# Employer of record in Ecuador: costs, rules and how to hire > Machine-readable page from Employ Borderless (https://employborderless.com/), an independent advisory platform for global hiring solutions. > Canonical page: https://employborderless.com/eor/countries/ecuador/ > Methodology: how providers are researched, tested and scored is documented at https://employborderless.com/methodology/. > Disclosure: Employ Borderless is free to use. We may earn a referral fee from some providers; this never affects a score or ranking position (https://employborderless.com/disclosure/). > Facts last changed: 2026-11-09 ## Hiring costs For every 100 of gross salary in Ecuador, the stored employer social contribution rate adds about 12.15%. Benefits and the employer of record fee are quoted separately. Source: National government, https://www.iess.gob.ec/documents/13718/54965/Tasasdeaportacion.pdf Published EOR base fees among providers covering Ecuador range from $179 to $699 per employee/month. These are provider base prices, not a quote for this hire or the total employment cost. ## Ending employment As a comparison average over 1, 5 and 10 years of service (World Bank method), ending employment in Ecuador carries no statutory employer notice and 31.8 weeks of severance, 31.8 weeks of salary in total, ranked 8 of 191 countries. Notice is time on payroll; severance is a payment on exit. Contracts and collective agreements can require more. ## Sourced employment rules - Eight hours a day, 40 a week: The maximum working day is eight hours, and the working week may not exceed 40 hours, unless the law provides otherwise. (source: Código del Trabajo, codified text with reforms to November 2017, published by INEC, article 47, https://www.ecuadorencifras.gob.ec/LOTAIP/2017/DIJU/diciembre/LA2_OCT_DIJU_CODIGO%20TRABAJO.pdf; checked 2026-09-28) - Overtime at 50%, or 100% after midnight: Hours beyond the legal day need a written agreement and the labour inspector's authorisation, and are capped at four a day and twelve a week. They are paid with a 50% surcharge up to midnight and 100% between midnight and 6 a.m. (source: Código del Trabajo, codified text with reforms to November 2017, published by INEC, article 55, https://www.ecuadorencifras.gob.ec/LOTAIP/2017/DIJU/diciembre/LA2_OCT_DIJU_CODIGO%20TRABAJO.pdf; checked 2026-09-28) - Fifteen days of vacation a year: Every employee is entitled to an uninterrupted 15 days of vacation a year, counting non-working days. After five years with the same employer, one extra day is added for each further year, up to 15 extra days, or paid in cash at the employer's choice. Vacation pay is paid in advance. (source: Código del Trabajo, codified text with reforms to November 2017, published by INEC, articles 69 and 70, https://www.ecuadorencifras.gob.ec/LOTAIP/2017/DIJU/diciembre/LA2_OCT_DIJU_CODIGO%20TRABAJO.pdf; checked 2026-09-28) - Thirteenth salary: a twelfth of pay: Employees are paid a thirteenth salary equal to a twelfth of what they earn in the calendar year. It is paid monthly, or, if the employee asks in writing, as one sum by 24 December. (source: Código del Trabajo, codified text with reforms to November 2017, published by INEC, article 111, https://www.ecuadorencifras.gob.ec/LOTAIP/2017/DIJU/diciembre/LA2_OCT_DIJU_CODIGO%20TRABAJO.pdf; checked 2026-09-28) - Fourteenth salary: a twelfth of the basic wage: Employees also receive a fourteenth salary: a monthly payment of a twelfth of the unified basic wage, whatever they earn. If the employee asks in writing, it is paid as one sum by 15 March on the Coast and in Galápagos, or by 15 August in the Sierra and the Amazon region. (source: Código del Trabajo, codified text with reforms to November 2017, published by INEC, article 113, https://www.ecuadorencifras.gob.ec/LOTAIP/2017/DIJU/diciembre/LA2_OCT_DIJU_CODIGO%20TRABAJO.pdf; checked 2026-09-28) - Reserve fund from the second year: After one year of service, the employer pays into a reserve fund the equivalent of one month of pay for each full year of service after the first. The employee cannot lose this right. (source: Código del Trabajo, codified text with reforms to November 2017, published by INEC, article 196, https://www.ecuadorencifras.gob.ec/LOTAIP/2017/DIJU/diciembre/LA2_OCT_DIJU_CODIGO%20TRABAJO.pdf; checked 2026-09-28) - Employees share 15% of profits: The employer shares 15% of its net profits with its employees: 10% split equally among