Guatemala Country Facts

We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in your country of choice and employment contracts.

Global Expansion Made Easy for You

Expanding into Guatemala generally comes with challenges, however, partnering with us and using Employer of Record (EOR) eliminates the frustrations you could encounter.

What types of Work Visas and Permits for Guatemala are there?

Every country has requirements to enter, stay and work on a temporary or a permanent basis – with some exceptions. Also bear in mind that Guatemala’s official language is Spanish, so paperwork submitted for the visas and permits may be required in Spanish.

Many countries’ nationals are visa-exempt status for visiting Guatemala (Category A travellers) – for periods of 90 days within a 180-day period. For others, national visas are required, covering Tourist and Business activities (Category B travellers).

Some also require a Visa plus interview e.g., China, (Category C travellers). Sometimes known as a Consulted Visa.

The documentation for B and C visas is the same, except for the interview. Check out the above link to see which category applies and whether an interview is mandatory.

Visas

  • Visa-exempt nationals receive a passport stamp when entering Guatemala i.e., Tourist/Traveller Visa on Arrival (A category) for 90-day visits within a 180-day period, with the possibility of a 30-day extension if applied for before the 90-day exemption stamp expires, or fines will be applied. Also, people transiting, provided they arrive and leave the airport on the same calendar day, do not require a visa
  • Tourist or Traveller Visa. (B and C category) for those NOT visa exempt. This allows visits for leisure or business, or longer transit periods. It has 90 days validity and business visitors can apply for an extension for a further 90 days. These visas can be applied for through an embassy or consulate abroad. The forms can be downloaded but the documents have to be presented at the diplomatic missions.

Note: Since 2019, Category C visitors, along with the usual documentation, have to include a Police Report regarding any criminal activity from countries they have lived in over the previous five years

Note: Visitors to Guatemala, or those who have homes on the island and hold the above visas, tend to do ‘border runs’ to renew their visas giving them a 90-day stay each time, but this can become expensive.

There is a 90-day Residence Permit available which can be applied for through the immigration office in Guatemala, giving a six-months stay (90 days, plus 90-day extension) and again people exit, and enter the country collecting a new Tourist/Traveller Visa.

For longer than 90 days, there is the Visa Ordinaria for six months (renewable), but this can take up to two months to process.

Other visas issued by the Oficina de Extranjeros (Foreign Office) are:

  • Student Visa for one year
  • Visas for retired persons (Pensionado)
  • Temporary Visas for one year to teach, or for foreign students
  • Religious workers – two-year visa
  • Rentista Visa for investors

Working Authorisation for employment in Guatemala requires:

Temporary Residence Permit for employment

  • Allows the holder to stay in Guatemala and is part of the paperwork required for the Work Permit. It is applied for through the employer’s sponsorship. Initially from one to five years depending on the length of the employment contract, however, the final decision is with the immigration services. After residence for five years, the Permanent Residency Permit application can be submitted. The Oficina de Extranjeros (Foreign Office) is responsible for issuing residence permits, and dependents such as spouses and children can apply for their own which is for the same period and status as the applicant

The Work Permit

  • Is the legal permission to work in the country and is obtained online from the Ministry of Labour and Social Welfare (MINTRAB) via the employer, generally valid for one year and is renewable. Foreigners, having received their residence permit and who will work as employees in Guatemala must present the work permit received from MINTRAB to the Guatemalan Immigration Institute within three months of approval by MINTRAB

There are two types of work permits:

  • Spouse work permit for the foreign wives or husbands and children of Guatemala citizens. These can be applied for through a Guatemalan embassy or consulate in country of residence by individuals directly
  • Employment permit for foreigners who are going to the country and who have been offered work from a Guatemalan registered company. These permits are applied for by employers, who sponsor the employment and can act as guarantor

Note: For employees already in Guatemala, who wish to leave the country for a short time while the Temporary Residence Permit is being processed must apply for a Single or Multi Entry Visa, which is valid for 90 days and not renewable.

Applying for the Work Visas for Guatemala

Companies expanding into Guatemala look towards specialists with the experience to battle through the system for onboarding personnel from home and overseas. As a Professional Employer Organisation, Bradford Jacobs has that local knowledge and global experience needed to find the right route into the Guatemalan economy, moving potential employees from the workforce and into your office.

