Payroll in Guatemala
Guatemala is a culturally rich and economically dynamic country in Central America, offering strategic access to regional markets and a young, growing workforce. For businesses planning to operate in Guatemala, understanding the country’s payroll framework, including tax obligations, social security contributions, statutory benefits, and compliance requirements, is essential for maintaining lawful operations, building employee trust, and reducing financial risk.
Workweek and Payroll Practices
In Guatemala, employers and employees typically agree on a monthly payroll cycle, though alternative arrangements (e.g., bi-monthly or daily pay) can be permitted when clearly specified in employment contracts. Employers must clearly define the pay frequency in contracts to ensure legal compliance and avoid disputes.
Guatemalan labor law sets clear limits on working hours, which vary depending on the type of shift. The standard workweek generally consists of 8 hours per day , 44 hours per week, although maximum daily and weekly hours differ based on whether employees work day, mixed, or night shifts.
The workweek typically runs from Monday to Friday or Saturday, with Sunday designated as the mandatory weekly rest day, unless otherwise agreed under lawful exceptions. Overtime hours in Guatemala must be compensated at 1.5 times the employee’s regular hourly rate, calculated by dividing the agreed base salary (typically monthly) by the applicable standard working hours.
Payroll structure in Guatemala
Payroll in Guatemala is a structured yet flexible process, with pay cycles determined by the nature of work and the terms outlined in the employment contract. Employers may compensate employees on a monthly, bi-monthly, weekly, daily, or hourly basis, depending on operational needs and role requirements. In addition to regular wages, Guatemalan labor law mandates two statutory annual bonuses, each equivalent to one month’s salary. These include the Bonus 14 (Bono 14), payable in July, and the Christmas bonus, payable in December, often referred to as the 13th-month salary. These mandatory payments must be factored into payroll planning and compliance to ensure accurate and timely employee compensation.
Leave and Benefits
Employees in Guatemala are entitled to a range of statutory leave and social security benefits. After completing one year of continuous service, employees receive 15 days of paid annual leave, which must be used within the following year and cannot be carried forward. Paid sick leave is available for up to three days per illness upon presentation of a medical certificate, while longer periods of illness may be covered through sickness benefits provided by the Guatemalan Institute of Social Security (IGSS).
Female employees are entitled to 12 weeks of maternity leave, six weeks before and six weeks after childbirth, with full pay funded by IGSS, and fathers are granted three days of paid paternity leave following the birth of a child. Additional leave for family emergencies, adoption, or compassionate reasons may be granted,d but is typically unpaid unless otherwise specified by company policy or contract. Beyond leave, IGSS provides healthcare coverage for employees and their dependents, as well as pension benefits upon reaching the statutory retirement age of 62 years.
While Guatemala does not offer a formal unemployment insurance program, employees may be entitled to severance pay upon termination, in accordance with the Labor Code.
Termination & Severance
Employment in Guatemala may be terminated for valid reasons, such as misconduct, poor performance, redundancy, or business-related grounds, but employers must follow a formal, documented termination process. Both employers and employees must observe statutory notice periods when ending an employment relationship: one week for employees with less than one year of service, 15 days for those with one to five years of service, and 30 days for those with more than five years of service. Employees dismissed without just cause are entitled to mandatory severance pay, calculated based on their length of service and wages. Employees may also resign voluntarily, provided they comply with the applicable notice period; failure to do so may result in the forfeiture of certain severance entitlements.
Payroll Expats in Guatemala
Immigration in Guatemala is regulated by the Guatemalan Institute of Migration under the Migration Code, with immigration status determined by the purpose and length of stay. Foreign nationals may enter as tourists or travelers for up to 90 days (extendable once), including certain technical, professional, scientific, cultural, sports, or religious specialists undertaking short-term paid activities of up to 180 days. Longer-term stays require temporary residence, which covers categories such as migrant workers, students, athletes and artists, investors, researchers and scientists, and ministers of religion, typically authorized for periods of up to five years. Migrant workers are permitted to engage in paid employment under an employer, subject to local labor law restrictions on the proportion of foreign employees and wage distribution. Permanent residence may be available to individuals who meet specific criteria, including extended temporary residence, marriage or family ties to Guatemalan nationals, qualifying Central American nationality, or status as a rentier or pensioner with lawful foreign income.
From a payroll and compliance perspective, visa and work permit requirements depend on the individual’s nationality, which determines whether they fall under the visa-exempt (Category A), visa-required without a guarantor (Category B), or visa-required with a guarantor (Category C) classifications. Applications must be submitted through Guatemalan diplomatic missions abroad or directly to the Institute of Migration, as applicable. Employers should ensure that the employment relationship and the employee's immigration status are properly aligned before the employee travels to Guatemala, as work authorization is a prerequisite for lawful payroll processing. Ongoing compliance also requires timely renewals of migration and work permits prior to expiry, and engaging specialized immigration advisors is strongly recommended to reduce regulatory and operational risk for expatriate payroll arrangements.
Conclusion
Guatemala offers a stable and increasingly attractive environment for regional and multinational employers, supported by its strategic location in Central America, access to international trade corridors, and a young, cost-competitive workforce. However, operating payroll in Guatemala requires close attention to local labor laws, statutory bonuses, social security obligations, termination rules, and immigration compliance particularly for expatriate employees. With mandatory payments such as Bono 14 and the Christmas bonus, strict notice and severance requirements, and defined social security frameworks, payroll accuracy and regulatory adherence are critical to maintaining compliance and employee trust. For organizations expanding into or operating within Guatemala, a well-governed payroll model is essential to mitigate risk, control costs, and ensure seamless workforce management.
Why choose Neeyamo for payroll in Guatemala?
Neeyamo brings deep expertise in managing Guatemala payroll within the broader context of global payroll operations. By combining strong local regulatory knowledge with a unified global payroll platform, Neeyamo helps organizations navigate Guatemala’s statutory requirements, social security contributions, expatriate payroll complexities, and reporting obligations with confidence. With coverage across 160+ countries, Neeyamo enables businesses to manage Guatemala payroll compliantly, efficiently, and at scale supporting growth while reducing operational and compliance risk.
Talk to our country payroll expert at irene.jones@neeyamo.com or explore Neeyamo’s Global Payroll solutions.
