Countries › Uruguay › Guide › 7. Labor and employment › Employing people in Uruguay: minimum wage, Wage Councils, hours, leave, bonuses, contributions, severance, unions and outsourcing

Employing people in Uruguay: minimum wage, Wage Councils, hours, leave, bonuses, contributions, severance, unions and outsourcing

Argentina. For full detail on Argentina, go to The Argentine Thread.

Last verified: 2026-10-27 · Status: Changing

Uruguay has no single labor code: employment is governed by a set of laws that fix an eight hour day, overtime at a 100 or 150 percent premium, 20 days of paid leave with a vacation bonus, a year end bonus of one twelfth of pay, and severance of one month per year capped at six months, while pay floors come from the national minimum wage (UYU 25,383 from July 2026) and, above all, from tripartite Wage Councils by sector. The employer pays 7.5 percent for pensions, 5 percent for health and 0.025 percent to the wage guarantee fund on covered pay, and withholds 15 percent for pensions and 3 to 8 percent for health from the worker, all through the BPS. Dismissal needs no cause but costs severance, with special protection for pregnancy, occupational illness and union activity; principal companies answer for their contractors' staff, and claims time bar one year after exit with a five year look back.

USD figures use UYU 40.214 per US dollar, the BCU quotation for DLS. USA BILLETE on 26 October 2026, retrieved from the BCU quotations service on 27 October 2026; conversions are for orientation only.

Key facts

National minimum wage, monthly, from 1 July 2026	25383 UYUDecreto Nº 319/025 art. 2, as of 2026-10-27 · in force
National minimum wage, monthly, in US dollars at UYU 40.214 (BCU, 26 Oct 2026)	631 USDDecreto Nº 319/025 art. 2, as of 2026-10-27 · in force
National minimum wage, daily (monthly divided by 25)	1015.32 UYUDecreto Nº 319/025 art. 2, as of 2026-10-27 · in force
National minimum wage, hourly (monthly divided by 200)	126.92 UYUDecreto Nº 319/025 art. 2, as of 2026-10-27 · in force
National minimum wage increase for 2026	7.54 %Decreto Nº 319/025 (considerando), as of 2026-10-27 · in force
Legal working day	8 hoursLey Nº 5.350; Ley Nº 10.489 art. 2, as of 2026-10-27 · in force
Overtime premium on working days	100 %Ley Nº 15.996 art. 1, as of 2026-10-27 · in force
Overtime premium on rest days and holidays	150 %Ley Nº 15.996 art. 1, as of 2026-10-27 · in force
Maximum overtime the employer may require per week	8 hoursLey Nº 15.996 art. 5, as of 2026-10-27 · in force
Minimum paid annual leave	20 daysLey Nº 12.590 art. 1, as of 2026-10-27 · in force
Vacation bonus (salario vacacional), minimum share of net leave pay	100 %Ley Nº 16.101 art. 4, as of 2026-10-27 · in force
Year end bonus (aguinaldo)	One twelfth of remuneration paid in the 12 months before 1 December Ley Nº 12.840 art. 2, as of 2026-10-27 · in force
Dismissal severance per year or fraction of service	1 month of total remunerationLey Nº 10.489 art. 4, as of 2026-10-27 · in force
Dismissal severance cap	6 monthsLey Nº 10.489 art. 4, as of 2026-10-27 · in force
Extra severance for dismissal during pregnancy absence	6 months of salaryLey Nº 11.577 art. 17, as of 2026-10-27 · in force
Deadline to sue after the employment ends	1 yearLey Nº 18.091 art. 1, as of 2026-10-27 · in force
Labor credits time bar	5 yearsLey Nº 18.091 art. 2, as of 2026-10-27 · in force
Employee pension contribution	15 %Ley Nº 16.713 art. 181, as of 2026-10-27 · in force
Employer pension contribution	7.5 %Ley Nº 18.083 art. 87, as of 2026-10-27 · in force
Employer health contribution (FONASA)	5 %Ley Nº 18.211 art. 61, as of 2026-10-27 · in force
Employee health contribution (FONASA), pay above 2.5 BPC with dependent children	6 %Ley Nº 18.211 art. 61 literal A), as of 2026-10-27 · in force
Employer contribution to the Labor Credit Guarantee Fund (FGCL)	0.025 %Ley Nº 19.690 art. 10, as of 2026-10-27 · in force
Base de Prestaciones y Contribuciones (BPC) for 2026	6864 UYUDecreto Nº 11/026 art. 1, as of 2026-10-27 · in force