So, for those companies going it alone, employees require:

  • A Temporary Residence Permit to allow them to stay for periods from one to five years from the Ministry of Foreign Affairs e.g., embassy or consulate abroad and is a pre-requisite for the Work Permit
  • Work Permit e.g., Employment Work Permit: This is the main work permit for employees who have had a job offer from a qualifying employer, who must keep within Guatemala’s ratio of employing foreigners to local workers at 10%

The Spouse Work Permit is the other permit for immediate relatives and spouses of Guatemalan citizens, applied for by individuals through the Ministry of Foreign Affairs in their current country of residence but who should also have a ‘sponsor.’

Steps for working in Guatemala

Eligibility regarding application:

  • Requires a job offer from a registered company in Guatemala who sponsors the foreigner, and an employment contract
  • A national passport with six months’ validity
  • Should be an upstanding citizen
  • Should have money to cover their stay or a guarantor e.g., their employer
  • Should have recommended vaccinations and consider a medical check-up. Check any required medication is available in Guatemala or that it is legal to take it into the country
  • Travel insurance is important
  • Medical insurance is also recommended

Requirements for the employer and employee

  • The employer has to supply paperwork for the employee’s Temporary Residence Permit issued through consulates, by the General Directorate of Migration (Instituto Guatemalteco de Migraciόn), which allows the migrant to enter and reside in Guatemala, which should take about two months to process. This is also a pre-requisite for the Work Permit application
  • Employers have to have approval from the Ministry of Labour (MINTRAB) to show that the expertise and skills of the foreigner are not available locally
  • The employer applies for the Work Permit from MINTRAB
  • The employee has to submit documents for the Temporary Residence Permit and the Work Permit. It should take about 20 days if completed by the employer online
  • Employers must abide by the legal requirements regarding numbers of foreigners allowed within the company (10% not including foreign management)
  • Employers must also state that upon a Work Permit being issued, the employer guarantees employment. They are also supposed to assure MINTRAB their employee’s legal requirements will be fulfilled, as their sponsor/guarantor
  • A copy of foreign worker’s job offer/employment contract should be submitted to MINTRAB with terms and conditions stated, which cannot be unilaterally changed by the company/employer
  • Generally, the employee is still in his country of residence and once the Residence and Work Permits are approved, they can then travel to work in Guatemala
  • The work permit received from MINTRAB, has to be submitted to the Guatemalan Immigration Institute within three months of MINTRAB’s approval

Note: Employees can go to Guatemala as a visa-exempt national for up to 90 days plus extension while their employer organises the Work Permit and Residence Permit. However, any delays may mean having to leave the country and return again.

Also, changes occur regularly regarding processes, documentation, eligibility etc. So, whereas this is a useful guide, Bradford Jacobs and our Professional Employer Organisation experts on the ground, and specialists in Guatemala, have the local knowledge and global experience to get your staff up and running and at their desks and screens quickly …and legally.

Overview of Taxes in Guatemala

Guatemala has an unusual tax regime. Apart from capital gains, all other categories are subject to a single tax. Gross income may include, salary, business income, rent and any other sources of remuneration in addition to benefits in kind such as housing or living allowances. Two options apply for personal income tax, known as ISR. The Simplified Tax Regime applies tax at 5% or 7% on gross income. Alternatively, the General Tax Regime applies tax at 25% on net taxable income and in this case a 1% solidarity tax is also applied and dividends are taxed at 5%. Guatemala has no bilateral or multilateral tax treaties.

Figures are given in Guatemalan quetzal (GTQ) with euro and US dollar equivalents.

Personal Income Tax (PIT): Known in Guatemala as ISR. The rate is 5% up to GTQ 300,000 (€35,078, US$38,470) and 7% above that, plus a payment of GTQ 15,000 (€1,754, US$1,923).

Corporate Income Tax (CIT): 25% applies to net profits, plus 1% solidarity tax on the greater of total assets or gross revenue (under the General Tax Regime).

Branch Tax Rate: 25% on net profits, plus 1% solidarity tax on the greater of total assets or gross revenue (under the General Tax Regime). Passive income taxed separately, with 5% withholding tax on payments from the branch to foreign parent company.

Capital Gains Tax (CGT): This is applied at 10%.

Withholding Tax: For resident individuals and companies, 5% on dividends and 10% on interest; for non-resident companies and individuals 5% on dividends, up to 0%-10% on interest for companies and set at 10% for individuals. Non-resident individuals and companies withheld at 15% on royalties and fees for technical services.

Value Added Tax (VAT): The standard rate is 12% on the sale or transfer of merchandise. Some categories are exempt and exports are zero-rated.

Other Taxes: Real Estate Tax applies at various percentages depending on the property value. There are no state or provincial government taxes.

