Laws and Policies in Honduras

Employment Contracts in Honduras

Employment relationships are governed by the Honduran Labour Code.

Contract Requirements

Employment contracts should be in writing and must include:

• Employer and employee identification
• Job title and duties
• Work location (on-site, field, remote)
• Salary and payment frequency
• Working hours and overtime rules
• Leave and benefits
• Contract duration (indefinite or fixed-term)
• Probation clause
• Termination and notice terms

Types of Contracts

• Indefinite-term contracts – most common
• Fixed-term contracts – for seasonal or project-based work
• Part-time contracts

Probation Period

Typically up to 2 months, depending on the role and contract type.

An EOR ensures all contracts are fully compliant and properly documented in Spanish.

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Working Hours in Honduras

• Standard workweek: 44 hours
• Typical schedule: 8 hours/day, Monday to Friday, plus partial Saturday depending on industry

Overtime

• Overtime is paid at a premium rate (commonly 125%–150% of regular pay)
• Night work and work on public holidays can carry higher premium rates
• Daily and weekly overtime caps apply

Rest Periods

• Employees must receive a weekly rest day, typically Sunday.

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Employee Leave in Honduras

Annual Leave

After one year of service, employees are entitled to:

• 10 days of paid annual leave (1–3 years of service)
• 12 days (4–7 years)
• 15 days (8–10 years)
• 20 days (10+ years)

This tiered system is set by law and increases with seniority.

Sick Leave

• Sick leave is available with medical certification
• Benefits may be paid jointly by the employer and IHSS (social security), depending on eligibility

Maternity Leave

• Female employees receive 10 weeks (70 days) of maternity leave
• Compensation is generally supported by social security when contribution requirements are met

Paternity Leave

• Typically 4–5 days of paid paternity leave, depending on employer policy or collective agreements

Public Holidays

Honduras observes multiple public holidays, including:

• New Year’s Day
• Holy Week (multiple days)
• Independence Day
• Christmas
• Other national and regional holidays

Employees working on these days receive premium pay.

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Employee Benefits in Honduras

Social Security – IHSS

All employees must be enrolled in the Honduran Social Security Institute (IHSS).

IHSS provides:

• Health insurance
• Work disability coverage
• Maternity and sickness benefits
• Accident insurance

Both employers and employees contribute based on salary.

Mandatory Bonuses

Honduran law requires two annual bonuses:

• 13th Month Bonus (Aguinaldo): paid in December
• 14th Month Bonus (Bonus for Education): paid in June

Each bonus is typically equivalent to one month of salary.

Additional Common Benefits

To stay competitive—especially for BPO, managerial, and technical roles—employers often offer:

• Private medical insurance
• Transportation and meal allowances
• Life and accident insurance
• Remote-work stipends
• Performance bonuses
• Training and professional development

An EOR helps structure benefits appropriate for both compliance and market expectations.

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Payroll & Tax in Honduras

Payroll Currency

• Salaries are paid in Honduran Lempira (HNL)
• Some expatriate roles may negotiate USD-based salaries

Payroll Cycle

• Most employers pay bi-weekly or monthly, depending on contract terms

Income Tax

Honduras uses a progressive income tax system. Employers must:

• Withhold PAYE (income tax) from salary
• Deduct employee IHSS contributions
• Remit employer IHSS contributions
• File mandatory payroll declarations

Employer Responsibilities

• Register employees with IHSS
• Maintain accurate payroll records
• Issue payslips
• Comply with bonus and severance requirements

An EOR ensures payroll accuracy and compliance with Honduran regulations.

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Employment Laws & Compliance in Honduras

Key compliance areas include:

• Labour Code regulations
• IHSS registration and contributions
• Health & safety standards
• Premium compensation for overtime and holidays
• Mandatory bonus payments
• Proper handling of leave and termination

Termination & Severance

When dismissing employees, employers may owe:

• Statutory severance pay, based on length of service
• Notice period or pay in lieu
• Payment of unused vacation
• Pro-rated bonuses

Failure to follow legal procedures can result in significant penalties.

Non-Discrimination

Employers must avoid discrimination based on:

Political affiliation

Gender

Age

Ethnicity

Religion

Disability

Union membership