Hire and pay employees in
Nicaragua, hassle-free

The individual income tax ranges from 15% and goes up to the maximum of 30%, based on net salary after Nicaraguan Institute of Social Security (INSS) deductions. Income tax is calculated according to progressive rates.

The employer cost is generally estimated at 24.50% of the employee salary

• Nicaraguan Social Security Institute (INSS) - 22.50%Ž
• National Technological Institute (INATEC) - 2%

Overtime payment is mandatory. Hours outside of standard work hours are considered overtime with the exception that the employee is remediating or fixing an error or mistake that they were responsible for. Employees can work a maximum of 3 hours of overtime per day or 9 per week. Overtime must first be authorized by the employer. Employees cannot claim overtime if it was not priorly agreed with the employer. 

Standard working hours are 9 hours per day and 48 hours per week. The standard work week is from Monday to Friday.

Pregnant employees who have worked for 16 weeks are entitled to paid leave. 120 days must be taken before the child's birth. The remaining 240 days can be taken postpartum. The employee will receive 100% of the salary during this period, and the Employer and Social Security will be responsible for this pay (40% and 60%, respectively).

Any extensions to the term would only be provided by the doctor attending the employee. In case of extended leave, the employee would no longer be on maternity leave per se, instead it will be a leave for general sickness, therefore, the employer may decide to assume the 40%, because Social Security will assume the other 60%.

Terminations in Nicaragua are moderately complex with a moderate
degree of litigation risk.

Compliant terminations include:

• Voluntarilyby the employee
• Unilaterally by the employer based on:
  • probation period
  • objective grounds
  • disciplinary dismissal
  • performance due to unsuitability for the job
• By expiration of the contract

In Nicaragua, all employees who are terminated are entitled to severance pay. Severance pay is based on seniority as follows:

• For each month the employee accrues 2,5 days of salary during the first 3 years of employment under the same employer. Monthly accrual calculation is 8,33%.
• For each month the employee accrues 1,6 days of salary during the years 3+ of employment under the same employer. Monthly accrual calculation is 5,55%.

Nicaragua celebrates 9 national holidays, 2 regional holidays in Managua (Capital City) and 1 day in each municipality in the rest of the country, based on the location of the employee.

National public holidays include:

• New Year’s Day
• Maundy Thursday
• Good Friday
• Labor Day
• Sandinista Independence Day
• Battle of San Jacinto
• Independence Day Nicaragua
• Immaculate Conception
• Christmas Day