To work legally in Uruguay, foreigners must obtain an authorisation (permanent or temporary) and a Uruguayan identification document from the National Directorate of Migration.
The different residency options depend in each case on the country of origin of the foreign worker, as well as the period of time he/she intends to stay in Uruguay.
- MERCOSUR residency: can be permanent or temporary (two years, renewable once), with no income or minimum stay requirements.
- Definitive Legal Residence: for foreigners from outside MERCOSUR who wish to reside permanently. The applicant's permanence and income are evaluated.
- Temporary Legal Residence: for foreigners from outside MERCOSUR with a stay of up to two years to work in Uruguayan companies, requires a letter from the company.
- Provisional Identity Card: allows temporary residence for up to 180 days, extendable (for employees in Uruguay).
- "Nómada Digital" - Hoja de Identidad Provisoria is for teleworkers with companies abroad, without Uruguayan social security contributions.
International Social Security Conventions and Temporary Transfers
In terms of social security, Uruguay has signed agreements with certain countries that facilitate the "temporary transfer" of foreign workers to the country. This option is an efficient business tool to relocate qualified personnel on a temporary basis and maximise profits.
In addition, it avoids the duplication of social security contributions. Through this agreement, workers can continue to receive their salary and make their social security contributions in their country of origin during their stay in Uruguay (for a period of up to one year, extendable). The procedure is initiated before the social security entity of the country of origin, in accordance with the "Multilateral Agreement on Social Security of MERCOSUR".
CONTRACTUAL MODALITIES
In Uruguay it is not mandatory for the employment contract to be in writing. However, it is compulsory to register the worker in the Work Control Form (Ministry of Labour and Social Security) and with the Social Security Bank (Banco de Previsión Social). It is considered, however, that the signing of a written contract is a highly recommendable business practice, due to its usefulness in facilitating evidence in case of claims, especially with regard to the agreements made between the parties (for example, the specification of a trial period).
With regard to their duration, employment contracts may be concluded for an indefinite period of time, for a term or subject to a resolutive condition (e.g. substitution contracts). Depending on the above, the payment of an indemnity may or may not be due upon termination, or the possible consequences of early termination.
Most frequent modalities and aspects to take into account:
- Probationary contract: It allows the employer to assess whether the employee meets the company's requirements for a maximum period of 90 days. In case of termination within this period, no obligation to pay severance pay arises.
- Contract for an indefinite term. It is understood that the contract is permanent or for an indefinite period of time. The termination of the relationship at the employer's will entails the obligation to pay severance pay (legally set according to the worker's seniority and remuneration).
- Term, harvest or seasonal contracts: It is understood to be justified by specific needs, such as a temporary increase in the workload or special qualities of the worker. At the end of the contract it is terminated without the need to pay compensation, unless the employer decides to terminate the contract early, in which case compensation must be paid. The continuous renewal of this type of contract may be interpreted as an open-ended contract.
- Substitution contract: Used to cover the absence of an incumbent worker (e.g. due to medical or maternity leave). It terminates automatically upon the return of the incumbent, with no obligation to pay compensation.
- Internships: The Youth Employment Act encourages the integration of young people into the labour market, combining employment with education and vocational training. This modality offers economic benefits to companies to encourage the hiring of young people under this regulation.
- Disability: Companies with 25 or more permanent workers are obliged to hire people with disabilities (registered in the National Register of People with Disabilities). This obligation implies reaching at least 4% of the total workforce, promoting effective labour inclusion and establishing concrete measures to guarantee accessibility conditions and making the necessary adaptations in the workplaces.
WORKING HOURS AND WORKING WEEK
The working day is legally limited to 8 hours per day. Overtime" is therefore "overtime" if it exceeds this limit and according to the law is paid with a surcharge of 100% on the hourly wage (except on rest days, which are paid with a surcharge of 150%). At the same time, an intermediate break (in the middle of the working day) must be taken.
The weekly work limit is 44 or 48 hours (depending on the activity, with 48 hours in the industrial sector and 44 hours in commerce and services). In principle, the usual working pattern is six continuous days and a weekly rest of one or one and a half days (depending on the regime). By agreement, it can be agreed to extend the weekly rest, redistributing the sixth day (e.g. Saturday).
Overtime" is defined as hours that exceed the limits set by law, contract or previously agreed upon arrangements. Their remuneration is due as a result of this restriction and compensates for the additional effort required in working hours that exceed the usual duration. It is not possible to compensate them with other benefits (e.g. days off). There are certain workers who are exempted from the application of the regulations limiting working hours, and therefore from overtime pay: among others, senior staff.
