Ecuador adds two extra salaries, a reserve fund and an uncapped share of company profit to every payroll. Here are the 2026 numbers on one salary, how the profit share works, what dismissal costs, and how Paraguay compares.
Ecuadorian payroll looks moderate at first: employer social security is 12.15%. Then come the 13th and 14th salaries, a reserve fund of one month’s pay a year from the second year, and the rule that sets Ecuador apart: 15% of the company’s profit belongs to its workers. From year two, an employee costs about 31% on top of salary before the profit share.
This guide works through one US$2,000 salary on both sides, explains the profit share and dismissal costs, and compares the same hire in Paraguay.
Minimum wage
US$482 a month from 1 January 2026 (US$470 in 2025).
Hours
8 a day, 40 a week. Overtime +50% (until midnight) or +100% (night, weekends).
Social security
Employer 12.15%, employee 9.45%, paid to the IESS within 15 days after the month.
Vacation
15 days a year, plus one day per year after five years, up to 15 extra.
Probation
Up to 90 days in an indefinite contract.
Law and practice: Ministerial Agreement MDT-2025-195 (minimum wage 2026); PwC Worldwide Tax Summaries, reviewed July 2026 (contribution rates); Labour Code, art. 55 (overtime).
| Employer cost, US$2,000 gross a month | Monthly | Share of gross |
|---|---|---|
| Salary | 2,000.00 | 100% |
| Social security (IESS 11.15% + 0.5% + 0.5%) | 243.00 | 12.15% |
| 13th salary (décimo tercero), 1/12 of pay | 166.67 | 8.33% |
| 14th salary (décimo cuarto), one basic wage a year | 40.17 | 2.0% |
| Total in year one | 2,449.84 | 122.5% |
| Reserve fund (fondos de reserva), from month 13 | 166.60 | 8.33% |
| Total from year two | 2,616.44 | 130.8% |
| Plus: 15% of company profit shared among staff | Depends on profit |
| Employee side, US$2,000 gross | Monthly |
|---|---|
| Social security (9.45%) | −189.00 |
| Income tax withheld, 2026 table, no expense projection | −68.02 |
| Take-home pay | about 1,743 (87%) |
| With personal expenses projected (tax credit up to US$1,035 a year) | about 1,811 |
| Plus the décimos and, from year two, the reserve fund — all tax-free |
The 13th and 14th salaries are now paid monthly by default; an employee can ask in the first half of January to receive them as lump sums instead. The reserve fund is paid monthly or deposited with the IESS, at the employee’s choice. Either way, the cost is the same.
Law and practice: 2026 income tax table, SRI Resolution NAC-DGERCGC25-00000043. Illustrative figures for a single employee with no dependants.
Every employer distributes 15% of its annual net profit to workers and former workers who worked during the year: 10% shared by days worked, whatever the salary, and 5% by the number of family dependants. It is calculated by 31 March and paid by 15 April. The share is deducted before corporate income tax.
No ceiling
A cap of 24 basic wages per worker, introduced in 2015, was struck down by the Constitutional Court in 2018.
Small teams, large profits
With five staff and US$100,000 of profit, each employee receives about US$2,000 from the 10% alone.
Outsourced staff
Workers of outsourcing companies share in the client company’s profit.
Related companies
The Labour Ministry can unify profit-sharing across companies in one value chain.
For a capital-light company with a few well-paid people, the profit share is often the largest single item after salaries. Put it in the model from the start.
Law and practice: Labour Code, art. 97 and art. 105; Constitutional Court ruling 002-18-SIN-CC of 21 March 2018.
Unjustified dismissal
Three months’ pay for up to three years of service; from three years, one month per year, up to 25.
Desahucio bonus
25% of the last monthly salary per year of service, on top.
Dismissal with cause (visto bueno)
Approved by the Labour Ministry; only pending pay is owed.
Resignation
15 days’ notice.
Fixed-term contracts were abolished in 2015. Short engagements use occasional (up to 90 days a year), eventual (up to 180 days) or specific-work contracts.
An employer of record can employ staff in Ecuador for you at roughly US$599–699 a month per employee at the main providers, plus setup and deposits. Note that the EOR’s own profit share applies, not yours. For teletrabajo, the employer provides equipment and must respect 12 consecutive hours of disconnection a day; contracts are registered with the Labour Ministry.
Law and practice: Ministerial Agreement MDT-2022-237 (teletrabajo). EOR list prices, October 2026.
| One employee at US$2,000 gross, 2026 | Ecuador | Paraguay |
|---|---|---|
| Employer social security | 12.15% | 16.5% (IPS) |
| Extra salaries | 13th and 14th | Aguinaldo (13th) |
| Reserve fund | 8.33% from year two | None |
| Profit share | 15% of company profit | None |
| Monthly employer cost | about US$2,616 from year two | about US$2,497 |
| Minimum wage | US$482 | Gs 3,044,000 (about US$500) |
| Weekly hours | 40 | 48 |
| Dismissal without cause | 3 months’ pay, or 1 month per year from year 3 (max 25), plus 25% per year | Notice plus 15 days’ pay per year |
The monthly figures are close; the difference is the profit share, the reserve fund and the 40-hour week. For a regional back office, Paraguay is usually the cheaper and simpler base. For a team serving Ecuadorian customers, the Ecuadorian contract is the honest option — see our SAS guide.
Law and practice: Paraguay: Decree 6225/2026 (minimum wage from 1 July 2026); IPS 16.5% employer, 9% employee.
US$482 a month from 1 January 2026.
About 22.5% on top of salary in the first year (12.15% social security plus the 13th and 14th salaries) and about 31% from the second year with the reserve fund, before the 15% profit share.
Employers distribute 15% of annual net profit to workers: 10% by days worked and 5% by family dependants, paid by 15 April. There is no cap.
The 13th salary is one twelfth of annual pay; the 14th is one basic wage a year (US$482 in 2026). Both are paid monthly unless the employee chooses to accumulate them.
For unjustified dismissal, three months’ pay up to three years of service, then one month per year up to 25, plus a desahucio bonus of 25% of monthly pay per year.
40 hours, 8 a day.
Monthly costs are similar for the same salary, but Ecuador adds the 15% profit share and a reserve fund, and has a 40-hour week against Paraguay’s 48.
The company your payroll will run on.
The same question on the Pacific coast.
Tell us the role, salary and where the person could sit. We compare Ecuador, Paraguay and EOR on real numbers — fixed quote within one business day.
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