Employer Of Record in El Salvador
We make it easy and painless to expand your business into El Salvador. Forget about dealing with local regulations, confusing tax laws and international payroll management. We take care of all that so you don't have to.
Accelerate your growth into El Salvador Compliantly and hassle-free
How we can help you expand in El Salvador
As your EOR in El Salvador we’d help you expand by hiring employees and running their payroll without establishing a local branch office or subsidiary.
Your candidate is hired by a PEO in El Salvador provider in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. Shortly after, your new employee will be working for you, just like any other member of your team.
Expand to Salvador with Serviap Global
Through our PEO and EOR services, you can hire qualified talent in your industry without the trouble of opening your own legal entity.
In just a few days, you can easily and safely build a presence in El Salvador, being sure that your staff will be hired in compliance with labor and tax regulations
Table of Contents
Quick Facts
Currency:
United States Dollar (USD)
Capital:
San Salvador
Payroll Cycle:
Monthly
Language:
Spanish
El Salvador Country Facts
El Salvador is the smallest nation in Central America and it’s growing into a big opportunity for companies looking to outsource. Touching the Pacific Ocean in the Central Standard Time Zone El Salvador is an attractive country for foreign business as a high percentage of citizens speak both Spanish and English. It’s a beautiful country home to the dormant Santa Ana volcano, many coffee plantations, Tazumal and Joya de Ceren Mayan ruins.
The Economy
El Salvador’s economy has shown consistent growth in recent years. According to the UN’s Economic Commission for Latin America and the Caribbean (ECLAC), El Salvador remains one of the fastest-growing economies in Central America, though Panama and Costa Rica continue to lead in overall GDP growth.
Average wages in El Salvador remain low compared to the United States and many other Central American countries. The current minimum wage ranges from USD 365 to USD 415 per month depending on the sector, following the 2021 wage reform, which remains in effect in 2025. On average, bilingual Salvadorans can earn between USD 600 and USD 700 per month, nearly double the minimum wage.
According to Salary Explorer and local sources, a software engineer in El Salvador earns approximately USD 18,000 to USD 20,000 per year, comparable to the earnings of professionals such as doctors or lawyers in the country.
The Importance of Small and Medium-Sized Companies
The vast majority of enterprises in El Salvador are micro, small, or medium-sized businesses (MSMEs). The country has more than 635,000 SMEs, which support over 850,000 jobs nationwide. To strengthen this sector, the government and financial institutions such as FEDECRÉDITO have announced support programs and credit lines.
A recent funding program of USD 10 million was allocated to MSME owners to promote entrepreneurship and job creation across the country.
Population Characteristics
6.5 million people are citizens of El Salvador. While the national language is Spanish, there is a large number of English-speaking individuals, especially among those with higher levels of education. Part of this is attributable to the shared cultural affinity resulting from physical proximity and the many American television shows that play in El Salvador.
Another part of this is the large number of Salvadorans who currently live in the United States or have returned to El Salvador after several years abroad. This cross-border exchange helps carry English deeper into the country.
Economic Opportunities
Although agriculture was once the backbone of El Salvador’s economy, the country has shifted toward manufacturing, services, and technology.
- Agriculture remains important, particularly the production of coffee, sugarcane, and basic grains, along with seafood, fruits, and timber for export.
- Manufacturing plays a significant role and includes the processing of agricultural goods such as food and textiles, as well as the production of pharmaceuticals, plastics, chemical products, and electronics.
- Tourism has grown steadily since the 1990s, driven by the promotion of the country’s beaches, volcanoes, and archaeological sites.
- Services are the largest contributor to the economy, accounting for approximately 60% of GDP, including financial services, outsourcing, and tourism-related activities.
Key Sectors of the National Economy
Human Talent
From the early days of outsourcing, El Salvador has specialized in developing contact centers for the North American market. The country offers a strong pool of workers trained for these roles, many of whom have experience working abroad.
With the government’s continued focus on workforce development and technical skills, El Salvador is increasingly attracting companies seeking software development and IT outsourcing services. Startups are emerging in areas such as fintech and digital services, supported by a growing base of local programming and technical talent.
