and includes detailed compliance requirements.

Remote People brings experience in supporting companies that hire in Uruguay, offering Employer of Record services that simplify compliance, payroll, benefits administration, and other employment obligations. Working with an EOR that understands Uruguay’s labor laws is essential for staying compliant and ensuring a smooth hiring process.

Our Uruguay EOR service provides a straightforward way to employ workers locally, giving businesses a reliable structure for managing staff without the complexities of setting up a local entity.

We also support talent acquisition through our Uruguay recruitment service. With deep knowledge of the local language, customs, and hiring landscape, our team is well equipped to help you identify and secure the right candidates for your business.