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- Labor FAQs for Foreign Investors
 

ABOUT HIRING EMPLOYEES

In which cases can I verbally hire my employees? When do I have to do it in writing?

Can I hire an employee for a limited period of time during consecutive periods of time?

Can I amend the original contractual conditions agreed upon with my employees?

What is the difference between a labor agreement and an agreement for professional services?

In the event I hire an intermediary to perform some work in my benefit, what are my responsibilities toward the employees hired by the intermediary or middleman?

OBLIGATIONS BY THE EMPLOYERS DURING THE TRIAL PERIOD

What rights do I have to acknowledge an employee who is dismissed during the trial period?

What are the legal consequences when the trial period is not agreed upon?

WHEN AND HOW CAN I SUSPEND THE LABOR AGREEMENTS?

When can I suspend labor agreements and what is the procedure to follow thereto?

WORK DAY, EXTENTION AND SPECIAL CASES

What is the daily maximum number of hours that I can employ my employees?

Can I change the work day and the work schedule without my employee's consent?

RELEVANT ASPECTS OF THE WEEKLY PERIOD OF REST

Can I set up with my employees a different period of rest other than Sundays?

Am I required to pay for the seventh day?

ALL YOU NEED TO KNOW ABOUT NATIONAL HOLIDAYS

Which are the holidays in Honduras and how should I pay them to the employee?

Am I required to grant holydays and days off to my employees?

Can I move the days off and holidays to other dates?

THE RIGHT TO VACATIONS

How many days of vacation time do I have to grant my employees and since when are they entitled to enjoy them?

Can I subdivide or interrupt the vacation time according with the needs of my company?

Can I compensate with money the vacations not enjoyed by my employees?

PAYMENTS THAT ARE PART OF THE SALARY AND APPLICABLE DEDUCTIONS

What kinds of payments made to employees are parts of the salary?

Do travel expenses are part of the salary?

What are the applicable legal deductions?

How often am I required to increase the salary of my employees? Must I increase it to all employees with no exceptions?

Which is the current minimum salary that I am required to pay my employees?

RIGHTS OF THE EMPLOYEES IN THE EVENTS OF DISMISSAL OR RESIGNATION

Which are the causes whereby I may terminate the labor agreement with no responsibility on my part?

When I dismiss an employee with responsibility on my part, what rights should I acknowledge to employee's benefit? When do I have to pay the employee?

HOW MANY DISABLED EMPLOYEES AM I REQUIRED TO HIRE?

How many disabled employees am I required to hire?

OBLIGATIONS OF EMPLOYER IN THE EVENT OF DECEASE OR WORK HAZARD

Which subsidy must I pay the employee in the event of a work hazard?

In what cases is the employer not required to indemnify for occupational hazards?

AM I REQUIRED TO INSURE MY EMPLOYEES BEFORE THE IHSS?

Am I required to insure my employees before IHSS?

ABOUT LABOR UNIONS

What is the responsibility of the company toward labor unions?

GENERAL ASPECTS OF THE COLLECTIVE BARGAINING AGREEMENT

Am I required to negotiate a collective bargaining agreement with my employees?

 

ABOUT HIRING EMPLOYEES


In which cases can I verbally hire my employees? When do I have to do it in writing?

According with article 39 of the Labor Code, you may verbally hire employees when it deals with domestic services, casual or temporary works not exceeding sixty days, fixed works where delivery date has been established provided said date does not exceed sixty says, farming or cattle work provided it is not performed in industrial companies. In all other cases you must have written labor agreements. Remember that the evidence of an existing labor agreement is achieved through the appropriate document. Non-existence thereof is imputed to the employer. If you do not have a labor agreement you will be compelled to prove the agreed upon conditions and if this is not possible, the work conditions alleged by the employee will be fully credible and truthful.



Can I hire an employee for a limited period of time during consecutive periods of time?

Yes, but there is a limit in the duration of limited time agreements. The provision of the agreement whereby the employee is required to work for a term which exceeds one year, is null and void. This is only possible in the case of services that demand the technical training of the employee. However, limited time agreements are susceptible to express or implied extensions, provided that it is not proven that the services rendered meet regular or permanent needs of the company. In such event, it will be understood that the term of the agreement is indefinite, regardless whether is provides for a termination date.



