Labor Laws Across Central, South, and North America
Erez Greenberg| Sep 28, 2017
One of the fastest ways to fail when expanding globally is by failing to understand, anticipate, and comply with international labor requirements. In the past we have explored some of the differences around the globe. Today we’re going to look at South, Central, and North America in conjunction with the announcement that Papaya Global is now supporting employers operating in these markets: Argentina, Bolivia, Brazil, Chile, Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Trinidad & Tobago, Uruguay, and Venezuela. Additional information on each can be found in the CountryPedia.
Based on the 2016 Global HR Practices research, we know that employers most often move to new markets in an effort to establish or maintain a presence in key customer markets, and there are many potential customers scattered across the South, Central, and North American markets. To help shed some light on the area and what labor requirements exist, we’re going to explore labor requirements in Argentina, Mexico, and Honduras to see how they compare and contrast.
Argentina is located in South America and has an estimated 43 million citizens. The country’s official language is Spanish, and the capital city is Buenos Aires. In terms of labor regulations, the country has a few areas that might be tricky for employers unfamiliar with the local laws.
For starters, the legal work schedule is eight hours per day and forty-eight hours per week. However, the regular working week is limited to 44 hours for daily work, 42 hours for night work, and 36 hours where work is performed in hazardous environments. Work is normally not permitted on Saturday afternoon or Sunday without approval from the proper authorities.
In addition, employers have several requirements for leave, notice periods, and pensions:
- Notice Periods: employers must provide 15 days of notice for terminations or must pay in lieu of the notice period.
- Sick Leave: employees with less than 5 consecutive years with a company can have up to three months of sick leave; employees with more than 5 years of tenure can have up to six months.
- Pension: employers must contribute 17% of salary to the employee’s pension fund; employees contribute 11%.
For additional information, check out the CountryPedia page for Argentina’s salary and benefits
Mexico houses more than 119 million residents and is part of North America. Bordering the United States, Mexico is one of three countries that participates in the North American Free Trade Agreement (NAFTA), a treaty that reduces barriers for businesses in Canada, the United States, and Mexico.
One area of Mexican labor law that employers need to know about is presumptive employment. An employee who works at least for a month for an employer is presumed to be a permanent employee, and unless a probationary contract is used to protect the employer’s interests in the initial month, any worker that completes at least one month of service is entitled to severance if terminated, according to Fisher Phillips law firm.
Additionally, work schedules differ from some other nations. Employees may not work more than eight hours in the daytime, seven hours for night work, or seven and a half hours for a shift that spans both day and night. Employees who work on Sundays receive a 25% premium over their regular daily pay. However, even if the employee does not work on Sundays, the individual is paid regular pay for Sundays. Even though employees in Mexico are not required to work more than 48 hours per week, they are paid for seven days, or 56 hours of work.
Requirements for leave, notice periods, and pensions:
- Notice Periods: employers are not required to provide notice prior to termination.
- Sick Leave: there is no mandatory unpaid medical leave of absence in Mexico, but employers can grant leave if the condition is one not covered under IMSS, Mexico’s version of state-funded disability coverage.
- Pension: employers must contribute 3.15% of salary to the employee’s pension fund; employees contribute 1.125%.
Honduras is a republic located in Central America and houses some 8 million people. There is a variety of talent available in the country, with one source estimating that 40 percent of the Honduran labor force was underemployed at the end of 2014.
Many employers hire employees on a temporary or trial basis basis under what is known as the Temporary Employment Law. Employers have the option to renew employees under short-term contracts to maintain flexibility and control over the workforce. Additionally, Honduran labor law prescribes a maximum 8-hour workday and 44-hour work week. At least one 24-hour rest period is required every week under the law.
Vacation days for Honduran workers depend on the length of service with a company and can range from 10 to 20 days. Employees with:
- 1-2 years of employment receive 10 days.
- 2-3 years of employment receive 12 days.
- 3-4 years of employment receive 15 days.
- More than 4 years of employment receive 20 days.
Requirements for leave, notice periods, and pensions:
- Notice Periods: employers are required to provide notice periods based on length of service, ranging from 24 hours notice for those with under three months of service up to two months’ notice with more than two years of service..
- Sick Leave: employees must receive 66% of their salary for up to 26 weeks.
- Pension: there is no mandatory pension in Honduras. In 2015 Congress passed the Social Protection Law that provides a framework for universal social security coverage for all Hondurans.
For additional information, check out the CountryPedia page for Honduras’s salaries and benefits.
It’s clear that while this group of countries may exist in the same general geographic area, their requirements can vary dramatically. That’s why it’s critical to have the right suppliers in place to support localized operations. And with more companies expanding internationally than ever before, it’s the perfect time to explore the opportunities for scaling your company across the globe.