The rule

1. Every private employer must pay at least the National Minimum Wage (Salario Mínimo Nacional, SMN). From 1 July 2026 it is UYU 25,383 a month; the daily wage is the monthly amount divided by 25 and the hourly wage the monthly amount divided by 200. From 1 January to 30 June 2026 it was UYU 24,572. In practice most jobs are governed by higher category minimums fixed by the Wage Councils (see the collective bargaining rule), so the SMN is a floor beneath the sector floors.
Cost to do it: UYU 25,383 a month (UYU 1,015.32 a day, UYU 126.92 an hour) before employer contributions.
Example: A full time worker on the SMN in October 2026 earns at least UYU 25,383 a month; a day worker earns at least UYU 1,015.32 per day. / UYU 25,383 is about US$631 a month at UYU 40.214 per US dollar.Decreto Nº 319/025 (National Minimum Wage, January 2026), Art. 1 and art. 2, 2025-12-26 official text · verified 2026-10-27 · changed: Decreto Nº 319/025, promulgated 26 December 2025 and published 12 January 2026, raised the SMN by 7.54 percent for 2026 in two steps: 4.1 percent to UYU 24,572 from 1 January 2026 and 3.3 percent to UYU 25,383 from 1 July 2026, replacing the amount set by Decreto Nº 369/024 for 2025.

2. The legal working day is eight hours. Hours beyond the daily limit that applies to the worker (by law or agreement) are overtime and are paid with a 100 percent premium on working days and a 150 percent premium on rest days and holidays, calculated on the ordinary hourly wage. Fractions under 30 minutes count as half an hour and longer fractions as one hour. The employer may require at most eight overtime hours a week, and only with the worker's consent; overtime pay is salary and is averaged into leave pay and the vacation bonus.
Cost to do it: Weekday overtime costs twice the hourly wage; rest day or holiday overtime costs 2.5 times the hourly wage, plus contributions on top.
Example: A worker paid UYU 500 an hour earns UYU 1,000 per overtime hour on a weekday and UYU 1,250 per overtime hour on a rest day; eight weekday overtime hours cost UYU 8,000. / About US$24.87 per weekday overtime hour and US$31.08 per rest day overtime hour; eight weekday hours are about US$198.94.Ley Nº 15.996 (Overtime Law); Ley Nº 5.350 (Eight Hour Law); Ley Nº 10.489 for commerce, Ley 15.996 art. 1, 2, 3, 4 and 5; Ley 5.350 (eight hours a day, at most 48 hours per six working days); Ley 10.489 art. 2, 1988-11-17 official text · verified 2026-10-27

3. Every private sector worker is entitled to at least 20 days of paid annual leave, taken in one continuous period in which holidays are not counted, after 12 months, 24 fortnights or 52 weeks of work; those with fewer get proportional days. After five years with the same company the worker earns one extra day for every four years of seniority. Employers must also pay a vacation bonus (salario vacacional) of at least 100 percent of the net daily leave pay, before the leave starts and in proportion to its days.
Cost to do it: 20 paid days a year plus a bonus equal to the net pay for those days, so leave costs roughly twice the net daily wage for each leave day.
Example: A worker earning a net UYU 3,000 a day takes 20 days of leave paid UYU 60,000 and receives a vacation bonus of at least UYU 60,000 before leaving. / About US$1,492 of leave pay plus at least US$1,492 of vacation bonus.Ley Nº 12.590 (Annual Paid Leave); Ley Nº 16.101 (vacation bonus), Ley 12.590 art. 1, 2 and 4; Ley 16.101 art. 4 and 5, 1958-12-23 official text · verified 2026-10-27

