With the deepening of globalization, when enterprises expand their business in multiple countries, cross-border labor compliance has become one of the most complex and severe challenges. To help enterprises systematically address this issue, we have collaborated with top labor lawyers from over 50 major jurisdictions worldwide (all recommended by Chambers, The Legal 500, or equivalent institutions) to jointly compile a Chinese-English labor & employment compliance guide exceeding 1 million words, and we will continuously update relevant key points.

his article publishes the key points of labor & employment compliance by September 2025 in Uruguay.

01 Overview of the Labor Law System

1.Legal System

Uruguay operates under a civil law system.

2.Resources and Agencies

In Uruguay there is no Labour Code or General Labour Law. Labour relations and employment and work conditions are regulated by numerous laws and decrees which have not been incorporated to this date in one single code or general Law.

02 Employment Qualifications and Classification

1.Employment Age

In Uruguay, the minimum legal age for employment is 15 years. Anyone under 18 must have a work permit issued by the Instituto del Niño y Adolescente del Uruguay (INAU). Employment cannot interfere with compulsory education and parental consent is required for minors under 18.

2.Qualifications for Employment

Foreign businesses cannot directly hire employees in Uruguay without establishing a local legal presence. To employ staff directly, the company must register a local entity such as a subsidiary, branch, or representative office. This process includes obtaining a taxpayer ID (RUT) from the Dirección General Impositiva (DGI), registering with the Banco de Previsión Social (BPS) for social security, and registering with the Ministry of Labor and Social Security (MTSS). A local bank account is also required.

3.Classification of Employment

Uruguay’s labor framework primarily distinguishes between employees and independent contractors. Employees work under subordination to the employer and are entitled to statutory benefits such as minimum wage, paid leave, social security, and severance. Independent contractors operate autonomously under civil or commercial law, invoice for services, and bear their own tax and social security obligations.

4.Foreign Workers

Foreign workers enjoy the same rights and duties as any national worker to be hired by an employer. In order to start working, the foreign worker must apply for certain categories of authorizations, depending on their nationality, term they will be working in our country, and others (Temporary identity sheet, temporary residence or definitive residence).

03 Recruitment and Employment Contracts

1.Background Examination

Employers in Uruguay may conduct background checks on job applicants, but these must comply with the Data Protection Law and respect privacy and anti-discrimination principles. Checks must be relevant to the position and require prior disclosure and written consent from the candidate. The same rules apply whether the employer conducts the check directly or through a third party.

2.Contract Types

In general terms no specific formalities must be followed to execute a labour contract. Parties may enter into labour relations through a written or oral agreement. Signing a written agreement is not compulsory and does not carry any penalties.

3.Probationary Period

It is valid to establish a probationary period, for a maximum of 90 days. The main consequence of this modality is that, if the employer terminates the labour relation during probationary period, the employee will not be entitled to receive the indemnity dismissal.

04 Working Standards

1.Remuneration and Statutory Benefits

The typical remuneration structure in Uruguay consists of a fixed monthly base salary, although in some sectors of activity (such as construction, among others), daily wages are the usual form of payment.

2.Social Security and Employment Taxes

Salaries are taxed by Social Security Contributions for “retirement purposes” of the employee, as well as taxes such as personal income tax.

It should be noted that amounts paid by the employees as Social Security Contributions and expenses incurred related to housing, education and health care for each child in charge of the employee may be deducted for the purpose of calculating personal income tax, according to certain fixed scale rates.

3.Working Hours

Employees have a double limitation (weekly and daily) on the total number of hours they can work: 8 hours a day and 44 or 48 hours a week. 48-hour limit applies to industry sector, whereas 44-hour limit applies to commerce sector.

4.Rest and Leave

Depending on the activity, employees must be granted at least one full day or one and a half days of rest per week. Employees cannot be compelled to work on weekends or on their respective day off. Weekend or day off work is paid as follows: regular time with 100% surcharge and "over time" with 150% surcharge.

05 Occupational Health and Special Protection

Uruguay has a comprehensive legal framework to ensure occupational health and safety. Employers are required to maintain a safe and healthy work environment by conducting risk assessments, implementing preventive measures, providing personal protective equipment, and delivering regular training on workplace hazards and emergency procedures.

06 Personal Information and Privacy

1.General Rules

Uruguay regulates personal data through Personal Data Protection Act, which applies to employment relationships. Employers act as data controllers and must obtain informed consent for processing personal and sensitive data, collect only what is necessary, and implement security measures.

2.Transnational Transfer

Uruguay’s Personal Data Protection Act restricts international transfers of personal data, including employee information, unless the destination country provides an adequate level of protection recognized by the Uruguayan data authority (URCDP).

07 Anti-Discrimination and Anti-Harassment

1.General Rules

Uruguay has a comprehensive legal framework prohibiting discrimination and harassment in the workplace. Employees who experience discrimination or harassment may file complaints with the MTSS.