them, and 5% in proportion to their family dependants. (source: Código del Trabajo, codified text with reforms to November 2017, published by INEC, article 97, https://www.ecuadorencifras.gob.ec/LOTAIP/2017/DIJU/diciembre/LA2_OCT_DIJU_CODIGO%20TRABAJO.pdf; checked 2026-09-28) - A trial period of up to 90 days: The first indefinite contract between an employer and an employee may include a trial period of up to 90 days, during which either side may end it freely. Only one trial period is allowed between the same employer and employee. (source: Código del Trabajo, codified text with reforms to November 2017, published by INEC, article 15, https://www.ecuadorencifras.gob.ec/LOTAIP/2017/DIJU/diciembre/LA2_OCT_DIJU_CODIGO%20TRABAJO.pdf; checked 2026-09-28) - Unfair dismissal: three months, or a month per year: An employer who dismisses an employee without legal grounds pays three months of pay for up to three years of service, and one month per year of service beyond that, up to 25 months. Part of a year counts as a full year, and the desahucio bonus is paid on top. (source: Código del Trabajo, codified text with reforms to November 2017, published by INEC, article 188, https://www.ecuadorencifras.gob.ec/LOTAIP/2017/DIJU/diciembre/LA2_OCT_DIJU_CODIGO%20TRABAJO.pdf; checked 2026-09-28) - Desahucio bonus: 25% of monthly pay per year: When employment ends by desahucio notice, or by agreement between the parties, the employer pays a bonus of 25% of the last monthly pay for each year of service with the same employer, settled within 15 days of the notice. (source: Código del Trabajo, codified text with reforms to November 2017, published by INEC, article 185, https://www.ecuadorencifras.gob.ec/LOTAIP/2017/DIJU/diciembre/LA2_OCT_DIJU_CODIGO%20TRABAJO.pdf; checked 2026-09-28) - Twelve weeks of maternity leave, ten days for fathers: A mother is entitled to 12 weeks of paid leave for the birth of a child, plus ten days for multiple births. A father is entitled to ten days of paid leave for a normal birth, extended for multiple or caesarean births. (source: Código del Trabajo, codified text with reforms to November 2017, published by INEC, article 152, https://www.ecuadorencifras.gob.ec/LOTAIP/2017/DIJU/diciembre/LA2_OCT_DIJU_CODIGO%20TRABAJO.pdf; checked 2026-09-28) - IESS: 11.15% employer, 9.45% employee: For private-sector employees, the IESS contribution table sets 11.15% for the employer and 9.45% for the employee, 20.60% in total, covering pensions, health, work risks, unemployment and administration. (source: Instituto Ecuatoriano de Seguridad Social: tasas de aportación, https://www.iess.gob.ec/documents/13718/54965/Tasasdeaportacion.pdf; checked 2026-09-28) - Labour intermediation is prohibited: A note in the codified Labour Code records that Constitutional Mandate 8 of 2008 eliminates and prohibits outsourcing, labour intermediation and any precarious form of employment in the activities to which a company is dedicated. Ask a provider which Ecuadorian company employs the person and how the arrangement fits that rule. (source: Código del Trabajo, codified text with reforms to November 2017, published by INEC, note on Mandato Constituyente 8 (Registro Oficial 330-S, 6 May 2008), https://www.ecuadorencifras.gob.ec/LOTAIP/2017/DIJU/diciembre/LA2_OCT_DIJU_CODIGO%20TRABAJO.pdf, Ecuador: private-sector employment under the Código del Trabajo, subject to the contract, any collective agreement and more favourable terms; checked 2026-09-28) - Old-age pension by age and years of contributions: The IESS grants an old-age pension from 60 with 30 years of contributions, from 65 with 15 years, from 70 with 10 years, or at any age with 40 years. (source: Instituto Ecuatoriano de Seguridad Social: jubilación ordinaria por vejez, https://www.iess.gob.ec/es/web/guest/jubilacion-ordinaria-vejez; checked 2026-09-28) - Eleven days of national holidays, moved to Mondays or Fridays: The Asamblea Nacional's note on the 2016 holidays reform says national holidays total 11 days a year, and that holidays falling mid-week or at the weekend move to a Monday or Friday under a schedule the President publishes each year. Confirm the year's schedule with the provider. (source: Asamblea Nacional del Ecuador: note on the 2016 reform to the Ley del Servicio Público and the Código del Trabajo (holidays), https://www.asambleanacional.gob.ec/es/blogs/esther-ortiz/47385-pleno-aprobo-ley-de-feriados-este-25-de, Ecuador: