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Employer of Record and Payroll Services in Uruguay Uruguay flag

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  • Employer of record
  • Contractor management
  • Global payroll
  • In-country payroll
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Mercans offers complete payroll, PEO and HR services in Uruguay

Mercans offers comprehensive payroll, PEO, and HR services in Uruguay to help businesses manage their human resource needs. With expertise in local compliance, Mercans ensures that businesses can focus on their core operations while staying compliant with the local regulations.

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Doing Business in Uruguay

Uruguay is known for being a safe and stable country with a growing economy and a strategic location for business in South America. The government has implemented various incentives to attract foreign investment, and key industries in Uruguay include agriculture, technology, and tourism.

Entity Registration and Incorporation Requirements

Entity registration and incorporation requirements in Uruguay include obtaining a tax ID number and registering with the National Register of Commerce.

Banking

Banking Hours: 9:00 am to 7:00 pm from Monday to Friday and Saturday (9:00 am to 2:30 pm)

Working Week

The standard working week is from Monday to Friday from 12:30 pm - 7:00 pm (Winter) and 7:00 am to 2:30 pm

Labor Law

Uruguay has a highly regulated labor market, with strong labor protections and a range of benefits required by law, such as paid vacation and severance pay. The labor laws also establish limits on working hours and overtime, as well as protections against discrimination, harassment, and unfair dismissal.

Main Industries

Food processing, electrical machinery, transportation equipment, textiles.

GDP Growth

3.7

Dates & Numbers

dd/mm/yyyy

Official State Name

Oriental Republic of Uruguay

Population

3.54 Million

Capital

Montevideo

Major Languages

Spanish

Currency

Peso

Internet Domain

.uy

International Dialing Code

+598

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Uruguay
Montevideo, UY
3:07 am, May 23, 2024
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Humidity 94 %
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Payroll

In Uruguay, payroll calculations are complex and involve several components, including social security contributions, taxes, and other mandatory withholdings. Employers must ensure compliance with labor and tax laws and maintain accurate records to avoid penalties and fines. Outsourcing payroll services to a local provider like Mercans can help businesses navigate the complex payroll landscape in Uruguay.

It is acceptable to provide employees with online payslips

Payslip

Payroll reports must be kept for 2 years

Reports

Employees receive paid annual leave of 20 days

Annual Leave

Employees receive paid sick leave of 365 days

Sick Leave

14 weeks of paid maternity leave and 13 days of paid paternity leave

Maternity & Paternity Leave

10 days

Employee Termination

There are no provisions mandated by law regarding the 13thmonth salary

13thmonth salary

423 USD per month

Minimum Wage

Overtime payment of 2.5x the employee's ordinary rate of pay for holidays and weekends

Overtime

Employees paid monthly are entitled to 30 days’ pay for each year of employment for every year of service

Severance Pay

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Tax and Social Security

In Uruguay, both employers and employees are subject to social security contributions, which fund the country’s social security system. The tax system is progressive, meaning that higher-income earners pay a greater percentage of their income in taxes, with the maximum individual income tax rate set at 36%.

Tax

Uruguay operates on a progressive tax system, which means that higher-income individuals are subject to higher tax rates. The tax system consists of several types of taxes, including personal income tax, corporate income tax, value-added tax (VAT), social security contributions, and property tax. Tax residents in Uruguay are subject to taxation on their worldwide income, while non-residents are taxed only on their income sourced within Uruguay. The tax system in Uruguay is known for being transparent and straightforward, with a relatively low tax burden compared to other countries in the region.

25%

Corporate Income Tax

36%

Personal Income Tax

22%

Sales Tax

22%

VAT

Social Security

Social security in Uruguay is managed by the Banco de Previsión Social (BPS), which provides coverage for retirement, disability, health, and other social benefits for workers and their families.

35.7%

Social Security Rate

12.6%

Social Security Rate for Employers

23.1%

Social Security Rate for Employees

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Employment Law

Uruguay's employment law is highly protective of workers, with regulations on issues such as minimum wage, working hours, overtime pay, annual leave, and severance pay. Employers are required to provide their employees with a safe working environment and adhere to strict rules and regulations in the case of dismissals.

Employment Agreement

In Uruguay, employment agreements can be either verbal or written, although written agreements are recommended to avoid any potential disputes. The agreement should include details such as job duties, salary, benefits, and working hours.

Working Condition

The standard workweek in Uruguay is 44 hours, and employees are entitled to a minimum of 20 paid vacation days per year, as well as additional paid public holidays and sick leave. Maternity leave is also available for female employees.

Leaves

In Uruguay, employees are entitled to 20 working days of paid vacation per year, as well as paid national and public holidays. They can also take sick leave and maternity/paternity leave. Employers must pay salary and social security contributions during leave periods.

Employment termination

In Uruguay, an employment contract can be terminated by mutual agreement, by the employer for just cause, by the employee for any reason, or by either party with notice.

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10 days

Minimum notice period for terminating an employee

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12 days

Total number of public holidays

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44 hours

Working hours per week

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3 days

Total number of days for Compassionate & Bereavement Leave

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Immigration

Foreign nationals who intend to work in Uruguay must obtain a work permit, which is issued by the General Immigration Office. The permit is granted for a maximum of two years and can be renewed. The applicant must provide a copy of their employment contract, a copy of their passport, and other supporting documents. The process may take several weeks, and the applicant must enter the country with a tourist visa while the work permit is processed.

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Residency permits

Foreigners seeking residency in Uruguay must first obtain a work visa, sponsored by a local employer. After obtaining the visa, individuals can apply for a temporary residence permit, which is typically valid for one year and can be renewed annually. After three years of temporary residence, they may be eligible for permanent residency, but it’s important to note that the process may vary and seeking expert guidance is recommended.

Work Permit Validity

2 years

Required Documents

A completed visa application form

A recent passport photograph

A passport with a minimum of six months of validity

A copy of the main page of the applicant’s passport

An offer of employment from a company registered in Uruguay, which should include information about the job position and the company as well as a signature from the company’s legal representative

A copy of the ID of a reference in Uruguay

Proof of payment of the visa fee

Compliant, reliable, error-free and touchless payroll in Uruguay

Build the best team and hire top talent compliantly in Uruguay. Get in touch with Uruguay payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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