Our legislation establishes special protection for those who work at night, between 10 p.m. and 6 a.m., by compensating them with a "surcharge" that must be at least 20% of the basic salary or its equivalent in reduced hours, at the employer's choice, as long as they exceed 5 hours of continuous work during these hours.
Notwithstanding the above, it should be noted that certain sectors of activity are regulated by collective agreements in a more favourable way for workers.
It is also worth mentioning that there is a departure from the general regime as regards teleworking, which is regulated in our country with a particular regime that expressly enables the possibility of agreeing a "flexible" timetable to be worked during the week as long as it does not exceed the maximum weekly legal limit of hours applicable to the company's activity (e.g. 44 or 48 hours). In this specific regime, the total number of hours worked per day is not taken into account, but over the course of the week.
TELEWORK
In Uruguay, telework under a dependency regime is regulated by law and is defined as the performance of work activities, either totally or partially (hybrid regime), outside the physical environment provided by the employer, using information and communication technologies. In cases where the provision of remote work is partial (hybrid regime), there will be teleworking when the parties so establish by mutual agreement (the application of its regulation being optional).
Telework requires the worker's consent and is reversible. The permanent change from face-to-face to teleworking, and vice versa, shall require the mutual agreement of the parties and shall be documented in writing. Otherwise, any change that implies the performance of work in one or the other modality for more than 45 (forty-five) consecutive days shall be considered permanent, and in the event that teleworking is agreed after having started a face-to-face working relationship, both the employer and the teleworker shall have the right to return to the face-to-face modality within 90 (ninety) calendar days from the beginning of the teleworking, prior written or electronic communication to the other party at least 7 (seven) days in advance.
In addition, equal rights are ensured with employees who work on a face-to-face basis (intermediate breaks, weekly rest, rest between shifts, disconnection, privacy, occupational health and safety).
The provision of the necessary equipment, supplies and services for teleworking, the possibility of freely distributing the working day in terms of working hours and overtime work are also foreseen in the regulation.
LABOUR COSTS. WAGE.
Wages are defined as the financial compensation, regardless of its denomination or method of calculation, payable by the employer to the worker for work performed or services rendered, whether under a written or oral contract, and which may be assessed in cash, as stipulated by law.
In certain industries or occupations, it is common for part of the wage to be made up in part of in-kind benefits (e.g. housing, food, clothing, transport). In such cases, it should be ensured that these benefits are appropriate for the personal use of the worker and his or her family, and that they provide a fair and reasonable benefit.
Labour costs are composed of three main elements:
- Minimum wages: Determined by category according to the sector of activity.
- Fringe benefits such as: Aguinaldo (or "13th salary"), Leave (paid holidays), Holiday pay (additional sum for better enjoyment of leave), Overtime, Severance pay; and eventual fringe items (such as tips, commissions, gratuities).
- Tax contributions: Contributions to the pension or social security system.
There are various forms of wage agreements:
- By time worked: either monthly, daily or hourly.
- For production achieved: through commissions, piecework or other incentives that ensure at least the achievement of a normal wage for 8 hours of work.
- By mixed system: combining a basic time-based salary with an additional percentage based on the production achieved after a set minimum.
Wages can in turn be set on a monthly (monthly workers) or hourly (daily workers) basis, as mentioned above, always respecting the mandatory minimums and their adjustments. Companies can only unilaterally offer more favourable conditions than those stipulated in the agreements.
In Uruguay, it is lawful to agree on the payment of wages in foreign currency, for example in dollars, and the process for the application of legal adjustments (conversion to national currency to apply the increases stipulated by the Wage Councils) is also foreseen.
The rule stipulates that payment of wages must be made within the first five working days and in no case later than the first ten calendar days of the following month (or fortnight - as the case may be) in which payment is due. If the payment is made on a weekly basis, it must be made at the end of the respective week. The payment of the salary is considered effectively made when it is at the employee's disposal.
WAGE BARGAINING
In Uruguay, minimum wages are set by Collective Agreements negotiated in Wage Councils, tripartite bodies that bring together representatives of workers (trade unions), employers and the government. Through collective bargaining, these councils establish not only minimum wages, but also job categories, wage adjustments and other benefits.
Wage adjustments are also determined, taking into account mainly the evolution of inflation (past or projected) as the main element, the loss of purchasing power of wages and the general and particular economic context of each sector.
Decisions of the Wage Councils are taken: unanimously, by a vote of the parties or by simple majority. If there is no agreement, the executive branch has the power to put a proposal to a vote or to decide by decree, which is limited in scope to the wage issue only.