Can I amend the original contractual conditions agreed upon with my employees?

Amendments to the individual labor agreement are only legal when mutually agreed upon and in the presence of a competent labor authority, or when such amendments are the consequence of the enactment of express provisions in a new law. In any case, if the amendment mutually agreed was not performed in the presence of labor authorities, same will be legal only when:

It meets real needs of the company.

It does not harm the originally agreed upon basic conditions of the labor agreement or otherwise subsequently supervened as vested rights of the employee, such as salary, daily work hours and position in the workplace.

  • It does not imply a reduction of the amount of the salary or of any other additional benefits of the employee.
  • It does not imply a change of the company location that would create additional costs to the employee.
  • It does not imply changes in the employee's labor category.
  • It does not imply the imposition of liens on the employee's rights such as health and economic security.



What is the difference between a labor agreement and an agreement for professional services?

The professional services agreement can be of a civil or administrative nature depending on the individuals engaged in it. In the professional services agreement, which differs from the labor agreement, there is no legal subordination which means that the hiring individual cannot impose rules or issue directives or apply by-laws or disciplinary sanctions upon de hired individual. The professional services agreement between the parties is above any (labor) provisions and this fact differs from the labor agreement in that the labor agreement in which, regardless of the agreed upon conditions, what effectively rules the labor relationship are the actual and real conditions upon which the labor relationship is carried out.

In civil or administrative law, the outcome of the personal work is considered as merchandise, subject to commercial exchange and where the risk for the results is assumed by whoever delivers the services, not by the contracting party. On the contrary, the labor insight is of a humanitarian nature which seeks to transcend the simple private or personal interests of the parties. For example, the labor laws in Honduras provide that the employees can participate of the benefits and earnings of the employer but would never assume any risks or losses.

Another clear difference is that in the labor agreement one of the essential elements is the salary as the economic retribution for the effort or work personally performed by the employee; in the professional services agreement such retribution is called professional fees, services charges or simply a payment.

It is important to take into account that when professional services agreements terminate, the worker does not acquire the right to collect labor benefits such as year-end bonus, dismissal indemnification, vacations, etc. The worker, in this case, is only entitled to collect whatever was contractually agreed upon at the beginning of the relationship, if any.

Finally, it is important to be aware of the inconvenient practice followed sometimes whereby labor agreements are "disguised" to make those agreements look like professional services agreements in order to avoid the application of the labor legislation as well as of labor courts, and also to avoid payment of labor benefits to employees. The principle whereby the Superiority of the Reality rules in all labor relationships, makes reality prevail over and above whatever other provisions the employer and the employee may had agreed upon verbally or in writing at the beginning of the relationship. Therefore, if it is proven in court that what in reality existed was a labor relationship, regardless if it was agreed upon as a professional services agreement, the court will order an instruct the employer to pay employee all the labor benefits that were never paid.



In the event I hire an intermediary to perform some work in my benefit, what are my responsibilities toward the employees hired by the intermediary or middleman?

Honduran law provides that the intermediary assumes the risk and obligations toward the employees and you, as ultimate beneficiary or employer, are jointly and severally liable with the intermediary for all legal effects of the individual labor agreement with the employees and for all obligations and rights provided for in the Political Constitution and the Labor Code of the Republic.


OBLIGATIONS BY THE EMPLOYERS DURING THE TRIAL PERIOD


What rights do I have to acknowledge an employee who is dismissed during the trial period?

The Law provides that when dismissing an employee during the trial period, employer will pay whatever amounts of money owed the employee, including accrued, but not yet paid, salaries, overtime, proportional vacation time to which employee is entitled according with the time worked. The foregoing implies that other labor rights and benefits, such as advanced notice for dismissal and severance pay start accruing until after the 60-day trial period is over.



What are the legal consequences when the trial period is not agreed upon?

Article 50 of the Labor Code provides that the trial period must be agreed upon by employer and employee in writing. Failure to meet said provision shall be understood that the parties did not agree thereof and this reason implies that employer cannot dismiss employee by alleging that employee is not fit for the job. To dismiss the employee, employer must prove the just cause upon which the employee could be dismissed, otherwise, employer may ultimate dismiss the employee but subject to paying all labor rights and benefits to which employee is entitled under labor laws.