Personal Income Tax in Guatemala

Figures are given in Guatemalan quetzal (GTQ) with euro and US dollar equivalents.

Personal income tax for residents

Income | Tax on Excess
Up to GTQ 300,000 (€35,078, US$38,470) | 5%
Above GTQ 300,000 plus payment of GTQ 15,000 (€1,754, US$1,923) | 7%
Note: there is a tax-free allowance of GTQ 48,000 (€5,613, US$6,128)

Individual Tax Rules in Guatemala

  • The tax year is January 1 till December 31
  • If entire salary is from payroll, tax returns are due by March 31 of the following year
  • Taxpayers under the Optional Tax Regime pay monthly, either by payroll withholding or paying directly to the tax authority. These individuals must file an annual information return
  • Individuals are considered residents if they live in Guatemala more than 183 days in a calendar year or their economic centre is based there
  • Residents are taxed on income sourced in Guatemala; non-residents are taxed through withholding at a flat rate of 15%
  • Spouses cannot file joint returns
  • Unpaid taxes are liable for a fine of 100% of the amount owing

Employers’ and Employees’ Social Security and Statutory Contributions in Guatemala

Employers’ Social Security Contributions | Percentages (%)
Social Security | 10.67% of the employees’ payroll
Workers’ Recreational Institute (IRTRA) | 1%
Professional Training Institute (INTECAP) | 1%

Employees’ Social Security Contributions | –
Social Security | 4.83% of their wages

Note:  An incentive monthly bonus of not less than GTQ 250 (€30, US$32) is not liable for social security contributions and is a deductible expense for employers.

Setting up a subsidiary is one option for international companies when expanding their operations into the Republic of Guatemala and intending to hire staff and operate payroll for the new entity.

Guatemala is seen as a prime location for establishing a local, legal entity. The dominant economy in Central America, Guatemala’s strategic position places it to the south of Mexico and the United States, with the rest of Central America to the south, and road and rail links into South America. Guatemala has sea routes east and west via its Caribbean and Pacific coastlines.

Agricultural produce, including palm oil, raw sugar, coffee and nutmeg, play a key role in Guatemala’s exports profile. Foreign Direct Investment is attracted into the developing sectors of hydroelectric power and geothermal energy, with finance and insurance, manufacturing and a growing e-commerce footprint also among the prospects.

Companies attracted by this potential to invest in Guatemala can opt to do so through a subsidiary, and typically look at establishing a limited liability company (LLC), in Spanish a Sociedad de Responsabilidad Limitada (SRL). It operates under the Commercial Code and must comply with several pieces of tax legislation as well as the Labour Code in regard to its employees.

There is a more practical, faster and simpler route into the Guatemalan economy which avoids the complications of opening a subsidiary. Bradford Jacobs has the expertise to remove these potential obstacles. Our Professional Employer Organisation (PEO) teams and Employer of Record (EOR) consultants will be with you every step of the way – from recruiting staff to managing every legal aspect of compliance. Instead of waiting weeks or months, you and your staff can be up-and-running in days … and your employees are always under your daily operational control.

How to set up a Guatemala Subsidiary

Incorporation and registration procedures to set up a limited liability company, for example, in Guatemala include the following:

  • Initially, companies lodge a unique business name with the Commercial Registry (Registro Mercantil) online at https://minegocio.gt/The name must carry the initials denoting a limited company either in English or Spanish, Ltd or SRL
  • Apply for the tax identification number, Número de Identificaciόn Tributaria (NIT), from the Superintendence of Tax Administration (Superintendencia de Administración Tributaria, SAT)
  • Obtain the Registro Unico Tributario, RUT, Tax ID
  • Open a provisional corporate bank account is necessary to deposit at least the minimum share capital for an LLC of US$260 (€240)
  • Create notarised Articles of Association signed by all shareholders, who give their individual tax numbers
  • Provide legal confirmation of registered address
  • The Registry provides a trading licence and checks all relevant fees have been paid to a Banrural agency
  • The company must register with the Guatemalan Institute of Social Security (Instituto Guatemalteco de Seguridad Social, IGSS)

What are the Benefits of setting up a Subsidiary in Guatemala?

The subsidiary operates in Guatemala as a separate and independent legal entity from the parent company, which is generally protected from responsibility for debts or liabilities, including legal issues. Shareholders, members and officers are normally liable only to the extent of their contribution to the subsidiary’s capital. These exemptions do not apply if the parent company elects to open a branch or agency.

