Hire employees in Honduras
Everything a foreign company needs to know before employing people in Honduras: whether you need an entity, what an employee really costs once the 13th and 14th months and IHSS, RAP and INFOP are added, how lempira payroll works, which leave is mandatory, and how notice and severance are calculated. Written for CHROs, CFOs, General Counsel and founders.
Quick answers
The questions leadership teams ask first, answered directly. Detail follows below.
Do I need a Honduran entity to hire?
No. Foreign companies can engage talent in Honduras through three routes:
- Employer of Record. Dryft Global employs the person through a compliant Honduran employer registered with the labor ministry (Secretaría de Trabajo y Seguridad Social, SETRASS), the social security institute (IHSS), the tax authority (SAR), the private contribution regime (RAP) and the training institute (INFOP). Dryft runs payroll, contributions, withholding and both extra months. You direct the day to day work.
- Direct local entity. You incorporate a limited liability company (Sociedad de Responsabilidad Limitada, S. de R.L.) or a branch, register with each authority and run payroll yourself. The guide puts this at 60 to 90 days.
- Independent contractor. A professional services agreement works only for genuinely independent work. If the daily reality is employment, SETRASS or a labor court will treat it that way. See below.
When should I use an EOR instead of setting up an S. de R.L.?
An EOR makes commercial sense when you are:
- Onboarding talent in 5 to 10 business days without waiting for corporate registration.
- Building a team of 1 to 15 across engineering, sales or customer operations.
- Avoiding permanent establishment exposure and SETRASS, IHSS and RAP administration.
A subsidiary becomes the right answer above roughly 20 to 25 staff, where EOR fees typically exceed the cost of your own entity, or for a site that needs domestic permits.
What does an employee actually cost beyond salary?
Plan for roughly 25% to 32% on top of gross base salary. The biggest items are the two mandatory extra months, the December aguinaldo and the June decimocuarto, at 8.33% each. IHSS and RAP are capped at wage ceilings, so in the guide's model they add only about 2% and 3% on a senior salary, and INFOP adds 1%. Private health cover and a telework stipend are market standard. Full breakdown below.
How difficult is termination in Honduras?
Possible without cause, but formula-driven and paid. Unjustified dismissal triggers notice (preaviso) or pay in lieu on a tenure scale reaching 1 month at 2 years, plus severance (auxilio de cesantía) of 1 month of salary per completed year, pro-rated and capped. Justified dismissal for serious misconduct under Article 112 carries no notice or severance but needs written grounds and evidence. The employee's RAP reserve can be credited against what you owe.
Can Dryft Global legally employ my team in Honduras?
Yes. Dryft Global acts as the legal employer in Honduras. We handle the contract registered with SETRASS, IHSS, RAP and INFOP enrolment, HNL payroll, SAR withholding, the June and December extra months and compliant offboarding, while you direct the work.
Hiring routes compared
Speed, capital, liability and IP ownership differ by route. A managed BPO vendor is a fourth option for tier-1 bilingual contact centre work.
| Factor | Direct entity (S. de R.L.) | Dryft Global EOR | Independent contractor |
|---|---|---|---|
| Speed to onboard | 60 to 90 days | 5 to 10 business days | 1 to 3 days |
| Corporate presence required | Yes, registered subsidiary or branch | No, employed through Dryft's local employer | No, services agreement |
| Upfront capital | Roughly USD 2,000 to 5,000+ in legal costs | Minimal deposit | None |
| Compliance liability | Low, but carried directly | Low, Dryft assumes employer risk | High under the reclassification test |
| IP ownership | Direct | Secured through EOR IP assignment | Vulnerable without a signed deed |
| Best fit | More than 20 staff, permanent physical hub | 1 to 15 knowledge workers, market testing | Short-term task projects |
What an employee costs in Honduras
Honduras effectively runs a 14-month statutory pay base. Social contributions are moderate and capped at ceilings that move with inflation and minimum wage decrees. The guide does not publish the IHSS illness and pension percentages, only the capped amounts in its model, which uses a senior specialist on HNL 60,000 a month.