Prominent Cities for Business
There are several cities in El Salvador that provide excellent locations for outsourcing. Here are a few of the most important cities to consider:
San Salvador is the capital and main economic hub of the country, hosting corporate headquarters, banking institutions, and financial services.
Soyapango is a major industrial city, known for its specialization in textiles, footwear, and light manufacturing.
Santa Ana, the second-largest city in El Salvador, is home to manufacturing plants and tourism-related industries.
Technological Ecosystem
El Salvador is investing in its Digital Agenda 2020–2030 to improve internet access, student connectivity, and technical skills development. Government initiatives aim to ensure access to digital tools for students nationwide. The country has a mature outsourcing industry, providing business process outsourcing (BPO) services since the early 2000s, with companies experienced in U.S. market practices. Cultural affinity with the United States, supported by a large Salvadoran diaspora, strengthens business collaboration. In addition, high schools and universities offer programs in coding, IT, and engineering aligned with outsourcing and technology sector needs.
Facilities for Foreign Investment
El Salvador is an excellent place to expand and outsource. More than 200 U.S. companies have established either a permanent commercial presence in El Salvador or work through representative offices in the country.
The United States and El Salvador are parties to the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR), which aims to facilitate trade and investment by eliminating tariffs, opening markets, reducing barriers to services, and promoting transparency.
Business Culture in Costa Rica
Because many Salvadorans have attended school or worked in America before returning home, the workforce has an attractive ability to adapt to U.S. business expectations. It’s still important to understand how business etiquette in El Salvador.
Pack your patience
As in many Central American countries, set work hours and business meetings are more of a suggestion than an exact time. Businesses that are successful in outsourcing in this country will do well to adjust company timing to accommodate Salvadoran counterparts or employees.
Watch the eye contact
Mind you do not maintain eye contact for a prolonged period. It’s considered rude or even aggressive.
Food and drink are part of doing business
It’s common to move from a meeting to a large meal with all the participants. Also, leaving a large bottle of liquor for the host shows both generosity and your willingness to do business with them.
El Salvador Gastronomy: Regional and Traditional Cuisines
El Salvador foods are a mixture of Spanish and indigenous (mainly Indian) ingredients and flavors. Key ingredients are corn, pork, chicken or seafood. The national dish of El Salvador is called Pupusas. Its handmade tortillas filled with cheese, pork, beans or a local edible flower called Loroco. Tamales are generally served at special events. Cooks in El Salvador may use animal parts in cooking Americans are not used to such as cow foot meat, tripe, tendons and cartilage.
General Highlights
| Year | 2025 |
| Country | El Salvador |
| Capital | San Salvador |
| Num. States / Province | 14 Departments |
Principal Cities | San Salvador, Santa Ana, San Miguel |
| Language | Spanish |
| Local Currency | United States Dollar |
| Major Religion | Catholic |
| Date Format | DD/MM/YY |
| Thousands Separator Format | 999,999,999.99 |
| Country Dial Code | +503 |
| Time Zone | UTC -6 |
| Population | ~6.5 million (2025 est.) |
| Border Countries | Guatemala and Honduras |
| Continental surface | 20,720 Km2 |
| Fiscal Year | 1 January to 31 December |
| VAT % | 13% |
Minimum Wage | Ranges from USD 365 to USD 415 per month depending on sector (last reform: Aug 2021, still in effect 2025). |
| Taxpayer Identification Number Name in the country | NIT (Número de Identificación Tributaria) |
| Current President | Nayib Armando Bukele Ortez |
Laws and Agencies that regulate labor relationships
| Laws | Brief Description |
| Labor Code | National Congress |
| Tax Code | Ministry of Finance |
Social Security | PENSIONS For the full pension, the worker must have reached age 60 (55 for women) with at least 25 years of contributions (or any age with 30 years of contributions). The pension is 30% of the base salary for the first three years of contributions plus 1.5% for each additional year. DEPENDENT/SURVIVOR BENEFITS The laws provide for a survivor benefit for dependents including widow, widower, children, or parents. Survivor benefits are 50% of the deceased’s pension for the widow/widower. If there are no children, 60% of the deceased’s pension will be paid. Each eligible child is entitled to receive 25% of the deceased’s pension. Parents are entitled to receive 20% of the pension the deceased received or was entitled to: 30% of the deceased’s pension is paid if there is only one surviving parent. When there are multiple survivors, benefits cannot exceed 100% of the deceased worker’s old-age pension. |
Key Tax and Labor Authorities
National Congress |
The Salvadoran legislature is made up of 60 deputies (updated adter the 2021 reform) |
| Ministry of Finance | Ministerio de Hacienda which began in February 1829 |
Labor Contracts
Executive decree (82) |
