Nicaragua: A Guideline to Payroll and Employer of Record

Establish your presence globally with Neeyamo as we help you go beyond borders to manage your international payroll and hire new talent in Nicaragua.

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In Nicaragua, the absence of conventional street names and numbers that are generally used to identify locations means that citizens and tourists must use a different approach to navigate their way around the place. Areas and houses are located using common landmarks and local references, which serves as guiding points, making their journey around the city a unique and engaging experience. These special traits are not limited to only those experiences, as the country also has a unique and engaging workforce. 

Do your organization’s expansion plans require you to hire employees in Nicaragua? Do you lack a physical entity in the country – a key requisite to hire local talent? Neeyamo, using its advanced payroll systems, assists organizations worldwide with onboarding and managing employees in Nicaragua -processing payroll and payroll accounting, managing local compliance requirements, benefits, and more.

Tools And Instances

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Global Payroll

Neeyamo’s global payroll solution covering 180+ countries

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Global Work

A tech-based EOR solution to manage your extended workforce

Facts And Stats




Nicaraguan Cordoba (NIO)

Official Language


Fiscal Year

1 January - 31 December

Date Format


Country Calling Code


Other Languages

English, Miskito, Sumo, and Rama

Time Zone

UTC -06:00

Global Payroll


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. Neeyamo’s 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 Nicaragua. 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, accounting payroll services, 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 Taxes

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.

Employee Taxes

Employees make the following contributions:

  • Pension & Disability: 4.75%
  • Health Insurance: 2.25%

The income tax bracket is as follows:

Income Range (NIO) Tax rate (%)
Less than 100,000 NIO 0%
100,001 to 200,000 NIO 15%
200,001 to 350,000 NIO 20%
350,001 to 500,000 NIO 25%
Over 500,000 NIO 30%

Employer Taxes

Employers make the following contributions:

  • Pension and Disability (less than 50 employees): 12.5%
  • Pension and Disability (more than 50 employees): 13.5%
  • Health Insurance: 6.0%
  • Labor Healthcare: 1.5%
  • War Victims: 1.5%

Payroll Cycle


Undoubtedly, payroll is a critical process for any organization. The pay cycle in Nicaragua refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.


Weekly payments are normally made to manual laborers, and monthly payments are made on the fifteenth day of the cycle.

13th Month Cycle

Employers are required to make 13th-month payments, and they must do so within the first ten days of December.

Every worker has the right to be paid an additional month's salary by his employer after one year of continuous work, or the proportional part that corresponds to the period of time worked, greater than one month and less than one year.

The thirteenth month must be paid within the first ten days of the month of December of each year or within the first ten days after the employment contract ends. In case of not doing so, the employer will pay the worker an indemnity equivalent to the value of one day of work for each day of delay. 

Global Work


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 locally registered entity and a local bank account before 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 Nicaragua for operational tasks, with the knowledge that they have a cost-effective solution to support their global payroll & HR requirements as they continue their global expansion.

Neeyamo, using its Cloud-based HR and Payroll system, strives to provide its customers with a seamless employee management experience and offers global compliance in payroll and EOR aspects with our Global Payroll Technology Stack.

HR Mandates and Practices

Minimum Wage

The industry in which an individual works determines the country's minimum salary. For the industries of agriculture, forestry, and fishing, the national minimum wage is 4,723.95 NIO per month, whereas it is 10,571.78 NIO per month for the industries of construction, financial institutions, and insurance.

With effect from March 1, 2023, the monthly minimum wage of employees in Nicaragua has increased by 10%.


All work performed after regular business hours is compensated as overtime and subject to labor contracts or collective bargaining agreements. There is a cap of 9 hours per week when an employee is asked to work extra or on holidays.

Every hour of overtime in excess of 48 hours per week is compensated at 200 % of the employee's base pay.

Employees are entitled to a 24-hour rest break in place of payment for work completed on the weekends or on holidays.