4. Every private employer must pay a year end bonus (aguinaldo, sueldo anual complementario) equal to one twelfth of all remuneration in money paid in the 12 months before 1 December, within the ten days before 24 December; profit shares are excluded. On termination for any reason other than notorious misconduct the worker receives the proportional bonus. Breach is fined at twice the bonus owed to each worker. IMPO links the annual decrees that fix the payment dates.
Cost to do it: One twelfth of yearly remuneration, about 8.33 percent of payroll, plus contributions.
Example: A worker paid UYU 100,000 a month for the full year earns an aguinaldo of UYU 100,000. / About US$2,487.Ley Nº 12.840 (Year End Bonus), Art. 1, 2, 3 and 7, 1960-12-22 official text · verified 2026-10-27

5. Employer and employee social security contributions are collected by the Banco de Previsión Social (BPS). The employee pays 15 percent of covered pay for pensions. The employer pays a 7.5 percent pension contribution on all covered pay and 5 percent of covered pay to the National Health Fund (FONASA). The employee pays FONASA at 3 percent if monthly pay does not exceed 2.5 BPC (UYU 17,160 in 2026, with the BPC at UYU 6,864), 4.5 percent above that threshold without dependent children and 6 percent above it with dependent children under 18 or disabled, plus 2 percent more to cover a dependent spouse or partner. The employer also pays 0.025 percent to the Labor Credit Guarantee Fund (FGCL), which covers workers if the employer becomes insolvent.
Cost to do it: Employer: 7.5 percent pension plus 5 percent FONASA plus 0.025 percent FGCL, 12.525 percent of covered pay on these items. Employee: 15 percent pension plus 3, 4.5 or 6 percent FONASA (plus 2 percent for a spouse), withheld by the employer.
Example: On a monthly salary of UYU 100,000 for a worker with a child and no dependent spouse, the employer pays UYU 12,525 on these items and withholds UYU 21,000 (UYU 15,000 pension and UYU 6,000 FONASA) before personal income tax. / On about US$2,487 of salary, the employer pays about US$311 and withholds about US$522.Ley Nº 16.713 (Social Security Law); Ley Nº 18.083 (Tax Reform Law); Ley Nº 18.211 (National Integrated Health System); Ley Nº 19.690 (FGCL); Decreto Nº 11/026 (BPC 2026), Ley 16.713 art. 181; Ley 18.083 art. 87; Ley 18.211 art. 61 and 66; Ley 19.690 art. 10; Decreto 11/026 art. 1, 2026-01-20 official text · verified 2026-10-27

6. A dismissed monthly paid worker is entitled to severance of one month's total remuneration for each year or fraction of a year of work, capped at six monthly salaries (the text of art. 4 sets three where the worker is entitled to retire, and Ley 12.597 art. 5 defines that entitlement). Day or piece rate workers earn two days' wages for every 25 days worked in years with fewer than 240 working days, with full years under the same laws. No severance is due for notorious misconduct, which the employer must prove. Severance ordered by a final judgment bears a 1 percent monthly surcharge. Uruguayan law requires no cause for dismissal; the severance is the price of dismissal.
Cost to do it: One month per year or fraction, at most six months of total remuneration.
Example: A worker earning UYU 100,000 a month dismissed after 4 years and 3 months receives five months, UYU 500,000; after 10 years the cap of six months, UYU 600,000, applies. / About US$12,433 for 4 years and 3 months; the six month cap is about US$14,920.Ley Nº 10.489 (Commerce, working hours and severance); Ley Nº 12.597 (severance for day workers), Ley 10.489 art. 4; Ley 12.597 art. 1, 5, 8 and 10, 1944-06-06 official text · verified 2026-10-27

