Hire employees in Guatemala
Everything a foreign company needs to know before employing people in Guatemala: whether you need an entity, what an employee really costs once IGSS, the Aguinaldo and Bono 14 are added, how payroll and SAT withholding work, which leave is mandatory, and why dismissal without cause is priced in months of salary. Written for CHROs, CFOs, General Counsel and founders.
Quick answers
The questions leadership teams ask first, answered directly. Detail follows further down the page.
Do I need a local Guatemalan entity to hire?
No. Foreign companies can engage talent in Guatemala through three routes:
- Employer of Record. Dryft Global employs the person through a compliant Guatemalan employer registered with the Guatemalan Social Security Institute (Instituto Guatemalteco de Seguridad Social, IGSS) and the tax authority (Superintendencia de Administración Tributaria, SAT). Dryft handles the contract, IGSS, SAT withholding, statutory bonuses and payroll. You direct the day to day work.
- Direct local entity (Sociedad Anónima or branch). You incorporate, register with IGSS, the SAT and the Ministry of Labor and run payroll yourself. The guide puts the tipping point at around 30 to 50 or more employees.
- Independent contractor. Workable for genuinely independent consultants with their own hours, tools and client base. Anyone on a fixed schedule for a fixed monthly fee is an employee. See the contractor section below.
When should I use an EOR instead of setting up a local company?
An EOR makes commercial sense when you are:
- Hiring software engineers, data analysts or technical staff without waiting for entity formation.
- Placing a regional sales or business development leader who needs a local employer from day one.
- Onboarding a small bilingual customer support or administrative team on Central Time.
- Moving existing contractors onto compliant employment before a misclassification claim does it for you.
A local entity becomes the right answer at 30 to 50 or more employees, when you need a physical office or local client contracts, or when you want the export and maquila incentive regime under Decree 29-89.
What does an employee actually cost beyond salary?
Plan for an employer social contribution of about 12.67% of salary (IGSS, IRTRA and INTECAP), plus two extra months of salary a year: the Aguinaldo and Bono 14, each accruing at about 8.33%. Add the monthly incentive bonus of at least Q250, a vacation accrual of about 4.17% and, if you model it as the guide does, an indemnity reserve of about 8.33%. Full breakdown below.
How difficult is termination in Guatemala?
Not procedurally complex, but expensive without cause. Dismissal with just cause (despido directo justificado) is limited to the grounds in Article 77 of the Labor Code and needs written notice within 20 working days of the infraction. Dismissal without cause (despido injustificado) is lawful but triggers statutory indemnity (indemnización) of roughly one month of salary per year of service. Pregnant and nursing employees cannot be dismissed without prior court authorisation.
Can Dryft Global legally employ my team in Guatemala?
Yes. Dryft Global acts as the legal employer in Guatemala under the Labor Code (Código de Trabajo). We draft and register the Spanish-language contract with the Ministry of Labor and Social Welfare (MINTRAB), enrol the employee with IGSS, withhold income tax (ISR) for the SAT, pay the Aguinaldo and Bono 14 and run compliant terminations, while you direct the work. Scope and pricing are confirmed with your Dryft representative.
Hiring routes compared
Speed, registration burden and indemnity exposure all differ by route.
| Factor | Direct entity (S.A. or branch) | Dryft Global EOR | Independent contractor |
|---|---|---|---|
| Speed to onboard | Weeks: incorporation, SAT, IGSS and MINTRAB registration, banking | Days once the agreement is signed | Days |
| Corporate presence required | Yes, a registered company or branch | No, employed through Dryft's local employer | No, direct services agreement |
| Contract registration | You register with MINTRAB within 15 days | Handled by Dryft | Not applicable |
| IGSS, IRTRA and INTECAP | You register and contribute monthly | Contributed by Dryft | Retroactive claims if reclassified |
| Aguinaldo, Bono 14 and incentive bonus | You accrue and pay on two annual cycles | Accrued and paid by Dryft | Not applicable |
| Payroll and SAT withholding | You run quetzal payroll on the SAT system | Fully managed | Contractor invoices and self-reports |
| Indemnity exposure | Direct, about one month per year of service | Managed compliantly by Dryft | Arises on reclassification |
| Best fit | 30 to 50+ staff, offices, local clients | Remote engineers, sales leaders, bilingual support | Discrete, specialised project work |
What an employee costs in Guatemala
Guatemala funds healthcare, disability, maternity and pension coverage through IGSS, and any employer with one or more workers must register and enrol its staff. IRTRA and INTECAP are smaller levies alongside it. The bigger cost items are the two statutory extra months of salary.