private-sector employment under the Código del Trabajo, subject to the contract, any collective agreement and more favourable terms; checked 2026-09-28) ## Top EOR providers for Ecuador 1. RemoFirst, from $199 per employee/month (https://employborderless.com/review/remofirst/) 2. Remote, from $599 per employee/month (https://employborderless.com/review/remote/) 3. Deel, from $599 per employee/month (https://employborderless.com/review/deel/) Full ranking: https://employborderless.com/review/best-employer-of-record-ecuador/ ## Hiring in Ecuador: the short version Say you are hiring a finance analyst in Quito at $1,000 a month. Ecuador pays in US dollars, and the employer cost has three fixed parts: 11.15% to the IESS, a thirteenth salary worth a twelfth of pay, and a fourteenth salary worth a twelfth of the basic wage, which is $482 a month in 2026. In the first year that comes to $1,235 a month, or $14,820 a year, before the provider fee. From the second year a reserve fund adds another twelfth of pay. The question that matters more than any rate is who employs your hire. A note in the codified Labour Code records that Constitutional Mandate 8 of 2008 prohibits outsourcing and labour intermediation in a company's own activities. So ask any provider which Ecuadorian company employs the person, and how its arrangement fits that rule, before you compare prices. Your first hire in Ecuador in five decisions Five things settle an Ecuadorian hire, and each figure below is worked through further down. - Entity or EOR. No fixed headcount decides it. Start from how the provider's arrangement fits the ban on labour intermediation, then compare the annual fee with running the IESS filings and payroll yourself. - Employee or contractor. A contractor label does not change what the work is. Where the person works inside your team under your direction, employ them. - Budget line. On $1,000 a month: $111.50 IESS, $83.33 thirteenth salary and $40.17 fourteenth salary, giving $1,235 a month in the first year and $1,318.33 from the second. - Exit cost. A dismissal without legal grounds costs three months of pay for up to three years of service, then a month per year, plus a bonus of 25% of monthly pay per year. - Realistic start. After the employing company, the written contract and the IESS registration are settled, not from an advertised onboarding window. ## How to hire employees in Ecuador An employer of record employs your hire through an Ecuadorian company, signs the contract, runs payroll and holds the IESS registration, while you direct the work. In Ecuador the legal basis deserves more attention than usual: a note in the codified Labour Code records that Constitutional Mandate 8 of 2008 eliminates and prohibits outsourcing, labour intermediation and any precarious form of employment in the activities a company is dedicated to. Ask how the provider's arrangement fits that rule, and keep the answer in writing. I read the mandate only as the Labour Code's note describes it, not the mandate's own text, so this page states the rule and no more. How it applies to a provider employing someone who works for a foreign client is a question for the provider and for Ecuadorian counsel. From an agreed role to the first payroll The steps are short, and the legal basis is the one to settle first. - Define the duties, the workplace and the region, because the fourteenth salary's payment date follows the region. - Verify the employing Ecuadorian company and the legal basis of the arrangement. - Agree the written terms: salary, schedule against the 40-hour week, vacation, any trial period and the treatment of the extra salaries. - Register the hire with the IESS through the employer. - Set the payday, and agree whether the thirteenth and fourteenth salaries are paid monthly or as one sum. How long the first hire takes, and what sets the date The contract and the IESS registration set the date, not a number of weeks. Ask which of these is outstanding, because that is the one holding your start: the employing company and its legal basis, the signed contract, and the IESS registration before the first payroll. Source: Código del Trabajo, codified text with reforms to November 2017 (INEC), captured September 2026. ## EOR, entity, or contractor in Ecuador? Ecuadorian employer cost is higher than the IESS rate suggests, because two extra salaries and a reserve fund sit on top of it. None of them are