Regulation of the Organic Law on Finance Administration of the State. |
Contracts Article 23 | 1) Name, surname, sex, age, marital status, profession or trade, domicile, residence and nationality of each contracting party 2) Number, place and date of issue of the personal identity cards of the contracting parties. and when they were not obliged to have it, mention shall be made of any reliable document or the identity shall be proved by means of two witnesses who shall also sign the contract 3) The work to be performed under the employer’s supervision, trying to determine as precisely as possible 4) The term of the contract or the expression that it is for an indefinite period of time; in the first case the circumstance or event that motivates the contract to term must be stated 5) The date on which the work is to commence. When the performance of the services has preceded the written awarding of the contract, the date on which the worker began the provision of services shall be recorded 6) The place or places where the services are to be rendered and where the worker is to live, if the employer undertakes to provide him with accommodation 7) The working hours 8) The salary to be received by the employee for his services 9) Form, period and place of payment 10) The quantity, quality and condition of the tools and materials provided by the employer 11) Name and surname of the persons who are economically dependent on the worker 12) Such other stipulations as may be agreed upon by the parties 13) Place and date of the conclusion of the contract 14) Signature of the contracting parties |
| The International Labor Organization | El Salvador are a part of the ILO |
| Work Hours | The standard working week in El Salvador consists of 44 hours a week, typically 8 hours a day over five and a half days. |
Payroll
Employees in El Salvador may be paid in local or foreign currency. Pay periods can be weekly, bi-weekly, or monthly. Payments must be made on the same day each month and no later than one working day following the end of the pay cycle. The standard workweek consists of 44 hours, typically eight hours per day over five and a half days. Any work exceeding this limit is considered overtime and must be paid at double the regular hourly rate (200%).
Legal Benefits in El Salvador
Minimum Wage | There is no single national minimum wage in El Salvador. The sector the employee belongs to determines the minimum wage for that group. |
Wages | Average wages in El Salvador are very low compared to the United States and many other Central American countries.On average, bilingual Salvadorans can earn around $600 -700 USD per month, nearly double the minimum wage. According to Salary Explorer, a software engineer in El Salvador can expect to earn approximately $18,000 – 20,000 USD per year, or about as much as a doctor or lawyer would expect to earn. |
| Overtime | All work above the standard weekly working hours is paid as overtime and regulated by the employment contract/collective agreements. |
Occupational safety and health
(Aguinaldo) | The payment is to be made around 20th December, and the amount depends on the years of service. The employer pays 15 days of salary to employees with one to three years of service, 19 days of salary for three to ten years of service, and 21 days for more than ten years of service. |
| Occupational safety and health | ISO 45001 is the new standard. |
Vacations or PTO | 15 days of paid annual leave. The annual leave is calculated from December 12-December 12 Paid time off is paid at a rate of 130.00% of the employee’s regular salary and paid to the employee before their leave. Any unused vacation days cannot be compensated financially and will be lost. |
Leaves of Absence
Employees have the right to paid absences for the following things: | • Sick days: 1-5 months of employment entitles the employee to 75.00% of the basic salary for 20 days • Five months to 1 year of employment service entitles the employee to 75.00% of the basic pay for 40 days • One year or more of employment entitles the employee to 75.00% of the basic pay for 60 days • Maternity Leave: Employees must take at least six weeks of leave before the expected due date and up to 10 weeks after the child is born • The employee can request to extend the maternity leave if there are any pregnancy-related illnesses/complications • Paternity Leave: In El Salvador, Fathers are entitled to three days of paternity leave which the employee must take within the first 15 days of the child’s birth • Bereavement Leave: Employees who have suffered the loss of an immediate family member are entitled to one day of paid leave |
Employers Contribution or Labor Cost
| Over this amount | Not over this amount | Tax % on Excess |
| 0 | $22,857 | 30% |
Corporate Tax Rates
| Taxable Gross Income | Tax % on Excess |
| Under $150,000 USD | 25% |
Types of Disabilities
DISABILITY BENEFITS
Law No. 927 establishes disability benefits in case of accident/injury/non-occupational disease resulting in permanent disability. The worker must be assessed with a disability, be under 60 years of age (men) or 55 (women) and have at least 36 months of contributions, including at least 18 months in the 36 months prior to the onset of disability. The disability pension for permanent disability is 70% of a worker’s average salary and 50% for partial disability of 50-65%.