 

WHEN AND HOW CAN I SUSPEND THE LABOR AGREEMENTS?


When can I suspend labor agreements and what is the procedure to follow thereto?

Labor agreements may be suspended with no responsibility for the parties, in the following cases:

  • Lack of raw material or moving cause provided they are not attributed to the employer.
  • Force majeure or act of God.
  • Excessive production, following its economic possibilities and the market circumstances in a given company.
  • Impossibility to exploit the corporate purpose of the company with a reasonable minimum profit.
  • Lack of funds and the impossibility to obtain them to pay the employees.
  • Death or disability of the employer provided the immediate, necessary and direct to interruption of the work is a consequence of such death or disability.
  • Illness that prevents the employee from performing work.
  • The prenatal and postnatal time off, licenses, other time offs and vacations.
  • Arrest or imprisonment of the employee or the employer, ordered by a competent authority.
  • Holding an office with a labor union that would prevent the employee from reasonably performing his duties.
  • Legal strikes.
  • Legal work stoppage.


Any other justified cause not listed above in accordance with the Department of Labor and Social Security's judgment thereof.

Suspension of labor agreements becomes in full force and effect as of the day of the occurrence of the event that caused it. These circumstances must be demonstrated and explained before the Department of Labor and Social Security within the following three days as of the date of the occurrence of the event that caused it, in case said event were imminent and fortuitous, and within 30 days prior to the date of the effective suspension, when the event that would cause the suspension could have been foreseeable. The Labor Department will accept or reject the petition depending on the evidence you file and on the investigation carried out therewith.

 

WORK DAY, EXTENTION AND SPECIAL CASES.


What is the daily maximum number of hours that I can employ my employees?

Depending on the work daily schedule, the daily maximum number of hours that your employees can work is as follows:

During the Daily Shift:

The number of hours cannot exceed eight (8) hours per day and forty four (44) hours per week, which are equivalent to forty eight (48) hours of salary.

During the Night Shift:

The number of hours cannot exceed six (6) hours per day and thirty six (36) hours per week. For the sole fact that it is a night shift an extra charge of 25% is applicable.

During a Mixed Shift:

The number of hours cannot exceed seven (7) hours per day or forty two (42) per week. It is worth mentioning that during the mixed shift the work performed at night cannot exceed three (3) hours otherwise it will be treated as night shift.


Can I change the work day and the work schedule without my employee's consent?


No, any amendments to the individual labor agreement are solely effective and valid when mutually consented by the employer and the employee in the presence of a competent labor authority, except when those amendments are a consequence of express provisions contained in a newly enacted law. At any rate, if the mutually consented amendments were executed without the presence of a competent labor authority, those amendments will only be effective and valid, when:

  • Are based upon real needs of the company.
  • Do not affect the basic conditions of the labor agreement originally agreed upon or later supervened as vested rights of the employee, such as salaries, work day, position, upon which an amendment can be harmful to the employee.
  • Do not imply a reduction of the salary or any other rights or additional benefits of the employee.
  • Do not imply a change of location that imposes additional costs to the employee.
  • Do not imply changes in the category of the employee in the company.
  • Do not imply liens over the employee's rights, such as employee's health and economic stability.

Therefore, the work day cannot be amended unilaterally either by the employer or the employee, even if such amendment has been accorded in verbally or in writing or in an express or implied manner. Necessarily, such amendments must have been approved and authorized by a competent labor authority. On the contrary, amendments to change the work schedule can be agreed upon, provided notice thereof has been served to the employee prior to enacting said changes.

 

RELEVANT ASPECTS OF THE WEEKLY PERIOD OF REST


Can I set up with my employees a different period of rest other than Sundays?

According with the law Sundays are preferable for the weekly period of rest. However, this period of rest can be enjoyed during any day of the week in the following cases:

  • When the need and urgency in performing certain works becomes evident that those works cannot be interrupted.
  • When thee technical and practical nature of those works require continuity.
  • When interruption of such works during Sundays could cause grave harm to the health and public interests.
  • When those works are of farming and cattle nature.