| Component | Employer share | Notes |
|---|---|---|
| IHSS illness, maternity and pension (EM and IVM) | ~HNL 1,250 a month, capped | About 2.08% of the model salary; rates not stated in the guide |
| IHSS professional risks (RP) | ~0.2% to 1.5% | Employer only, by occupational risk tier |
| RAP severance reserve (Fondo de Cesantía) | ~4%, subject to ceiling | Individual reserve creditable against severance |
| RAP housing and pensions | 1.5% | On salary above statutory baselines; employee matches 1.5% |
| INFOP (vocational training) | 1.0% | Employers with 5 or more staff |
| Statutory contributions subtotal | ~6% in the model | Higher share on lower salaries |
| 13th month (aguinaldo, December) | 8.33% | Decree 112-82 |
| 14th month (decimocuarto, June) | 8.33% | Decree 135-94 |
| Vacation accrual | 10 to 20 working days by tenure | Grows with each anniversary |
| Market-standard benefits | ~5.4% | Private health and life cover, connectivity stipend |
| Total employer on-cost | ~25% to 32% | Above base salary; driven by the two extra months |
For an employee on HNL 60,000 gross a month, the guide's model adds HNL 5,000 each for the 13th and 14th month accruals, HNL 1,250 of IHSS, HNL 1,800 of RAP, HNL 600 of INFOP and HNL 3,250 of insurance and stipend, for roughly HNL 76,900 a month, about 128% of base. Ask us for a cost model with current ceilings applied.
Payroll and tax
Honduran payroll runs monthly or bi-weekly (quincenal) in lempiras. Contracts may reference USD, but payroll, deductions and withholding must be settled in HNL at the official rate. Two rules catch foreign employers out: an employee who completes the 44-hour daytime week must be paid for 48 hours under Article 322, and the 13th and 14th months are statutory entitlements, not discretionary bonuses.
Income tax withholding (SAR)
The employer withholds personal income tax (Impuesto Sobre la Renta) monthly and remits it to the tax authority (Servicio de Administración de Rentas, SAR). The scale is progressive: an exempt band up to roughly HNL 200,000 a year, then 15%, 20% and a top rate of 25%. SAR adjusts the brackets annually for inflation and applies an automatic medical expense deduction. The 13th and 14th months are exempt up to designated thresholds. Employee-side IHSS and RAP deductions are also withheld.
Statutory minimum wage
Honduras has no single national minimum wage. The National Minimum Wage Commission sets a matrix by economic sector and by headcount band (1 to 10, 11 to 50, 51 to 150 and 151 or more employees), adjusted annually by tripartite agreement and executive decree. Commercial services, finance and technical support sit in the upper brackets. Confirm your sector, headcount tier and the current table with SETRASS before setting pay.
Leave and mandatory benefits
- Paid vacation. Scales with service under Article 346: 10 consecutive working days after 1 year, 12 after 2, 15 after 3 and 20 from 4 years. Leave must be granted within 3 months of the anniversary with at least 10 days' notice. Cash in lieu is prohibited during employment; the balance is paid on exit.
- Public holidays. 11 national days, including Holy Week, Independence Day on September 15 and the consolidated Semana Morazánica in early October. Holiday and rest-day work is paid at double time or compensated with a day off.
- 13th and 14th months. The aguinaldo is paid in December and the decimocuarto in the first half of June, each one month's pay. Late payment carries SETRASS fines and interest.
- Sick leave. Illness benefits run through IHSS; the guide gives no employer-paid waiting period.
- Maternity. 10 weeks, split 6 before and 4 after birth or 4 and 6, at 100% of salary, shared between IHSS and the employer.
- Paternity and family leave. Paternity is typically 3 to 6 working days under civil service and progressive private policies. Bereavement and marriage leave are customarily 3 paid days each.
- Working time. Day shifts are capped at 8 hours a day and 44 a week but paid as 48; night shifts at 6 hours and 36 a week; mixed shifts at 7 hours and 42, both also paid as 48. Overtime is capped at 4 hours a day and paid at a 25% premium by day, 75% at night and 50% on mixed shifts. Managers and trust personnel can be exempt.
Termination and notice periods
Contracts must be written, in three originals with one filed at SETRASS; an unregistered contract creates an evidentiary presumption in the employee's favour. Probation is capped at 60 continuous calendar days under Article 49, during which either side can exit without notice or severance. After probation, a dismissal is either justified under Article 112 (false credentials, violence or grave insubordination, intentional damage or gross negligence, unjustified absence of 2 consecutive or 3 non-consecutive days in a month, disclosing trade secrets), communicated in writing with grounds and evidence, or unjustified under Articles 116 to 120, which is lawful but paid.
| Completed service | Notice (preaviso) | Severance (auxilio de cesantía) |
|---|---|---|
| Under 3 months | None, within probation | None |
| 3 to 6 months | 24 hours | 10 days of base salary |
| 6 months to 1 year | 1 week | 20 days of base salary |
| 1 to 2 years | 2 weeks | 1 month per completed year, pro-rated |
| 2 or more years | 1 month | 1 month per completed year, up to the statutory cap |
- Notice mechanics. During notice the employee gets 1 paid day off a week to look for work. Skip notice and you pay salary in lieu.
