Employer of Record in Uruguay

Employment Laws and Regulations in Uruguay

Employment Contracts

Uruguay does not have a single consolidated labour code; instead, the employment relationship is governed by a layered framework of individual statutes, collective bargaining agreements negotiated through the Consejos de Salarios, and the 1967 Constitution. Key statutes include Law 10.489 on severance, Law 12.590 on paid annual leave and the Salario Vacacional, Law 12.840 on the Aguinaldo, Law 16.074 on mandatory workers’ compensation insurance through the Banco de Seguros del Estado (BSE), Law 17.292 on paternity leave, Law 18.345 on special leave categories, and Law 18.083 establishing the IRPF system. Written contracts are not legally required for indefinite-term employment, but every EOR issues a Spanish-language written contract in practice to evidence salary, working time, and probation terms. Both indefinido (indefinite-term) and plazo (fixed-term) contracts are permitted, though Uruguayan courts will recharacterise successive fixed-term renewals as indefinite where the underlying role is permanent, under the principio de primacía de la realidad. Contracts must identify the parties, the position, the base salary, the workplace, the start date, and the working-time schedule, and must reference the applicable Consejo de Salarios group where a collective agreement binds the employer.

Working Hours and Overtime

Uruguay sets a maximum working week of forty-eight hours for industrial and rural workers and forty-four hours for commerce and services, under Law 5.350 (1915) as amended and Decree-Law 14.320. Daily hours are capped at eight for day shifts. Overtime is governed by Law 15.996, which pays weekday overtime at a 100% premium (2.0 times the base hourly rate) and work on public holidays or the weekly rest day at a 150% premium (2.5 times). The total overtime cap is eight hours per week, and overtime must be authorised by the MTSS Inspección General del Trabajo where it exceeds the statutory cap. Managerial and senior technical roles may be excluded from the weekly working-time cap by collective agreement, though they remain entitled to holiday and rest-day premiums.

Overtime pay forms part of the BPS contribution base and is treated as ordinary Category II income for IRPF withholding. Employers must log overtime in the planilla de control de trabajo filed monthly with the MTSS; Inspección General del Trabajo inspectors treat missing overtime records as prima facie evidence of underpayment and can impose fines of up to 150 Unidades Reajustables per worker per month.

Minimum Wage

Uruguay’s Salario Mínimo Nacional is set annually by executive decree on the recommendation of the Consejo Superior Tripartito, and revised in line with inflation. For 2026 the minimum wage is UYU 24,572 per month as of 1 January 2026, rising to UYU 25,383 per month from 1 July 2026 under the mid-year adjustment announced in December 2025. The equivalent daily rate is UYU 982.88 and the hourly rate is UYU 122.86. Sector-specific minimum wages negotiated through the Consejos de Salarios typically sit well above the national floor – the tech and services groups in Group 19 set minimums two to four times higher – and an EOR will apply the sectoral scale that matches the employee’s role. For a detailed breakdown of sectoral minimums and the BPS wage-base treatment, see our Uruguay minimum wage guide.

Probation Period

The default probation period in Uruguay is three months under general practice, though there is no single statutory provision and the length is typically set by collective bargaining or the written contract. During probation either party may terminate the employment without the notice period that would otherwise apply, though BPS contributions, annual-leave accrual, and the Aguinaldo proportion continue from day one. An EOR will ordinarily align the probation clause with the client’s internal policy while keeping it within the three-month norm. Severance may still be payable during probation if the employee has completed at least one hundred calendar days of continuous service, per Article 4 of Law 10.489 as interpreted by the Supreme Court.

Leave Entitlements

Uruguay’s statutory leave regime is set in Law 12.590 (annual leave and Salario Vacacional), Law 17.215 and Law 19.161 (maternity), Law 17.292 as amended (paternity), and Law 18.345 (special leave categories). The framework ties annual-leave entitlement to tenure, gives maternity and paternity their own statutory minimums, and channels sick leave through the BPS subsidy system. EOR contracts should reference each entitlement explicitly to avoid disputes at termination, when unused annual leave must be paid out.