| Component | Employer share | Notes |
|---|---|---|
| IGSS employer contribution | 10.67% | Healthcare, disability, maternity, pension; employee pays 4.83% |
| IRTRA | 1.00% | Workers' recreation institute |
| INTECAP | 1.00% | Technical training institute |
| Aguinaldo accrual (13th month) | 8.33% | One month of base, December to November cycle |
| Bono 14 accrual (14th month) | 8.33% | One month of base, July to June cycle |
| Incentive bonus (Bonificación Incentivo) | At least Q250 a month | Fixed amount, itemised separately |
| Vacation accrual | ~4.17% | 15 working days per year of service |
| Statutory subtotal | ~33.5% plus Q250 | Of base salary, before indemnity reserve |
| Indemnity reserve | ~8.33% | Contingent; one month per year of service on dismissal without cause |
| Market-standard benefits | Varies | Private health insurance, equipment and internet stipends |
| Total employer on-cost | Roughly 34% to 42% above base | Plus the fixed bonus; the higher figure carries an indemnity reserve |
For an employee on Q10,000 gross a month, budget roughly Q13,600 a month before an indemnity reserve and about Q14,400 with one. Ask us for a cost model with current rates applied.
Payroll and tax
Guatemalan payroll runs monthly in quetzales. Each cycle carries base salary, the incentive bonus on its own line, overtime and night differentials, the employee IGSS deduction of 4.83%, ISR withholding, employer contributions and monthly accruals of 8.33% each for the Aguinaldo and Bono 14.
Income tax withholding (ISR)
The employer withholds personal income tax (Impuesto Sobre la Renta, ISR) and remits it to the SAT. From 2026 the SAT requires designated special taxpayers and compliant employers to use its updated web-based employment-income system for monthly withholding, reporting and annual reconciliation. The guide does not publish income tax bands; use the SAT's current tables.
Statutory minimum wage
Guatemala sets minimum wages by economic circumscription (Circunscripción Económica) and by activity: agricultural, non-agricultural, and export and maquila. Circumscription 1 is the Department of Guatemala; circumscription 2 is everywhere else. The 2026 rates come from Government Agreement 256-2025. For non-agricultural work in circumscription 1 the guide reports a base of Q4,002.28 a month plus the Q250 bonus, a total of Q4,252.28; in circumscription 2 the total is Q4,066.90. Export and maquila rates are lower. Professional roles pay well above these floors.
Leave and mandatory benefits
- Paid vacation. A minimum of 15 working days after each continuous year of service under Article 130 of the Labor Code. It cannot be cashed out during employment; unused days are paid out on termination.
- Aguinaldo (13th month). One month of base salary under Decree 76-78, calculated December 1 to November 30. Customarily paid half in early December and half in late January, though many employers pay it all in December. Pro rata for partial years.
- Bono 14 (14th month). A second month of base salary under Decree 42-92, calculated July 1 to June 30 and paid in full in the first half of July. Pro rata for partial years.
- Incentive bonus. At least Q250 a month under Decree 78-89, shown separately on the payslip.
- Public holidays. New Year's Day, Holy Week, Labor Day, Army Day, Independence Day, Revolution Day, All Saints' Day, Christmas and New Year's Eve. Holiday or rest-day work requires premium pay or compensatory time.
- Maternity. 12 weeks of paid leave, 30 days before and 54 after the birth, funded through IGSS. Nursing mothers get two 30-minute breaks daily for 10 months after returning. Pregnant and nursing employees have job security (inamovilidad laboral): no dismissal without prior Labor Court authorisation.
- Working time. Day shift (jornada diurna): maximum 8 hours a day and 44 a week, paid as 48. Night shift: 6 hours a day and 36 a week. Mixed shift: 7 hours a day and 42 a week. Overtime carries a 50% premium.
Termination and notice periods
Guatemala does not price termination through notice periods. It prices it through indemnity. An employer can dismiss with just cause only on the grounds in Article 77 of the Labor Code, and must deliver written notice citing the specific cause within 20 working days of the infraction. Miss the deadline or fail to document the ground and the dismissal is treated as without cause. Dismissal without cause is lawful but the employee is owed all accrued rights plus statutory indemnity under Article 82: approximately one month of salary for each year of continuous service, prorated for fractions. The base includes salary, average variable pay over the preceding six months and proportional Aguinaldo and Bono 14, so it is larger than a month of base pay. The guide publishes no notice-period schedule, so none appears here.
