Honduras Labor Law Guide for Hiring Employees and Contractors
This guide has important information for businesses looking to hire employees or contractors in Honduras.
Honduras is a Central American country. Its economy grew by 4 percent in 2022. The economic growth is expected to be 3.2 percent in 2023.
The currency is Honduran Lempira (HNL).
Minimum Wage
Starts at HNL7,802.10
Overtime Wage
137.5% of regular pay
Meal Breaks
30 Minutes
Rest Breaks
2 hours for women employees
Working hours
8 hours/day, 44 hours/week
Salary Payment Cycle
Monthly or bi-monthly
Payroll Taxes
Sickness and maternity, Disability, old age, death, Professional Risk Contributio, Social Housing Fund, Labor Reserve Contribution
Paid Vacation
10 days, 20 after 4 years
Overtime Hours
Beyond 40 hours in a week
Night Shift Hours
125% of regular pay
Between 7PM and 5AM
Holidays
11 Holidays per year
No Work Days
Sunday
A business needs a local entity in Honduras to hire locally. You also need to set up a local bank account to pay the wages.
Setting up an entity in Honduras navigating multiple agencies. It can take 10-12 weeks to incorporate the business and open a bank account. Most businesses hire a local attorney or law firm to register a business in the country.
Honduras requires employment contracts. They should clearly outline terms and conditions of employment such as compensation, working hours, benefits, and termination clauses.
The business also needs to comply with local benefits, payroll, tax, and HR laws.
Like in most countries, Honduras laws treat employees and contractors differently. You must classify people correctly to avoid fines.
Minimum wage in Honduras varies by the industry and size of business.
In addition to the minimum wages, many employers also pay two month’s salary (13th and 14th month salary). This makes the total annual salary 14-times the monthly salary.
The lowest monthly salary is HNL7,802.10 for Agricultural businesses employing less than 10 people.
The highest monthly salary is HNL15,496.56 for Financial institutions, real estate and Business services that employ more than 150 workers.
Standard working hours in Honduras are 8 hours per day or 44 hours per week. Sunday is a holiday throughout the country. Workers can work for a maximum of 6 days in a week.
Managers can work up to 12 hours in a day.
You can employ workers less than 18 years of age. Workers between 14-16 years can work for 4 hours a day. Those between 16-18 years of age can work up to 6 hours in a day. These workers can work for a maximum of 36 hours in a week.
Night shift timings are 7PM to 5 AM. Workers who work in the night-time cannot work for more than 36 hours in a week.
If an employee works a mixed day-night shift, the weekly hours cannot cross 42 hours.
Women employees who are between 14 to 18 years must be given tow-hour rest break during work hours.
Overtime pay in Honduras is calculated is 137.5% of the regular pay.
Employees who work night shifts are to be paid at 125% of the regular pay.
Those working on a Sunday or rest day are entitled to pay at 200% of the regular pay.
For night work, the pay rate is 125% of the regular pay.
The payroll cycle in Honduras can be monthly, bi-monthly, weekly, daily, or hourly. However, most employers follow monthly or bi-monthly pay cycle.
You need to pay 13th and 14th salaries to employees. Each of these is equal to a full-month salary. These are paid in December and July.
Employers need to pay the following payroll taxes:
| Type of deduction/tax | Employer Contribution | Employee Contribution |
|---|---|---|
| Sickness and maternity | 5% | 2.5% |
| Disability, old age, death | 3.5% | 2.5% |
| Professional Risk Contribution | 1% | Nil |
| Private Contribution Regime – Social Housing Fund | 1.5% | 1.5% |
| Labor Reserve Contribution | Nil | 2.64% |
Income tax rates in Honduras:
| Taxable Income | Tax Rate |
|---|---|
| Up to HNL198,995.06 | No tax |
| Between HNL198,995.07 and HNL242,439.28 | 15% |
| Between HNL242,439.29 to HNL563,812.30 | 20% |
| Above HNL563,812.31 | 25% |
There are 11 National Holidays in Honduras.
Employees are entitled to a minimum of 10 paid holiday days after one year of work. If one of these holidays falls on Saturday or Sunday, then the holiday is moved to the following Monday.
This increases to 12 days after second year, 15 days after third year, and 20 days after fourth year.
Expectant mothers get four weeks of maternity leave before birth and six weeks after birth. They must get paid at 66% of their average salary over the previous three months.
Women who do not have social insurance from the government are entitled to paid maternity leave from their employers.
Employees also get 10 weeks of paid leave for adopting a child.
Women employees are also entitled to an additional three months of leave in case of a medical complication during pregnancy or childbirth.
Men do not get paternity leave in Honduras.
Employees get 66% of the last three months’ salary for up to 26 weeks in case of an illness. It can be extended to 52 weeks in case of a serious illness or injury.
Employers must give paid leave to employees if the employees aren’t covered by social security. Employees must have at least two months of contributions in the previous four months to qualify.
Honduras has a comprehensive social security system that offers several benefits to employees:
- Minimum 10 days of paid annual Leave
- 11 Public Holidays
- Maternity benefits
- Sick Leave
- Overtime Pay
- Severance Pay
- 13th & 14th month pay
- Social Security Benefits like health insurance, old age and death benefits
Some employers also provide supplemental health insurance to their employees.
The maximum probation period in Honduras is two months or 60 days.
An employee contract in Honduras can be mutually terminated on valid grounds. Employees are eligible for a severance pay in case the termination is on unfair grounds.
- 24 hours notice is required if the employee has worked for less than three months
- One week notice period is mandatory if the employee has worked between three and six months
- Two weeks notice is required if the employment period was between six months and a year.
- Employee is eligible for one month notice period if the work duration is between one and two years .
- For more than two years of employment, the notice period is two months
| Length of Employment | Severance Pay |
|---|---|
| 3 to 6 months | 10 days of pay |
| 6 to 12 months | 20 days |
| Over 1 year | One month’s pay for every year of employment subject to a maximum of 25 months. |