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Overview of Ecuador

Ecuador is located in the north western corner of South America. The name means: The Republic of the Equator as the equator runs right through it. The capital Quito lies on a height of 2850m and is the highest official capital city in the world. It is also a UNESCO heritage site due its old town which dates back to the Spanish colonial times. The population is 17.08 million. The summit of Mount Chimborazo, the highest mountain in Ecuador, is the point on Earth closest space due to the mountain being located on a huge bulge in the Earth. It is actually higher than Mount Everest but as one counts the distance from sea level to determine the height, Mount Everest wins. Ecuador is one of the largest exporter of bananas in the world and has the eighth largest economy of Latin America. Spanish is the official language but there are also 13 indigenous languages which are recognised including Quichua and Shuar.

Ecuadoreans are polite and well-mannered. When conducting business, small talk is expected to get to know ones business partner better and to build up a relationship. Dress is formal and conservative and people expect to be addressed with their titles. Punctuality is flexible and Ecuadoreans will be late to meetings. They are indirect communicators and will tell you what they think you want to hear, even if it is not what they plan to do. Blunt communication is considered rude.

Currency of Ecuador

  • US Dollar

Health Insurance and the Social Security system of Ecuador

Healthcare is Ecuador is divided into the public and the private sector. The public healthcare is provided through the Instituto Ecuatoriano de Seguridad Social (or IESS) and it provides free healthcare for all residents regardless of their income. Is funded through employee and employer contributions. Employees pay 17.6% of their income for this.

Private healthcare is available but is used mainly in the major cities.

Employer cost of Ecuador

The cost for an employer to hire someone in Ecuador is a plus of 12.15% to the gross salary.

Salary and bonuses of Ecuador

Regular employees are paid twice a month or monthly.

There is a mandatory 13th and 14th month salary in Ecuador. The 13th month wage has to be paid in December. Employees can choose to have this bonus paid out on a monthly basis instead. The total of the 13th salary is calculated based on the individual employee’s overtime, bonuses and commissions accumulated throughout the year. The 14th month salary is to be paid in March or August and is equal to the current amount of the legal minimum wage.

Commissions, incentives, and bonuses are variable and will be agreed upon directly with the employer.

Public Holidays in Ecuador

  • January 1st – New Year’s Day
  • moveable (February or March) – Carnival (Monday and Tuesday)
  • moveable (March or April) – Good Friday
  • May 1st – Labour Day
  • May 24th – The Battle of Pinchincha
  • August 19th – Declaration of Independence of Quito
  • November 2nd – All Soul’s Day
  • November 3rd – Independence of Cuenca
  • December 25th – Christmas Day

Working Hours in Ecuador

Office hours are from 9:00am to 6:00pm, Monday to Friday.

A regular work week is 40 hours.

Overtime is paid with an increase of 125-200% of the regular hourly wage based on the schedule.

Vacation in Ecuador

After one year of employment, employees are entitled to 15 days of annual leave (this includes rest days). After 5 years of employment, an additional day is added every year until a maximum of 30 days has been reached.

Sick Leave in Ecuador

When an employee falls sick in Ecuador, they must certify their illness with the social security medical center within 3 days. The first 3 days of an illness are paid by the employer. After this, the Ecuadorean Social Security Institute (IESS) takes over. For the first 2 months, employees are entitled to 50% of their salary. The IESS covers an illness for up to 180 days.

Termination/Severance in Ecuador

When terminating an employee in Ecuador, one must have a legal reason to support such a dismissal. The employer must obtain authorization from the Ministry of Labor and Human Resources. For this, diligent records with time, place, form and event need to be submitted. The authorization needs to be granted otherwise the employer needs to pay the dismissed employee severance. In all cases, the termination period is 30 days or as stated in the employment contract.

Should the employer need to pay severance, the minimum the employee is entitled to is 3 months wages for employment lasting up to 3 years. If the employee has been with the company for longer than 3 year, one month’s wage gets added for each year of service. The maximum severance pay is 25 months salary.