Hiring at a Glance

Honduras is a Central American hiring market where compliance is anchored in a prescriptive Labour Code and a payroll system built around monthly statutory deductions. Employment is governed primarily by the Código de Trabajo de Honduras (Decreto N.º 189/1959), which sets clear limits on working time and establishes minimum paid leave. For ordinary daytime work, the maximum is 8 hours/day and 44 hours/week (paid as the equivalent of 48 hours of salary), while night work is capped at 6 hours/day and 36 hours/week; “mixed” shifts have their own maximum of 7 hours/day and 42 hours/week.

Paid annual leave is also defined in the Labour Code: after one year of continuous service employees are entitled to 10 working days, rising to 12 days after 2 years, 15 days after 3 years, and 20 days after 4+ years.

On payroll, employers must withhold income tax for employees where applicable and remit social security and related employer contributions. Common recurring employer obligations include contributions to IHSS (social security), RAP (mandatory private contributions where applicable), and INFOP (training levy). PwC’s Honduras payroll tax summary outlines employer contributions such as employee-side IHSS components and employer levies including INFOP (1%) and RAP/FOSOVI (commonly 1.5% employer + 1.5% employee, subject to ceilings).  An EOR in Honduras assumes these employer registrations and monthly remittance mechanics, allowing foreign companies to hire locally without establishing a Honduran entity.

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Key characteristics of talent market

Honduras’ talent pool is strongest in Tegucigalpa and San Pedro Sula, with a meaningful concentration of bilingual service talent supporting BPO/shared services, alongside a growing base of IT and engineering professionals. Hiring is often commercially straightforward, but the operational “make-or-break” is payroll execution: correct classification of wage components, correct application of contribution ceilings where required, and consistent remittance discipline. Employers that underestimate month-to-month compliance (rather than recruitment itself) tend to experience the highest risk—especially when variable pay, overtime, or contractual allowances are introduced and not mapped cleanly into the taxable/contributory base.

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Most In-Demand Skills in 2026

Demand in Honduras skews toward export-linked services and operationally critical functions: bilingual customer operations, finance operations, and HR/payroll administration remain consistently needed, while technology roles are increasingly sought for nearshore delivery. In practice, the “hardest to fill” profiles are those combining technical capability with English fluency and process maturity—software developers with cloud and integrations experience, data and reporting specialists, cybersecurity/IT infrastructure, and operations leaders who can run regulated payroll and compliance workflows reliably. In industrial and logistics-linked sectors, maintenance, electrical/mechanical engineering, and process engineering remain structurally in demand.

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Top Universities Supplying Talent

Honduras’ graduate pipeline is dominated by a small number of institutions with national scale. Universidad Nacional Autónoma de Honduras (UNAH) is the country’s flagship public university and is regularly positioned as the leading national institution in research-linked rankings; UNAH itself reports it remains #1 in Honduras in the SCImago 2025 ranking context.  Private universities also supply a significant share of employable business and engineering talent for the BPO/tech ecosystem, particularly in Tegucigalpa and San Pedro Sula, where employers recruit directly for bilingual business services, IT, and engineering tracks.

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Salary Benchmarks for Roles

Compensation in Honduras is typically benchmarked in HNL and varies sharply by city, English proficiency, and whether the role supports international clients. For tech, location-based reporting from Prosfy shows a median software developer/engineer salary in Tegucigalpa of ~HNL 252,000/year (based on their dataset and confidence indicator).  Employer cost modeling sources that roll in statutory employer contributions commonly estimate that total employer cost runs meaningfully above gross salary once IHSS/RAP/INFOP items are included, particularly for formal, full-time roles.

The practical takeaway for budgeting is that Honduras can be cost-efficient for nearshore hiring, but the market rewards bilingual and internationally experienced talent with a clear premium—and those premiums must be modeled gross-to-net with the correct statutory overlays rather than treated as “all-in” salary numbers.