- Document cause in writing, fast. A late or vague notice converts a just-cause dismissal into an indemnity claim.
- Final settlement checklist. Outstanding wages, proportional Aguinaldo and Bono 14, unused vacation and indemnity where applicable.
- Calculate indemnity on the full base. Miscalculating it is a named compliance risk. Carry a reserve of about 8.33% of base.
- Protected employees. Pregnant and nursing employees cannot be dismissed without judicial authorisation. A dismissal without it is null: reinstatement with back pay.
- Probation. The guide does not state a maximum probation period. Write the term into the contract and confirm it against the Labor Code.
Can I use independent contractors?
Only for people genuinely running their own business. Guatemala has an active community of independent professionals, and a properly structured services agreement with one of them is fine. The risk starts when the relationship looks like employment. The guide's own test: exposure is high if the contractor is under direct managerial control and discipline, keeps mandatory hours, works exclusively for you, uses company equipment and accounts, performs core ongoing duties alongside your employees, or receives a fixed monthly payment regardless of output. Tick several of those and the person is an employee. Reclassification means retroactive liability for IGSS contributions, Aguinaldo, Bono 14, vacation and indemnity, plus back taxes. For anyone who works like an employee, an EOR is the compliant route.
The legal framework in brief
Guatemalan employment law is codified and employee-protective. The instruments and authorities you will hear referenced most:
- Labor Code (Código de Trabajo). Contracts, working schedules, vacation (Article 130), just-cause grounds (Article 77), indemnity (Article 82) and maternity protections.
- Decrees 76-78 and 42-92. The Aguinaldo and Bono 14.
- Decree 78-89. The monthly incentive bonus (Bonificación Incentivo) of at least Q250.
- Government Agreement 256-2025. The 2026 minimum wages by circumscription and activity.
- Ministry of Labor and Social Welfare (MINTRAB). Registers contracts, reports minimum wages and issues work permits for foreign nationals.
- Guatemalan Social Security Institute (IGSS). Compulsory employer registration and enrolment of every employee.
- Superintendencia de Administración Tributaria (SAT). ISR withholding, reporting and annual reconciliation.
- Guatemalan Migration Institute (Instituto Guatemalteco de Migración). Residency and work visas for foreign employees, alongside the MINTRAB permit and statutory foreign-worker quotas.
Where the talent is
Guatemala is Central America's most populous country, sits on Central Time and has a mature BPO industry, so it suits both high-volume operational teams and specialised professional hires. Companies commonly hire bilingual customer service and technical support, SDRs, executive assistants, finance and bookkeeping, recruiting, software development and QA, and shared services. Spanish is the national language, but Guatemala City has a deep pool of fluent English speakers. Contracts must be in Spanish.
| Region | Talent and industry concentration |
|---|---|
| Guatemala City metropolitan area | Corporate headquarters, finance, technology, shared services, multinational operations; the primary hub for English-speaking talent |
| Guatemala City BPO sector | Bilingual customer service, technical support, SDR and lead generation, insurance, healthcare and legal intake, bookkeeping and payroll support |
| Guatemala City technology ecosystem | Full-stack, mobile and web developers, QA automation, cloud and DevOps, data and BI, IT help desk |
Guatemala Implementation Kit
This page tells you the rules. The kit tells you what to do, in what order, and what goes wrong when you skip a step. Built from Dryft's own onboarding checklist for Guatemala.
- Step-by-step implementation checklist, from hiring route selection to first payroll
- Minimum-wage circumscription and activity category for each role
- Spanish-language contract and MINTRAB registration within the 15-day window
- IGSS registration and SAT ISR withholding setup
- Accrual schedule for the Aguinaldo, Bono 14 and vacation, plus the incentive bonus line
- Fully burdened cost model with IRTRA, INTECAP and an indemnity reserve
- Termination procedure: Article 77 grounds, the 20-day window and the indemnity base
- Work permit and visa steps for foreign nationals
This guide is general information, not legal, tax or immigration advice. Guatemalan employment rules change through annual minimum-wage agreements, IGSS and SAT requirements and amendment of the Labor Code. Confirm current figures with a qualified adviser or with Dryft before acting. Last reviewed September 2026.
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