optional and all of them are owed whoever employs the person, so a quote that shows only the IESS rate is showing half the picture. What can a $1,000 monthly salary cost? This illustration assumes an unchanged salary, the 2026 basic wage of $482 and the IESS private-sector rate table. The reserve fund starts after the first year. Budget itemMonthlyAnnual illustration Gross salary$1,000.00$12,000.00 IESS, employer 11.15%$111.50$1,338.00 Thirteenth salary, a twelfth of pay$83.33$1,000.00 Fourteenth salary, a twelfth of the $482 basic wage$40.17$482.00 Subtotal in the first year$1,235.00$14,820.00 Reserve fund from the second year, a month of pay per year$83.33$1,000.00 Subtotal from the second year$1,318.33$15,820.00 Profit share, company benefits, equipment and provider feeAdd the agreed costs Employee deductions are separate money: on the same salary the employee pays $94.50 to the IESS, 9.45%, before income tax is withheld. The profit share Ecuadorian employers share 15% of their net profits with their employees. With an employer of record, the employer is the provider's Ecuadorian company, so the share comes from that company's profits, not yours. Ask the provider how it handles the profit share and whether any of it is passed on to you. Ask for a complete provider quote A useful quote names the employer and prices every statutory line, so you can compare two providers on the same salary. - The Ecuadorian company that employs your hire, and how the arrangement fits the ban on labour intermediation. - The IESS contribution, the thirteenth and fourteenth salaries, and the reserve fund from the second year. - How the profit share is handled. - The service fee, deposit and invoice tax. - The cost of ending the employment, including the dismissal indemnity and the desahucio bonus, or of moving the hire to your own company. Compare providers on the same gross salary and benefits, because an advertised fee does not establish the employment budget, and there is no universal headcount at which you should switch to direct employment. Moving from an employer of record to your own Ecuadorian company Plan the move around years of service, because the reserve fund, the extra vacation days after five years and the dismissal indemnity all count them. Settle in writing how the accrued thirteenth and fourteenth salaries and the vacation balance are paid or carried, and who pays the desahucio bonus if the employment ends by agreement rather than transfers. Take Ecuadorian advice on whether service with the provider counts once the person joins your company. Source: Instituto Ecuatoriano de Seguridad Social, contribution rates, captured September 2026. Source: Código del Trabajo, codified text with reforms to November 2017 (INEC), captured September 2026. Source: Registro Oficial, Suplemento 187 of 18 December 2025, Acuerdo MDT-2025-195, captured September 2026. ## What types of employment contracts exist in Ecuador? For most hires through an employer of record, expect an indefinite contract. The Code allows occasional, seasonal and other fixed forms for circumstantial needs, such as covering someone on leave, but the ordinary employment of a person in an ongoing role is indefinite. Trial period The first indefinite contract between an employer and an employee can include a trial period of up to 90 days, during which either side can end it freely. Only one trial period is allowed between the same parties, whatever the contract type, so a second contract with the same person cannot restart it. Put the employment terms in writing State the employer, the duties, the workplace and region, the start date, the salary, the schedule against the 40-hour week, the vacation, any trial period, and whether the thirteenth and fourteenth salaries are paid monthly or as lump sums. Misclassification risk, and the rules the label sits under Ecuador's starting point is strict: the Code's note on Mandate 8 describes a ban on outsourcing, labour intermediation and any precarious form of employment in a company's own activities. A contractor agreement for someone who works inside your team, on your schedule and under your direction, is the arrangement that ban is aimed at. I have not read a penalty schedule for misclassification in this pass, so I am not going to quote one. Decide the status on the working conditions you will actually impose, and where the person works under your direction, employ them through