Payroll in Uruguay: a guide for employers

Hiring staff in Uruguay means meeting monthly obligations before the Ministry of Labour and Social Security (MTSS), the Social Security Bank (BPS) and the tax authority (DGI). This guide explains what payroll in Uruguay involves, how much each party contributes, how IRPF is withheld, when the aguinaldo and holiday bonus are paid, which records must be kept and what a dismissal costs, with foreign-owned companies hiring their first team in the country particularly in mind.

What payroll in Uruguay involves

Every month, whoever runs payroll has to:

1. Collect the month’s changes: hires, leavers, overtime, absences, leave, medical certificates and variable items.
2. Calculate each employee’s gross pay, never below the minimum rate for their category.
3. Deduct employee contributions to BPS and IRPF withholding to arrive at net pay.
4. Calculate employer contributions, an additional cost for the company.
5. Issue payslips and pay by bank transfer.
6. File the payroll return with BPS and pay contributions and withheld IRPF by the deadline.
7. Accrue the aguinaldo, leave and holiday bonus, which build up month by month even though they are paid later.

Main guide: accounting services in Uruguay, where we explain how we coordinate bookkeeping, taxes and BPS payroll.

Before the first payday: registering as an employer

A company cannot run payroll unless it is first registered as a taxpayer with DGI and BPS and recorded as a company with employees. Before the first hire it needs:

• DGI and BPS registration under the correct activity, since it determines the wage council group and the contribution regime.
• Workplace accident insurance with the State Insurance Bank (BSE), mandatory for every employer.
• Registration of each employee in the BPS system before they start work, with category, pay and working hours.
• An account to pay salaries, since the financial inclusion law made electronic payment of wages the rule.

If the company has not yet been set up, the first step is choosing the legal form; see types of companies in Uruguay. If foreign nationals will be hired, see also requirements to work in Uruguay as a foreigner.

Wage councils and minimum rates (laudos)

In Uruguay, minimum wages for almost all private activity are set through tripartite collective bargaining (government, employers and workers) in wage councils. Activities are divided into groups and subgroups, each with its own agreement or decision, which sets:

• Minimum rates by job category, below which the company cannot pay.
• Periodic wage increases, which also apply to those earning above the minimum when the agreement says so.
• Additional benefits depending on the sector, such as seniority or attendance bonuses.

The first step to running payroll correctly is knowing the company’s group and subgroup and each employee’s category. For the general framework of employment relationships, see labor regime in Uruguay.

BPS contributions: employee and employer

Social security contributions are calculated on gross pay. For most industry and commerce companies, the rates published by BPS are:

Item	Employee contribution	Employer contribution
Pension (jubilatorio)	15%	7.5%
FONASA (health)	3% to 8%, depending on income and family	5% + health-plan top-up
Labour Retraining Fund (FRL)	0.10%	0.10%
Labour Claims Guarantee Fund (FGCL)	None	0.025%

How the employee’s FONASA rate varies

The employee’s FONASA contribution depends on whether pay exceeds 2.5 BPC a month and whether the employee has dependent children or a spouse or partner without their own coverage. It ranges from 3% (no spouse, up to 2.5 BPC) to 8% (children and spouse, above 2.5 BPC). Each employee’s family situation must therefore be kept up to date.

Health-plan top-up and pension ceiling

When a low-paid employee’s contribution does not cover the fee of their health provider, the employer pays the difference: the complemento de cuota mutual. At the other end, pension contributions have a ceiling on pay that BPS updates periodically; no pension contribution is due above that amount.

IRPF withholding on salaries

Salaries are employment income under IRPF category II. The employer acts as withholding agent: every month it calculates the tax, deducts it from the payslip and pays it over with the payroll. Key points:

• Employees whose gross income exceeds 7 BPC a month are within scope; the tax is calculated in progressive bands expressed in BPC.
• Deductions (employee contributions, FONASA, dependent children, among others) reduce the tax at a rate of 14% if annual gross income excluding aguinaldo and holiday bonus does not exceed 180 BPC, and 8% if it does.
• Employees must give the employer form 3100 with their deductions when they join and whenever their details change.
• Anyone with several employers whose combined income exceeds 7 BPC must report it on that form so the tax-free threshold is not applied in the withholding.
• In certain cases the employee must file an annual tax return with DGI.