Public Holidays
| Date | Holiday Name |
| 1 January | New Year’s Day |
| 1 April | Maundy Thursday |
| In April | Good Friday |
| 3 April | Holy Saturday |
| 4 April | Easter Sunday |
| 1 May | Labour Day |
| 10 May | Mother’s Day |
| 17 June | Father’s Day |
| 6 August | Fiesta de San Salvador |
| 15 September | Independence Day |
| 24 December | Christmas Eve |
| 25 December | Christmas Day |
| 31 December | New Year’s Eve |
Termination The Labor Code outlines rules for termination of an employment contract:
The Salvadoran Labor Code establishes the rules for terminating an employment contract. Severance pay is only required in cases of unjustified dismissal or when the employer breaches the contract. In such cases, severance is calculated as 30 days of salary for each year of service, proportional for partial years. Severance is not owed in cases of justified dismissal or voluntary resignation.
| Type of Termination | Brief Description |
| Justified Dismissal | 1) If the worker deceived the employer by means of false letters of recommendation or certificates when the contract was concluded. This ground ceases to be operative after the worker has completed 30 day’s employment 2) Due to the worker’s repeated negligence 3) If the employer lost confidence in an employee exercising managerial supervision, surveillance, audit functions, or similar functions – however lack of confidence of employees holding supervising duties is difficult to prove at court. As stated by the Supreme Court of Justice –Sala de lo Civil. Sentencia N° 436- 2002 de 13/08/2002, sufficient objective evidence must be submitted by the employer to convince the Judge that the actions that led to the dismissal for lack of confidence are indubitable 4) If the worker reveals manufacturing secrets or communicates administrative matters to the detriment of the undertaking 5) If the worker commits serious acts of immorality inside the undertaking or while performing work outside the workplace 6) If the worker commits disrespectful acts against the employer or his/ her relatives, except in the case of provocation 7) If the workers commits acts causing serious disruption to the company’s activity |
| Justified Dismissal | 8) If the worker (either intentionally or by negligence) seriously endangers the safety or operation of the establishment, or the persons therein safety or activity of the workers, or their health 9) If the worker deliberately damages the plant, machinery, tools, work implements, goods or merchandise 10) If the worker is absent from work without any justification for two consecutive working days, or a total of three days within the same months 11) If the worker, after imprisonment or pre-trial detention, comes back to work, within three days from the date of release, and s/he committed a crime against the employer or his/her relatives, if the worker commits serious breaches of the obligations under the contract of employment 12) In the event of disobedience to the employer (or employer’s representative) 13) If the worker drinks alcohol or takes drugs during working time or if s/he works under the effect of alcohol or drugs 14) If the worker does not fulfill his/her obligations under art 24 LC. In these cases, no severance payment is due |
| Unjustified Dismissal | In case of dismissal without cause (“despido incausado”), the severance payment amounts to 30 days basic salary per each year of service or in proportion for any fraction of year, with a minimum of 15 days basic salary (Article 58 LC). The same severance payment applies to the termination of the employment agreement due to the employer’s breach of its obligations, as defined in article 53 LC (despido de facto). |
| Voluntary Resignation | Art. 54 Resignation shall take effect without the need for acceptance by the employer. |
Other forms of compensation upon termination include:
Severance pay in El Salvador is subject to specific regulations and will vary depending on the reasons that led to the termination of the employment. For instance, severance is not provided in case of resignation by the employee or when the employment contract’s duration term has elapsed.
If severance is required, it is generally calculated as 30 days of salary for each year of service.
| Length of Employment | Severance Amount |
| 0-30+ | 30 days salary for each year of service |