Venezuela Employer of record (EOR)
Expanding into Venezuela presents unique opportunities, but it also requires navigating complex labor laws, payroll requirements, and tax regulations. Using an Employer of Record (EOR) allows businesses to hire employees in Venezuela without setting up a legal entity, ensuring compliance with all local employment laws.
At Europortage, we provide a fully compliant EOR solution that enables international companies to onboard employees in Venezuela efficiently. We manage payroll, benefits, and compliance so you can focus on business growth.
Our Venezuela Employer of Record (EOR) Responsibilities:
✔️ Drafting locally compliant contracts
✔️Processing payroll accurately and on time
✔️ Providing an excellent employee experience
✔️Seamlessly handling global mobility
✔️ Paying your talent in local currency
Employment Agreements in Venezuela
In Venezuela, written employment contracts are mandatory. These contracts must include:
Job title and description
Salary and benefits
Working hours and overtime terms
Termination clauses
Probation period details (if applicable)
Venezuelan labor law strongly favors employees. It ensures job stability and requires employers to justify terminations thoroughly. This makes having a well-drafted employment contract essential for compliance and risk mitigation.
Most contracts in Venezuela are indefinite-term, as fixed-term contracts are allowed only under specific conditions. These conditions include seasonal work, special projects, or temporary replacements. Employers must register contracts with the Venezuelan Social Security Institute (IVSS) to ensure compliance.
Taxes in Venezuela
Venezuela’s tax system is structured to fund social security, healthcare, and unemployment benefits. Employers must ensure compliance with these mandatory tax obligations, which include contributions from both employers and employees.
Employer Contributions in Venezuela
Employers in Venezuela must contribute to several statutory funds and programs, including:
Social Security (SSO)
Employers contribute 9% of the employee’s salary to fund retirement, healthcare, and disability benefits, ensuring financial security and medical support for employees.
Regime for Employment Protection (RPE)
A 2% contribution goes towards job security programs, which provide unemployment benefits and protect employees in case of economic downturns or company restructuring.
Housing Fund (FAOV)
Employers must allocate 2% of the employee’s salary to the Housing Fund, which supports affordable housing programs and helps employees secure home loans.
National Institute for Educational Cooperation (INCE)
A 2% payroll contribution finances vocational training and education programs, enhancing employees’ skills and employability.
Severance Fund (Art. 92)
Employers deposit 15 days of salary per quarter into a severance fund, ensuring employees receive appropriate compensation upon termination or resignation, as mandated by labor laws.
Employee Contributions in Venezuela
Employers in Venezuela must contribute to several statutory funds and programs, including:
Social Security (IVSS)
Employees contribute 4% of their gross salary to the Venezuelan Social Security Institute (IVSS). This contribution provides access to healthcare, pension benefits, and disability coverage, ensuring financial support in cases of retirement, illness, or work-related injuries.
Housing and Habitat Fund (FAOV)
Employees are required to contribute 1% of their salary to the Housing and Habitat Fund (FAOV). This fund facilitates low-interest home loans and affordable housing programs, helping workers secure housing and improve living conditions.
Income Tax (ISLR)
Employees are subject to a progressive income tax (ISLR), with rates ranging from 6% to 34%, depending on earnings. Higher earners contribute at a greater rate, while lower-income workers receive tax benefits and deductions to ease financial burdens. The government adjusts tax brackets periodically to reflect economic conditions.
Benefits in Venezuela
Mandatory benefits in Venezuela
Venezuelan labor law requires employers to provide mandatory benefits, ensuring employees receive adequate compensation beyond their base salary.
Year-End Bonus (Aguinaldo)
The Aguinaldo is a mandatory 13th-month salary, paid in December. This bonus helps employees manage holiday expenses and financial planning. The government mandates that this extra salary be equivalent to one month’s regular wages. Some companies may offer additional bonuses, but compliance with the base requirement is essential.
Vacation Bonus
Workers are also entitled to receive, when taking their vacations, a payment of 15 days of salary as a “vacation bonus” upon completion of the first uninterrupted year of service, plus one additional day’s salary for each subsequent year of uninterrupted service, up to a maximum of 30 days of salary.
Profit Sharing
All employees are entitled to receive an annual payment representing their share in the employers’ net profits amounting to not less than thirty (30) days of salary and not more than four (4) months’ salary. The employer must distribute at least fifteen percent (15%) of its net profits for each fiscal year, computed on the basis of the employer’s income tax return. This benefit must be paid within two (2) months following the end of the company’s fiscal year. Employers are obligated to make an advance payment of the profit sharing benefits equivalent to at least thirty (30) days salary during the first fifteen (15) days of December of each year.
Common Additional Benefits In venezuela
To attract top talent, many companies offer extra benefits, such as:
Private Healthcare Plans
Transportation Allowances
Performance-Based Bonuses
Flexible Work Arrangements
Employers who provide competitive benefit packages gain an advantage in recruiting and retaining skilled professionals.
How an EOR Helps You Administer Benefits in Venezuela
Managing employee benefits in Venezuela requires compliance with strict labor laws. An EOR simplifies this process by handling payroll contributions, benefit distribution, and compliance reporting. This ensures employees receive the correct benefits on time, while employers avoid penalties and administrative burdens.
Payroll in Venezuela
Minimum wage
Venezuela’s minimum wage changes frequently due to inflation and government adjustments. Employers must stay updated on the latest changes to ensure fair compensation. The government periodically reviews the minimum wage to address economic challenges. Wage increases often impact payroll structures, requiring businesses to adjust salaries accordingly. Using a Venezuela EOR ensures that companies comply with the latest wage regulations without administrative burdens. This guarantees that employees receive the correct salary while employers maintain compliance with labor laws.