In domestic services works and private automobile drivers, it is understood that this provision is an exception to the general rule, therefore, you must find a way to establish the necessary measurements to rotate the employees that have to perform work on Sundays.

Besides the cases mentioned above, you can agree with your employees in setting up another day for the weekly period of rest other than Sundays if yours is an amusement business, hotels, restaurants, public markets, soda shops, drugstores, funeral homes, baking stores, gas stations, food stores to the public, vegetables, fruits and milk.



Am I required to pay for the seventh day?

The Law of the Seventh Day provides the right of employees to be paid for the weekly period of rest which will be paid according with the average daily amount of salary earned or accrued during the previous six days or during the previous month, when the salary is paid by a time unit of the month.

 

ALL YOU NEED TO KNOW ABOUT NATIONAL HOLIDAYS .


Which are the holidays in Honduras and how should I pay them to the employee?

In Honduras the following dates are regarded as days off or holidays:

  • January 1, New Years.
  • April 14, Day of the Americas (Pan-Americanism)
  • May 1, International Labor Day
  • September 15, Independence Day
  • October 3, Francisco Morazán's Birth
  • October 12, Day America was Discovered
  • October 21, Armed Forces Day
  • December 25, Christmas
  • Thursday, Friday and Saturday of Easter Week, Holy Days

These days are paid as regular work days according with the daily average salary.

When salary is agreed on fifteen-day periods or monthly, it is implicitly understood that payment of National Holidays or days-off are included therein.



Am I required to grant holydays and days off to my employees?

During the national holidays and days off employers are legally required to halt work and pay the salary for that day as if it had been effectively worked.



Can I move the days off and holidays to other dates?

Honduras has ruled and allowed that the holidays for the month of October (3, 12 and 21) be moved to the first three days of Easter Week: Monday, Tuesday and Wednesday, to promote internal tourism and reduce the losses of those companies that are affected due to the interruption during the month of October when three different alternate days are days off or holidays. However, it is always optional to employers to agree with the employees if the above mentioned modality is not suitable to the company and thus prefer that the holidays or days off be enjoyed as provided by the Labor Code.

You may agree with you employee to work during a given holiday and in exchange the employee enjoys that right on any other given day.

This is a different situation to what happens when the employee accepts to work during the weekly period of rest not only is the employee entitled to double pay but also to the right to be granted a weekly period of rest to compensate for the day the employee could not enjoy.

 

THE RIGHT TO VACATIONS


How many days of vacation time do I have to grant my employees and since when are they entitled to enjoy them?

You are required to grant vacation time to your employees after an effective year of work, even if the employee's labor agreement does not require employee to work all hours of the ordinary work day or all days of the week.

Vacation time that you have to grant to your employees varies depending on the length of time that each employee has worked for you. The minimum length of time is ruled by the following provisions:

  • Ten working days after a year of continued service
  • Twelve working days after two years of continued service
  • Fifteen working days after three years of continued service
  • Twenty consecutive working days after four or more years of continued services.


Can I subdivide or interrupt the vacation time according with the needs of my company?

In principle, employees must enjoy without interruption their vacation time and only due to urgent needs of the company, you may request from them to suspend their vacation time and go back to their work without the loss of the right to resume their vacations once the emergency or the company's urgency are over. The urgency or needs of the company are determined by considering whether the activities are of a special kind and that the extended absence of the employee could cause damages to the company, or that incidents in the company come forth for which that employee is the only one that can solve them.



Can I compensate with money the vacations not enjoyed by my employees?

The law specifically prohibits compensation of vacation time with money and only the Department of Labor and Social Security, in very special cases, may authorize such payment. Obviously, in the event of termination of a labor agreement, the vacation time not enjoyed by the employee must be compensated with money.

 

PAYMENTS THAT ARE PART OF THE SALARY AND APPLICABLE DEDUCTIONS


What kinds of payments made to employees are parts of the salary?

The Salary is not only the fixed remuneration but also everything received by the employee in money or in kind (food, clothes, etc.) that imply remuneration for services rendered even if they have a different name (premiums, extra pay, customary bonuses, value for overtime, value for work performed during days off, percentages over sales, commissions or profit sharing).

