Hiring local personnel through a Professional Employer Organization (PEO) in Guatemala is a wise decision for foreign companies that have a limited-scale operation or are planning to do business in the country for a short period of time. A PEO in Guatemala will manage complex and time-consuming HR activities while ensuring full compliance with local labor and tax regulations.
A PEO in Guatemala can also be known as an Employer of Record (EOR) or a payroll outsourcing company.
In recent years, Guatemala has seen consistent economic growth and development. With a gross domestic product (GDP-PPP) of $153 billion (all figures in USD) and a gross national income (GNI) that reached $8,870 in 2019, the country has the largest economy and is the most prosperous among the Northern Triangle, which also includes El Salvador and Honduras.
The country has seaports on the Caribbean Sea and Pacific Ocean and has reached free trade agreements (FTAs) with the United States, the European Union, and various Latin American countries, Colombia, Costa Rica, the Dominican Republic, and Panama.
As such, international trade passing through Guatemala represents more than 30 percent of Central America’s total imports and exports. Valuable goods produced in the country include metals, oil, and timber, along with other commodities such as sugar, coffee, and bananas. Agriculture alone accounts for 13.5 percent of Guatemala’s GDP and generates employment for 31 percent of the country’s labor force.
Whether if you are considering starting a business in Guatemala or have already established a company in the country, read on to understand how a PEO in Guatemala could help you find qualified local staff and maximize your chances of success.
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What can a PEO in Guatemala do for you?
A PEO in Guatemala will help your business enter the market by managing all responsibilities involved in the hiring process. This usually includes recruiting, hiring, firing, managing employee payroll, and paying all social benefits. An experienced PEO will also assist your company by drafting all contracts and related paperwork, allowing you to maintain control of general operations, meaning you can focus on developing your business without having to worry about employment laws.
A PEO is also able to offer support with your market incorporation, providing legal and accounting advice. Likewise, a PEO in Guatemala is responsible for compensating staff in the event of resignation, dismissal, or retirement. Note that a PEO is also in charge of paying staff severance, unused vacations, and any other required payments.
6 benefits of working with a PEO
A PEO in Guatemala can provide solutions to many of the challenges faced by your business, especially when first setting up. Some of the key benefits are listed below:
- Risk protection: using professional PEO services means that legal specialists will be working to minimize your risk of legal disputes as they take legal responsibility for your employees.
- Qualified staff: With an established recruitment team of HR specialists, a PEO in Guatemala will promptly be able to find the most suitable personnel for your company.
- Quick setup: A PEO service will already be recognized as a legal entity, so using it will allow you quick access to the market.
- Reduced costs: A PEO will eliminate the time and money that is required for setting up and maintaining a legal entity within Guatemala.
- Immigration support: A PEO will supervise the work visa application processes for those foreign employees who require it.
- Time management: With the time saved by outsourcing payroll to a PEO, you can focus on other aspects of your company’s operations.
Starting a business in Guatemala: hiring and paying staff
One of the most important things to consider when doing business in Guatemala is how you are going to meet the legal requirements of your staff. The rights of your employees are set out in Guatemalan labor laws, so it is essential to meet these requirements to avoid any legal complications. It is also worth keeping in mind that these laws will change over time, so working with a PEO in Guatemala will guarantee you keep abreast of all such developments.
The main employment requirements, which a PEO in Guatemala will take care of for you, include:
Working hours: The standard working week is 44 hours, with any overtime is paid at time and a half.
Holidays: Guatemala celebrates 11 national holidays and staff are entitled to 15 days annual leave after completing 150 days in a job.
Bonuses: Employees are entitled to a bonus in both July and December equivalent to one average month of pay.
Sick leave: Employees are entitled to a minimum of five days of sick leave.
Maternity/paternity pay: Maternity leave of 12 weeks and paternity leave of 2 days are guaranteed by law.
Tax: Employers must contribute 12.67 percent of wages to social security.
Contracts: Contracts must be in writing and given to the employee and submitted to the government.
Termination of contracts: When a contract is terminated, the employer must pay any owed salary as well as proportional bonuses. Also, if there is no just cause for termination, severance pay may be offered.
Biz Latin Hub: your reliable PEO in Guatemala
At Biz Latin Hub, our multilingual recruitment and employment specialists are equipped to offer you a tailored service to cater to your business needs and help you find the right staff in Guatemala, as well as elsewhere in Latin America and the Caribbean. With our full portfolio of legal, accounting, and back-office services, we can be your single point of contact to help you to enter the Guatemalan market in the shortest possible time.
Contact us now to discuss your expansion options.
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