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Employer of Record vs Legal Entity Setup in Honduras

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To legally hire employees, a company must

A company hiring directly (without an EOR) must be able to operate as a registered employer and execute the statutory employment stack end-to-end. That includes issuing a compliant employment contract under the Labour Code framework, complying with maximum working time rules (including distinct caps for day, night, and mixed shifts), and administering statutory leave entitlements, including the minimum vacation ladder defined in Article 346.

On payroll, the employer must set up and maintain registrations and monthly remittances for social security and related funds. Where applicable, RAP’s mandatory “Planes Individuales Obligatorios” framework describes the 1.5% employee + 1.5% employer contribution construct and provides contribution ceilings by employer category.  Employers must also operate wage tax withholding for employees when the salary falls into taxable brackets and maintain defensible payroll records to support audits and disputes.

When hiring through an EOR, these employer registrations, contract issuance, and monthly filings are executed by the EOR as the legal employer.

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Cost of Entity Setup

Entity formation costs in Honduras vary based on legal form, local counsel, and banking requirements, but the material cost driver for foreign companies is not incorporation alone—it is ongoing compliance. Running a Honduran entity typically requires local accounting, tax filings, payroll processing, employer registrations, and ongoing labour-law administration (contracts, time/attendance evidence, and termination settlement math). Many companies therefore use an EOR until headcount and commercial commitment justify building an in-house compliance function and maintaining a permanent local structure.

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What Hiring Through an EOR Means in Honduras

An Employer of Record (EOR) in Honduras becomes the legal employer registered before the Servicio de Administración de Rentas (SAR) and the Honduran social security system (Instituto Hondureño de Seguridad Social – IHSS), while the employee works exclusively for your company. You manage the employee’s daily work and performance, but the EOR assumes all statutory employer obligations under Honduran law.

Employment in Honduras is governed primarily by:

• Código del Trabajo (Honduran Labour Code)
• Social Security Law (IHSS regulations)
• Income Tax Law
• Occupational Health and Safety Regulations
• Social Benefits Laws (13th and 14th month salary rules)

Foreign companies cannot legally employ workers in Honduras without:

• Registering a local legal entity or branch
• Obtaining a Honduran Tax ID (RTN)
• Registering with SAR
• Enrolling employees with IHSS
• Managing payroll tax and statutory social contributions

An EOR provides this full employer infrastructure without requiring you to establish a Honduran company.

An EOR in Honduras handles:

• Labour Code-compliant employment contracts (Spanish language required)
• Payroll processing in HNL
• Income tax withholding
• Social security contributions (IHSS)
• Mandatory 13th and 14th month salary payments
• Paid leave and public holiday compliance
• Overtime tracking
• Severance calculations and termination execution
• Labour inspection coordination
• Work permit and immigration support (if applicable)

This model is ideal for companies that want to hire in Honduras while avoiding direct exposure to local labour litigation and statutory risk.

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Risk Involved in Both Models

Honduras has strong statutory employee protections, particularly regarding severance, mandatory bonuses, and dismissal procedures. Labour enforcement is overseen by the Secretaría de Trabajo y Seguridad Social (STSS).

Key characteristics:

• Mandatory written employment contracts
• Strict severance entitlements
• Mandatory 13th and 14th month salary
• Social security enrollment requirements
• Formal dismissal procedures
• Active labour inspections

Compliance failures can result in:

• Fines from STSS
• Retroactive IHSS contributions
• Tax penalties from SAR
• Court-ordered severance increases
• Reinstatement claims

Termination disputes represent a significant employer risk in Honduras.

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EOR Vs. Entity: When to use What?

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Why an EOR Is the Most Efficient Way to Hire in Honduras

Honduras is a growing outsourcing and manufacturing destination, with activity in textiles, agribusiness, call centers, and nearshore services. However, employment is governed by mandatory benefits, statutory bonuses, and formal termination protections.

An EOR is not a payroll vendor. It is the legal employer recognized by Honduran authorities, responsible for:

• Labour Code compliance
• Social security reporting
• Payroll tax withholding
• Bonus and leave administration
• Termination execution

This allows foreign companies to operate in Honduras without assuming direct employer compliance liability.

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#1. EOR Manages Social Security Contributions (IHSS)

Employers in Honduras must register employees with IHSS and make statutory contributions.