Annual Leave

Annual paid leave under Law 12.590 is twenty calendar days after one completed year of service, rising by one additional day for every four years of continuous service thereafter. Accrual begins on the first day of employment, but the employee must complete twelve months of service before the first period can be taken. On top of the leave days, Uruguay grants a statutory Salario Vacacional (vacation bonus) equal to 100% of the net liquid pay for the leave period, payable before the employee begins leave, funded entirely by the employer. Leave must be scheduled by mutual agreement, usually during the November-to-April low-activity season, and cannot be replaced by a cash payment except at termination.

Sick Leave

Uruguayan employers pay no statutory sick leave directly. Instead, BPS-enrolled employees who have contributed for at least three of the twelve months before illness qualify for a subsidio por enfermedad (sick-leave subsidy) of 70% of average wages, payable from the fourth day of certified illness up to one year per episode, extendable in exceptional cases. A certificado médico from a BPS-registered physician is required, and the first three days are unpaid under the statute (though many employers and EOR contracts close that gap as a discretionary benefit). For long-term incapacity, BPS pays disability benefits through the pension system.

Maternity Leave

Uruguay’s maternity regime is set in Law 17.215 and Law 19.161, which give pregnant employees fourteen weeks of fully paid maternity leave – typically six weeks before the expected date of birth and eight weeks after. Pay is funded entirely by BPS-FONASA at 100% of average wages (capped at a statutory ceiling), with the employer topping up where salary exceeds the cap by contract. Pregnant employees are protected from dismissal from the date pregnancy is notified to the employer through six months after return to work. After maternity leave, Law 19.161 provides a reduced working-day benefit of up to six months, during which the mother works half-time while BPS covers the difference.

Paternity Leave

Paternity leave was expanded effective 1 January 2026 from thirteen days to twenty days of fully paid leave, taken at the birth of a child or on legal adoption. The first three days are funded by the employer and the remaining days are funded by BPS. A thirty-day post-leave dismissal protection (fuero paternal) applies to the employee from the date of return. Same-sex partners are covered on equal terms under the Law 19.075 marriage-equality regime. The EOR monitors the annual MTSS decree list to confirm the applicable BPS ceiling for each calendar year.

Other Statutory Leave

Law 18.345 and subsequent amendments provide several additional categories of statutory leave that apply alongside the headline categories above:

• Marriage leave: Three working days paid under Law 18.345.
• Bereavement leave: Three working days paid on the death of a spouse, child, or parent under Law 18.345.
• Study leave: Up to nine days paid per year for university or equivalent examinations, rising to twelve days for employees in tertiary technical programmes.
• Adoption leave: Six weeks paid leave to the adoptive parent under Law 17.292 where the adopted child is under age nine.
• Voting and civic duty leave: Paid time off on national election days and for jury-style civic duties.

The table below summarises the statutory leave framework applied by every EOR in Uruguay. The headline point for buyers is that annual leave is twenty calendar days from year one with a full Salario Vacacional on top, maternity is fourteen weeks fully paid by BPS, and paternity rose to twenty days in 2026 – one of the more generous frameworks in Latin America.

Statutory Benefits Beyond Leave

Beyond the leave categories above, every Uruguayan employee is entitled to the mandatory 13th-month Aguinaldo, the Salario Vacacional vacation bonus, BPS pension enrolment, FONASA health-system enrolment, and mandatory accident-and-occupational-disease insurance through the Banco de Seguros del Estado under Law 16.074. BSE premiums sit outside the BPS contribution schedule and are paid directly by the employer at a rate that varies by industry-risk category (typically 0.3% for low-risk office roles, rising to 6% or higher for construction and heavy industry). EOR contracts list every benefit explicitly so that the client sees the true all-in cost before salary negotiation.

Recent Updates

Uruguay enacted two material employment-adjacent reforms that take effect during 2026. First, paternity leave rose from thirteen to twenty days of fully paid leave effective 1 January 2026, with the BPS cost-share framework unchanged. Second, Law 20.446 came into force on 1 January 2026, substantially broadening the scope of taxable foreign-source income for Uruguayan tax residents by treating most foreign capital income as Uruguayan-source for IRPF purposes. The change matters for expatriate employees on EOR-sponsored residence permits: Uruguay’s historical territorial tax exemption no longer protects most foreign dividend, interest, rental, or royalty income after the five-year “tax holiday” window elapses. EOR providers should flag the change to incoming foreign hires during onboarding and coordinate with a DGI-registered tax adviser to plan for the new regime.

