Establish your presence globally with Neeyamo as we help you go beyond borders to manage your international payroll and hire new talent in Uruguay.
Located on the southeastern coast of South America, Uruguay stands out as a forward-thinking nation in various aspects, including education, renewable energy, and agricultural production. Notably, Uruguay boasts one of the highest literacy rates in South America and is entirely self-reliant in terms of renewable energy production. However, one remarkable facet of the country is its significant cattle population, four times its human population. Moreover, Uruguay is the pioneer in comprehensive cattle inventory tracking.
Do your organization’s expansion plans require you to hire employees in a forward-thinking country that is brimming with skilled talent? If you lack a physical entity in the country – a key requisite to hiring local talent- your solution is the best payroll software, Neeyamo – Global Payroll Services. Neeyamo - Global Payroll Providers assists organizations worldwide with onboarding and managing employees in Uruguay - processing payroll, accounting for payroll taxes and payroll accounting, managing local compliance requirements, benefits, and more.
Tools And Instances
Facts And Stats
Uruguayan Peso (UYU)
1 January - 31 December
Country Calling Code
What is Global Payroll?
Handling payroll for a widespread workforce can pose a significant challenge for any organization, and the added complication of compliance can make things worse. If companies spend more time processing payroll, it directly impacts day-to-day operations and their overall productivity. The solution to this is global payroll outsourcing.
What is a global payroll system?
Over the years, Neeyamo – Global Payroll Services has observed these complexities and strived to provide global payroll solutions through a single technology platform – Neeyamo Payroll. Neeyamos online payroll system eases the process for companies looking to outsource their global payroll requirements and aids them in maneuvering the tricky payroll system in Uruguay. Neeyamos payroll software provides the perfect solution for all your global payroll needs – for employees working in primary geographies, the long-tail region, remote or internationally located.
How is payroll calculated?
Neeyamo acts as your personalized Payroll consultant as well as Payroll calculator. Ensuring adherence to local regulatory requirements using multi-level controls. Providing timely and accurate payroll, courtesy of our experts worldwide and using a tech-based integrated smart helpdesk solution with seamless support experience manned by payroll experts - Neeyamo has all your payroll needs covered.
Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards aiding both short-term and long-term benefits for their employees.
Employees make the following payroll contributions:
- 15% - Pension Fund
- 3% - 8% - Health Insurance
- 0.1% - Labor Re-conversion Fund
- 18.10 - 23.10% - Total Employee Cost
The income tax rates applicable to resident employees are the following (as of 31 December 2021):
|0 - 409,080 UYU
|409,080 UYU to 584,400 UYU
|584,400 UYU to 876,600 UYU
|876,600 UYU to 1,753,200 UYU
|1,753,200 UYU to 2,922,000 UYU
|2,922,000 UYU to 4,383,000 UYU
|4,383,000 UYU to 6,720,600 UYU
|6,720,600 UYU and above
This tax can also be paid as a family unit. The scale of rates to be applied depends on the income of each of the family group's members. If each member earns more than 12 minimal salaries (one minimal salary is 17,930 UYU), taxable income before deductions must be added together, and then the following scale of rates is applied according to the different income brackets.
The following are the employer payroll contributions:
- 5% - Health Insurance
- 0.1% - Labor Re-conversion Fund
- 7.5% - Pension Fund
- 0.025% - Labour Credit Guarantee Fund
- 12.625% - Total Employment Cost
Undoubtedly, payroll is a critical process for any organization. The pay cycle in Uruguay refers to the period an organization pays its employees, which can vary depending on the pay frequency the organization chooses to adopt.
The payroll cycle in Uruguay is generally monthly, and employers must pay employees by the 5th day of the following month.
13th Month Cycle
Employees are entitled to a 13th-month salary payment (Aguinaldo), distributed in two halves: one in June and one in December.
An Employer of Record (EOR) service provider helps you eliminate the hassle of handling complexities while onboarding a new employee in an international location. They help bridge the gap that otherwise mandates organizations to have a local registered entity and a local bank account, prior to making a job offer to an international hire.
An EOR service provider acts as a legal employer, facilitates salary payments, and manages other statutory requirements such as health insurance, payroll taxes, and employee benefits ensuring compliance with local tax laws and regulations.
