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Comprehensive Guide to Employee Benefits and Compensation in Guatemala

What are Employee Benefits?

Employee benefits are the extra benefits companies give employees per their compensation and other internal policies. These benefits can be monetary or non-monetary, depending on the employees’ needs and the company’s budget.

Providing employee benefits comes with its own set of advantages. Companies can increase employee satisfaction and decrease employee turnover by providing additional employee benefits. Employers can attract top talents to their companies by providing employee benefits. 

The employees in Guatemala have access to different kinds of employee benefits. All employees pay a salary equivalent to at least the minimum pay as decided by the Government of Guatemala. Also, the employees of Guatemala can take different types of leaves based on their requirements. Apart from these mandatory benefits, the employees of Guatemala also enjoy some supplementary benefits like travel allowance, health insurance, etc. 

Before deciding on employee benefits, you must conduct thorough research on the industry.  This guide will help you draft a compensation and benefits policy in Guatemala that will keep employees motivated.

Compensation Laws in Guatemala

There are several compensation laws in place in Guatemala that govern employee benefits in Guatemala. Some popular compensation laws include:

  • All the compensation laws in Guatemala apply to both local and foreign employees.
  • As per the Guatemalan Labor Code, all employees in Guatemala are entitled to a minimum wage. The National Wage Commission decides the wage, and employers must pay employees the equivalent amount. Employees working in agriculture must get a minimum wage of 94.44 Guatemalan quetzales daily. 
  • As per the federal law of Guatemala, besides the minimum wage, employees should also get a monthly productivity bonus of 250 quetzales.

Companies in Guatemala must adhere to the government’s compensation laws. Also, if there are any collective agreements deciding the aspects of the compensation structure, you must consider that too.

How to Design an Employee Benefits Program for Employees in Guatemala?

Designing an employee benefits program is a simple and comprehensive process. You need to check the employee benefits program’s viability at the company level, and only then can you consider the employees’ needs. Also, you need to have an aggregate budget in place to give you a fair understanding of how much you are about to spend on a benefits program.

You need to keep a tab on some critical aspects like employee needs before you design a compensation package in Guatemala:

Step 1: Set your goals and budget

Start designing the compensation structure in Guatemala by noting all objectives you want your benefits plan to achieve. Once you have clarity on goals, you can start drafting the plan. You must factor in the size of the company and the industry in which it operates before finalizing the benefits policy. 

Additionally, companies must consider the employees’ collective bargaining agreements or employment contracts when finalizing the benefits. Before you conclude the policy, you must consider your company’s business environment.

You should include the maximum budget to manage all benefits in the policy’s objectives. You can set your goals by considering:

  • Motivating the existing workforce and attracting new talent
  • Maintaining the budget when creating a benefits plan
  • Compliance with all labor laws

Step 2: Understand the current industry standards and employees’ requirement

Budgeting is helpful but offering valuable and pertinent employee benefits is crucial to boosting job satisfaction. You can investigate industry standards and the advantages your competitors offer. You’ll also get an idea of the type of benefits that prospective candidates might look for in a company.

It would help if you also surveyed your staff internally to find out what they expect from a benefits package. This internal survey result will determine the perks Guatemalan employees seek from their employers. Once it is set up, the survey helps uncover gaps in your benefits plan. You could cut back on certain expenses and eliminate incentives your staff aren’t using.

Step 3: Make the compensation structure flexible

Once you’ve gathered enough data from various surveys and analyses, you should start creating a framework for worker’s compensation in Guatemala.

Given that each employee has different needs, there might not be a single framework that applies to all possible solutions.  You must consider every employee’s need, and the benefits package must be flexible. Employees can choose benefits, but employers must clarify how to use these benefits to the fullest.

Step 4: Communicate the benefits and get feedback

You must inform all parties involved of your benefits policy now that you have one. Open discussion is helpful in this situation. Employees can review the policy and provide feedback. You can consider the feedback and incorporate them into the benefits plan. 

Step 5: Analyze the plan

The volatile nature of business and the economy may impact the benefits program. To determine feasibility and sufficiency, you must regularly evaluate your benefits package. Also, to ensure the plan is error-free, assess the program’s components before implementing them. Using precise metrics, you can test the effectiveness of the benefits package for the employees, and you can take corrective actions if necessary. 

Types of Guaranteed Benefits in Guatemala

Employers offer different types of employee benefits in Guatemala to their employees. Some of these benefits are mandatory, which are as listed below:

Minimum wage

  • In Guatemala, the minimum wage for an employee is decided based on the employment sector.
  • An employee working in the agricultural sector must get a minimum wage of Q. 94.44 per day. However, for people working in non-agricultural sectors, the minimum wage is set at Q. 97.29. 
  • The minimum wage for employees working in export and maquila activities is fixed at Q. 88.91.