7. Special severance applies in protected situations: a worker dismissed while absent for pregnancy must be paid six months' salary on top of the legal severance; a worker readmitted after an occupational illness cannot be dismissed for 180 days without serious cause, failing which severance is three months' salary for each year or fraction. Any act intended to discriminate against union membership or union activity, including dismissal, is absolutely null, and the worker may sue for reinstatement under a summary procedure.
Cost to do it: Pregnancy dismissal: six extra months of salary; occupational illness readmission breach: three months per year of work; union discrimination: reinstatement risk plus back pay.
Example: Dismissing a pregnant worker earning UYU 60,000 with 2 years of service costs UYU 360,000 of special severance plus UYU 120,000 of ordinary severance, UYU 480,000 in total. / About US$11,936 in total.Ley Nº 11.577 (special protections); Ley Nº 17.940 (union freedom protection), Ley 11.577 art. 10, 16 and 17; Ley 17.940 art. 1 and 2, 2006-01-02 official text · verified 2026-10-27

8. Minimum wages by job category and pay rises for all private sector workers are set by tripartite Wage Councils (three government, two employer and two worker delegates per activity group), whose decisions bind the whole activity group once registered and published by the Executive. Collective agreements by sector signed by the most representative organizations bind all employers and workers in that sector once registered and published; lower level agreements cannot reduce higher level minimums. Since Ley 20.145 of 2023, expired agreements no longer stay in force automatically until replaced, and registration and publication are not an approval by the Executive.
Cost to do it: No fee; the cost is the sector minimum and the raises agreed in each bargaining round, which must be checked for the employer's activity group.
Example: A software firm must pay at least the category minimum of its Wage Council group, which can be well above the UYU 25,383 SMN. / Each US$1 of category minimum above the SMN carries about US$0.125 of the employer contributions listed above.Ley Nº 10.449 (Wage Councils), as reworded by Ley Nº 18.566 (Collective Bargaining) and amended by Ley Nº 20.145, Ley 10.449 art. 5 and 6; Ley 18.566 art. 11, 15, 16 and 17; Ley 20.145 art. 4 and 5, 2023-05-17 official text · verified 2026-10-27 · changed: Ley Nº 20.145, promulgated 17 May 2023, repealed the second paragraph of art. 17 of Ley 18.566, which had kept an expired collective agreement fully in force until a new one replaced it unless the parties agreed otherwise, and declared that registration and publication of Wage Council decisions and agreements are not an authorization or approval by the Executive.

9. A principal company that uses subcontractors, intermediaries or labor suppliers is jointly liable for their labor obligations to the workers assigned, their social security contributions and work accident insurance premiums, limited to the period of the subcontract. If the principal exercises its right to be informed, by requiring the contractor's BPS payroll filings and payment receipts, BPS and insurance certificates and payroll records, its liability becomes subsidiary (it pays only if the contractor does not). Outsourced workers cannot be used to replace workers on suspension unemployment benefit or in a collective dispute.
Cost to do it: No fee; the cost is the monthly document check on each contractor, which turns joint liability into subsidiary liability.
Example: If a cleaning contractor fails to pay UYU 400,000 in wages to staff placed at a client, the staff may claim the full amount from the client when it did not request the contractor's records. / About US$9,947 of exposure that the document check would make subsidiary.Ley Nº 18.099 (Outsourcing), as amended by Ley Nº 18.251, Ley 18.099 art. 1, 2 and 3; Ley 18.251 art. 1, 4, 6 and 7, 2008-01-06 official text · verified 2026-10-27

10. Claims arising from an employment relationship time bar one year after the day following the end of the relationship, and labor credits time bar five years after they became payable. Filing a conciliation request at the Ministry of Labor and Social Security (MTSS) or any court filing interrupts the period.
Cost to do it: No fee; the rule sets how long exposure lasts after a worker leaves.
Example: A worker who left on 31 October 2026 can claim unpaid overtime from as far back as November 2021 if the claim is filed by 1 November 2027. / Exposure for five years of unpaid items survives for one year after exit.Ley Nº 18.091 (Prescription of labor claims), Art. 1, 2, 3 and 4, 2007-01-07 official text · verified 2026-10-27

Item	Rate	UYU	USD	Norm
Gross salary		100,000	2,486.70
Employee pension contribution (withheld)	15%	15,000	373.00	Ley 16.713 art. 181
Employee FONASA (withheld)	6%	6,000	149.20	Ley 18.211 art. 61
Employer pension contribution	7.5%	7,500	186.50	Ley 18.083 art. 87
Employer FONASA	5%	5,000	124.33	Ley 18.211 art. 61
Employer FGCL	0.025%	25	0.62	Ley 19.690 art. 10
Year end bonus accrual	1/12	8,333	207.22	Ley 12.840 art. 2
Employer cost before leave, vacation bonus and contributions on the bonus		120,858	3,005.37

