What do you need to know to hire in Uruguay?
An employer in Uruguay can end a contract without giving a reason and without advance notice. What you owe instead is fixed severance, one month's pay per year worked, capped at 6 months of salary. A bill in the Senate would change that. Each guide below takes one layer.
· Uruguay guide
How does Teamed handle Uruguayan hiring for you?
Teamed becomes your legal employer of record in Uruguay for from $599 per employee per month, with zero FX mark-up in any currency.
Payroll, BPS contributions, contracts, and the full Uruguayan employment law stack run on one platform.
Real HR and legal experts manage every Uruguayan hire, from the first offer to the final severance settlement. An actual person, not a chatbot or a pooled queue, handles your Uruguay team alongside EOR, contractor onboarding, and entity payroll on one platform. There is no setup fee and no exit fee. Employer cost passes through at cost, itemised on every invoice, including both halves of the aguinaldo.
A Uruguayan contractor who converts to employment keeps their record, and that same employee can graduate to your own Uruguayan entity without re-onboarding. Run the Crossover Calculator to see the month the model flips. EOR is the right model for a first Uruguayan hire, until it isn't.
- Uruguay lets you dismiss without cause or notice, but the bill for it is fixed. You owe 1 month of total pay per year worked, capped at 6 months. There is no unfair-dismissal claim to defend, only the tariffed payout. A 2025 Senate bill would add a notice period and a cause requirement. The termination guide tracks it.
- The aguinaldo is paid in two halves, not one December lump. The 13th salary equals 1 month of annual pay, split between June and the ten days before 24 December (Ley 12.840). Many guides written for one-payment markets miss the June half and under-budget the mid-year cash call.
- Day-workers and monthly staff carry two different severance formulas. Monthly staff get one month per year to a 6 months cap. Day-workers (jornaleros) earn 25 days per year once they pass 100 days, capped at 150 days. The cost breakdown guide runs both.
Hiring in Uruguay runs on monthly payroll plus a mandatory 13th salary worth 1 month of yearly pay. The 13th is paid in two halves, June and December.
The employer funds pension at 7.5% and health (FONASA) at 5%. Two small funds add 0.1% and 0.025% on top. The national minimum wage is UYU 24,572/month, rising to UYU 25,383/month from July 2026.
You can end a contract without a reason. You owe fixed severance instead, 1 month of pay per year worked, capped at 6 months.
This page is the map. Each guide below is the detail.
Zero FX. No setup fees. 48-hour onboarding. The price your finance team can forecast against without an asterisk.
How much does it cost to hire an employee in Uruguay in 2026?
Plan for salary plus employer pension at 7.5% and FONASA health at 5%.
Two small funds add 0.1% and 0.025%. The mandatory 13th salary adds 1 month of pay across the year.
Employer pension (aporte jubilatorio patronal) runs at 7.5% of pay. Employer FONASA health is 5%, with a small mutual-fund complement on top in some cases. The Labour Reconversion Fund adds 0.1% and the Labour Credits Guarantee Fund adds 0.025%. On the employee side, pension is 15% and FONASA runs from 3% to 8% depending on income and dependents. Teamed's Uruguay fee sits inside the total cost envelope, not outside it.
The aguinaldo is real cash, not an accrual you can defer. It equals 1 month of annual pay and lands in two installments. The minimum wage is UYU 24,572/month from January 2026 and UYU 25,383/month from July. Teamed's Uruguay price is a starting rate, with zero FX in any currency pairing. No setup fees. No exit fees. Salaries, contributions, and benefits passed through at cost on every invoice.
The full breakdown, with worked examples at current BPS rates, is in the cost guide.
Do you need a Uruguayan entity to hire employees in Uruguay?
No. An Employer of Record runs Uruguayan payroll and contracts from day one.
Your own Uruguayan entity becomes cheaper than EOR once headcount in-country grows, depending on salary levels.
Registering a Uruguayan company means incorporation, a RUT tax number with the DGI, and registration with the BPS for social security before the first payroll. Setup takes weeks and brings ongoing monthly filings to both the DGI and the BPS. An Employer of Record is faster and cheaper at low headcount. Teamed runs Uruguayan payroll, contracts, and compliance from day one.
The crossover point depends on Uruguayan salary levels and your local accounting costs. The EOR vs entity guide runs those numbers for your country and headcount.
Most EOR providers will not tell you when you have crossed it. We do, and we help you move. You progress from contractor to EOR to your own Uruguayan entity on one platform under Teamed's Graduation Model, with tenure preserved.
What changed in Uruguayan employment law recently?
The national minimum wage rose to UYU 24,572/month on 1 January 2026 and steps up again to UYU 25,383/month on 1 July 2026.
A bill in the Senate would, for the first time, require advance notice and a stated cause for dismissal.
Decree 319/025 set two minimum-wage steps for 2026: UYU 24,572/month from January and UYU 25,383/month from July (MTSS). The IRPF income-tax scale for 2026 is set against a BPC base value, with the tax-free floor at UYU 48,048/month and a top rate of 36%.
The bigger change is still a proposal. A bill before the Senate would replace today's free-dismissal rule with a requirement to give notice and justify the reason, drawing on ILO Convention 158 (Parlamento). It is not law yet. Until it passes, an employer can still end a contract without cause and without notice, owing only the tariffed severance. The termination guide tracks the bill's progress.
What benefits must you provide Uruguayan employees in 2026?
The floor is 20 days of paid annual leave and 14 weeks of maternity leave.
Sick pay runs at 70% of income through the BPS once the qualifying conditions are met.