Payroll cycle and frequency
In Venezuela, most employees receive their wages bi-weekly or monthly, depending on company policies or collective bargaining agreements.
Bonus Payments
Employees in Venezuela are entitled to a 13th-month salary, commonly known as the Aguinaldo. This annual bonus must be paid by December and is equivalent to one month’s salary. Some companies offer additional performance-based bonuses to retain talent and increase motivation. Employers must calculate bonuses correctly to avoid discrepancies and ensure compliance with labor laws.
Payday
The standard payday in Venezuela varies by company, but most businesses pay salaries on the last working day of the month. Some organizations follow a bi-weekly payment system, especially for hourly or contract employees. Ensuring prompt salary payments is crucial for employee satisfaction and productivity. Employees expect their wages on time, and any delay can impact morale.
Payment requirements
Venezuelan regulations require salaries to be paid through local bank accounts, ensuring transparency and financial security.
Payments are usually done in USD.
How an EOR helps you run payroll in Venezuela
A Venezuela Employer of Record (EOR) ensures payroll compliance by managing every aspect of salary payments, tax withholdings, and reporting. Payroll errors can lead to legal complications and financial penalties, making expert management essential. An EOR ensures that all calculations follow local labor laws, reducing administrative burdens. Businesses benefit from a streamlined payroll process that guarantees timely, accurate payments. By outsourcing payroll to an EOR, companies can focus on growth while maintaining full compliance with Venezuela’s payroll regulations.
Working time and overtime in Venezuela
Working hours
In Venezuela, the standard workweek consists of 40 hours, spread over five or six days depending on company policies. Employees typically work eight hours per day, with one hour allocated for meals and rest.
Overtime
Overtime in Venezuela is highly regulated. Employees working beyond the 40-hour weekly limit must receive additional compensation. The standard overtime rate is 150% of the regular hourly wage, ensuring fair payment for extended work hours. Work performed on weekends and public holidays requires 200% compensation, making it essential for businesses to plan schedules accordingly.
Night Shifts and Compensation
Employees working night shifts, typically between 7:00 PM and 5:00 AM, are entitled to an additional 30% premium on their hourly wage.
Time tracking obligations in Venezuela
Venezuelan labor laws require businesses to track employee work hours accurately. Employers must maintain detailed records of work shifts, overtime, and break periods to comply with labor regulations. These records serve as legal proof in case of disputes and help ensure payroll accuracy. Digital tracking systems can help streamline this process and reduce administrative burdens.
Leave in Venezuela
Annual leave in Venezuela
Employees in Venezuela become eligible for 15 days of paid vacation after completing one year of service. This period increases by one day per year of service, up to a maximum of 30 days. Employers must grant employees their annual leave within the following 12 months. Workers also receive an additional vacation bonus equivalent to one day’s salary per vacation day taken. Businesses must track and manage vacation accrual properly to ensure compliance. A Venezuela EOR assists in handling leave entitlements efficiently, preventing administrative errors.
Regional and national holidays in Venezuela
Venezuela observes national and regional public holidays, during which employees are typically entitled to paid time off. Key national holidays include:
New Year’s Day (January 1st)
Independence Day (July 5th)
Christmas Day (December 25th)
Labor Day (May 1st)
Employees working on public holidays must receive additional compensation, often at double their regular salary. Employers must account for these costs when scheduling shifts.
Sickness and disability leave
Employees who fall ill are entitled to paid sick leave, with the employer covering the first three days. Beyond this period, social security (IVSS) takes over, providing financial assistance to the employee. The duration and payment of sick leave depend on medical certification and government approvals. Employers must ensure that sick leave records are documented properly to facilitate claims.
Paternity and maternity leave
Maternity Leave: Female employees are entitled to 26 weeks of paid maternity leave (6 weeks before and 20 weeks after childbirth). This leave ensures that new mothers receive financial and job security during pregnancy and postpartum recovery. Employers cannot terminate employees during pregnancy or within two years after childbirth.
Paternity Leave: Fathers are entitled to 14 consecutive days of paid leave following the birth of their child. This time allows them to support their families during the critical postpartum period.
Employers must comply with parental leave policies to avoid penalties and maintain a supportive work environment.
End of employment in Venezuela
Ending an employment relationship in Venezuela requires careful adherence to labor laws. Employers must comply with regulations concerning notice periods, terminations, and severance pay to avoid disputes and legal penalties. The Venezuelan labor market heavily favors employees, making it essential for businesses to handle terminations correctly.
Termination notice period
Employees in Venezuela are entitled to a notice period before termination, depending on their length of service. Typically, the required notice period ranges between 15 and 30 days. Employers must provide written notice detailing the termination reasons and effective date. If an employer fails to provide proper notice, they must compensate the employee for the equivalent salary of the notice period.
Severance
Employees dismissed without just cause are entitled to severance compensation based on their years of service. The standard severance package includes one month’s salary per year worked, with a cap based on labor law provisions. Employers must also account for accrued vacation days, pending bonuses, and unpaid benefits in the final payout. Failing to pay severance correctly can result in legal disputes and financial penalties.
How to hire in Venezuela
Independent contractor
This solution might seem a good fit to reduce the cost of setting up an entity or hiring a full-time employee. Engaging a contractor can be a winning strategy in some cases and will depend of your business strategy and goals. For instance, it is a great solution when you need a talent for a short-term project.