The law provides that occasional amounts received by the employee are not part of the salary; for example: occasional premiums, bonuses or gratifications). Neither is considered part of the salary that which the employee receives in cash or in kind aimed to the performance of employee's duties, such as representation expenses, transportation, or tools and other elements of the work.


Do travel expenses are part of the salary?

No, travel expenses are re-imbursements you make acting as the employer, to the employees, for expenses incurred by employees in the performance of their duties. They are not part of the salary since those expenses do not have a remunerative nature.



What are the applicable legal deductions?

Legal deductions are:

  • Social Security Pay
  • Retention at the source of income for payments of Income Tax and other taxes
  • Payments for services from INFOP
  • Labor Union contributions.

To carry out the abovementioned deductions or retentions employer does not need authorization from employees, given that the laws that rule each of said receiving institutions, authorize it.



How often am I required to increase the salary of my employees? Must I increase it to all employees with no exceptions?


When the National Commission for the Minimum Salary resolves on a salary increase, you must immediately proceed therewith regarding all employees that earn the then minimum salary, in accordance with the terms of the relevant memorandum thereof. With regards to the rest of the employees, who are those that earn above the minimum salary, then it will be up to you: increasing salaries, in general, or in a selective fashion, but in all cases you are required to follow the equality remuneration principle. That principle applies to employees who perform their duties during the same work days, in the same company and in equal efficiency conditions, with the same or similar classifications and qualifications.

No differences in the amount of the salary can be established by reasons of age, sex, citizenship, race, religion, political opinions or labor union activities, alleging incompetence or unskilfulness.

Discriminatory actions that bring about inequality will be subject to investigations and sanctions.



Which is the current minimum salary that I am required to pay my employees?

The minimum salary is fixed according the occupational categories, economic activities and other classifications that the Minimum Salary Commission finds reasonable. The parties are authorized by law to reach an agreement regarding the factors through which the minimum salary is established, during the month of October of each year.

 


RIGHTS OF THE EMPLOYEES IN THE EVENTS OF DISMISSAL OR RESIGNATION


Which are the causes whereby I may terminate the labor agreement with no responsibility on my part?

Some causes for termination of labor agreements are:

  • With no responsibility for any of the parties
  • The mutual consent of the parties
  • Death of the employee or physical or mental disability that fully prevents the performance of the agreement
  • Loss of personal liberty of the employee in those cases so provided for by law
  • Force Majeure or Acts of God
  • Loss of confidence by the employer about those employees that perform positions related to direction, administration, supervision and vigilance.

In the event of suspension of the labor agreements for over 120 days when the event occurred for:

1. Lack of raw material or moving force.

2. Force Majeure or Acts of God.

3. Excess in production.

4. Impossibility to exploit the corporate purpose of the company with a reasonable minimum of profit.

5. Lack of monetary resources to pay salaries to employees.

6. Death or disability of the employer.

 

With no responsibility on your part as employer:

  • By misrepresentations of employee when taking the job regarding employee's aptitudes (this cause will not be applicable if alleged after thirty days from the date the employee started working).
  • For acts of violence or offenses, serious threats from the employee, in the employee's time off, against the employer and employer's family, directors or fellow workers, provided that the employee was not induced by a provocation of any kind.
  • For material damage caused fraudulently to the company or its assets.
  • For any and all immoral or criminal acts committed by the employee against the workplace, eventually proven by a competent authority.
  • For disclosing to third parties technical and commercial secrets of the company.
  • In a case of a final sentence against the employee as a consequence of a crime.
  • For the absence of the employee to the workplace for more than two consecutive days or three alternate days within a term of one month.
  • For refusing to adopt preventive, security and work health measures, instructions to enhance the work performance and those instructions that are clearly ordered to employee.
  • For refusing to take medical treatment against some decease when such refusal could create a dangerous situation from the employee suffering a hopeless infectious or mental decease.



When I dismiss an employee with responsibility on my part, what rights should I acknowledge to employee's benefit? When do I have to pay the employee?

The law provides that if you dismiss an employee without just cause you are required to immediately pay the employee the following benefits:

The amount for pre-notice:

  • 24 hours when employee has worked for less than 3 months.
  • 1 week when employee has worked from 3 to 6 months.
  • 2 weeks when employee has worked from 6 months to a year.
  • 1 month when employee has worked from 1 to 2 years.
  • 2 months when employee has worked more than 2 years.