Work Permits and Visas for Foreign Employees

Uruguay does not issue a standalone work permit in the way many jurisdictions do. Instead, the right to work is conferred by a residence permit issued by the Dirección Nacional de Migración (DNM) within the Ministerio del Interior. Any foreign national who holds Temporary Residence, Permanent Residence, or MERCOSUR Residence may legally work in Uruguay; the EOR’s role is to sponsor the application, supply the employment contract, and coordinate with BPS and DGI registration. Short-term business visitors under a ninety-day tourist entry may not legally earn Uruguayan-source employment income, though the digital nomad residence under Decree 238/022 opens a narrow channel for remote workers serving non-Uruguayan clients.

Temporary Residence Permit

The Temporary Residence (Residencia Temporaria) permit is the standard route for foreign employees sponsored by an EOR. Issued under Law 18.250 and Decree 394/009, it is granted for a renewable one-to-two-year term and confers the right to work in any job for any employer. The DNM requires an apostilled police-clearance certificate from every country in which the applicant has lived in the prior five years, a medical certificate from the Ministerio de Salud Pública, proof of sufficient income (typically evidenced by the EOR employment contract), and a clean DGI/BPS record for the sponsoring employer. Processing takes four to eight weeks from filing a complete file, and the cédula de identidad para extranjeros is issued on approval. After two renewals, the holder becomes eligible for Permanent Residence.

MERCOSUR Residence

Nationals of the MERCOSUR bloc and its associated states (Argentina, Brazil, Paraguay, Bolivia, Chile, Colombia, Ecuador, and Peru) qualify for an accelerated residence route under the bloc’s Residence Agreement, transposed into Uruguayan law. MERCOSUR Residence is issued for an initial two-year term, renewable once for a further two years, and converts to Permanent Residence at the end of the four-year window. The documentary burden is lighter than the general Temporary Residence: a single country-of-origin police clearance, passport, and proof of identity are typically sufficient, and processing completes in three to six weeks. Because Uruguay has roughly 28,000 Argentine and 12,000 Brazilian residents under this route, the EOR pipeline is well-developed and predictable.

Digital Nomad Residence

Uruguay’s Digital Nomad Residence, introduced by Decree 238/022 in 2022, permits remote workers whose employers or clients are located outside Uruguay to live in the country for an initial six-month term, renewable once for a further six months. The route does not authorise employment by a Uruguayan employer (including an EOR), so it is not applicable where the client wants to hire through a Uruguayan entity; it is relevant only for remote workers maintaining a non-Uruguayan employment relationship. For a buyer using an EOR to hire a Uruguayan team, the standard Temporary or MERCOSUR Residence routes apply.

Permanent Residence

Permanent Residence (Residencia Permanente) confers indefinite right of residence and work in Uruguay under Law 18.250. It is granted to applicants who have held Temporary or MERCOSUR Residence for the statutory qualifying period (typically three-to-five years), and directly to spouses or civil partners of Uruguayan citizens, parents of Uruguayan-born children, and retirees with a stable pension income exceeding the statutory threshold. Permanent Residence does not confer Uruguayan citizenship; naturalisation is a separate process requiring three-to-five years of residence and a language, civics, and integration assessment.

The EOR handles every step of the residence sponsorship: the employment contract that proves income, the BPS affiliation letter that evidences lawful payroll enrolment, the clean DGI tax record, and the appearance before the DNM office in Misiones 1513, Montevideo. For MERCOSUR nationals the EOR will often file under both the MERCOSUR and general Temporary Residence tracks to secure whichever issues first. For a typical U.S. or EU foreign hire, budget six to eight weeks between signed EOR agreement and first legal day of work in Uruguay.

