When you hire remote developers in Latin America, you need to learn the critical differences between hiring an employee or a contractor. You may be familiar with the terms “full-time employee” or “part-time contractor”, but these do not refer exclusively to their work schedules. Each has different characteristics based on labor and legal laws that companies must abide by when added to their teams.
We're here to guide you through all the must-know details you can't miss when you want to hire Latin American programmers.
In this blog:
What's a full-time employee?
What's a contractor?
Schedules for full-time work vs. contractor work
Types of Contracts: Ecuador, Colombia, Mexico, Brazil and Chile
Download the complete Guide to Hire in Latam
Understanding Employment Types in LATAM
What's a full-time employee?
When you hire a developer full-time, it entails that they have a long-term working agreement with your company. They will become an active part of your company's daily activities and abide by its working schedules.
When a company pays its full-time employees, it must consider taxation laws and obligations. Not complying with these may cause legal trouble for your company, so make sure its accountant is familiarized with the region's tax laws.
Labor laws specify that full-time employees must receive perks when hiring them, even in a remote work setting. These perks may vary depending on state laws, but the employee will surely expect to receive them. Some of the more common perks include paid vacation, bonuses, and in some cases, health care for the employee.
Another thing to consider when hiring a full-time employee is that when they leave the company they work for, they sometimes receive compensation. Depending on how they leave the company, the employer might be obligated to pay the employee fees for leaving. For example, if an employee is fired, in some regions, the company must pay them three months’ pay when they leave their position.
What's a contractor?
Contractor developers are usually employed when you need them to work on a specific task that does not need to be fulfilled all year round.
Labour laws are different when hiring remote workers since they are not active members of the company they are working for. Their affiliation is momentary and ends once they complete the project they were hired to work on.
However, taxation laws do not change when hiring contractor developers for your company. This doesn’t exempt you from having to keep a close eye on your financial movements and fulfill your company’s tax obligations.
Usually, perks are not warranted for contractors, but they might be offered to the developer in some cases. This depends entirely on the sort of working agreement that takes place when they are hired.
Key Differences: Full-time vs. Contractor
Work Schedules and Flexibility
There is no universal standard for the number of hours that defines a full-time developer or contractor’s working schedule. When you hire software developers, their schedules are usually appointed by the employer.
Software developers working full-time for companies usually work on 8-hour schedules during workdays. This means 40 hours each week, the developer will work and interact with other company members.
Contractors working part-time usually have looser schedules, but there are cases in which they may need to comply with some of the company’s agenda. When you hire software developers as part-time contractors, they usually choose how many hours a day they work and when they do their tasks.
Legal and Tax Implications, Benefits and Perks
Every region has different specifications for what contracts look like for full-time developers or contractors. LATAM is an excellent example of how contracts may differentiate when looking to hire software developers for your company. Here are some examples:
Hiring in Ecuador 🇪🇨
| |
Employee |
Contractor |
| Company creation |
Would need to set up an Ecuadorian company legally. |
Does not require setting up an Ecuadorian company
|
| Taxes |
Accountants handle tax and compensation movements.
|
Legally not obligated to pay working taxes.
|
| Perks |
Employees expect multiple perks when legally hired. |
Without perks, the candidate expects higher pay.
|
| Sick days & Holidays |
An employee expects days-off (sick leave, holidays, and vacation). |
Based on the company’s agreement with contractor |
| Termination of Contract |
Employees would expect three monthly salaries if fired.
|
Termination of contract would not demand labor settlement.
|
Recruiting in Colombia 🇨🇴
| |
Employee |
Contractor |
| Duration |
Contracts need to have an expiration date. May last for less than a year or extend up to three years.
|
Contracts are not obligated to have an expiration date. Flexible duration and may be submitted to a trial period.
|
| Termination |
In case of firing, an employee must be notified with a 30-day notice.
|
Unjust cause of firing guarantees paid termination within 15 days.
|
| Renewal |
Renewal of contract guarantees employees will be re-hired for no less than a year. |
Renewal of contract may be flexible on duration when re-hired. |
| Work Schedule |
Must fulfill daily working hours (7-8 per day). |
Working hours may be agreed upon and managed by employee.
|
Navigating Brazil's Labor Laws 🇧🇷
| |
Employees |
Contractor |
| Christmas Bonus |
Employees in Brazil are entitled to a Christmas bonus. |
Bonus may be negotiated but is not a requirement.
|
| Work Schedule |
Working hours may not exceed 44 hours per week.
|
Working hours can vary and are more flexible.
|
| Perks |
Common to offer meal vouchers and healthcare.
|
Perks could be negotiated under contract.
|
| Tax Treatment |
Must comply with tax income to the government.
|
Must verify taxes with the government as well.
|
Mexico's Tech Talent Landscape 🇲🇽
| |
Employee |
Contractor |
| Perks |
Employees expect full perks when hired. |
Under Mexican labor laws, you must be a full-time employee.
|
| Vacation |
Paid Annual Leave. |
Most working perks would apply.
|
| Termination |
Termination of contract entitles an employee 3-month pay plus yearly perks.
|
Must comply with 3-month pay plus perks.
|
| Tax Treatment |
Employee’s compensation is subject to income tax. |
Must comply with tax income laws when hiring. |
Chile's Remote Work Regulations 🇨🇱
| |
Employee
|
Contractor
|
|
Working Hours
|
Working weeks are 45 hours.
|
Schedules may vary upon working agreement.
|
|
Company creation
|
Would need to set yourself as an employer with the Chilean government legally.
|
Do not need to register legally to hire.
|
|
Probation Period
|
Contract for employees that are for less than a year is considered on a probation period.
|
Flexible agreement for no less than two weeks of probation.
|
|
Perks
|
Employees expect full perks when hired.
|
Employees expect perks but are open to negotiation.
|
Related: How to pay a remote worker in LATAM
Why Hire Remote Developers from Latin America?
- Rich talent pool with strong technical skills
- Favorable time zone alignment with North America
- Cultural affinity and English language proficiency
- Cost-effective without compromising quality
Success Story: TechStartup's LATAM Team
Learn how Marqii built a high-performing development team by hiring remote developers from Peru, Ecuador, and Brazil. This resulted in accelerated product growth and time savings.
Ready to build your Latin American Dream Team?
Download our comprehensive Guide to Hire in LATAM for startups and take the first step towards assembling your high-performing remote team. Get your free guide.