2.Protective Characters

Relevant laws prohibit discrimination and harassment based on a wide range of protective characteristics, including race, skin color, gender, religion, national or ethnic origin, disability, aesthetic appearance, sexual orientation, gender identity, union affiliation, and political opinion.

08 Internal Policies

1.Applicability

Employers can manage employees through internal policies as long as these policies comply with labour laws and collective agreements. Such policies typically cover workplace conduct, disciplinary rules, health and safety, and operational procedures. They apply to all employees under an employment relationship, although senior management may have individualized terms that prevail over general rules.

2.Validity

Internal employment policies do not require prior approval from employees, trade unions, or government authorities to be valid, as long as they comply with labor laws and any applicable collective bargaining agreements.

3.Whistleblowing

Uruguay does not currently have a dedicated whistleblower protection law for the private sector. Instead, protections are derived from general labor law principles and sector-specific regulations, particularly those addressing anti-corruption and public administration integrity.

09 Transactions

In Uruguay, employment contracts generally continue without interruption after a M&A or equity transfer, as the employing entity remains the same. Employees retain their positions, remuneration, benefits, and seniority, and ownership change alone is not a valid reason for termination.

10 Termination of Employment

1.Termination Grounds

Employers have the right to dismiss employees at any time without need of any justification or motive.

Every time an employer decides to dismiss an employee (either with or without motive) the employer must pay the employee a dismissal indemnity with the only exception of those cases in which the employee has incurred in notorious misbehavior ("notoria mala conducta").

2.Termination Procedure

Unless defined in the labour contract, there is no minimum legal notice period required to terminate employment.

3.Termination Protection

Uruguay does not follow an at-will employment system. Employers can terminate employees without just cause, but they must pay severance pay. Termination with just cause (under notorious misbehaviour) requires strong evidence and procedural fairness; in such cases, no severance is owed.

4.Severance and Compensation

Financial compensation for termination of employment includes the payment of all legal obligations and also could include contractual obligations when stipulated in the employment agreement or companies’ policies.

5.Mass termination and Layoffs

Uruguayan labor law does not establish a specific statutory regime for mass termination. There is no legal requirement for prior government authorization or formal consultation with unions before implementing mass layoffs in the private sector, unless it has been agreed in a collective agreement a specific procedure.

11 Confidentiality, Non-Compete, and Non-Solicitation

1.Confidentiality

Confidentiality agreements are not mandatory, but they are widely used as a best practice, particularly for roles that handle sensitive business information such as executives, IT staff, and employees with access to trade secrets or client data. Although confidentiality obligations are generally implied during employment, formal agreements provide stronger legal protection and clarity.

2.Non-Compete and Non-Solicitation

Non-compete clauses are permissible under Uruguayan law, but enforceability depends on reasonableness and proportionality.

12 Work Representation and Trade Unions

1.Work Representation

Uruguayan labor law does not mandate the creation of works councils or employee representatives within companies, but it strongly protects freedom of association and collective representation. Employees are free to organize and elect representatives, and these representatives often play a role in collective bargaining and workplace negotiations.

2.Trade Unions

Trade unions in Uruguay operate under a system of free association and are highly influential. The union movement is centralized under the PIT-CNT (Plenario Intersindical de Trabajadores – Convención Nacional de Trabajadores), which brings together most industrial unions. Unions have the right to organize, bargain collectively, and call strikes.

13 Dispute Resolution

1.Procedures & Enforcement

The employee has a period of one year—counted from the termination of the employment relationship—to summon the company to a mandatory preliminary conciliation hearing before the Ministry of Labour. Then, he/she has one year from the request for preliminary conciliation to file a claim before the Court, unless a settlement has been reached with the employer before the Ministry of Labour.

2.Waiver & Enforcement

Employees cannot waive statutory labor rights, as these are considered minimum protections under the law and labour general principles, and any agreement to the contrary is null.

14 Others

1.Latest Development & Trends

Uruguay presents a stable and investor-friendly environment. Despite the change of government in March 2025, no major legislative changes are expected in terms of labour or commercial issues affecting investors. The current government shows no signs of intending to increase the burden on private sector, with the aim of maintaining investment.

2.Cultural and Religious Considerations

Uruguay is a country with a strong democratic tradition and culture, serving as a reference for solid and stable democracy in Latin America and around the world. There is a deep respect for the rules and legal certainty, which is a very important aspect for those wishing to invest in the country.

* To avoid ambiguity, this article should not be regarded as legal advice.

Authors

As a senior associate in the Labor and Social Security Department of Hughes & Hughes, Ignacio Ulery provides comprehensive advice on labor matters to the largest employers in the chemical, forestry and commercial industries, among others. His advice covers both judicial and extrajudicial matters. He defends our clients in labor lawsuits, as well as provides preventive advice in relation to the application of good practices in labor relations. He also participates in all labor aspects related to legal audits and the installation of companies. This includes advising on our labor regime and the preparation of employment contracts, policies and protocols.

Translator

Zhou Hao, Master of Laws, Associate at Anli Partners. Areas of expertise: Labor Law, Dispute Resolution, ESG Compliance.