Working hours and overtime

  • In Guatemala, the maximum working hours cannot exceed 8 and 44 hours a week. The limit exceeds 48 hours for employees in the agricultural sector.
  • Employees who work a day shift can be asked to work anytime between 6 am and 6 pm.
  • If an employee works beyond 44 hours in a week, they are entitled to a payment equivalent to 150% of regular pay.
  • Also, employees who work on a rest day or a public holiday are entitled to overtime pay.
  • Even if the employee works overtime, the total working hours cannot exceed 12 hours a day.

Paid time off

  • All employees are eligible for an annual leave once they complete 12 months of employment in the company.
  • Employees can get 15 days as paid time off yearly if they complete 150 working days in the last year.
  • If the employee does not avail of these leaves, they can ask for a cash payment in return.
  • As per federal law, the employees cannot accumulate these leaves and carry them forward in the next year.

Public holidays

  • Guatemala follows a list of public holidays. All employees get a holiday these days, irrespective of the sector and industry where they work. 
  • There are 12 public holidays in Guatemala.

Sick leaves

  • The employees in Guatemala can also avail of sick leave if their health needs immediate attention.
  • As per labor law, an employee can take sick leave of up to 6 months, given he has made social security contributions for at least three months in the last six months.
  • Employees who take sick leave get two-thirds of their average salary and sickness benefits for up to 180 days of absence from work.
  • The maximum benefit the employees get is 52 weeks in two years. 
  • These benefits can go up to Q. 2,400

Maternity leaves

  • All pregnant employees in Guatemala are entitled to a maternity leave of 12 weeks.
  • Female employees can take these leaves 30 days before their due date and 54 days after delivery.
  • If the employee goes through a miscarriage or birth, the employee can still take 42 days of paid leave.

Paternity leaves

  • In Guatemala, there are no provisions for paternity leave. However, they can use a portion of their annual leaves after the child’s birth.

Year-end bonus

  • Employees earning a minimum wage are entitled to a monthly productivity bonus of 250 quetzales.
  • Regular employees are entitled to two annual bonuses, and the value of one bonus is equal to the employee’s average salary.

Employee Benefits for Expatriates

In Guatemala, foreign workers have the same rights to benefits as native workers. Expats can take advantage of health insurance and travel reimbursements while working in Guatemala. Expats also enjoy the following benefits:

  • Lodging costs
  • Relocation and travel benefits

How are Employee Benefits Taxed in Guatemala?

In Guatemala, most fringe benefits that are a part of the employee’s compensation are taxable. Benefits like housing allowances, living allowances, etc., are taxed as per Guatemala’s regular income tax slabs. Even the non-residents working in Guatemala must pay these taxes. 

Also, the employees must contribute to social security from their monthly salaries. However, no social security contributions are deducted from the monthly and annual bonuses.

Restrictions for Guatemala Benefits and Compensation

Like other economies, most benefits in Guatemala are taxable. Therefore, you must know the monetary value of these benefits to ascertain the amount of taxes the employee will have to pay. Also, as an employer, you must ensure that all tax payments are made to the authority in time. 

Before you start drafting a benefits plan for your employees, you must ensure that your business is incorporated in Guatemala and that you can legally operate in the country. Companies must adhere to the minimum wages paid to the employees based on their sectors.

Supplemental Benefits for Employees in Guatemala

The employees in Guatemala also enjoy several supplemental benefits. These benefits might have different names across companies, but their purpose is to improve the employees’ lives. Some of these extra benefits include:

  • Bereavement leaves: The employees in Guatemala can take bereavement leave for three days if someone from their immediate family passes away. You need to inform the employer about any such event to avail of these leaves.
  • Wedding leaves: All employees can take paid five days of leaves in the event of their wedding.
  • Health insurance: In Guatemala, many companies insure their employees against accidents and illnesses. Hospitals in Guatemala may not provide free care to employees even if the country has universal healthcare coverage. Your employees will be motivated to perform regular tasks without worry if they get additional health coverage.

    Also, some employers give their employees dental and vision insurance benefits if they have a surplus budget.

  • Temporary disability insurance: From the second day of incapacity until recovery, the employee is compensated for 66.7% of the insured’s average daily earnings during the three months before the onset of the disability. The minimum daily benefit for temporary disability is 12 quetzales. 120 quetzales per day is the maximum daily temporary disability benefit.

How Can Multiplier Help with Benefits Management in Guatemala?

Finding staff abroad and starting a business in a foriegn country might be difficult. Employers must adhere to local rules and regulations while drafting employment contracts and providing employee benefits. You can contact a global PEO platform like Multiplier to assist you in this procedure.

Multiplier assists in compliance with Guatemalan labor rules as well as the qualifications of foreign workers. Our skilled staff can assist you in correctly managing the workforce without setting up a subsidiary in the country. You can therefore explore new markets and reduce your employment expenditures.

Frequently Asked Questions

A 4.83% employee’s gross pay is deducted and contributed to the IGSS.

Employers can arrange a night shift anytime between 6 pm and 6 am based on the employees’ discretion.

There are no laws in Guatemala that provide employees with work flexibility. However, employees might have a small degree of flexibility if they are working in a remote setup.

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