Employment Contracts in Guatemala: A Guide for Employers and Employees

## What is an employment contract? An employment contract is an agreement through which a person (the employee) agrees to provide services to another (the employer) in exchange for remuneration. In Guatemala, employment contracts are regulated by the **Labor Code (Decree 1441 of the Congress of the Republic)**, which is the primary labor law. The Labor Code is based on worker-protective principles: the tutelary principle (protection of the worker), the irrenunciability of rights, and the principle "in case of doubt, resolve in favor of the worker." --- ## Types of employment contracts ### 1. Indefinite-term contract Has no termination date. It is the most common form and is presumed when no term is specified. It can end by: - Voluntary resignation of the employee - Justified dismissal (with cause) - Unjustified dismissal (with severance payment) - Mutual agreement ### 2. Fixed-term contract Has a specific termination date. Must be in writing. Used for: - Temporary or seasonal work - Replacing employees on leave - Specific projects with a determined duration If the contract ends and the employee continues working, it becomes indefinite. ### 3. Project-based contract Entered into for the completion of a specific work or project. Ends when the work is completed. Must be in writing. ### 4. Professional services contract Used for independent professionals who provide services without a subordinate relationship. It is not governed by the Labor Code but by the Civil Code. It is important to distinguish it from an employment contract, as independent professionals are not entitled to labor benefits. --- ## Written contract requirements The Labor Code does not require all contracts to be in writing, but it is **strongly recommended**. Fixed-term and project-based contracts **must** be in writing. A written contract should include: - Names and details of the parties (employer and employee) - Start date - Duration (if fixed-term or project-based) - Job description and duties - Salary and payment method - Workplace and schedule - Rest days and vacation --- ## Employer obligations The Labor Code establishes numerous obligations: ### Wage payment - Pay at least the current **minimum wage** (set annually by the National Wage Commission of the Ministry of Labor) - Pay in legal tender (not in kind) - Pay at most monthly (biweekly or monthly recommended) ### Mandatory benefits - **Christmas bonus (Aguinaldo):** One full month's salary in December (Decree 42-92) - **Bono 14:** One full month's salary in July (Decree 78-89) - **Vacation:** 15 working days per year of continuous service - **Severance:** If the employer dismisses without cause, one month's salary per year of service must be paid ### IGSS registration The employer must register each employee with the **Guatemalan Social Security Institute (IGSS)** within **10 days** of the start of the employment relationship. Contributions are: - Employer: 10.67% of salary - Employee: 4.83% of salary ### IRTRA registration The employer must contribute **1%** of the monthly payroll to the **Workers' Recreation Institute (IRTRA)** (Decree 13-2016). ### Internal regulations If the company has more than 10 employees, it must have internal work regulations approved by the Ministry of Labor. --- ## Employee rights - Guaranteed minimum wage - Maximum 8-hour workday and 44-hour week (day shift) - Overtime with 50% premium over ordinary salary - Weekly rest (at least 1 day) - Paid vacation (15 working days per year) - Christmas bonus and Bono 14 - Protection against unjustified dismissal - Stability during pregnancy and nursing (women) - Freedom of association (unions) --- ## Step-by-step to formalize a contract ### Step 1: Define the contract type Determine whether it will be indefinite, fixed-term, or project-based, based on the nature of the work. ### Step 2: Draft the contract Include all required elements: parties, salary, duties, schedule, duration. ### Step 3: Sign the contract Both parties sign. Two original copies are recommended, one for each party. ### Step 4: Register the employee with IGSS Within 10 days of the start, register the employee with IGSS. ### Step 5: Notify the Ministry of Labor If the contract is fixed-term or project-based, it must be reported to the Ministry of Labor. --- ## Documents you will need - Signed employment contract (if applicable) - Copy of the employee's DPI - Copy of the employer's tax ID (NIT) - Employer's IGSS registration - Internal work regulations (if more than 10 employees) --- ## Authorities involved | Authority | Role | |---|---| | Ministry of Labor and Social Welfare (MINTRAB) | Supervises labor relations; approves internal regulations | | Guatemalan Social Security Institute (IGSS) | Social security and contributions | | Workers' Recreation Institute (IRTRA) | Worker recreation | | Labor Courts | Resolution of labor disputes | | National Wage Commission (MINTRAB) | Sets the annual minimum wage | --- ## Legal basis - **Labor Code** (Decree 1441), articles 18-35 (contracts), 48-60 (workday), 126-135 (vacation), 61-68 (dismissal) - **IGSS Law** (Decree 295) - **IRTRA Law** (Decree 13-2016) - **Aguinaldo Law** (Decree 42-92) - **Bono 14 Law** (Decree 78-89) - Available at: www.congreso.gob.gt *This article is informational and does not constitute legal advice.*