How to Hire Remote Employees In

Honduras

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The Basics

Currency
Lempira (HNL)
Employer Taxes
16.60%
Payroll Frequency
Monthly
Official Language
Spanish
OVERVIEW

Employment in

Honduras

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors

  • Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
  • Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
  • Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.

Disadvantages of Hiring Independent Contractors

  • Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
  • Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
  • Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
  • Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.
EMPLOYMENT IN
Honduras

Set up a subsidiary in

Honduras

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Honduras can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Honduras, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Honduras.

EMPLOYMENT IN
Honduras

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Hire with Panther

Paying Remote Employees

Paying employees in Honduras is not the same as paying workers in your own country. Employees have to be paid using Hungary’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Honduras

 Specific Information

Working Hours

A full-time work week is 44 hours or hours a day. In addition, the maximum number of days in a workweek is 6.

Overtime

Overtime pay is paid at the rate of 137.5% of the regular pay. 


For work on a rest day, the pay rate is 200% of the regular pay.


For night work, the pay rate is 125% of the regular pay. 

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Taxes

Payroll Tax

Employer

16.60% - Employer Contributions
- Employer Contributions

Minimum Wage

The minimum wage varies based on the industry as well as the number of employees an employer has. The lowest monthly minimum wage is 6,762.70 HNL for agriculture workers and the highest being 12,357.84 HNL for financial institutions, real estate, and business services.

Payroll

Pay Cycle

Employees receive salaries bi-weekly or monthly.  

13th Salary

Employees are entitled to 13th and 14th salaries and are paid in June and December.  Each is for the amount of one months’ salary.

Leave

Paid Time Off (PTO)

Paid leave depends on the length of service completed:  

  • Up to 1 year of employment- 10 days
  • 1-2 years of employment- 12 days
  • 2-3 years of employment- 15 days
  • 4+ years of employment- 20 days

In addition to the leave, the employee is entitled to vacation pay, which must be paid out at least 3 days before the leave is taken.

Public Holidays

There are 11 public holidays.

Sick Days

  • Sick leave starts from the third day of sickness.   
  • Employees are entitled to up to 26 weeks of sick leave per year and can be extended up to 52 weeks. 
  • Pay is 66% of the average of the previous 3 months or 100% if the employee is hospitalized and has no dependents.  
  • Pay is split equally between the employer and social security.  

Maternity Leave

Mothers are entitled to 10 weeks of 100% paid leave, with salary partially covered by the employer and the IHSS. 4 weeks of leave should be taken before delivery and 6 weeks should be taken after.

Paternity Leave

There are no statutory laws for paternity leave.   

Parental Leave

There are no statutory laws for parental leave.

Other Leave

None.

Marriage Leave

None.

Bereavement Leave

None.

Termination

Termination Process

Termination procedure depends on if it is a case of dismissal with just cause or wrongful dismissal.  

Dismissal with just cause is effective from the moment the employer notifies the employee; however, the employee does have the right to take the employer to court and require they provide evidence to prove their dismissal was fair. If the employer cannot prove dismissal with cause, the employee is entitled to compensation for damages and losses and accrued unpaid wages. The employee also has the right to file a claim against the employer and request reinstatement.  

If termination is deemed wrongful and the employee is reinstated, the employer is not required to pay termination benefits.

Notice Period

The notice period is determined by the length of employment:

  • Less than 3 months – 24-hour notice
  • More than 3 months but less than 6 – 1 weeks’ notice
  • More than 6 months but less than 1 year – 2 weeks;’ notice
  • More than 1 year but less than 2 years – 1 months’ notice
  • More than 2 years – 2 months’ notice

Severance Pay

For employees who were dismissed for just cause, there is no severance pay entitlement.

For employees who were dismissed for unjust cause or dismissed indirectly (i.e. failure on the part of the employee to pay wages on time) are entitled to severance pay:

  • 3-6 months of employment- 10 days of wages
  • 6-1 year of employment- 20 days of wages
  • 1 or more years- 1 months’ salary for every year of employment, capped at 25 months.

Probation Period

None.