Severance pay equivalent to:

  • 10 days' salary if employee worked from 3 to 6 months.
  • 20 days' salary if employee worked from 6 months to less than one year.
  • 1 month's salary for every year worked, and in a proportional manner should there be a fraction of a year. In no event may severance pay exceed 15 months.


Vested rights, whichever employee is entitled to according with the following:

Accrued but not paid salaries.

  • Vacations.
  • Proportional year-end bonus.
  • Proportional fourteenth month.

These payments, although they are payable immediately after dismissal, an agreement can be reached with the employee in that said payments would be honored in installments or at any given date. This agreement, in any case, must be executed in the presence of the relevant Labor Authorities.

 

HOW MANY DISABLED EMPLOYEES AM I REQUIRED TO HIRE?


How many disabled employees am I required to hire?

According with provisions of the law, private business companies are required to hire a minimum number of disabled employees in conformity with the following schedule:

When the company or entity has:

  • From 20 to 49 employees…………1 disabled employee
  • From 50 to 74 employees………….2 disabled employees
  • From 75 to 99 employees………….3 disabled employees
  • Thereafter, for every one hundred employees, four disabled employees.

 

OBLIGATIONS OF EMPLOYER IN THE EVENT OF DECEASE OR WORK HAZARD


Which subsidy must I pay the employee in the event of a work hazard?

The employee that was subject to an occupational hazard, be it an accident or workplace decease, and as a consequence employee is incapacitated to work, will be entitled to a daily subsidy equivalent to 66% of the daily base salary. If the employee is hospitalized the subsidy will drop to 50%.

When employee's remuneration is paid monthly or weekly, the subsidy will be payable as of the date the event occurred and until employee is released from the hospital.

The amount of daily subsidy, in those cases where employees perform their duties under a full ordinary work day, cannot be less than the Minimum Salary.

When, due to special characteristics in the payment modality of salaries, the salary reported in the monthly payroll does not match exactly with the salary accrued during the month, the IHSS will apply the special rules provided for in the By-Laws relative to benefits in order to figure out the daily base salary.



In what cases is the employer not required to indemnify for occupational hazards?


The employer is not required to indemnify for occupational hazards in the following events:

  • Hazards intentionally provoked by the insured employee or by other subject at the request of employee.
  • Those hazards caused as a consequence of the voluntary participation of the insured employee in a fight or quarrel, or as a consequence of a crime wherein the responsibility is with the victim.
  • Hazards provoked as a consequence of the employee's drunkenness, use of narcotic or hallucinogenic drugs.




AM I REQUIRED TO INSURE MY EMPLOYEES BEFORE THE IHSS?


Am I required to insure my employees before IHSS?

Yes, you as any other employer are required to insure your employees within the following five days as of the date the works starts, registering the employee with IHSS. This responsibility remains in effect even in the event the employee is under the authority of middlemen or intermediaries from whom the employer is dependent for the execution and performance of the works. The employee is required to submit as much data and documents as be necessary for employee's affiliation and likewise as that data and documents of employee's children under eleven years old and employee's spouse.

 

ABOUT LABOR UNIONS


What is the responsibility of the company toward labor unions?

Employers are required to acknowledge the legal existence of labor unions for all legal applicable effects and to timely meet with the labor union's representatives, agents and spokespersons once the union has been duly and legally accepted as an organization by way of a certificate issued by the Labor Ministry.

 

GENERAL ASPECTS OF THE COLLECTIVE BARGAINING AGREEMENT.


Am I required to negotiate a collective bargaining agreement with my employees?

Yes, if you have a labor union organization of employees in your company, you are required to execute a collective bargaining agreement at the organization's initiative. If, within the same company other labor unions exist, the collective bargaining agreement must be executed with the union that has the most number of affiliates.

If you refused to negotiate the terms and conditions filed by the employees they could request that the stage of direct settlement be terminated.

Although the rule does not expressly provide that a collective bargaining agreement must be executed, it has been understood that a real obligation to negotiate exists since if an agreement is not reached after having gone through all the stages required by law, the employees will then be entitled to exercise the right to strike.

 
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