1st Bac - Tax and Labor Obligations

 Unified Basic Salary

It is the minimum income that a worker receives as a right to the work performed during a month; It should be noted that this minimum income is adjusted by the Ministry of Labor on an annual basis. For example, for 2016 a basic salary equivalent to US $ 366 has been established. For the year 2022, the basic salary is US $425. In 2023, the basic salary is 450 USD. Currently, this amount is 460 dollars

Living Salary

It is the product of the result of dividing the average value of the basic family basket registered in the year being calculated for the number of family earners established by the National Institute of Statistics and Censuses (INEC). If a worker has received monthly, as total remuneration, which includes basic salary and other social benefits, a value lower than the living wage, the company is obliged to cover that difference with its own funds.

Overtime

An ordinary worker is obliged to work 8 hours a day, 5 days a week. Although there is the figure of overtime when their collaboration is requested on holidays and weekends. In this case, the additional hours are paid with a 100% surcharge on the value of the hour worked in ordinary hours. Also with a 50% surcharge, overtime may arise between regular work days - Monday through Friday, as long as they are not considered as holidays-.

Distribution of Profits to Workers

According to the reforms to the Ecuadorian labor legislation included in the Labor Justice Law, the payment of profits has a limit of 24 unified basic salaries, which for 2016 is $ 8,784 US dollars. In 2021 it is $ 9600 US dollars. If there is a surplus, regarding the payment of utilities, it will be delivered to the Ecuadorian Institute of Social Security (IESS) with the purpose of contributing to the financing of those benefits considered as solidarity.

To calculate the value of the amount that workers will receive as profits, it must be based on the premise that they are entitled to 15% of the profit generated by the company.

Remuneration

In Ecuador we have the fourteenth and thirteenth remuneration. These are additional income given to the workers and are based on the unified basic salary, overtime and commissions. The worker can make the decision to receive the payment in full or to receive a the payment monthly.

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