Employer Payroll Tax
Employee Payroll Taxes
Employee Income Tax
In Nicaragua, the minimum wage varies depending on the industry with agriculture, forestry, and fishing being the lowest at 4,286.33 NIO per month and construction, financial institutions, and insurance is the highest at 9,592.4 NIO per month.
Payroll cycles depend on the type of employment. Manual workers are paid weekly and employees are paid every 15th day.
Employees receive a 13th salary within the first 10 days of December.
The working hours depends on the hours of the day:
- Day work between the hours of 6 am and 8 pm- A typical workday is 8 hours or a maximum of 48 hours per week
- Night work between the hours of 8 pm and 6 am- A typical workday is 7.5 hours or a maximum of 45 hours a week.
Overtime pay is paid at a rate of 200%.
For work over a weekend or holiday, the employee is entitled to a 24–hour rest period in lieu.
Employees who have completed at least 6 months to 1 year of employment are entitled to 15 days of paid leave. After 1 year of employment, the employee is entitled to 30 days of paid leave.
There are 9 public holidays.
Sick leave is paid from the 3rd day of illness and the benefit is for up to 6 months and is covered by social security. Pay for sickness is 60% of the regular wages.
However, if the employee is hospitalized, the 3 day waiting period is waived.
Maternity leave is 12 weeks and is paid at the rate of 100% of the regular wages in which 60% of this is paid by the employer and 40% is paid by social security. Maternity leave can begin 4 weeks from the expected due date.
For multiple births, maternity leave is extended to 14 weeks.
Fathers are entitled to 5 business days of paid leave.
There is no statutory law on parental leave in Nicaragua.
To terminate employees, employers must request for termination from the labor inspection department. At the time of dismissal, the employee is entitled to remaining vacation pay and their annual bonus. Notice of termination is also required.
Employees must provide 15 days notice.
The employer must pay severance when the employee is terminated for an unjust cause. The severance pay is calculated at one month’s salary for the first 3 years of employment and 20 extra days of wages for every year after. Severance is capped at 5 months in payments.
The probation period is 30 days, during which either party can terminate the employment agreement for any reason.
VAT is 15% standard rate.