The number of overtime hours may not exceed three hours per day or nine hours per week, except as the following:

  1. To prevent or eliminate without delay the consequences of catastrophes or accidents that may harm production or services.
  2. To carry out urgent repair work on machinery, equipment, or buildings, when their poor condition endangers the health or life of the workers or the population;
  3. To carry out urgent tasks aimed at reestablishing public services or repairing the consequences of disasters that affect said services;
  4. To carry out seasonal or intense seasonal work, when it is impossible to increase the number of workers for technical or climatic reasons or due to a labor force shortage.

Overtime hours and those worked by the worker on his day of rest or compensation for any reason will be paid one hundred percent more than what is stipulated for the respective normal day.

Data Retention Policy

Any personal data shall be kept for five years, or for the term that the parties agree upon, even in the event of the personal data no longer being adequate, proportional, or necessary for the purposes which it was created

Hiring and Onboarding Requirements


The law provides for gender equality. Nevertheless, women often experienced discrimination in employment, credit, and pay equity for similar work, as well as in owning and managing businesses.

The Nicaraguan constitution states that working is a social responsibility and the right of all citizens. Under the law, citizens are entitled to equal pay for equal work and freedom from discrimination based on the following traits:

  • Religion
  • Political views
  • Race
  • Gender

Discrimination against persons with physical, sensory, intellectual, and mental disabilities was widespread despite being prohibited by law.

There was lethal and increasing societal violence against women; violent attacks against lesbian, gay, bisexual, transgender, and intersex (LGBTI) persons, to which police failed to respond; trafficking in persons; discrimination against ethnic minorities and indigenous persons and communities; societal Country Reports on Human Rights Practices for 2017 United States Department of State • Bureau of Democracy, Human Rights and Labor discrimination against persons with disabilities; and discrimination against persons with HIV/AIDS.


The following information is required during onboarding:

  • Personal information: Name, Surname, address, DOB
  • Identity Card
  • Residence proof


To evaluate an employee's performance and eligibility for the position, Nicaraguan employment law specifies a standard probationary term of one month (30 days). Within the trial period, either party may terminate the agreement for valid reasons.


Public Holidays

There are 11 public holidays identified in Nicaragua: 

  • January 1: New Year's Day
  • April 14: Maundy Thursday
  • April 15: Good Friday
  • May 2: Labour Day
  • May 30: Mother's Day
  • July 19: Sandinista Revolution Anniversary
  • September 14: San Jacinto Day
  • September 15: Independence Day of Nicaragua
  • November 2: All Souls Day
  • December 8: Feast of the Immaculate Conception
  • December 26: Christmas

Sick Leave

Employees are entitled to up to 26 weeks of paid sick time, which begins on the fourth day of illness and is reimbursed by Social Security at 60 % of the regular pay.

Sick leave's initial three days are unpaid (unless the company has established a practice of paying for those days, and it is stipulated within the employment contract).

However, the 3-day waiting time and unpaid leave are removed if the employee is hospitalized if the illness or injury is related to their job.

Maternity Leave

In Nicaragua, maternity leave is 12 weeks long and is compensated; an employee must take four weeks off prior to the birth of the child and eight weeks off afterward.

An employee is entitled to 14 weeks of paid leave in the event of multiple births, with four weeks of such leave to be used prior to the baby's birth and 10 weeks following it.

All maternity leave is paid for by Social Security at a rate of 60% of the employee's regular wage and 40% from the employer, making it a fully compensated leave.

A maternity leave benefit of 12 weeks is provided to workers who are paid into Social Security for at least 16 weeks before giving birth, at a rate equal to 100 % of the employee's average weekly wage. If an employee hasn't made social security contributions, the employer is responsible for paying the compensation.

Paternity Leave

After the kid is born, the father or partner is entitled to 5 days of paid paternity leave.

Parental Leave

There are no provisions in the law regarding parental leave.

Other Leave

Workers have the right to leave or leave with pay in the following cases: a) Due to the death of the father, mother, children, or spouse, a partner in a stable de facto union according to the law, up to three consecutive business days; b) For marriage, up to five consecutive business days.