Payroll and Taxes in Uruguay

Uruguayan payroll runs on a dual-filing calendar: BPS contributions and the monthly nómina are filed by the end of the following month, and IRPF withholding is remitted to DGI on the same cycle. The headline numbers for 2026 are a 12.625% base employer contribution before workers’ compensation, an 18.1% base employee contribution (rising to 23.1% for employees with dependent spouses), and a progressive IRPF schedule from 10% to 36% indexed to the 2026 BPC of UYU 6,864. The figures below reflect BPS Resolution Board notices in force at 1 January 2026.

Employer Social Security Contributions

Employer BPS contributions cover the Jubilación (pension), the FONASA health system, and the Fondo de Reconversión Laboral (FRL). A separate workers’ compensation premium under Law 16.074 is paid to the Banco de Seguros del Estado at a rate that varies by industry risk (0.3% to 6%+ of payroll). The BPS base contribution of 12.625% applies to gross wages with no cap on the first UYU 283,000 per month (approximately 41 BPC); higher earnings are capped at the ceiling for the aporte jubilatorio portion. EOR clients should budget 15-20% total employer on-cost inclusive of BSE premium for typical office roles.

Employee Social Security Contributions

Employee BPS contributions are withheld at source by the EOR and remitted monthly. The base rate is 18.125%, composed of the 15% pension contribution, the 3% FONASA health contribution (the employee’s own coverage), and the 0.125% FRL. The FONASA rate rises to 5% where the employee covers a spouse or civil partner without their own health coverage, and by a further 1.5% where dependent children are covered – bringing the total employee contribution to as much as 23.125% in a full-dependent household. An additional surcharge on pension contributions applies to employees whose earnings exceed 10 BPC per month, under Article 181 of Law 16.713 as amended.

Income Tax (IRPF)

Uruguay taxes employment income under Category II of the Impuesto a la Renta de las Personas Físicas (IRPF), established by Law 18.083 and reformed periodically. The eight-bracket progressive schedule ranges from 0% to 36% and is indexed to the Base de Prestaciones y Contribuciones (BPC). For 2026 the BPC stands at UYU 6,864 (effective 1 January 2026), which places the non-taxable threshold at the first 7 BPC of monthly income (UYU 48,048). Employees may claim personal deductions for dependents, mortgage payments, private pension contributions, and FONASA contributions already withheld, subject to a deduction cap that itself is stepped according to total income. The EOR calculates IRPF on a monthly basis, withholds the net amount, and files the annual reconciliation by 31 May of the year following the tax year.

The IRPF brackets apply in stepped fashion: each rate is charged only on the portion of income within the bracket, and all-inclusive calculations require the EOR to apply the statutory deductions schedule against the gross before computing withholding. A worked example helps. An employee earning UYU 200,000 gross per month (approximately 29 BPC) will fall into the fourth bracket at the top of their earnings, with a marginal rate of 24% on the top peso and an effective rate of roughly 14–16% before deductions, falling to around 9–11% after standard deductions, depending on dependents and mortgage interest.

Payroll Cycle and Filings

Uruguay runs a monthly payroll cycle with pay day falling at the end of the month or by the fifth business day of the following month under standard practice. The EOR files the nómina BPS (BPS roster) by the end of the following month, remits employer and employee social security contributions on the same cycle, and remits IRPF withholding to DGI under Form 2181. Annual filings include the IRPF reconciliation (Form 1103) by 31 May and the DGI annual affidavit. Pay slips (recibos de sueldo) must itemise gross wages, each statutory deduction with its BPS or DGI line reference, any voluntary deductions, and the net pay, and must be signed by the employee and archived for five years per the Inspección General del Trabajo recordkeeping rules.

13th Month (Aguinaldo)

The mandatory 13th-month payment (Aguinaldo or Sueldo Anual Complementario) is set by Law 12.840 (1960) and is paid in two installments: the first by 30 June, covering the period 1 December to 31 May, and the second by 20 December, covering the period 1 June to 30 November. The Aguinaldo equals one-twelfth of total earnings accrued during the relevant period (including base salary, overtime, bonuses, and commissions), so the annual total equals approximately one month’s pay. The EOR calculates each installment against the relevant six-month earnings record, remits BPS contributions on the Aguinaldo payment, withholds IRPF where applicable, and issues a separate recibo de sueldo. Partial-year employees receive a proportional Aguinaldo on termination or on the statutory payment date.

