General Overview

Uruguay is a stable South American economy known for its high standard of living and progressive labor policies. Its labor market is governed by comprehensive employment laws that protect workers’ rights while promoting fair working conditions across a diverse range of industries.

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Employment Contracts

Types: Employment contracts in Uruguay can be either indefinite (permanent) or fixed-term.‍

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Conversion: Fixed-term contracts may convert to indefinite contracts if extended beyond the agreed period.

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Probation Period

Duration: Probation periods are typically set for up to 3 months.

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Notice: During probation, either party can terminate the contract with a notice period of about 7 days.

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Working Hours

Standard Hours: The normal workweek usually consists of 44 hours.

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Daily Hours: Daily working hours generally range between 8 and 9 hours.

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Overtime: Overtime is allowed and must be paid at a premium rate, often 150% of the regular hourly wage.

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Vacation Days

Entitlement: Employees are entitled to at least 20 working days of paid vacation per year.

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Accrual: Vacation is accrued on a pro-rata basis and may increase with seniority or as specified by collective agreements.

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Sick Leave

Benefits: Employees who are ill or injured are entitled to sick leave.

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Compensation: Typically, full pay is provided for the first 3 days of sick leave, with a reduced rate (approximately 70–80% of the regular salary) for subsequent days, subject to the terms of the employment contract.

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Certification: A medical certificate is required after the initial few days.

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Wages and Salary Payment

Payment Frequency: Salaries are usually paid monthly via bank transfer on the agreed date.

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Minimum Wage: As of 2025, the national minimum wage was approximately UYU 22,751.22 per month.

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Public Holidays

Holidays: Uruguay observes around 13 national public holidays.

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Paid Days Off: Public holidays are paid days off and are not counted as part of the annual leave entitlement.

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Employer Taxes

Social Security: Employers contribute to social security, covering pensions, health, and unemployment insurance, at an approximate rate of 20–25% of the gross salary (actual rate may vary by sector).

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Employee Taxes

Income Tax: Employees are subject to progressive income tax rates ranging from 0% to 36%, depending on income levels.

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Social Contributions: Employees also contribute to social security at a rate of roughly 10–12% of their gross earnings.

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Notice Period

Statutory Period: The notice period varies by length of service—for instance, shorter service (less than one year) may require 15 days’ notice, while longer service could require up to 30 days or more, as specified in the employment contract or collective agreement.

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Termination and Severance Pay

Termination: Termination procedures must follow statutory guidelines.

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Severance: In cases of unfair dismissal or redundancy, employees are typically entitled to severance pay calculated at around one month’s salary per year of service, subject to legal limits.

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Additional Benefits: Employees should also receive payment for any accrued but unused vacation and other statutory benefits upon termination.