This allows organizations to focus on collaborating with the employee in Uruguay for operational tasks, with the knowledge that they have a cost-effective solution support their global payroll & HR requirements, as they continue their global expansion.
HR Mandates and Practices
The current minimum wage of UYU 21,106.00 (effective January 1, 2024) will be adjusted to UYU 22,628 monthly.
In general, overtime maximum limits are set at 8 hours per week and paid 200.00% of the standard salary rate. Overtime performed on a non-working day such as a holiday is compensated at 250.00% of the employees’ standard earnings.
Data Retention Policy
Tax records generally must be kept for a minimum of five years.
Hiring and Onboarding Requirements
Employers must enrol in the Social Security Bank before initiating activities.
Employers obligated to withhold income tax must file a unified registration form to register with BPS and the General Directorate of Taxation. Employers exempt from income tax withholding must only register with the BPS. Construction companies must register separately, registering each construction project.
Employers must enrol in Remote Connection (Conexion Remota) by filing a Request for Remote Connection Membership on the BPS website.
All employers must register employees with the Social Security Bank using the Form Gestion de Afiliaciones. The form may be presented through the BPS website, by email, fax, in person, or by mail. The deadline to register employees with BPS varies as follows:
- Employees working in the industry, commerce, and domestic service; 10 days before their hire date
- Employees working as bakers, stable laborers, fisheries staffers, and catering workers; within 24 hours after earning income or until 12 hours after the employees' hire dates
- Employees working in rural jobs; within 72 hours of employees' hire dates
- Employees working in construction; 48 hours before an employee's hire dates.
The following information needs to be provided during onboarding:
- Birth Certificate
- Identity card or documents
- Uruguayan address certificate
- Marriage Certificate
- Health Certificate
- Work Visa (expats)
- Work permit (expats)
The probation period in Uruguay is typically up to 3 months.
There are 12 public holidays recognized in Uruguay:
- January 1 - New Year's Day
- January 6 - Epiphany
- February 20 to 21 - Carnival day
- April 6 - Maundy Thursday
- April 7 - Good Friday
- April 17 - Landing of the 33 Patriots Day
- May 1 - Labor Day
- May 22 - Battle of Las Piedras
- June 19 - José Artigas' Birthday
- July 18 - Constitution Day
- August 25 - Independence Day
- October 16 - Day Of the Races
- November 2 - All Souls' Day
- December 25 - Christmas Day
Holidays occurring on weekends are moved to the following Monday concerning when paid leave is required to be granted.
Employers must provide employees who are members of religions other than Orthodox Christianity with up to three days a year to celebrate religious holidays.
The workday must be reduced by one hour on the day before a holiday, regardless of whether the employee has a five- or six-day week.
Employees are generally prohibited from working on holidays unless the employer is in the service industry or is continuously operating. Employees working on holidays must be paid double their regular salary. Employees may choose to receive another day off instead of extra pay.
Employees are entitled to 1 year of sick leave, which is compensated at 100% of the employee’s salary for the first three days of sickness. Following this, the employee will be compensated by Uruguay’s social security system, Banco de Previsión Social (BPS) at 70% of the employees’ average earnings.
To qualify for sick leave, all sickness is to be justified with a medical certificate.
Leave for gynecological examination
Women in the private and public sectors will have the right to one day of special paid leave per year to undergo Pap smear and/or breast X-ray examinations.
Employees are entitled to a minimum annual paid vacation of 20 consecutive days, although under a collective bargaining agreement the annual leave may be divided into two periods of not less than 10 days. Employees with more than five years of service are entitled to one additional vacation day for every five full years of service. Payment for annual leave must be made before the leave begins.
Public holidays or Sundays cannot be considered in the calculation of the leave period.
Workers who study in Basic Secondary Education Institutes, Higher Professional Technical Education, University Education, Normal Institutes, and others of a similar public or private nature authorized by the Ministry of Education and Culture will have the right to study leave during the calendar year under the following regime:
• up to 36 hours worked per week: six days minimum,
• more than 36 hours but less than 48 hours: nine days minimum and
• more than 48 hours: 12 days minimum.
Leave may be granted in three-day periods.
Parents can alternate taking leave in days weeks, or months at any time during the period between the end of Maternity leave and the first six months of the baby's life. Leave cannot be taken at the same time by both parents.