The subsidiary provides the parent company with the opportunity to test new markets outside its   regular area of operations. The subsidiary opens the potential to enter into agreements with other registered companies in Guatemala and throughout the Central and Latin American nations, with commercial routes open to North and South America and the Caribbean. Also, the permanency of a subsidiary has greater credibility with clients and suppliers, compared with branches.

However, taking the step of setting up a subsidiary is still a long journey compared with taking the most efficient and financially sensible route to starting operations in Guatemala.

This is the efficient and sensible solution … let Bradford Jacobs locate top-rated talent for your company in Guatemala through our in-country Professional Employer Organisation (PEO) specialists. Employees can be working at their desks and screens in days … not weeks, or even longer. We remove all concerns regarding employment laws and compliance. Our Employer of Record (EOR) teams handle the hassle … while you have day-to-day operational control over your workforce.

Subsidiary Regulations in Guatemala

Procedures applying to a limited liability company include:

Registration and Documentation:

  • Companies register a unique business name with the Commercial Registry (Registro Mercantil) online at https://minegocio.gt/The name must carry the initials denoting a limited company, either in English or Spanish
  • Obtain trading licence from the Registry
  • Create notarised Articles of Association signed by all shareholders, who give their individual tax numbers
  • Provide legal confirmation of registered address
  • Company must register with the Guatemalan Institute of Social Security (Instituto Guatemalteco de Seguridad Social, IGSS)

Accounts and Taxation:

  • Apply for the tax identification number, Número de Identificaciόn Tributaria (NIT), from the Superintendence of Tax Administration (Superintendencia de Administración Tributaria, SAT)
  • Obtain the Registro Unico Tributario, RUT, Tax ID
  • Open a provisional corporate bank account to deposit at least the minimum share capital for an LLC of US$260 (€240)
  • Corporate Income Tax (CIT) is applied at 25% on net profits, plus 1% solidarity tax on the greater of total assets or gross revenue (under the General Tax Regime)
  • Withholding tax applies to non-resident companies at 5% on dividends, between 0% and 10% on interest payments and 15% on royalties and technical services fees
  • The company will pay Value Added Tax at 12% on goods and services, with exports zero rated
  • Articles of Association detail responsibilities of accountants and auditors

Management:

  • The LLC requires a minimum of two shareholders or partners to a maximum of 20, who are exempt from any liabilities beyond their share contribution
  • Shareholders and directors can be foreigners, but a resident legal representative must be appointed if there is not a Guatemala resident director
  • The entity is managed by shareholders’ meetings; single administrator or board of directors
  • Decisions are made by the majority
  • Shareholders may facilitate working capital by taking extra shares
  • Each share represents one vote

International companies planning expansion into the Guatemalan economy will find a country rich in history, culture and investment potential. At the heart of Guatemala’s heritage is the ancient Mayan culture and the ruins from their civilisation can still be seen in the jungles of the northern region of Petén.

Spanish culture has been embedded in Guatemala since they conquered the country in 1524. The capital was established at Antigua Guatemala. Its colonial splendour is still evident today despite the destruction caused by an earthquake in 1773, after which the capital was moved to the current capital of Guatemala City.

Today, Guatemala is Central America’s strongest economy and has held a key role in the region since becoming a republic after independence from Spain in 1821. Guatemala was the political centre of a federation including Honduras, Costa Rica and Nicaragua, which was united with Mexico for the following two years.

Spanish influences merged with the dominant indigenous Indian culture that distinguishes Guatemala from its Central American neighbours. The main ethnic groups are the Maya, comprising the majority of Indians, and the Ladinos of mixed Hispanic and Maya ancestry. Today there are sharp contrasts between the urban, high-earning society who can live an hour’s drive from those who follow the customs of past centuries.

Guatemala’s spectacular landscape lies between Pacific and Caribbean coastlines and features volcanoes and towering mountain ranges, jungles, fertile plains and rivers. This topography creates a similarly varied climate. Located in the tropics, Guatemala also has desert-like conditions and is susceptible to hurricanes and tropical storms.

Starting your business in Guatemala

Foreign companies intending to start business operations by opening a subsidiary in Guatemala must make the right choices from day one when considering the options for their expansion plans. Which of the business structures available in Guatemala best suits their needs? Where should they base operations to find staff whose skills and experience are vital to success? Which incentives apply to foreign businesses? And how long will the incorporation process take?

Guatemala, the largest economy in Central America, has a number of company structures operating under the Commercial Code. These include general and limited partnerships, entrepreneurships and corporations. The most popular choice is a limited liability company (LLC), in Spanish a Sociedad de Responsabilidad Limitada (SRL).