STATUTORY ANNUAL LEAVE (LEAVE)
Holiday time is to be paid as actually worked on the basis of the prevailing wage (including marginal items such as commissions, average overtime etc.). The leave item corresponds to the number of days of paid leave to be taken.
All workers are entitled to at least 20 days, and must have worked 12 months, 24 fortnights or 52 weeks in the calendar year (January to December). The length of annual leave is then linked to the time actually worked in that period. No minimum length of service in the company is required to generate the entitlement. If these minimums are not reached, the duration of annual leave is fixed proportionally.
In addition, after the fifth year in the same company, an "extra" day is added for every four years of seniority. Therefore, after five years, the worker is entitled to 21 days of leave, and then, after eight years, another one is added.
The leave must be taken during the following year, on a date mutually agreed between the parties (taking into account the possibilities of the company, the season, etc.). It may not be substituted in cash.
The leave must be taken in a single continuous period without counting holidays or Sundays. However, the law allows the division of the leave into two periods (splitting), the shorter of which may not be less than 10 days, and the counting of holidays, to be agreed (in advance) by Collective Bargaining Agreement.
HOLIDAY SALARY (AMOUNT FOR THE BETTER ENJOYMENT OF THE LEAVE)
In addition to the benefit of paid leave, which consists of a certain number of paid rest days during which the staff is entitled to be off work and continue to receive their normal salary, including all the salary items they usually receive, the regulations also provide (for the private sector) for the payment of the "holiday salary" or "sum for the better enjoyment of the leave". This payment must be made in all cases before the start of the leave.
Holiday time is compensated in Uruguay in a dual manner. On the one hand, the days of absence are remunerated to ensure that the worker does not lose wages during the rest period. On the other hand, an additional amount is granted to ensure an effective enjoyment of the leave, known as holiday salary, the amount of which is equivalent to the liquid amount to be received for leave.
SPECIAL LICENCES
In Uruguay there is a law that establishes special leave for private sector workers in certain circumstances, with a different purpose than annual leave. There is a maternity leave scheme (subsidy granted by social security), special leave for blood donation and genitomammary examinations, and the following special leave (paid by the employer):
- Study leave
- Marriage leave
- Maternity, paternity and adoption leave
- Bereavement leave
- Leave for parents with children with disabilities
- Leave for disabled or terminally ill dependents
PREVENTION OF HARASSMENT AT WORK
Uruguay was a pioneer in ratifying International Labour Convention No. 190, which recognises as a fundamental right to work in safe environments free from violence and harassment. This convention obliges employers to guarantee the physical and psychosocial integrity, dignity and non-discrimination of workers.
The employer is responsible for the working climate, just as he is responsible for health and safety, even if the offensive behaviour comes from another worker and not from a company representative.
To mitigate this responsibility, the existence of preventive mechanisms for workplace harassment is taken into account, such as protocols for dealing with complaints. Workers have the option of filing a complaint internally or with the General Labour and Social Security Inspectorate (MTSS).
Although Uruguay has ratified the Convention, it has not yet adopted clear legal definitions on harassment at work, violence at work, prevention measures to be implemented by employers, those responsible and sanctions. There is also a lack of regulation on the procedure to be followed for complaints, either within the company or before the Inspectorate.
In the meantime, based on the prevention duties already in place, it is recommended that preventive measures be adopted, such as the creation of action protocols that provide an internal channel for complaints, the establishment of a clear procedure for investigating reported incidents, and the inclusion of informative clauses in employment contracts and internal manuals. It is also advisable to disseminate informative content and to carry out awareness-raising activities, training or workshops with the participation of workers.
HEALTH AND SAFETY. ACCIDENTS AT WORK AND OCCUPATIONAL DISEASES.
In Uruguay, the regulations establish that it is the employer's obligation to implement occupational safety and security measures to prevent occupational accidents and diseases of occupational origin.
Coverage for accidents at work and occupational diseases is provided through the Banco de Seguros del Estado (BSE), a public body in charge of administering compulsory insurance for these risks under a monopolistic regime. In our system, the coverage of this risk is outside the social security system, and falls on the company, which is obliged to take out this policy.
This system provides comprehensive coverage including treatment and rehabilitation, temporary disability benefits, and compensation for permanent disability or death. By taking out such insurance, the employer "discharges" the liability of the insurer. However, the law establishes that the employer is also liable when there is malice (intentional action in the event) or gross negligence (non-compliance with safety and prevention rules).
