Guide to hire in Latam

Hire software developers: full time employee vs. contractors

We’re here to guide you through all the must-know details you can’t miss when you want to hire software developers for your workforce.


You may be familiar with the terms “full-time” or “part-time” employee, but did you know these titles are not referring exclusively to their work schedules? Each has its different characteristics based on labor and legal laws that companies need to abide by when adding to their teams.

When you hire software developers, you need to assess what works best for your company and learn the critical differences between hiring a full-time programmer or a part-time contractor.

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We’re here to guide you through all the must-know details you can’t miss when you want to hire software developers for your workforce.

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

Download complete Guide to Hire in Latam.

What's a Full-time employee?

When you hire software developers full-time, it entails they will 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 benefits when hiring them, even in a remote work setting. These benefits may vary depending on state laws, but the employee will surely expect to receive them. Some of the more common benefits include paid vacation, bonuses, and in some cases, health care for the employee.

When a company pays its full-time employees, it needs to 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.

Another thing to consider when hiring a full-time employee is that when they exit the company they work for, they sometimes receive compensation when doing so. Depending on how they exit 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?

When you hire part-time employees or contractors, it entails a limited working agreement with your company. 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 pretty flexible when hiring contractors 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, benefits are not guaranteed for contractors, but they might be offered to the developer in some cases. This depends entirely on what sort of working agreement takes place when hired.

Looking to add contractors to your team?  Start Hiring Now

 

Schedules for full-time work vs. contractor work

There is no universal standard for the number of hours that define 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 on which 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 and when they do their tasks. 

 

Types of Contracts

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:

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 salary movements.

Legally not obligated to pay working taxes.

Benefits Employees expect multiple benefits when legally hired.

Without benefits, 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.

 

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. 

 

Brazil 🇧🇷

  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.

Benefits

Common to offer meal vouchers and healthcare.

Benefits could be negotiated under contract.

Tax Treatment

Must comply with tax income to the government.

Must verify taxes with the government as well.

 

Mexico 🇲🇽

  Employee Contractor
Benefits Employees expect full benefits when hired.

Under Mexican labor laws, you must be a full-time employee. 

Vacation Paid Annual Leave.

Most working benefits would apply.

Termination

Termination of contract entitles an employee 3-month pay plus yearly benefits.

Must comply with 3-month pay plus benefits.

Tax Treatment Employee’s salary is subject to income tax. Must comply with tax income laws when hiring.

Want to learn more about LATAM developers? Check our very own Guide to Hire in LATAM to find out everything you need to know to find amazing software talent. 

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