As an example, incorporation requirements for a limited liability company include the following:

  • Companies must register a unique business name with the Commercial Registry (Registro Mercantil) online at https://minegocio.gt/The name must carry the initials denoting a limited company either in English or Spanish
  • The Registry provides a trading licence and checks all relevant fees have been paid to a Banrural agency
  • Apply for the tax identification number, Número de Identificaciόn Tributaria (NIT), from the Superintendence of Tax Administration (Superintendencia de Administración Tributaria, SAT)
  • Obtain the Registro Unico Tributario, RUT, Tax ID
  • Open a corporate bank account to deposit at least the minimum share capital for an LLC of €240, US$260
  • Create notarised Articles of Association signed by all shareholders, who give their individual tax numbers
  • Provide legal confirmation of registered address
  • The LLC requires a minimum of two shareholders
  • Shareholders and directors can be foreigners, but if there is not a Guatemala resident director a resident legal representative must be appointed
  • Company must register with the Guatemalan Institute of Social Security (Instituto Guatemalteco de Seguridad Social, IGSS)

This incorporation process underlines the importance of taking the best possible advice. By making the right choice now, you can steer a course around these obstacles by working alongside Bradford Jacobs. Our Professional Employer Organisation (PEO) specialists and Employer of Record (EOR) experts will recruit the staff and undertake every step of compliance to have them up-and-running in the shortest possible time. Instead of waiting weeks to complete the process for opening a subsidiary, you can be operational in days.

Expanding your business into Guatemala

The Republic of Guatemala is the strongest economy in Central America and occupies a strategic trading location, with ports on its Pacific Ocean and Caribbean coastlines, Mexico along the northern border and road and rail links into South America.

Avenues for Foreign Direct Investment are opened by economic free zones, with manufacturing, utilities, hydroelectric power, finance, insurance and geothermal energy attracting funds from abroad. The embryonic, but growing, digital and start-up culture also attracts foreign investment as Guatemala seeks to become a hub for Central America.

Agriculture employs 30% of the workforce and is still the major driver of exports. These feature nutmeg – Guatemala was the largest exporter globally in 2020 – bananas, coffee, raw sugar and palm oil among other fruits and nuts.

Expanding in Guatemala offers these opportunities and incentives. However, for companies aiming to establish their own entity in the country, expansion comes with issues of incorporation, recruitment and contracts, company and employment legislation and much more. By working with Bradford Jacobs as your Professional Employer Organisation (PEO) and Employer of Record (EOR), we deal with everything on that list. We can ensure that ‘expanding the business, is the only item on your list.

Advantages and Challenges when entering the Guatemalan Market

Some Advantages:

  • Key strategic location for further expansion through North, Central and South America for sustaining supply chains
  • Access to sea trading routes from Pacific and Caribbean ports has Guatemala ranking second in Central America for maritime cargo operations
  • Digital and e-commerce operations for Business Process Outsourcing and contact centres are growing
  • Ministry of Economy facilitates access to free economic zones and encourages investment in transport and logistics, textiles, agri-business and the energy sector

Some Challenges:

  • Perceived corruption and lack of transparency in regulatory procedures
  • Inadequate tax collection contributes to low government revenues
  • Social inequality between urban and rural areas
  • Severe disparity in income levels and a large informal economy
  • Vulnerable to natural disasters – earthquakes, hurricanes and cyclones
  • Sub-standard infrastructure

The Labour Code stipulates that all employees must have a written contract, in Spanish, which will be the default version if the employee requests a copy in their own language. A copy must be forwarded to the Ministry of Labour and Social Welfare. If a contract is not issued, in the case of dispute Labour Courts will usually take the side of the employee. If benefits and entitlements are not specified in the contract, those minimums specified by the Labour Code will automatically apply.

Different types of Employment Contracts in Guatemala

Open-ended, permanent employment contracts:  The typical form of contract that has a start date but no termination date, so is not set for a fixed period. They end by mutual agreement, retirement, resignation or termination by following the regulated procedures.

Fixed-term or temporary employment contracts: These are an exception to usual employment practice, but can be set to a specific period or project. This is an indeterminate area as the Labour Code does not specify time limits on either fixed-term or temporary contracts. Fixed-term employees are entitled to the same benefits as permanent employees, adjusted pro rata as to the contract’s length. If the employer terminates the contract prematurely, the employee is compensated by one day’s pay for each month they worked.