- Severance cap. The guide describes the cap as historically between 15 and 25 years or months depending on the regime; confirm it before modelling long-tenure exits.
- RAP offset. The employee's accumulated RAP severance reserve may be credited against the final severance obligation.
- Resignation. A resigning employee must give statutory notice and receives accrued wages, pro-rated 13th and 14th months and vacation, but no severance.
Can I use independent contractors?
Only for short-term, task-based projects, and never as a way to avoid payroll cost. A professional services agreement (Contrato de Servicios Profesionales) gives no protection when the daily reality is employment: full-time, exclusive personnel on commercial invoices whose schedule you control is the classic misclassification pattern. If SETRASS or a labor court reclassifies the contractor, you owe retroactive 13th and 14th months, vacation pay and holiday premiums for the whole relationship, unpaid IHSS, RAP and INFOP contributions with surcharges, unwithheld income tax with SAR fines, and full notice and severance from day one. Without an explicit IP assignment deed, rights in the work may not transfer either. For anyone who works like an employee, an EOR is the compliant route.
The legal framework in brief
Honduran employment law rests on the Constitution, the Labor Code and ratified ILO conventions. The instruments you will hear referenced most:
- Labor Code (Código del Trabajo, Decree 189). Contracts, probation, working time, vacation, justified dismissal (Article 112) and unjustified dismissal (Articles 116 to 120).
- Social Security Law (Ley de Seguro Social, Decree 140). IHSS health, maternity, disability, old age and death benefits.
- Private Contribution Regime Law (Ley del RAP). Mandatory severance reserve and housing contributions for private sector employees.
- Minimum Wage Law (Decree 103). The negotiated, sector-and-headcount minimum wage matrix.
- Decrees 112-82 and 135-94. The 13th month aguinaldo and the 14th month social compensation salary.
- Industrial Property and Copyright Laws. Employee-created IP belongs to the employer only where the contract has an explicit assignment clause.
- Article 11 Labor Code (national quotas). At least 90% of headcount and 85% of payroll must be Honduran; foreign executives and specialists need SETRASS authorisation plus a work permit or temporary residency from the National Migration Institute (INM).
- Data protection. No single GDPR-style statute; protections derive from constitutional habeas data, banking and e-commerce law, so put data handling terms in the contract.
Where the talent is
Honduras is an established nearshore market on Central Standard Time (UTC-6) year-round, with burdened costs well below Costa Rica or Mexico. San Pedro Sula and Tegucigalpa host one of Central America's most established BPO sectors; accounting graduates trained in US GAAP, IFRS and major ERP systems support shared services; and a growing junior-to-mid engineering cohort covers JavaScript, Python,.NET, QA automation and cloud support. Benchmarks run from about HNL 16,000 a month for junior bilingual support to HNL 110,000 for senior cloud engineers.
| Region | Talent and industry concentration |
|---|---|
| San Pedro Sula | Industrial and BPO engine; bilingual support, QA and operations managers, SDRs, manufacturing engineering, logistics |
| Tegucigalpa | Capital and government seat; finance shared services, software engineering, IT support, BPO |
Honduras 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 Honduras.
- Step-by-step implementation checklist, from hiring route selection to first payroll
- Confirming sector, headcount tier and minimum wage bracket with SETRASS
- Bilingual contract template with telework provisions and IP assignment
- Three-original execution, SETRASS registration and IHSS, RAP and INFOP enrolment
- Payroll setup for bi-weekly HNL runs, the 48-hour pay rule and SAR withholding
- June and December extra-month calendar and vacation anniversary tracker
- Termination playbook: Article 112 evidence, preaviso schedule and cesantía math
This guide is general information, not legal, tax or immigration advice. Honduran employment rules change through annual minimum wage decrees, ceiling updates and SAR bracket adjustments. Confirm current figures with a qualified adviser or with Dryft before acting. Last reviewed September 2026.
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