Employer of Record in Honduras

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in Honduras if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Honduras below, to avoid any compliance issues.

Employment Contract Requirements

In Honduras, contracts must be in Spanish, but can also be bilingual. They should be written and signed by both the employer and employee, outlining specific details such as:

• Company and employee names
• Start date
• Duration of employment
• Job description
• Termination conditions

Onboarding Process

We can help you get a new employee started in Honduras quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Probation Period in Honduras

The probationary period, limited to 60 days, assesses the employee's abilities for the employer and the job's suitability for the employee. It's a paid period, and if neither party indicates a desire to terminate the contract, it extends indefinitely.

The maximum working hours in Honduras is 44 hours per week for day shifts, 42 hours for mixed shifts, and 36 hours for night shifts. In typical working hours, Monday through Friday, the hours are 8:00 AM to 5:00 PM, with an hour for lunch.

Overtime pay is mandatory and separate from the base salary. Any hours worked beyond the standard limits (e.g. over 8-hour days / 44-hour weeks, or beyond allowed hours for night or mixed shifts) qualify as overtime, compensated at 125% of daytime wages, 175% for overtime in night hours, and 200% of the normal rate for overtime on rest days or public holidays.

Employment laws in Honduras can be intricate, and even unintentional mistakes in contracts, benefits, or termination processes can carry legal and reputational consequences. With an Employer of Record, you gain a local partner that ensures every hire is compliant. The EOR takes care of drafting compliant contracts, processing accurate payroll, managing contributions to statutory benefits, and handling lawful terminations if needed, all according to local employment standards.

This level of protection is especially valuable when expanding into new or unfamiliar regions. Instead of using time and resources to build in-house legal knowledge, you gain immediate access to local expertise. The EOR keeps you ahead of regulatory updates and shields your company from potential compliance gaps, so you can confidently hire and manage employees while minimizing risk. For hiring managers and founders, it's the difference between hiring with uncertainty and building your team on a legally sound foundation.

To run payroll in Honduras in 2026, you need to manage progressive income tax withholding, shared IHSS social security, RAP, and labor security contributions, with employer costs typically adding around 12%–16% on top of base salaries. Accurate configuration of brackets, rates, and ceilings, combined with timely monthly filings to SAR and IHSS, will keep your team compliant and ensure employees receive the correct net pay and statutory benefits.

• Core Obligations: Withhold Impuesto Sobre la Renta, calculate IHSS, RAP, and labor security contributions, and file monthly reports.
• Employer Cost: Budget for an additional 12%–16% of salary to cover mandatory employer-side contributions.
• Systems And Data: Use payroll tools that support Honduran rules and maintain clean employee and timekeeping data.
• Compliance Calendar: Track monthly and annual due dates so income tax and social security payments are never late.
• No-Entity Strategy: Consider an Employer of Record if you want to hire in Honduras without setting up a local company.

When you’re scaling quickly, setting up local payroll systems in each new country slows you down. In Honduras, the administrative load can include government registration, benefits management, and accurate, on-time payment delivery. An EOR gives you a plug-and-play solution that handles all of this while your internal team stays focused on growth, not red tape.

Key Ways an EOR Supports Payroll in Honduras:

• Rapid Payroll Setup: Onboards employees quickly with ready-to-go infrastructure.
• End Administration: Handles salary, tax, and benefits with no extra internal resources.
• Vendor Simplicity: Consolidates payroll across countries for centralized oversight.
• No Entity Required: Operates legally, saving your business the time and resources needed for local incorporation.

In Honduras, foreign nationals who wish to live and work legally typically do so under a Temporary Residence with work authorization (Residencia Temporal con permiso de trabajo) or, for longer-term stays, a Permanent Residence (Residencia Permanente). Shorter business visits are usually covered by a Business Visa (Visa de Negocios) or entry as a visa-exempt national, but these options generally do not allow hands-on productive work in the local labor market.