Contributions fund:

• Healthcare coverage
• Maternity benefits
• Disability protection
• Workplace injury insurance

Employer and employee contributions apply based on salary thresholds.

Errors can trigger:

• IHSS audits
• Retroactive contribution demands
• Financial penalties
• Interest charges

An EOR ensures proper enrollment, calculation, and reporting.

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#2. EOR Handles Income Tax Withholding

Honduras applies progressive income tax rates.

The EOR ensures:

• Proper tax bracket application
• Monthly withholding compliance
• Annual reporting submissions
• Accurate payroll documentation

Incorrect withholding may result in:

• Tax audits by SAR
• Employer liability for unpaid tax
• Administrative fines

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#3. EOR Controls Mandatory Bonuses and Leave Compliance

Honduran law mandates:

• 13th month salary (Aguinaldo – paid in December)
• 14th month salary (paid mid-year)
• Paid annual leave (minimum 10 days, increasing with tenure)
• Paid public holidays
• Overtime premiums

Failure to comply may lead to:

• Wage claims
• Labour fines
• Employee disputes

An EOR ensures:

• Proper bonus accrual tracking
• Leave calculation
• Overtime documentation
• Payroll adjustment accuracy

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#4. EOR Minimizes Termination Risk

Termination in Honduras carries significant statutory severance exposure.

Requirements include:

• Valid legal grounds or payment of statutory severance
• Notice or payment in lieu
• Seniority-based severance calculations
• Final settlement documentation

Improper termination can result in:

• Court-ordered compensation
• Additional penalty payments
• Reinstatement claims

An EOR manages termination documentation and severance calculations to reduce litigation risk.

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EOR vs. PEO in Honduras: How to Decide the Right Hiring Model?

A PEO in Honduras does not replace the legal employer.

Under a PEO model:

• The client remains the legal employer
• The client must register with SAR and IHSS
• The client bears labour liability
• The client assumes severance exposure

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Payroll, Taxes, and Monthly Compliance

Monthly payroll compliance in Honduras involves (1) calculating gross pay including any variable components, (2) withholding employee deductions and applicable wage tax, and (3) remitting employer-side obligations to the relevant institutions. Honduras’ tax authority (SAR) updates income tax guidance regularly and maintains resources for withholding and calculation support; Deloitte reports SAR published a 2026 progressive table for individuals (ISR), noting automatic annual adjustments per Article 22 methodology and providing exemption thresholds and taxable bands.

For contributions, employer obligations often include IHSS-linked components and additional statutory levies. PwC’s Honduras payroll summary outlines typical payroll contributions and references ceilings for certain items, including RAP/FOSOVI (commonly 1.5% employer + 1.5% employee) and INFOP (1% employer levy).  RAP’s own guidance also frames the 1.5%/1.5% structure and provides ceiling references for categories such as companies with 10+ employees.

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Salary Structure: Where Most Compliance Issues Begin

In Honduras, payroll risk usually starts where the compensation structure becomes more complex than a fixed monthly wage. Common failure points are overtime and termination math. Working time limits differ by shift type, and anything exceeding the legal maximum is treated as overtime under the Labour Code framework—so employers must track hours defensibly, not informally.

Termination exposure is another major compliance hotspot. The Labour Code sets formal pre-notice (preaviso) windows based on service length (ranging from 24 hours for short service up to 2 months for longer tenures), and it defines auxilio de cesantía for unjustified dismissal or certain employer-initiated endings: 10 days’ salary (3–6 months), 20 days’ salary (6–12 months), and then one month of salary per year after one year, with a statutory cap noted in the Code text.  Errors here—wrong notice, wrong salary base, or misapplied caps—are exactly the kind of disputes that become expensive after the fact.

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What Monthly Payroll Operations Actually Involve

Monthly payroll in Honduras is a controlled workflow. Employers begin by validating each employee’s payable elements for the month (base wage, overtime, allowances, deductions). They then apply statutory rules: working-time compliance must be supported by time records (given the distinct day/night/mixed caps), vacation accrual must respect the Labour Code minimum ladder, and statutory deductions must be computed with the correct bases and ceilings where applicable.