Part-time employment contracts: Part-time workers have the same rights as full-time employees, adjusted pro rata for the amount of time they work. Their hourly paid rate cannot be less than statutory minimums. Part-time employees have first call on full-time positions that become available, for which they have the skills or qualifications, but they must give their permission for the change. The first two months then become a probationary period and if they fail to meet requirements they return to their part-time role.

Probation periods:  These are generally the first two months of an indefinite contract and included in the written agreement, during which either party can terminate with or without just cause or the risk of sanctions or compensation.

Collective Bargaining Agreements (CBAs): In theory, CBAs can operate at the level of enterprises, production centres, industry, sector or region. In practice, they operate only at the enterprise level and apply to all employees, whether or not they belong to the relevant union.

Laws that regulate the labour relationship in Guatemala

  • The Labour Code
  • The Guatemala Constitution
  • The Commercial Code
  • The Social Security Law
  • The Tax Code
  • The Income Tax Law
  • The VAT Law
  • The Solidarity Tax Law

General requirements for Contracts

All employees must have a written contract in Spanish, with copies for the employer, employee and Ministry of Labour and Social Welfare. If benefits and entitlements under the Labour Code are not specifically referred to, they nevertheless apply. The contract must contain the following: The employee’s age, gender, nationality, marital status and the municipality where they live and where the company is registered; the start date for the employment, the length of the contract if applicable, and whether the contract is indefinite or fixed-term; place of work and the duties, working hours and schedule; remuneration and payment schedule; signatures of all parties, with National Identification Number (Número de Identificaciόn Tributaria,NIT) for Guatemalans and passport ID for foreign nationals.

Employee benefits and entitlements in Guatemala are regulated by the Labour Code, with influence from the Guatemalan Constitution.

What are the Compensation Laws?

National Minimum Wage (NMW): Minimum wages vary by sector and type of business, and apply to all employees in the relevant category regardless of age and experience. For example, from January 2023 the following monthly minimums apply: Agriculture sector GTQ 2,872 (€340, US$368); non-agriculture GTQ 2,959 (€350, US$380); Export business and foreign-owned companies GTQ 2,704 (€320, US$347).

Working Hours and Breaks: A working week can be five or six days. The Labour Code states that in a standard working day between 6am and 6pm, hours cannot exceed eight per day or 44 a week. Standard night work between 6pm and 6am the following day cannot exceed six hours per day or 36 a week. Employees working a combination of these periods cannot exceed seven a day or 42 hours a week. Employees are entitled to 30 minutes paid break each day. Employees have a 12-hour break between working days, and one paid full day’s rest each week.

Overtime: Any hours worked over the standard working day are overtime up to a maximum two hours per day and paid at 50% above the normal hourly rate.

Sick Leave and Benefits: Employees are entitled to paid sick leave, funded either by the Guatemala Institute of Social Security (IGSS) or the employer, if the employee is not covered by the IGSS. Employer liability depends on the employee’s length of service, as follows: half salary for one month if employee has worked between two and six months; half salary for two months for service between six and nine months; half salary for three months after more than nine months’ service.

Paid Vacations: The entitlement is 15 consecutive days of paid leave after completing 12 months’ continuous work with the same employer; the employee must have worked at least 150 days in the year to qualify.

Public Holidays: These paid holidays are not included in the statutory minimum holiday entitlement.

Probation Periods: Generally the first two months of an indefinite contract, during which employer or employee can terminate, with or without cause and at no risk of penalties or liabilities.

Notice Periods: Unless covered by contract, the Code’s statutory minimums are: One week after six months’ service; 10 days for between six and 12 months; two weeks between one and five years’ service; one month for more than five years’ service.

Termination, Severance and Redundancies: The Labour Code gives specific cases where employers can dismiss an employee without having to pay severance. These include breaching contract terms; committing offences against the company or fellow workers; ignoring health and safety rules; arrest or imprisonment; violating company secrets. Prior judicial permission is required for dismissing certain categories, such as pregnant employees or union officials. Severance: All outstanding salaries and bonuses must be paid whether or not dismissal is for a just cause. Extra severance applies if dismissal is without just cause, based on one month’s salary for each year of service including bonuses, assessed over the previous six months. Additionally, the Code details ‘economic advantages’ (ventajas econόmicas) such as non-cash health or life insurance, vehicles and mobile phones which are calculated as an extra 30% of the total salary for severance. Redundancies: There are no specific regulations for mass lay-offs, so general regulations on termination apply.

