How to Hire Employees in El Salvador (2026): ISSS, AFP and Contracts

El Salvador is a dollarized economy with a young, bilingual workforce. Here is what an employer needs to know in 2026.

Employment contracts

Contracts follow the Labor Code (Código de Trabajo). Contracts are usually indefinite. If a fixed-term contract is ended early without just cause, the employee is owed the pay for the remaining term, but never more than the indemnity for an indefinite contract (art. 59).

Minimum wage in 2026

For commerce, services and industry, the minimum wage is US$408.80 a month (Executive Decree of the Ministry of Labor and Social Welfare, MTPS). Lower rates apply in agriculture.

Social security and pensions

• ISSS (health, maternity and work risks): 7.5% from the employer and 3% from the employee. The employer registers within five days of hiring the first worker.
• Pensions (AFP): 16% of the contribution base, 8.75% from the employer and 7.25% from the employee (Integral Pension System Law, art. 16).

Aguinaldo

The year-end bonus is at least 15 days’ wages with 1 to 3 years of service, 19 days with 3 to 10 years, and 21 days with 10 years or more. It is paid between 12 and 20 December, and pro rata for those with less than a year.

Vacation

After a year of continuous service, employees get 15 days of vacation, paid at their ordinary wage plus 30%.

Severance

Dismissal without just cause on an indefinite contract costs 30 days’ basic wage per year of service, pro rata for fractions, and never less than 15 days. The daily wage used for the calculation is capped at four times the legal daily minimum wage (art. 58).

Hiring foreigners

At least 90% of a company’s staff must be Salvadoran. Foreign employees also need immigration authorization to work.

Employer of record or your own company?

If you want to hire before you have a local entity, an employer of record can employ staff on your behalf. For a long-term team, local invoicing or contracts in your own name, it is usually better to set up your own company in El Salvador and run payroll there.

Get help from Easyco

Easyco coordinates the company setup in El Salvador up to the issue of the NIT, and supports companies afterwards with tax, accounting, payroll and company compliance, including a registered office address. Contact us to discuss your hiring plans.