Next, the employer processes withholding for ISR where the employee falls into taxable ranges, using the current SAR-aligned tables and guidance for the year.  Employer-side contributions and statutory levies (e.g., IHSS-linked items, RAP where applicable, and INFOP) are calculated and remitted, and payslips plus proof of payment records are retained for auditability.

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Step-by-Step Onboarding Process With an EOR in Honduras

Hiring in Honduras requires tax registration, social security enrollment, and strict statutory documentation.

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1. Verify EOR Registration with SAR

Confirm the EOR holds a valid RTN and tax registration.

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2. Confirm IHSS Enrollment Capability

Ensure the EOR is properly registered with social security authorities.

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3. Determine Contract Type

Honduras recognizes:

• Indefinite contracts
• Fixed-term contracts (limited scenarios)

Improper contract structuring may trigger liability.

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4. Validate Salary and Minimum Wage

EOR ensures:

• Compliance with national minimum wage
• Sector-specific wage scales (if applicable)

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5. Calculate Total Cost-to-Company

Includes:

• Employer IHSS contributions
• Mandatory 13th and 14th month salary accruals
• Severance exposure
• Payroll tax obligations

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6. Draft Labour Code-Compliant Contract

Contract must specify:

• Role and duties
• Work schedule
• Salary structure
• Bonus entitlements
• Termination conditions

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7. Register Employee with IHSS

Registration must occur upon employment commencement.

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8. Establish Payroll and Bonus Tracking

EOR sets up:

• Monthly payroll
• Aguinaldo accrual
• 14th month accrual
• Leave tracking

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9. Immigration Compliance (If Applicable)

For foreign nationals:

• Work authorization management
• Residence permit support

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10. Execute First Payroll

Includes:

• Salary payment
• Social security contributions
• Income tax reporting

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11. Ongoing Compliance Management

EOR oversees:

• Monthly tax filings
• Social security reporting
• Labour inspections
• Bonus payment scheduling

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12. Termination and Final Settlement Handling

EOR manages:

• Legal termination procedure
• Severance calculation
• Final settlement documentation
• Labour authority coordination

Most employer disputes in Honduras arise during termination and unpaid bonus claims.

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Build Your Honduras Team with Bolto EOR

Hiring in Honduras requires careful management of mandatory bonuses, social security contributions, and statutory severance formulas.

Bolto’s Employer of Record model absorbs:

• Labour Code complexity
• Social security compliance risk
• Payroll tax obligations
• Mandatory bonus administration
• Termination and litigation exposure

This allows you to expand into Honduras without establishing a local entity or inheriting direct employer liability.

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Full Legal Employer Coverage in Honduras

Bolto becomes the legal employer before:

• Servicio de Administración de Rentas (SAR)
• Instituto Hondureño de Seguridad Social (IHSS)
• Secretaría de Trabajo y Seguridad Social (STSS)
• Labour courts

Bolto manages:

• Employment contracts
• Payroll and statutory filings
• Social security reporting
• Labour inspection coordination
• Termination execution

You manage employee performance. Bolto manages legal risk.

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Built for Fast Market Entry and Flexible Exit

With Bolto EOR:

• Hire within weeks
• Avoid Honduran company registration
• Skip tax and IHSS setup complexities
• Exit without liquidation procedures

Transparent Cost Structure

Bolto provides:

• Clear statutory cost breakdowns
• Visibility into bonus and severance exposure
• Predictable EOR service fees
• No hidden compliance liabilities

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End-to-End Employee Lifecycle Management

Bolto manages:

• Contract drafting
• Payroll processing
• Social security and tax compliance
• Bonus and leave administration
• Termination handling

You never interact directly with Honduran labour authorities.

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Designed for Risk-Controlled Expansion in Honduras

Honduras enforces penalties for:

• Social security underpayment
• Failure to pay 13th or 14th month salary
• Improper termination
• Tax non-compliance

Bolto enables compliant hiring in Honduras while shielding your company from direct employer liability exposure.