Cost of Hiring an Employee in Uruguay

The true cost of a Uruguayan employee is more than gross salary. On top of the base wage, the employer pays the 12.625% BPS contribution, the BSE workers’ compensation premium (0.3% for office roles), one month of Aguinaldo spread across the year (8.33%), and the Salario Vacacional vacation bonus (roughly 5.5% of annual gross depending on leave days taken). A typical all-in on-cost lands between 28% and 32% of gross salary before any EOR fee, and the EOR service fee on top is a flat monthly charge that does not scale with salary.

EOR Service Fees

Uruguay EOR service fees run between USD 500 and USD 800 per employee per month, depending on the provider, the complexity of the employee’s compensation package, and whether foreign-national residence sponsorship is included. Remote People charges a flat monthly fee inclusive of Uruguay-compliant contract drafting, monthly UYU payroll, BPS pension and FONASA contributions, FRL levy, BSE workers’ compensation premium pass-through, IRPF withholding, Aguinaldo calculation and both installment payments, Salario Vacacional accrual, benefits administration, and HR advisory. Temporary Residence or MERCOSUR Residence sponsorship for foreign nationals is billed as a separate one-time setup fee.

Cost Breakdown Example

The table below breaks down the employer cost for a USD 60,000 per year Uruguayan employee through an EOR, in USD for buyer budgeting. Conversions assume an April 2026 reference rate of approximately UYU 40 = USD 1; the employee sees the full gross paid in UYU and statutory deductions calculated in UYU per the tables above. Figures are indicative and any quoted EOR fee will be given in writing in the service agreement.

The illustrative mark-up of approximately 41% is at the high end for a Latin American EOR engagement because Uruguay couples a moderate BPS employer rate with a full Aguinaldo and Salario Vacacional on top. Compared with neighbouring jurisdictions, Uruguay’s total on-cost sits between Paraguay (lower, around 25-27%) and Brazil (substantially higher, around 55-70% with FGTS and 13th month) and is comparable with Chile and Argentina’s formal-sector mark-ups. Where the gross salary is close to the BPS pension ceiling (UYU 283,000 per month, approximately USD 84,750 annually), the employer on-cost ratio falls further because contributions above the ceiling are exempt.

Employee Benefits in Uruguay

Uruguayan employees receive a broad package of statutory benefits funded partly by the employer and partly by BPS-FONASA. On top of the statutory floor, most EOR clients layer supplementary benefits – private health insurance, additional life cover, and variable pay – to match market expectations for professional roles in Montevideo. Standard EOR benefit components include:

• BPS pension enrolment: Contributions build the employee’s pension record under the mixed public-private pension system (BPS base plus AFAP individual accounts for earnings above the threshold).
• FONASA national health coverage: Employees and (with additional contribution) dependents access the SNIS integrated health system through a registered prestador. Waiting-time rules apply to new enrolments.
• Mandatory accident-and-occupational-disease cover: Law 16.074 cover through BSE pays medical costs, rehabilitation, and wage-loss compensation on workplace injuries.
• Family allowance (Asignaciones Familiares): BPS-funded cash transfers to employees with dependent children, under Law 15.084 and subsequent reforms, typically paid direct to the employee’s BPS account.
• Unemployment insurance: BPS-funded seguro de desempleo at 50% of average wages for up to 6 months after involuntary termination with at least 180 days of BPS contributions.
• Private health top-up: EOR clients commonly add a supplemental private health plan (for example, through Hospital Británico, Clínica Asociación Española, or Medicauruguaya) for professional roles.
• Meal and transport allowances: Tax-advantaged vouchers under the ticket alimentación and canasta de alimentos regimes, up to statutory caps free of IRPF and BPS contributions.

On top of the statutory mandatory set, EOR clients may add performance bonuses, stock or phantom-stock programmes, and learning-and-development stipends. The EOR administers all components through the monthly recibo de sueldo so the employee sees a single consolidated statement.

Termination and Severance in Uruguay

Uruguayan employment relationships can be terminated by mutual agreement, resignation, expiration of a fixed-term contract, dismissal for cause (notoria mala conducta), or dismissal without cause (despido común). The severance rules are among the oldest in Latin America – Law 10.489 dates from 1944 – and are well-settled in case law. Notice (preaviso) is not strictly mandated by statute for indefinite contracts, but common practice and collective agreements require the timeline shown below. The EOR handles every step: calculation, final liquidación, BPS deregistration, and DGI final withholding.