Maternity / Paternity Leave and Benefit: Pregnant employees are entitled to 12 weeks leave, with 30 days generally taken before the due date and 54 post-natal, with an extension up to 36 days if the pregnancy causes illness. The woman receives full salary from the Guatemalan Institute of Social Security (Instituto Guatemalteco de Seguridad Social, IGSS). Fathers are entitled to two days paid paternity leave, but there is no provision for parental leave.

13th Month Bonus: There are two annual bonuses, each equivalent to one month’s salary, and paid in July and December.

Pensions: Retirement is either at 60 years of age, with a minimum 18 years of contributions for those first insured before 2011; or 62 years and at least 240 months of contributions for those first insured after 2011. It is a two-tier system, comprising pay-as-you-go and voluntary contributions.

Health Insurance:  In theory, the Constitution provides for universal free healthcare but provisions are particularly lacking in rural areas, away from Guatemala City and other urban centres. The under-funded public healthcare sector covers close to 90% of the population, but suffers from the government allocating less finance than any other Central American country. Expats cannot access the system, except in cases of emergency, and if entering the private sector will still have to pay fees in advance.

Foreign companies expanding their international operations into a new country, typically need to recruit staff there … and recruitment in the Republic of Guatemala needs expert guidance. Incoming companies need to be up-and-running in the shortest possible time, however bureaucracy and red tape can cause a frustrating delay to a smooth hiring process.

In Guatemala companies must comply with every aspect of the Labour Code (Cόdigo de Trabajo) … and this includes drawing up contracts with new recruits. The Code generally applies to all employees, except where high-level personnel are not subject to restrictions on working hours, for example. The Code applies to employment contracts and expat recruits cannot elect to be covered by contract regulations of their own jurisdiction.

The recruitment ‘to do’ list is long and often complex. Locating new talent will be the No. 1 requirement and it is certain to raise major issues. Guatemala has severe shortages of skilled workers in some key sectors. Once staff are recruited and onboarded, employers must comply with the strictly-applied legislation that spells out their responsibilities and obligations to employees, in addition to the legal rights of their staff.

These demands add up to a considerable workload. There is a better option … a straightforward, fast and cost-effective alternative that will have your new staff operational in just a few days, without the need to unravel the red tape surrounding recruitment.

Bradford Jacobs has the experience and contacts you need to provide the simplest route for your journey into the Guatemalan economy. Our Professional Employer Organisation (PEO) networks have global reach to find the right staff. Then, through our Employer of Record (EOR) platforms we will have your new employees at their desks and screens in the shortest time. This guide highlights the essentials of recruitment and onboarding in Guatemala. You can trust Bradford Jacobs to put the brightest talent in position for your company – right now!

Recruiting in Guatemala

Guatemala’s population of just over 17 million is estimated to contain a workforce of around 6.6 million. Companies seeking to recruit staff face problems posed by the large informal labour pool, with the World Bank estimating that as many as 75% work in the unregulated informal economy.

Another issue to be faced in finding the best talent is that many graduates seek higher-paid employment in the US rather than stay in Guatemala. This is among the problems employers are likely to encounter when trying to recruit technicians and engineers for the manufacturing sector, for example. Other sectors with shortages include sales and marketing staff, financial services, office management and business support, logistics, accounting and IT. Graduates in chemistry, industrial engineering and business administration are in high demand.

Employers hoping to sidestep these issues by importing staff, will need to have their company or subsidiary established in Guatemala before they can offer the foreigner a job. The prospective employee will also need to have a temporary residence visa for Guatemala. The application for this has to be filed at a Guatemalan embassy or consulate abroad or, internally, with the Guatemala Institute of Migration (Insituto Guatemalteco de Migraciόn, IGM). Applications for the work permit must then be filed with the Ministry of Labour and Social Welfare (Ministerio de Trabajo y Previsiόn Social).

Complicated? Yes! These considerations highlight where the global experience and local know-how of Bradford Jacobs is essential. Our Professional Employer Organisation (PEO) platforms will bridge the gap between the skills you need and finding the right fit for your company.

Employees’ pre-hire checks in Guatemala

General:  A grey area, as there is no specific legislation preventing employers from implementing background checks against employment candidates. Third parties can undertake pre-hire checks on behalf of the employer, but must have the applicant’s written permission to reveal any personal information that was not voluntarily disclosed at the interview.

Guidelines include:

Discrimination:  The Labour Code prohibits employers from discriminating against potential or existing employees on the grounds of: gender, race, language, religious or political beliefs, economic or social status or other personal data.

Criminal Checks: The Constitution prohibits criminal records alone from being used as a reason not to offer employment, or from any other constitutional rights.

