Our guide to Payroll in Honduras

Doing Business in Honduras

Investing in Honduras

Honduras has a diversity of investment sectors, some of which are considered major, and others with great potential for growth, export and stability in the domestic and foreign markets.

Basic Facts about Honduras

General Information:

Full Name: Republic of Honduras

Population: 9.904 million (World Bank, 2020)

Capital: Tegucigalpa

Major Language: Spanish

Monetary Unit: Lempira hondureño

Main Exports: coffee, shrimp, bananas, melon, lobsters and pineapples.

Internet Domain: .hn

International Dialing Code: +504

How to say:

Hello: Hola

Good Morning: Buenos Días

Good Evening: Buenas Noches

Do You Speak English? Habla Inglés

Good Bye: Despedida

Thank You: Gracias

See You Later: Hasta Luego

Dates & Numbers

Dates are usually written in the day, month and year sequence. For example, 1 July 2019 or 1/7/19.

Numbers are written with a comma as the decimal point, for example three thousand would be written 3.000,00.

Registrations and Establishing an Entity

The Public Deed is a legal instrument or document that contains the following containing:

• the names of the persons who make up the organization,
• the name or corporate name of the organization,
• its initial capital, its duration,
• its nature and purpose.

Who performs the procedure: a notary public.

Where it is done: at the law firm of your choice.

Average time: two (2) business days.

The requirements for the Public Deed are:

• Name or corporate name of the Company.
• Description of the activity to which the company will be dedicated.
• Domicile or address of the company.
• Initial capital, depending on the legal status to be adopted.
• Copy of the personal documents of the partners: identity card or passport, National Tax or passport; National Tax Registry (RTN) of the partners; and municipal solvency. of the partners; and municipal solvency.

All companies incorporated under the Commercial Code should register their Articles of Incorporation with the Commercial Registry, depending on the type of company.

Banking

It is mandatory in Honduras to have an in-country bank account in order to run business.

Working Week

Normal working hours cannot exceed 44 hours per week, 8 hours per day.

No more than 12 hours, overtime over a period of one week.

Employment Law

Holiday Accrual/Calculations

The minimum vacation time offered to any employee on a Honduran payroll is as follows:

• 10 days - after the 1st year
• 12 days - after the 2nd year
• 15 days - after 3 years
• 20 days - after 4 years

Hondurans celebrate the following public holidays:

• New Year’s Day (Jan 1)
• Pan-American Day / Day of the Americas (Apr 14)
• Maundy Thursday, Good Friday, Holy Saturday (Easter week)
• Labor Day (May 1)
• Independence Day (Sep 15)
• Francisco Morazán / Soldier’s Day (Oct 3)
• Discovery of America / Columbus Day (Oct 12)
• Armed Forces Day (Oct 21)
• Christmas (Dec 25)

Maternity Leave

• 4 weeks before birth + 6 weeks after birth = 10 weeks total
• Paid at two-thirds (66%) of average salary
• Salary base = average of previous 3 months
• Employer job protection is mandatory

Paternity Leave

There is no statutory paternity leave in Honduras.

Sickness

• First 3 days: unpaid or employer-paid (practice varies)

• From day 4 onward:
  • IHSS pays 66%
  • Employer pays 34%
  • Maximum entitlement: 26 weeks, extendable in serious cases
  • Requires IHSS medical certification

Tax & Social Security

The tax period in Honduras is the 12-month period ended on 31 December.

The key legislative authorities in Honduras are:

• Secretary of Finance (Secretaría de finanzas)
• Honduran Institute of Social Security (IHSS)
• Private Contribution Regime. (RAP)

Income Tax

Income tax in Honduras is defined in Article 1 of the Income Tax Law as a tax levied on income derived from capital, labor, or a combination of both. Income also includes any gain or economic benefit that increases the taxpayer’s net worth.

Honduras applies a territorial tax system, meaning that both individuals and legal entities are generally taxed only on income derived from Honduran sources. This applies to residents and non‑residents, whether nationals or foreigners. Entities operating under special regimes—such as Free Zones (ZOLI) and the Temporary Import Regime (RIT)—remain subject to income tax unless a specific legal exemption applies.

Individual income tax

Social Security

Social security fees are paid between the employer and the employee. The division is made as follows:

Employees

Employers

Reporting

Monthly

The employer is obliged to pay his contributions and those of his employees, corresponding to the salaries paid during a calendar month, within the first ten days of the following month.

Taxes are paid according to the fiscal calendar of the year.

Payroll

It is legally acceptable in Honduras to provide employees with online payslips as long as it’s GDPR-secure.

According to the Labor Code, wages must be paid regularly and in legal tender to the worker or an authorized person at the workplace during working hours or immediately after work in the presence of two witnesses.

Barter is permitted as payment for rural workers or their family in the form of food, housing, and other items of personal consumption, provided that the value assigned to such benefits does not exceed 30% of the cash wage and that such items are offered by the employer free or at low cost.