Length of Leave:
Until six months after childbirth. Leave is a family entitlement.
Leave must be taken part-time; the parent taking leave cannot work more than four hours a day.
Payment: As for Maternity and Paternity leave
All pregnant workers, both private and public sector, will have the right to be absent from work for up to four hours each month to attend prenatal check-ups or other related consultations.
In the case of adoption (Laws 17,292 and 18,436), workers in both the public and private sector are entitled to a continuous six-week leave and a reduction of the working day (up to 50 percent) for six months. These subsidies may be used by one of the two parents from the time the child is integrated into the family, while the other parent is them granted ten working days of leave.
Pregnant workers have the right not to work during the six weeks preceding and the eight weeks following childbirth and to receive medical assistance and a stipend representing wages, year end bonuses and vacation pay plus vacation bonus. In the event of birth before the expected date, postpartum leave is extended to reach the full leave entitlement of 14 weeks. If birth is later than expected, the full eight weeks of postnatal leave is still available to the mother. If the mother suffers a pregnancy- or childbirth-related illness, leave can also be extended. The mother can also choose to take the entire 14 weeks of leave after the child is born.
Payments to the employee during maternity leave are made by the social security institute—Banco de Previsión Social (BPS)—not the employer.
Employed workers are entitled to a leave of absence in the following manner:
A) A maximum of ten continuous days.
B) A maximum of thirty continuous days, in cases of births cited in the third paragraph of article 2; and in articles 2 bis and 3 of this law.
The 1st 3 days are the responsibility of the employer with regard to payment and the next 10 are paid by the social security system. Paternity leave for Uruguay, If both parents are working in the public sector, one parent can take this leave, while the other may take ten working days of leave. In the private sector, workers can take three days of paid leave for a reduction in working hours, meeting a minimum of four hours a day, between six and twelve months of baby. 100% of earnings with no ceiling on payments.
- Marriage Leave: Employers must give newly married employees three days of leave starting on the day of the wedding provided that the employee has given at least 30 days of notice.
- Bereavement Leave: Employers must provide three days of leave for employees experiencing the loss of a father, mother, spouse, adopted child, adopting parent, partner, common-law spouse, or sibling.
- Blood Donation Leave: All employers must provide employees with one day (up to two maximum) of leaving the day that employees donate blood.
- Testifying in a Trial Leave: Employers must provide employees with paid leave on the days they are called on to testify in a trial.
- Seniority Leave: After the fifth year of employment, one day of seniority leave is generated and added to the regular leave. Then, for every four years worked, one day is added. That is, the worker generated two days of leave in the eighth year, three days of seniority leave in the twelfth year, and so on every four years. The license is generated one year and becomes usufruct the next year. The number of days that can be generated is unlimited.
Employers can terminate a fix term contract for the following reasons – business, personal, or worker misconduct. It requires notice and a written explanation for the termination. If the reason for termination is misconduct, a warning needs to be given, and the employee gets a chance to explain their actions. All terminated employees must receive a notice of termination as well as a severance payment.
The notice period in Uruguay is typically 1.5 weeks for both the employee and employer.
Severance pay must be granted to a terminated employee at the rate of one month’s salary for every year of service, up to six months.
Individuals wishing to work and reside in Uruguay offers a variety must obtain the temporary or permanent residency permits. Special work permits are not required. Temporary Residence Permit: Temporary residency permits allow individuals to reside and work legally in Uruguay for periods between one and two years, renewable once. There are seven categories of visas to permits each of which grant the holder the ability to work in different fields. Prior to applying for a temporary residence permit, employers must issue foreign nationals including;with a preliminary work offer and work contract. Foreign nationals can apply the permits at Uruguayan consular missions or at the Immigration Authority (Direccion Nacional de Migracion, DNM) within Uruguay.
Permanent Residency Permits: Permanent residency permits allow foreign nationals to work and reside legally in Uruguay for an indefinite period of time, although the permit expires after the holder has resided outside of Uruguay for more than three years. Employers must present applicants with official documentation detailing the employment relationship as well as a copy of the employment contract before foreign nationals can apply for the permit. Foreign nationals must apply at a DNM office.
Employee Background Checks
Legal and Background Checks
The following checks are conducted in Uruguay to establish a potential employee's background:
- and Credit
Last updated on January 19, 2024
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