If you are interested in company formation in the Dominican Republic, or who is already doing business in this Caribbean nation, understanding employment law will be crucial to maintaining your company’s good standing and maximising your potential for success.
The Dominican Republic’s Employment Law is administered by the Works MinistryWhile many aspects of Dominican legislation look similar to other market laws, each Dominican system has its unique characteristics.
For anyone who’s needs in the market are limited in scale, such needing a small number of local executives or a team for a short-term project, hiring via an employer of record (EOR) in the Dominican RepublicThis could be your best option.
By hiring via an EOR you become the authorized employer. However, you have complete control over the schedule and duties of the employees, which allows you to avoid having to set up a local entity.
This overview provides information about employment law in Dominican Republic, such as the normal hours of work, most common contracts used by foreign investors and details on terminations and severance. It also includes information on leave entitlements.
To learn more about our support for Dominican Republic’s market entry and business operations, please click here contact us now.
Working hours in Dominican Republic employment law
The Dominican Republic’s employment law states that a typical work week lasts 44 hours and a regular shift is eight hours. All full-time employees have the right to at least 36 hours of rest per week for any employee working more than 6 hours consecutively.
These provisions do not apply to certain positions such as supervisory and management roles.
You should also be aware that most national holidays fall on weekdays in each year.
The Dominican Republic has common employment laws that govern contracts
The Dominican Republic has three kinds of employment contracts that can be used most often by foreign investors.
- Indefinite period employment contracts The most commonly used type of contract, and can only be ended by mutual agreement between an employer and employee.
This could be an employee quitting their job or a case of misconduct by employees that is grounds for dismissal, as defined in the contract.
- Fixed-term employment contractsThey are only valid for the time specified in the contract. The employee can sue only if they feel the need or the benefit of the service. This could be when the worker needs to take maternity leave or for extended periods.
- For specific projects or tasks, contractsare provided for specific outcome-based tasks and must include markers or thresholds to clearly define when the project, task or task is completed.
Severance and termination
A company’s length of employment is a factor in whether an employee has to give notice that they are resigning. Employers must give a similar notice if they terminate a contract for any reason. The following is the duration of that notice:
- If the employee is not employed for more than three months, there will be no notice
- 7 days notice if the employee is serving between 3 and 6 months in the company
- One day notice if the employee is serving between 6 and 12 months in the company
- If the employee serves more than twelve months, 28 days notice
The employer must pay these amounts to employees upon termination of employment, regardless of cause:
- Based on the amount of work they did in a calendar year, the percentage of their annual bonus is calculated.
- Unused vacation allowances are eligible for full compensation
- The employee’s contribution to the financial year is the basis for the payment of a profit share.
Additionally, an employee who is fired without cause will have the right to financial assistance. This aid can be based on their time with the company.
- If you are not in service for three months or less, there is no need to pay.
- A minimum of six days must be paid for each three- to six month period of service
- Between six and twelve months service, 13 days must be paid in salary
- A minimum of 21 days must be served for each one- to five year period.
- 23 days must be served for more than five years’ service.
Dominican law governs vacations, leave, or other absences
An employee is entitled to 14 paid days off per year after one year continuous full-time employment. The PTO can be extended up to 18 days after five consecutive years.
The Dominican Republic’s employment law stipulates that vacations should last at least for one week. Allowances can not be traded for more remuneration.
Paternity and maternity leave
New mothers are entitled to 12 weeks’ paid maternity leave, starting six weeks prior to the due date. Dominican employment law allows for paternity leave of two days for fathers who give birth.
Leave for sick
Under employment law in the Dominican Republic, employees are not entitled to paid sick leave and, as such, it is at the employer’s discretion to remunerate time missed due to illness.
In the case of death of a child, parent or partner, three-day bereavement leave is available.
The Dominican Republic’s employment law: Contributions
The Dominican Republic’s employment law allows employees to deduct from their salaries the amount for state pension (AFP) or public health insurance (SFS), which totals 5.92%.
Those amounts are divided into a 2.87% and a 3.04% deduct for the AFP.
Contributions by employers
Employer contributions to the AFP, SFS and for occupational insurance total a minimum 15.34% from the amount of the salary being received
Those are broken down into a 7.1% contribution to the AFP, a 7.09% contribution to the SFS, and a 1.25% contribution for occupational health, with up to an additional 0.6% based on the level of risk involved in the job.
The law requires employers to share 10% from net annual profits with employees. Payments must be made between 90-120 days after the close of fiscal year. In Dominican Republic, this is December 31. This means profit shares are generally paid in April.
The equivalent of 45 days’ salary for workers with less than five year service must be paid. However, 60 days should be allowed for employees who have served more than five-years.
These types of businesses are exempted form sharing profits
- Businesses in mining, agriculture and forestry that are less than three years old have not been in business.
- Companies whose capital is less than one million Dominican pesos (approximately US 18,000 in November 2021).
- Based in free trade zones
Biz Latin Hub will help you do business in Dominican Republic
Biz Latin Hub has bilingual professionals who can help you understand and adhere to Dominican Republic employment law.
The comprehensive range of corporate solutions we offer includes company formation, accounting & taxation, corporate legal services, visa processing, and hiring & PEOWe offer customized packages of back-office services that are tailored to meet every customer’s needs.
There are 16 Latin America and Caribbean markets where we have teams. Trusted partners help us expand our reach to all corners of the region. Our specialty is multi-jurisdictional market entry.
Contact us today to find out more about how we can assist you entering the market and doing business in the Dominican Republic.
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