The bands and the BPC value change every year, so payroll software must be updated in January. For the company’s other taxes, see company tax obligations in Uruguay.

Aguinaldo (13th-month pay)

The aguinaldo, or annual supplementary salary, equals one twelfth of total cash pay received in the twelve months from 1 December to 30 November. It is paid in two instalments:

Instalment	Period covered	When it is paid
First	1 December to 31 May	In June
Second	1 June to 30 November	In December, before the 24th

The law sets payment within the ten days before 24 December, and the Executive usually sets the deadline for each instalment by decree, so it should be checked every year. The aguinaldo is subject to social security contributions and IRPF withholding. An employee who leaves earlier receives the proportional amount in their final settlement.

Annual leave and holiday bonus

Annual leave

Every private-sector employee is entitled to at least 20 days of paid annual leave, earned through work in the calendar year and taken the following year. From the fifth year of service with the same company, one extra day is added every four years. If the employee did not work the full year, leave accrues proportionally.

Holiday bonus (salario vacacional)

Besides being paid for the leave days, the employee receives the salario vacacional: at least 100% of the net daily wage for the leave days. It is paid before the leave begins and in proportion to the days taken. Because it is based on the net daily wage, that is, the leave wage less statutory deductions, calculating it on gross pay is a common mistake.

Work register, payslips and payroll return

Unified work register (planilla de trabajo unificada)

Since 2017 MTSS and BPS have used a single work register: data on the company and each employee (category, pay, working hours and rest days, wage council group) is entered in the BPS system and has the status of a sworn statement. It must be kept up to date with every hire, departure or change in conditions, and it is the first thing a labour inspection checks.

Payslips

Every payment must come with a payslip showing the period, gross pay, each pay item (overtime, bonuses, leave), each deduction (contributions, IRPF, court-ordered deductions) and net pay. Paying by bank transfer does not remove the obligation to issue one. The signed payslip, or its electronic record, is proof of payment if a claim arises.

BPS payroll return and deadlines

Companies with employees file a monthly named payroll return (declaración nominada) showing what was paid to each employee, and pay contributions and withheld IRPF the following month. BPS publishes an annual calendar of deadlines split by the last digit of the company number. Late filing or payment triggers fines and surcharges, and a company with arrears cannot obtain the BPS certificado común (clearance certificate), needed for many procedures.

Termination and dismissal

When employment ends, by resignation or dismissal, the company must pay the final settlement, which includes pay for days worked, accrued unused leave, the corresponding holiday bonus and the proportional aguinaldo. The departure must also be recorded with BPS.

Severance pay

If the company dismisses the employee, standard severance is added to the above:

• Monthly-paid staff: one month’s pay for each year or fraction of a year of service, capped at six months.
• Daily-paid staff: if they reach at least 240 working days a year, 25 daily wages per year of work, with the same cap; if they worked more than 100 but fewer than 240 days in the year, partial severance of two daily wages for every 25 worked.
• Serious misconduct (notoria mala conducta): no severance is due, but the employer bears the burden of proof.

There are special dismissal cases with higher severance, for example during pregnancy or on return after illness or a workplace accident.

Common payroll mistakes

• Wrong category or group: the company pays below the minimum rate without realising it and claimable differences pile up.
• Late BPS registration: employees must be registered before they start, even on probation.
• Overtime without premium: on working days it carries a 100% premium, and on rest days or public holidays the premium is higher.
• Paying the holiday bonus after the leave or calculating it on gross pay.
• Treating an employee as a contractor: where there are set hours, subordination and exclusivity, BPS and the courts can reclassify the relationship with back contributions.
• Not accruing the aguinaldo and leave, which causes cash surprises in June and December.

For companies whose owners live abroad, a common option is to delegate the whole process to a local firm; see accounting outsourcing in Uruguay.

Frequently asked questions

Payroll with GlobalTax

At GlobalTax we run payroll, file the payroll return with BPS and coordinate employment matters with the company’s accounting and taxes. Find out more on our accounting services page.