Occupational diseases are grouped into specific categories according to the agents or working conditions that cause them. To facilitate the identification of these diseases, the BSE has an official list of occupational diseases that links occupational pathologies with risk activities or exposures. Uruguay adopted the International Labour Organization (ILO) List of Occupational Diseases, revised in 2010, with the exception of mental and behavioural disorders, due to the complexity of establishing their direct link to the work environment.
In addition, Uruguayan legislation provides for criminal liability for the employer, or for those who effectively exercise the power of management on his behalf, in case of failure to adopt the necessary occupational safety measures, in a way that seriously and specifically endangers the life, health or physical integrity of the worker.
TERMINATION OF EMPLOYMENT AND COMPENSATION REGIME
The employment relationship may be terminated for various reasons, some of which are beyond the company's control, others beyond the employee's control, and in some cases as a result of an agreement, even established in advance, as in the case of fixed-term contracts.
Some of these hypotheses are:
- Waiver. There is no obligation to give advance notice.
- Abandonment of office. Must be established (prior notice and proof thereof).
- Dismissal. Severance pay is due.
- End of term or condition. Example, the reinstatement of the incumbent after a substitution.
- Early termination of forward contracts. Compensation may have to be paid for the remaining term.
- Dismissal for gross misconduct. No severance pay (either due to accumulation of sanctions or sufficiently serious misconduct).
- Special dismissals (protected workers entitled to special compensation).
In our country, the termination of the employment contract by unilateral decision of the employer is not subject to prior notice, consent or acceptance by the worker. Neither is the expression of a cause or reason required, except in specific cases (e.g. trade union privileges).
However, this termination of employment entails the obligation on the part of the employer to compensate the worker with a legally pre-established or "tariffed" sum for damages. Such compensation is calculated on the basis of the length of service and the remuneration at the time of departure.
A monthly payment (understood as the total income per month) is due for each year or fraction thereof, with a maximum of six. Unlike other systems, in Uruguay, after six years of seniority, the indemnity to be received by the worker does not continue to increase.
In certain exceptional circumstances, the payment of special compensation is required because the dismissal occurs under particular conditions. These situations affect workers who enjoy specific protection because their condition places them in a state of greater vulnerability. Some examples are: the Worker who was "recently" certified sick, the Worker who suffered an occupational disease or accident at work, the pregnant Worker or new mother, disabled persons, etc.
TRADE UNION ASPECTS AND THE RIGHT TO STRIKE
In Uruguay, the right to strike and the exercise of trade union activity are guaranteed by the Constitution and the law. Shop stewards and members are protected against discrimination, persecution or dismissal on anti-union grounds.
Following observations by the International Labour Organisation (ILO) on freedom of labour and enterprise, which noted that the system did not respect the rights of non-strikers (insofar as occupations were allowed that prevented access to others), a law was passed in 2020 that guarantees workers who do not adhere to trade union measures the right to enter work and allows company management to enter their establishments. In addition, pickets blocking access or the free movement of people, goods or services in public or private spaces for public use were declared illegitimate. It should be noted that currently, following the change of authorities in the Ministry of Labour in March 2025, a possible revision of the regulations on labour occupations in Uruguay has been announced.
Collective Bargaining.
The Collective Bargaining Act (LNC) regulates the setting of minimum wages and adjustments, and organises collective bargaining on three levels:
- First level: Tripartite Higher Council.
- Second level: Wage Councils, organised by branch of activity.
- Third level: Bipartite bargaining between the employer and the basic union.
In May 2023, the regulation incorporated ILO observations, validating the possibility of negotiating collective agreements directly between the company's workers and the employer, without the need to resort to a branch union, when one does not exist. This modification responded to the fact that the previous legislation required the intervention of the branch union in these cases.
Trade union forces.
Until 2006, dismissal of a worker for trade union reasons was considered abusive, with special compensation. Since 2006, the concept of trade union privileges has been introduced, allowing for the nullity of dismissal for trade union reasons and the reinstatement of the worker. The employer must prove reasonable cause to avoid the nullity of such dismissal. However, the regulations do not grant absolute stability, and "reasonable cause" may be related to the worker's behaviour or the needs of the company, and the possibility of other reasons "of sufficient substance" is left open.
Other trade union rights and guarantees for trade union activity.
The most relevant trade union rights include:
- Right to strike (constitutional).
- Protection against retaliation for trade union activity (trade union privileges).
- Right to claim and collective bargaining.
- The right to join or leave a trade union.
- The right to form and organise trade unions without prior authorisation or interference from employers.
- The right to trade union activities during working hours (with prior authorisation) and to hold assemblies.
- Right to post publications ("union bulletin board").
- Right to paid time off for trade union activities.
- Right to order the withholding of union dues (workers' contributions).