Monthly payroll cost of a UYU 100,000 salary in October 2026 (worker with a child, no dependent spouse), statutory items verified on IMPO; excludes personal income tax, the Labor Reconversion Fund and work accident insurance premiums; USD at UYU 40.214

Situation	Severance	Norm
Dismissal after 4 years and 3 months	5 months, UYU 500,000 (about US$12,433)	Ley 10.489 art. 4
Dismissal after 10 years	6 month cap, UYU 600,000 (about US$14,920)	Ley 10.489 art. 4
Dismissal for notorious misconduct proven by employer	None	Ley 12.597 art. 10
Dismissal during pregnancy absence	Ordinary severance plus 6 months, UYU 600,000 extra	Ley 11.577 art. 17
Resignation	No severance; proportional year end bonus is due	Ley 12.840 art. 3

Termination cost by situation, monthly salary UYU 100,000 (about US$2,487)

Worked example

Hiring a developer at UYU 100,000 a month (about US$2,487): the employer pays UYU 12,525 (about US$311) in pension, health and FGCL contributions and withholds UYU 21,000 (about US$522) from the worker before personal income tax. Adding the UYU 8,333 monthly accrual of the year end bonus, the cost is about UYU 120,858 (US$3,005) a month before leave, the vacation bonus, the Labor Reconversion Fund and accident insurance.
Letting the same developer go after 4 years and 3 months without cause: severance is five months, UYU 500,000 (about US$12,433), plus the proportional year end bonus and unused leave. The worker has one year from the day after exit to sue for any unpaid items from the last five years.
Using a contractor for security staff: if the client asks every month for the contractor's BPS payroll filing, payment receipts and certificates, it is liable only subsidiarily for unpaid wages and contributions; if it does not, it is jointly liable for the whole amount accrued during the contract.

Step by step

1. Register the company as an employer with the BPS and obtain work accident insurance from the Banco de Seguros del Estado before the first hire.
2. Identify the Wage Council group and subgroup for the activity and read the latest Wage Council decision or registered sector agreement for category minimums and scheduled raises; the national minimum wage applies only as the floor.
3. Set working hours within the eight hour day, record overtime and obtain the worker's consent for any overtime, up to eight hours a week.
4. Run monthly payroll: withhold the 15 percent pension and the FONASA rate that matches the worker's pay and family situation, pay the employer contributions to the BPS, and pay wages.
5. Communicate annual leave dates, pay the vacation bonus before each leave starts, and pay the year end bonus within the dates set each year.
6. For contractors and labor suppliers, request their BPS filings, payment receipts and certificates every month to keep liability subsidiary.
7. On termination, pay severance where due, the proportional year end bonus and accrued leave and vacation bonus, and keep payroll records for at least the five year claim window.

Common traps

Paying the national minimum wage is not enough: Wage Council category minimums bind the whole activity group once published and are usually higher, and back pay claims reach five years.
Severance counts each year or fraction, so one day past an anniversary adds a full month of pay.
Expired collective agreements no longer roll over automatically since Ley 20.145 of 2023, so check what each agreement says about extension and termination.
Overtime above eight hours a week, or without the worker's consent, breaches Ley 15.996 even if paid at the premium.
A principal that never checks its contractors' records is jointly, not subsidiarily, liable for their wages and contributions.
Dismissing a worker for union activity is null and can lead to reinstatement, not just severance; dismissal during pregnancy absence costs six extra months.
Notorious misconduct removes severance only if the employer can prove the facts; the burden is on the employer.
Staff moving between Argentina and Uruguay: Uruguay approved the Mercosur Multilateral Social Security Agreement of 14 December 1997 by Ley Nº 17.207, so check its coordination rules for pension contributions; for the Argentine side see The Argentine Thread guide.

Sources

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