Right to nursing breaks or a daily reduction of hours of work:

Fifteen minutes every three hours. Time spent nursing shall be counted as time worked. Time spent by female workers for breastfeeding breaks will be paid as time worked.


Notice Period

When the contract is for an indefinite period of time, the worker may terminate it by notifying the employer in writing fifteen days in advance.

Severance Pay

The termination of the individual contract or employment relationship puts an end to the generation of the rights and obligations that emanate from them.

The individual contract or employment relationship ends:

  1. Due to expiration of the agreed term or completion of the work or service that gave rise to the contract;
  2. Due to the death or permanent incapacity of the employer that brings as a precise consequence the termination of the company; or due to death or permanent disability of the worker;
  3. By conviction or sentence of deprivation of liberty of the worker;
  4. By the definitive cessation of the industry, commerce, or service based on legally substantiated economic reasons and duly verified by the Ministry of Labor;
  5. By firm judicial resolution whose consequence is the definitive disappearance of the company;
  6. By the termination of the contract in accordance with the law;
  7. Due to the retirement of the worker;
  8. Due to force majeure or fortuitous event when they bring the closure of the company as a precise consequence.

Whatever the cause of termination of the employment contract, the employer is obliged, according to the Law, to pay the worker, or whoever corresponds in the case of literal b), the proportional part of the benefits such as vacations and thirteenth month.

The termination of the labor relationship by mutual agreement or resignation does not affect the acquired right of the worker due to seniority. When the employer terminates the employment contract for an indefinite period of time and without just cause, it will pay the worker compensation equivalent to:

  1. One month's salary for each of the first three years of work;
  2. Twenty days of salary for each year of work from the fourth year.

In no case will the indemnity be less than one month nor more than five months. The fractions between the years worked will be settled proportionally.



A work permit can be obtained by foreign nationals who plan to work or engage in remunerated activities in Nicaragua for a period of less than a year. The period that the foreign national will carry out employment-related activities in Nicaragua normally corresponds to the duration of the Work Permit. Foreign people who will work or engage in remunerated activities in Nicaragua for more than a year must apply for temporary residence, whether they are independent contractors or employees of Nicaraguan businesses. Temporary residence permits are available for up to a year and are renewed for the same amount of time. The foreign national may petition for permanent resident status, which may be granted for up to five years, after three years in Nicaragua.

To live and work in Nicaragua, foreigners must obtain a one-year Temporary Residence Visa, which is issued based on valid employment in the country. An applicant can apply for it at the Nicaraguan embassy in their home country and or through their employers in Nicaragua.

For work commitments of more than one year, the employees need to apply for visa renewal every year or appeal for a Permanent Residence Visa that allows them to stay and work for five years in Nicaragua.

Visa Requirements

To live and work in Nicaragua, foreigners must obtain a one-year Temporary Residence Visa, which is issued based on valid employment in the country. An applicant can apply for it at the Nicaraguan embassy in their home country and or through their employers in Nicaragua.

For work commitments of more than one year, the employees need to apply for visa renewal every year or appeal for a Permanent Residence Visa that allows them to stay and work for five years in Nicaragua.

Steps required to get a work visa in Nicaragua:

  1. A Temporary Residence Visa is sufficient for foreigners to work in Nicaragua.
  2. The employer has to apply for a work visa on behalf of the workers.
  3. The employer has to provide a valid reason to the authorities to justify hiring foreign nationals; since the local citizens get priority in employment.
  4. Once a temporary visa is approved, workers can stay and work in Nicaragua.
  5. The visa needs renewal after 12 months. Three consecutive renewals make workers eligible for a Permanent Residence Visa for five years.

Other Considerations

  1. Contrary to its name, a Permanent Residence Visa is valid only for five periods and needs renewals every five years.
  2. If ex-pats marry a Nicaraguan citizen, they can apply for a Permanent Residence Visa by producing their marriage certificate.

Employee Background Checks

Legal and Background Checks

There are no mandatory legal provisions for criminal background checks nor legislation prohibiting convicted sex offenders from holding positions involving or facilitating contact with children.

Last updated on October 16, 2023

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