Notice Periods

There is no general statutory notice period for indefinite contracts under Uruguayan law; the Labour Code framework relies on severance rather than preaviso. However, tenure-based notice has emerged through collective agreements and customary practice as set out below, and fixed-term contracts require notice where the contract is terminated before the agreed end date. Common practice is summarised in the table below.

Severance Pay

Severance for dismissal without just cause is governed by Law 10.489 of 1944. For monthly-paid workers, Article 4 sets severance at one month of wages per year of service or fraction thereof, with a statutory cap of six months’ wages. The calculation base is the average of the employee’s earnings over the last six months before dismissal, inclusive of base salary, commissions, Aguinaldo proportion, and other regular remuneration components, so a typical calculation base sits above the stated monthly salary. Daily-paid workers follow the parallel Article 2 schedule of 25 days’ wages per year of service, capped at 150 days. No severance is payable where dismissal is for notoria mala conducta (gross misconduct) under Law 12.597, but the burden of proof sits with the employer, and any challenged dismissal defaults to full severance if the employer cannot substantiate the misconduct in court.

Termination Procedure

The EOR handles terminations on a strict procedural track. A written termination letter identifies the cause of termination (dismissal without cause, dismissal for gross misconduct, or mutual agreement), sets the last day of work, and reserves any pay-in-lieu of notice. Within ten days of the termination date, the EOR issues the final liquidación, which covers: (i) accrued and unpaid salary, (ii) proportional Aguinaldo, (iii) accrued but unused annual leave plus proportional Salario Vacacional, (iv) statutory severance where applicable, and (v) any other amounts under the employment contract. Final payment is made by bank transfer in UYU; any USD-denominated severance must be converted at the Banco Central del Uruguay reference rate on the payment date. The EOR also submits the BPS baja (exit) filing and the DGI final withholding adjustment, which closes the employee’s tax and social security record for the employment.

EOR vs Other Hiring Models in Uruguay

Foreign buyers hiring in Uruguay can theoretically choose between four models: hire through an EOR, incorporate a Uruguayan subsidiary (SA or SRL), engage the worker as an independent contractor (unipersonal), or set up a co-employment arrangement with a local PEO. The right choice depends on headcount, engagement length, capital commitment, and control requirements. The comparisons below distinguish the operational and compliance trade-offs.

EOR vs. Establishing Your Own Uruguayan Entity

Incorporating a Uruguayan SA or SRL takes eight to twelve weeks from first application to operational payroll, requires a local registered address, a resident director, paid-in capital (substantially higher for SA than SRL), BPS patronal registration, DGI registration, and opening of a Uruguayan peso bank account. Ongoing compliance includes quarterly or annual DGI tax filings, annual audited financial statements where the SA exceeds statutory thresholds, and the general corporate-secretarial burden. The EOR removes all of those friction points for a fixed monthly fee.

The decisive factor for most buyers is the combination of setup time and exit cost. Eight to twelve weeks before a new hire can be paid is rarely acceptable, and a Uruguayan dissolution typically runs six to twelve months under the Civil Code procedures. The EOR model eliminates both friction points and is the right choice for engagements expected to last less than three years or involve fewer than fifteen hires. Buyers contemplating a free-zone operation at Zonamerica, Aguada Park, or Parque de las Ciencias will eventually outgrow the EOR; for everything else, the EOR is the better structure.

EOR vs. Hiring Independent Contractors

Hiring a Uruguayan worker as an unipersonal or monotributista (independent contractor) is appropriate for genuinely project-scoped work where the contractor sets their own hours, uses their own tools, and serves multiple clients. For full-time, ongoing, exclusive relationships, MTSS labour inspectors and DGI tax auditors can (and regularly do) recharacterise the contractor arrangement as employment under the principio de primacía de la realidad, which prioritises the substance of the relationship over its form. Recharacterisation exposes the client to back BPS contributions, back IRPF, MTSS fines, and potential severance claims for the entire historical period.

