If you have a business in Guatemala or are thinking of opening one in the country, you must familiarize yourself and comply with all applicable labor regulations. Some labor laws in Guatemala are updated periodically, while others have been on the books for many years.
In addition, there are international standards, such as the Conventions of the International Labor Organization to which Guatemala is a party, and that’s why we recommend having specialized legal advice to help you comply with these obligations to avoid potentially incurring penalties, lawsuits and fines.
Likewise, complying with labor obligations in Guatemala is essential to guarantee the safety, stability and well-being of employees, which are fundamental pillars for the proper development of a company.
The 2023 labor obligations that companies in Guatemala must obey are as follows:
- Adjustment of minimum wages
- Payment of Christmas bonus for the year 2022
- Employer’s annual report
- Wage book closing
- Ornament ticket (boleto de ornato, a tax for maintaining public areas)
Each of these obligations is explained in more detail below.
1. Adjustment of Minimum Wages
Employee’s adjustment to the minimum wages take place yearly as per the Labor Code. In 2023, there are different economic districts and types of economic activities that have to be followed and set through the Governmental Agreement number 353-2022.
2. Payment of Christmas bonus for the year 2022
As per Guatemalan Labor Code, Christmas Bonus can be paid in full during the first two weeks of December of each year, or paid half in that date and the other half in the first two weeks of January.
3. Employer’s Annual Report
The employer’s annual report must be filed electronically with the Ministry of Labor and Social Security during the first two months of the year.
4. Closing of the Wage Book
The closing of the salary book must be carried out during the fiscal year and contain the record of all the company’s employees.
5. Ornament Ticket
It’s a tax that all residents must pay annually, in order to contribute to the maintenance of their city. The corresponding withholding must be made for the payment of the ornament tickets of each employee, or else, the employees must be asked for proof of payment of said ticket within the first two months of each year.
SEE ALSO: Legal representation in Guatemala
Other labor obligations in Guatemala with regards to taxes that companies must file at the beginning of each year include:
Income tax, filing of the Annual Affidavit of Income – From Dependent Workers (SAT-1431) for each employee in the company’s possession, within the first three months of the year.
- Return of excess income tax – Withheld for each employee in a relationship of dependency (SAT-1331) within the first two months of the year.
In addition to the applicable labor, tax and reporting obligations at must take place at the beginning of each year, companies must also carry out the following:
- Payment of salaries and labor benefits – It is the employer’s responsibility to ensure that employees receive their salaries and benefits within the term agreed upon in their employment contracts (biweekly or at the end of the month). This includes the payment of overtime, paid leave, and bonuses, among others.
- Compliance with labor laws – Employers must comply with all local and international labor laws, as well as with workplace safety regulations, and laws concerning non-discrimination and wage parity. This includes providing a safe and healthy work environment as well as job training and employee development.
- Registration of the employer and employees with the Guatemalan Institute of Social Security – The employer must register their company as an employer and all of its employees in the Social Security Program, which in Guatemala is the Instituto Guatemalteco de Seguridad Social. The contributions are calculated from the employees total salaries.
- Registration of employment contracts – Within a maximum period of 15 days after signing the employment contract, these must be registered with the Electronic Registry of Individual Employment Contracts (or Registro Electrónico de Contratos Individuales de Trabajo in Spanish).
- Compliance with leave and vacation regulations – Employers must comply with paid and unpaid leave regulations as well as the annual vacation period to which all workers are entitled.
Regarding the change in the minimum wage for the year 2023, employers must adjust the salary of those who receive the minimum wage to the new legal minimum for the current year, which has increased by 7% to $403 USD.
This legal minimum wage varies according to the: A. Economic District (determined by the Governmental Agreement that sets the minimum wage) that in 2023 is divided in A. Department of Guatemala, and B. The rest of the departments of the country, and C. Economic Activity (also determined by the Governmental Agreement) which is divided into three types: 1. Agricultural, 2. Non-agricultural, and 3. export and assembly plant.
Biz Latin Hub can help you with Labor Obligations in Guatemala
At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with offices in Bogotá and Guatemala, as well as over a dozen other major cities in the region. We also have trusted partners in many other markets.
Our unrivalled reach means we are ideally placed to support multi-jurisdiction market entries and cross-border operations.
As well as knowledge about labor compliance, our portfolio of services includes hiring & PEO accounting & taxation, company formation, bank account opening, and corporate legal services.