Payment in the form of promissory notes, vouchers, tokens, or coupons intended to substitute the salary is prohibited.

Reports

By law, payroll reports must be kept for at least 7 years.

New Employees

The new worker must be reported to the IHSS.

The steps for this procedure are:

• Request enrollment of the employee
• Receive the contribution form with the enrolled employee.
• Payment of the contribution form
• Request proof of the employee's validity
• Then, for the affiliation you must:
• Request affiliation and issuance of IHSS card.
• Pay for the issuance of the card
• Obtaining the card

Leavers

Honduran law protects workers with a severance payment for unjustified dismissal.

Sometimes, it is the worker who decides to terminate the contract. This usually happens because a better opportunity arises in another company, but it can also be for personal reasons (because he/she plans to move, for studies, etc.).

If this is the case, you must give your employer advance notice so that he/she can look for a replacement. In addition, at the time of liquidating your contract, you must pay the outstanding salaries, thirteenth and fourteenth proportional month, vacations not taken, etc.

The severance payment depends on the length of time you have been with the company.

Article 120 of the Honduran Labor Code establishes the employee’s right to severance pay (cesantía) in cases of termination without just cause, once the employee has completed at least three consecutive months of service.

Severance is calculated at the rate of one month of the employee’s average ordinary salary for each year of service, plus the proportional amount for fractions of a year, based on the average salary earned during the last six months of employment.

The total severance indemnity may not exceed 25 months of salary.

Severance must be paid regardless of whether the employee immediately obtains employment with another employer.

Employee Benefits

Expenses

While you must offer the statutory minimum for vacation time, many executives will negotiate additional time at the start of an employment agreement based on what they received from their previous employer.

Thirteenth- and Fourteenth-Month Bonus

Full-time employees should receive Christmas bonus or 13th month is an additional monthly salary paid in December as a whole month if the employee has worked 12 Month or as a proportional allowance of the time worked and 14 th month pay is an additional month salary or proportional to the time worked and is paid on June.

Visas & Work Permits

Under Honduran labor legislation, employers are prohibited from employing less than 90% Honduran workers and from paying them less than 85% of the total wages earned in their respective companies.

Foreigners hired by natural or juridical persons established in the country, or by governmental or non-governmental institutions, may opt for a special residence permit by complying with the requirements and other regulatory provisions. The General Directorate of Migration and Aliens in consultation with the Secretary of State in the Offices of Labor and Social Security, will verify the conditions of hiring.

The General Directorate of Immigration and Foreigners will authorize special permission to stay in the category of foreigners under contract, to foreigners hired by private companies as employees for a period of more than 3 months in various areas of their specialization such as professionals, technical or specialized personnel, management personnel of national or foreign corporations, trust personnel, athletes, scientists and others for a maximum of 5 years.

The necessary requirements for the application are:

• Submit an application addressed to the Director General of Migration and Foreigners, for each of the petitioners.
• To include in the application a contact address and telephone number.
• Authenticated power of attorney expressing the general information of the legal proxy with which he/she is invested, his/her address and telephone number, fax or e-mail, if applicable;
• The applicant must submit a recent photograph of 6 centimeters high by 5 centimeters wide taken from the front, with the name of the applicant on the back.
• Certificate of criminal record from the country of origin and of last residence duly legalized;
• Original certification issued by the General Directorate of Criminal Investigation of not having any accusations against him/her or criminal record;
• Medical certificate not older than six months as of the date of presentation of the application;
• Duly authenticated photocopy of the passport;
• Work contract issued by the private company for which the foreigner will render his services, with their signatures duly authenticated by a Notary Public;
• Proof issued by the employer taking responsibility for the subsistence of the foreign worker during his stay and for the exit of the country at the expiration of the permit and to notify to the General Directorate the termination of the labor relationship, according to the established in the final paragraph of article 42 of the Regulation of the Law of Migration and Foreigners;
• Proof issued by the Secretary of State in the Office of Labor and Social Security that the employer complies with the provisions of article 137 of the Constitution of the Republic and article 11 of the Labor Code with respect to foreign workers;
• Accreditation of educational institutions or of professional or technical formation of the foreigner, properly authenticated, that the applicant possesses the capacity and the knowledge for the work that he/she will carry out;
• Photostat copy of the deed of incorporation of the company or declaration of sole trader, duly authenticated;
• Copy of the valid operation permit, authenticated by a notary public;
• Proof from the Executive Directorate of Income (DEI) of having initiated operations and of the commercial establishment being in operation;
• Statement of Results and General Balance authorized by a duly certified accountant, with its corresponding stamps and professional seal.
• All documents coming from abroad must be submitted duly legalized and those authorized in a foreign language must be officially translated by the Secretary of State in the Office of Foreign Affairs or in the Consulate of Honduras.

• Legal documents must be notarized and often officially translated
• Taxpayer RTN and municipal solvency required
• Barter permissible for agricultural labor compensation

Further Information For more information, or assistance with Honduras tax enquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.