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.

Fiscal Year in Honduras

1 January - 31 December is the 12-month accounting period that businesses in Honduras use for financial and tax reporting purposes.

Payroll Cycle in Honduras

The payroll cycle in Honduras is usually monthly, with employees being paid as specified in the contract.

Minimum Wage in Honduras

As of January 1, 2025, Honduras implemented a new minimum wage structure that varies based on company size and sector. These changes were a result of negotiations between the Business Sector and the Labor Sector to improve workers' living conditions and enhance national competitiveness.

The minimum wage adjustments for 2025 are as follows:

• From 1 to 10 workers: 5.5% increase, totaling L 12,191.70 per month.
• From 11 to 50 workers: 5.5% increase, totaling L 12,636.50 per month.
• From 51 to 150 workers: 6.5% increase, totaling L 14,933.50 per month.
• From 151 workers and above: 7% increase, totaling L 12,910.90 per month.

Bonus Payments in Honduras

Full-time employees are entitled to receive a 13th-month salary payment as a Christmas bonus in December and a 14th-month salary payment in July, with each payment amounting to one month's salary.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 16.6% on top of the employee salary in Honduras.

Employee Payroll Tax Contributions

In Honduras, the typical estimation for employee payroll contributions cost is around 8.1%.

Individual Income Tax Contributions

The individual income tax in Honduras varies from 0% to 25%, calculated based on progressive rates. Household status and the number of children can influence overall tax rates.

Pension in Honduras

Pension arrangements in Honduras involve compulsory monthly contributions from both employers and employees. Men typically retire at the age of 65, while women retire at 60.

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, employers seeking to hire foreign workers must navigate several types of work permits and visas, including the Temporary Work Visa, Permanent Work Visa, Specialized Worker Visa, and Investor Visa. The application process involves submitting necessary documentation such as employment contracts, proof of qualifications, and a health certificate, as well as meeting specific labor law requirements.

Employers must also demonstrate that no suitable local candidates are available for specialized roles. Understanding the visa types and the associated fees, as well as ensuring compliance with local regulations, is essential for successfully sponsoring foreign employees.

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.

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