Uruguay’s misclassification risk is real and well-established in case law: the Supreme Court has repeatedly applied the primacía de la realidad doctrine to recharacterise long-running contractor engagements as employment. For any role where the worker is exclusive to the client, follows the client’s schedule, uses the client’s tools, or is integrated into the client’s hierarchy, the EOR model is the appropriate structure. Remote People’s Uruguay contractor-of-record service is the right option for clearly project-scoped, non-exclusive engagements where the risk profile supports that structure.

EOR vs. PEO (Professional Employer Organization)

The Professional Employer Organization (PEO) model is well-established in the United States and depends on the client already operating its own entity in the relevant country. Uruguay has no formal PEO regulatory framework, but some domestic HR firms offer co-employment-style administration to foreign-parent groups that already have a Uruguayan SA or SRL. The practical distinction is simple: an EOR is the legal employer and does not require the client to have a Uruguayan entity; a PEO is a co-employment arrangement that only works if the client already has its own legal entity to co-employ with.

For a company entering Uruguay for the first time, the EOR is almost always the right structure because there is no local entity to co-employ with. PEO becomes a consideration only once the client has established a registered Uruguayan SA or SRL and wants to outsource day-to-day payroll and HR administration while retaining legal-employer status.

Public Holidays in Uruguay

Uruguay observes fifteen national public holidays set by the Constitution and statute. The five feriados no laborables (non-working holidays) are fixed on their original date and, where worked, attract a 2.5x premium. The remaining ten feriados laborables (working holidays) move under the statutory shifting rules: holidays falling on Saturday, Sunday, or Monday stay on the original day; holidays falling on Tuesday or Wednesday shift to the preceding Monday; and holidays falling on Thursday or Friday shift to the following Monday. Employers should calendar the holidays below for scheduling and factor public-holiday pay into the monthly payroll run.

Public holidays affect payroll scheduling in two ways. First, non-working holidays worked attract a 2.5x base-hourly-rate premium under Law 15.996, which the EOR builds into the monthly payroll run. Second, pay days falling on a public holiday are advanced to the preceding business day under standard Uruguayan payroll practice, so the monthly cycle calendar should be set at the start of the year and communicated to employees. Summer holiday season runs from late December through the end of February, so EOR clients should plan hand-offs and approval calendars accordingly.

How to Get Started with an EOR in Uruguay

Setting up a Uruguay team through an EOR follows a predictable sequence. Each step below takes one to five business days, and several run in parallel.

• First, scope the hire: Define the role, salary in UYU or USD, work location (Montevideo, Canelones, or remote from the interior), start date, and whether the candidate is a Uruguayan national, a MERCOSUR national, or a non-MERCOSUR foreign national. This determines whether a Temporary Residence permit is required and which processing track applies.
• Second, sign the EOR service agreement: Execute the EOR service contract, which sets the monthly service fee, residence setup fee if applicable, and the scope of HR services. The EOR typically requires the first month of fees plus a deposit at signing.
• Third, issue the Uruguay employment contract: The EOR drafts the Spanish-language employment contract, incorporates the client’s specific benefits and IP-assignment clauses, and sends it to the employee for signature. The signed contract is the basis for BPS and DGI registration.
• Fourth, register payroll and sponsor immigration if needed: The EOR enrols the employee with BPS, loads them into the payroll system, files the monthly MTSS nómina and DGI IRPF register, and sets up UYU direct deposit. For foreign nationals, the EOR files the Temporary Residence or MERCOSUR Residence application with the Dirección Nacional de Migración in parallel.
• Fifth, run the first payroll cycle: The employee starts work, the EOR issues the first itemised UYU recibo de sueldo on the next monthly cycle, and monthly BPS and DGI filings follow the standard calendar.

Contact Remote People to hire in Uruguay. We operate as your employer of record in Uruguay, run UYU (or contractually USD) payroll, handle BPS pension and FONASA contributions, FRL and FGCL levies, BSE workers’ compensation under Law 16.074, IRPF withholding, Aguinaldo in two installments, Salario Vacacional, and Temporary or MERCOSUR Residence sponsorship, and have your team onboarded in one to two weeks.