Work authorization is usually tied to a specific employer and role, and the sponsoring company must demonstrate that it is duly registered, compliant with Honduran labor and tax rules, and genuinely needs to hire a foreign worker. Applications are typically filed with the Instituto Nacional de Migración (INM) and may involve coordination with the Secretaría de Trabajo y Seguridad Social. Processing times can range from a few weeks for short-term visas to several months for residence-based work permits.

Mandatory Leave Entitlement in Honduras

The annual leave entitlement in Honduras is 10 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Honduras

Honduras observes 11 national holidays throughout the year. Notable public holidays include:

Paid Time Off in Honduras

Honduras employees are entitled to 10 days of paid annual leave. The annual leave entitlement varies according to employee tenure:

1. After one years' service: 10 days paid leave
2. After 5 years' service: 12 days

Maternity Leave In Honduras

Employees receive 10 weeks of paid maternity leave, with 4 weeks taken before the birth and 6 weeks after. During this period, the employee receives their full salary: 66% from social security and 34% from the employer.

Paternity Leave In Honduras

Honduras does not have a statutory provision for paternity leave. However, legislative amendments to the Labor Code have been proposed to introduce paternity leave and extend maternity leave.

Sick Leave In Honduras

An employee is entitled to 26 weeks of paid sick leave, which can be prolonged to 52 weeks after a three-day observation period. The sick leave compensation amounts to 66% of the employee's average earnings from the preceding three months.

Parental Leave In Honduras

Honduras does not have a statutory provision for paternity leave.

Employee benefits in Honduras combine strong statutory protections with a growing market for voluntary perks. As an international employer, you will need to understand both the legal minimums and what local talent now expects from competitive companies.

Your core obligations will center on social security contributions, paid annual leave, public holidays, maternity and paternity protections, and the thirteenth and fourteenth month bonuses. Beyond these, employers increasingly use private health plans, meal benefits, and flexible work options to differentiate their offer.

• Top mandatory benefits include Honduran Social Security Institute (IHSS) coverage, paid annual leave and public holidays, maternity and paternity protections, and the thirteenth and fourteenth month bonuses.
• Top supplemental benefits include private health insurance, meal and transport allowances, and performance-based bonuses beyond the statutory 13th and 14th salaries.
• Key legal and tax considerations include correct registration and contribution to IHSS and related funds, proper calculation and timely payment of statutory bonuses and leave, and accurate reporting of taxable benefits in kind for Honduran income tax and employer payroll tax purposes.

For startups and small teams, managing global employee benefits isn’t just complex, it’s a full-time job. In Honduras, understanding what benefits are required, how to deliver them, and how to stay compliant can be overwhelming, especially without local HR expertise. An Employer of Record removes that pressure by taking complete ownership of benefits administration, so you don't have to become an expert in local employment law.

Whether it’s healthcare contributions, pension enrollment, or statutory leave, the EOR ensures everything is delivered accurately and on time. They navigate any country-specific nuances, keep up with legal changes, and ensure each benefit is properly tracked and documented. For founders, that means fewer distractions and more time to focus on growth. Your employees get the security and support they expect from a local employer, and you get to scale your team in Honduras without building complex infrastructure or worrying about compliance missteps.

Termination Process in Honduras

In Honduras, ending employment mandates notice and a written explanation, including a warning for misconduct. Unfair termination can lead to legal action, with the employer having to prove fairness. Failure to provide evidence can result in compensation. Fixed-term contracts can be terminated for specific reasons, which include:

• Just cause with prior authorization from the Ministry of Labor
• Upon the contract's expiration
• Workers misconduct

Notice Period in Honduras

The minimum notice period is one day and may extend based on the length of employment, as described below:

• Less than 3 months' service: 24-hour notice
• 3-6 months' service: one week
• 6-12 months' service: two weeks
• 1-2 years' service: one month
• Over 2 years' service: two months

Severance in Honduras

When employees are terminated without just cause, Honduras mandates severance pay based on their length of service, as outlined below:

• Service between 3 to 6 months: 10 days pay
• Service between 7 to 12 months: 20 days pay
• Service more than 12 months: 1 month per year