Paid annual leave is 20 days as a minimum, with one extra day from the fifth year of service and another every four years after that (Ley 12.590). Uruguay also pays 5 days of mandatory paid public holidays, treated as worked, and double pay if the employee does work them. Work beyond the ordinary day is paid at 200%, and 250% on a public or non-working day.
Maternity leave is 14 weeks, with salary funded through the BPS up to a capped amount (Law 19.161). Sick pay is 70% of income under the BPS scheme. The ordinary working day caps at 8 hours, and the working week at 48 hours in industry. The benefits guide covers each entitlement in full.
Read the full Uruguay benefits guide
What are payroll taxes in Uruguay in 2026?
Employees pay pension at 15% plus FONASA health from 3% to 8%.
Income tax (IRPF) is progressive, with a tax-free floor of UYU 48,048/month and a top rate of 36%.
On the employee side, the BPS deducts pension at 15% and FONASA health at 3% to 8% depending on income and dependents, plus 0.1% for the Labour Reconversion Fund. Employers add pension at 7.5%, FONASA at 5%, and the two small funds at 0.1% and 0.025%.
IRPF is progressive across eight bands. Monthly income up to the floor of UYU 48,048/month is taxed at 0%. The next band is 10%, then 15%, 24%, 25%, 27%, 31%, and a top rate of 36% on the highest band. Teamed payroll handles all employee deductions and BPS and DGI remittances. The tax and payroll guide sets out every band and threshold.
How do you terminate an employee in Uruguay?
An employer can end a contract without a stated cause and without advance notice.
What you owe is fixed severance, 1 month of total pay per year worked, capped at 6 months.
Uruguay runs a free-dismissal system. There is no statutory notice period today, and an employer does not have to prove a reason to end a contract. A 2025 bill in the Senate would change both, adding a notice requirement and a cause requirement, but it is not yet law (Parlamento). What an employer owes on dismissal is tariffed severance, not a negotiated settlement and not damages for unfair dismissal.
For monthly-paid staff, severance is 1 month of total pay per year or fraction worked, capped at 6 months (Ley 10.489). Day-workers (jornaleros) follow a separate scale: 25 days per year of work once they have completed 100 days, up to a maximum of 150 days. The termination guide runs both formulas and the dismissal process in full.
What should you know before hiring in Uruguay?
Two things catch US buyers out. The first is that dismissal is free of cause but never free of cost.
The second is the 13th salary, worth 1 month of annual pay, that lands in two installments.
You can dismiss without a reason, but you always pay the tariff. There is no unfair-dismissal claim to defend in Uruguay, only the fixed severance: 1 month of pay per year worked, capped at 6 months for monthly staff. Budget that figure into any role from the start, because the payout is automatic on a no-cause exit.
The aguinaldo is a cash-flow event, not a year-end gesture. The mandatory 13th salary equals 1 month of annual pay and is paid in two halves, one by the end of June and one in the ten days before 24 December (Ley 12.840). Plan the June half into mid-year cash, not just the December run. The hiring guide and the cost breakdown both set out the timing.
Frequently asked questions
How much does it cost to hire an employee in Uruguay?
Plan for salary plus employer pension at 7.5%, FONASA health at 5%, and two small funds at 0.1% and 0.025%. A mandatory 13th salary adds 1 month of pay across the year. Teamed's Uruguay fee is one flat number per employee per month, with zero FX mark-up in any currency pairing. The cost breakdown guide has worked examples.
Can a US company hire in Uruguay without an entity?
Yes. An Employer of Record like Teamed runs Uruguayan payroll, contracts, and compliance through a registered local entity. You direct the work. Teamed becomes the legal employer of record. Setup takes 48 hours once terms are confirmed. Registering your own Uruguayan company takes weeks and requires a DGI tax number and BPS registration plus ongoing monthly filings.
Is there a notice period for dismissal in Uruguay?
No. Uruguay has no statutory notice period and an employer does not need to state a cause to end a contract. What you owe instead is fixed severance: 1 month of total pay per year worked for monthly staff, capped at 6 months. A 2025 bill before the Senate would add a notice and cause requirement, but it is not yet law.
What is statutory severance in Uruguay?
Monthly-paid employees are owed 1 month of total pay per year or fraction worked on dismissal, capped at 6 months (Ley 10.489). Day-workers earn 25 days per year once they pass 100 days, capped at 150 days. Severance is owed on a no-cause dismissal, since Uruguay has no separate unfair-dismissal award.
What is the 13th salary (aguinaldo) in Uruguay?
The aguinaldo is a mandatory 13th salary equal to 1 month of total pay across the year (Ley 12.840). It is paid in two installments, one by the end of June and one in the ten days before 24 December. Both halves pass through at cost on a Teamed invoice.
What is the minimum annual leave in Uruguay?
The minimum paid annual leave is 20 days, with one extra day from the fifth year of service and another every four years after that (Ley 12.590). Uruguay also pays 5 days of mandatory public holidays, with double pay if an employee works one. Maternity leave is 14 weeks, funded through the BPS.
Uruguay surprises new employers in two directions at once. Dismissal is simple, no cause and no notice, yet it is never free, because the tariffed severance is automatic and capped at six months of pay. And the aguinaldo splits across June and December, so the 13th salary hits cash flow twice. Neither is hard once you know it. Both are costly when you do not.
Uruguay lets you end a contract without a reason, then hands you a fixed bill: one month of pay per year worked, capped at six months.
Add a 13th salary paid in two halves, and the surprises are about timing, not size.
Read the right Uruguay guide before the hire, not after the first payout.