Reference and Educational Checks:  Employers should ask the applicant’s permission.

Basic requirements when recruiting in Guatemala

Employment legislation in Guatemala is based on the Labour Code, which also covers employment contracts. The rules are strict and employers must comply with all aspects of this essential element of the recruitment process.

In Guatemala, therefore, employment legislation applies to one of the basic requirements of recruiting – drawing up contracts. Employment contracts must be in writing and in Spanish, although it is reasonable for employees to have a copy in a language they understand. In case of disputes, the Spanish version will apply. A copy of the contract must be deposited with the Ministry of Labour and Social Welfare. If employers fail to provide a written contract, the Labour Court will generally rule in favour of employees in the case of disputes.

It is implied that all statutory minimum entitlements under the Labour Code are part of the contract by default, even if they are not explicitly referred to. The only exceptions are if workplace rules or a Collective Bargaining Agreement apply more beneficial terms for the employee.

Written contracts must include the following:

  • Complete details of all parties, including age, gender, nationality, marital status and the municipality where the employee lives and where the company is registered
  • The start date for the relationship, the length of the contract if applicable, and whether the contract is indefinite or fixed-term
  • Place of work and the duties to be carried out, working hours and schedule
  • Remuneration and payment schedule
  • Signatures of all parties, with National Identification Number (Número de Identificaciόn Tributaria,NIT) for Guatemalans and passport ID for foreign nationals

The Basics of Guatemalan Culture

Guatemalans are generally always ready to smile, they value maintaining relationships with family and friends by frequent visits. Extended families in the rural areas often share homes. Guatemalans are proud of their heritage, which is a fusion of Spanish and indigenous Indian cultures.

Guatemala’s history is rooted in the Mayan culture, which originated in the Yucatán region around BCE 2,600 and became prominent around CE 250 in what is now Guatemala, northern Belize, southern Mexico and western Honduras. Ruins and traces of their culture can still be seen in Guatemala’s northern region of Petén.

The majority of Guatemala’s indigenous population are descended from the Maya peoples, and they are the only indigenous group that makes up the majority of a population in Central America. Guatemala has over 20 distinctive Mayan communities and historically – unlike Aztecs – Mayans never formed a united empire despite following similar ideologies.

The mix of cultures can be seen in Guatemalan cuisine; traditional textiles, handicrafts and costumes; religious beliefs that cover Mayan spiritualism and mysticism, Catholicism and Evangelical Christianity. Guatemala presents both a modern economic outlook and a cultural journey back in time.

Guatemalan Work Culture

Hierarchy:  Recognise and respect the hierarchy in the business. Decisions come from the top and are not contradicted by lower ranking personnel, who are unlikely to be involved in discussions. Consensus rarely applies and workers accede to their bosses’ experience and knowledge. Your team should include an individual of similar status to the senior member of the host company.

Punctuality:  Guatemalans are likely to be punctual and will expect the same. The meeting, however, may not start on time as small talk is seen as important in ‘breaking the ice’. Wait for the host to initiate business talk.

Introductions/Greetings: Firm and friendly handshake are exchanged between men and between male and female member of the teams. Maintain eye contact and when standing respect personal space, say an arm’s length. Use the relevant title and family name before invited to share first names. Where appropriate, bearing in mind personnel on the other team, use Señor, Señora or Señorita.

Language:  English is commonly spoken but best to check if meetings will be in Spanish and an interpreter is required. Guatemala has more than 20 Mayan languages, which may also be used by individuals, although most in the business sector will understand Spanish.

Out of the Office: Business lunches will be just that – an opportunity to continue negotiations. Expect dinner in the evening to be more relaxed.

Gift Giving: Not usually given at the first meeting, but can be exchanged to mark closing the deal.

Business Cards:  Where one side of the card is printed in Spanish, which is not necessary but will be appreciated, exchange with that side uppermost.

Dress Code: Dark business suits for men and formal, stylish dresses, trouser suits, skirts and shirts for women.

Negotiations and Meetings:  Loyalty to friends and family applies as much to business in Guatemala as social life. Forming relationships is essential in initial meetings before moving towards presentations and negotiations. Be prepared for tough negotiations. Written agreements, documents and contracts should be in Spanish and English to avoid cross-cultural errors. Again, consider whether Mayan translations may also be required. Raised voices are taboo; communication should be indirect and avoid hard sell techniques and applying pressure for a conclusion.

Avoid: Offering opinions on politics, poverty or Mayan-Guatemalan issues.

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