a company that can lawfully do so. Source: Código del Trabajo, codified text with reforms to November 2017 (INEC), captured September 2026. ## What catches employers out in Ecuador Six points decide whether an Ecuadorian payroll is right, and most of them are payments that arrive outside the monthly salary. Ask the provider how each one is handled before the first payslip. PointWhy it changes the decision Labour intermediation is prohibitedMandate 8 of 2008 bans outsourcing and intermediation in a company's own activities, so the provider's legal basis is the first question. Two extra salariesA thirteenth salary of a twelfth of pay and a fourteenth of a twelfth of the $482 basic wage, paid monthly or as lump sums. The fourteenth depends on the regionAs a lump sum it is due by 15 March on the Coast and in Galápagos, and by 15 August in the Sierra and the Amazon. Reserve fund from year twoOne month of pay per year of service after the first, which the employee cannot lose. The profit share15% of the employer's net profits goes to employees, 10% equally and 5% by family dependants. Exit bonuses stackAn unfair dismissal indemnity and the 25% desahucio bonus are both owed, and a part year counts as a full year. A seventh point is the date of the rules. The Labour Code text I read is codified with reforms to November 2017, so ask the provider whether later legislation has changed a rule you are relying on. Source: Código del Trabajo, codified text with reforms to November 2017 (INEC), captured September 2026. ## How does payroll and compensation work in Ecuador? Ecuador has one national minimum wage, the unified basic wage, set each year by the Ministry of Labour. For 2026 it is $482 a month from 1 January, under Agreement MDT-2025-195. For a professional role it rarely binds, but it still matters to every payroll, because the fourteenth salary is calculated on it rather than on the employee's pay. Hours and overtime The working week is short and overtime needs paperwork, which matters for teams that want cover across time zones. TopicRule in the Labour Code Normal hoursAt most eight hours a day and 40 hours a week. Overtime conditionsA written agreement and the labour inspector's authorisation; at most four hours a day and twelve a week. Overtime up to midnightA 50% surcharge. Overtime from midnight to 6 a.m.A 100% surcharge. The thirteenth and fourteenth salaries Both are paid monthly unless the employee asks in writing for a lump sum. The thirteenth is a twelfth of everything the employee earns in the calendar year, due by 24 December as a lump sum. The fourteenth is a twelfth of the basic wage, $40.17 a month in 2026 whatever the salary, due as a lump sum by 15 March on the Coast and in Galápagos or by 15 August in the Sierra and the Amazon. Agree the method in the contract, because it changes the monthly payslip. Source: Registro Oficial, Suplemento 187 of 18 December 2025, Acuerdo MDT-2025-195, captured September 2026. Source: Código del Trabajo, codified text with reforms to November 2017 (INEC), captured September 2026. ## What taxes and social contributions apply in Ecuador? One institution collects the ordinary social contributions. For private-sector employees the IESS table sets 11.15% for the employer and 9.45% for the employee, 20.60% in total, covering pensions, health, work risks, unemployment insurance and administration. Separate employer contributions from employee deductions The IESS table splits each branch between the two sides. BranchEmployerEmployee Disability, old age and death3.10%6.64% Health5.71%None Work risks0.55%None Unemployment1.00%2.00% Rural social security0.35%0.35% Administration0.44%0.36% Disabilities lawNone0.10% Total11.15%9.45% The IESS page I read does not date its table, so ask the provider to confirm the rates on the payslip for the payroll year. Example: $1,000 monthly salary IESS $111.50, thirteenth salary $83.33 and fourteenth salary $40.17 bring the employer's monthly cost to $1,235 in the first year, or $14,820 a year, and to $1,318.33 from the second year with the reserve fund. It is a partial budget example, not an all-in quote or a take-home calculation. Income tax and payroll administration The employer withholds income tax through payroll using the progressive tables of the tax authority, the SRI. The SRI table I captured stops at the 2023 tax year, so ask the provider for the table and the tax year behind the payslip rather than estimating from an old one. What an employer of record adds to the employment cost Budget the provider fee as a third line, next to gross pay and the employer contributions above. Across the market it runs from $99 to $799 per employee per month, or 8 to 20% of salary, and where a quote sits in that range is decided by the work rather than by the country: headcount, how much of the administration you hand over, and whether the provider is pricing a single hire or a team. I treat a quote at the bottom of the range as a question rather than a win, because the cheap number is usually the one with the fewest things inside it. What the fee buys is the employment itself: the employing company, the payroll run, the IESS filings and the employer-side administration. What it does not buy is the cost of employing the person. Gross pay, the two extra salaries, the reserve fund and the employer contributions are all yours. Ask for a quote that separates the fee from the pass-through costs, because a single blended figure hides which half moves when pay changes. Source: Instituto Ecuatoriano de Seguridad Social, contribution rates, captured September 2026. ## What benefits and leave are employees entitled to in Ecuador? Statutory leave in Ecuador grows with service. Vacation starts at 15 days and gains a day a year after five years with the same employer, and a reserve fund of a month's pay a year starts after the first year. Family leave is 12 weeks for mothers and ten days for fathers. Leave entitlements These are the rules in the codified Labour Code text. LeaveStatutory rule Vacation15 uninterrupted days a year, counting non-working days, paid in advance; one extra day per year after five years, up to 15 extra, or paid in cash at the employer's choice. Maternity leave12 weeks with pay, plus ten days for a multiple birth. Paternity leaveTen days with pay for a normal birth, longer for a multiple or caesarean birth. Holidays The Asamblea Nacional's note on the 2016 holidays reform says Ecuador has 11 days of national holidays a year, and that holidays falling mid-week or at the weekend move to a Monday or Friday under a schedule the President publishes by decree each year. Local holidays come on top, so confirm the year's schedule for the workplace with the provider. Pensions and retirement The IESS grants an old-age pension from 60 with 30 years of contributions, from 65 with 15, from 70 with 10, or at any age with 40 years. The employer's part is the monthly IESS contribution and, from the second year, the reserve fund. Source: Código del Trabajo, codified text with reforms to November 2017 (INEC), captured September 2026. Source: Asamblea Nacional, note on the 2016 holidays reform, captured September 2026. Source: Instituto Ecuatoriano de Seguridad Social, old-age pension, captured September 2026. ## What are the termination and compliance rules in Ecuador? Ending employment without legal grounds has a set price in Ecuador, and a second payment rides on top of it. The dismissal indemnity is three months of pay for up to three years of service, then one month per year up to 25 months, with part of a year counted as a full year. The desahucio bonus of 25% of the last monthly pay per year of service is owed as well. What an exit costs The figures below are our arithmetic on articles 185 and 188 for a $1,000 monthly salary, in whole years of service. ServiceDismissal indemnityDesahucio bonusTotal Two years$3,000$500$3,500 Three years$3,000$750$3,750 Five years$5,000$1,250$6,250 An exit by agreement between the parties costs the desahucio bonus alone, which makes a negotiated exit the ordinary route. The employer settles the bonus and the other amounts owed within 15 days of a desahucio notice. During the trial period Within a trial period of up to 90 days on the first indefinite contract, either side can end the employment freely. Intermediation The ban on labour intermediation described in the Code's note on Mandate 8 is the compliance point that sits over the whole arrangement. Ask the provider to explain, in writing, which company employs your hire and how the arrangement fits that rule. Source: Código del Trabajo, codified text with reforms to November 2017 (INEC), captured September 2026. --- Employ Borderless is an independent advisory platform. Rules can depend on location, the employee and the applicable agreement; confirm with the employer of record before you hire.