The Ministry of Labor set the living wage for the year 2020[1] at $ 447.41 (four hundred and forty-seven dollars and forty-one cents). The agreement mainly states:

  • Employers, companies, or individuals required to keep accounting records, who have generated profits in 2020 or who have paid an income tax advance payment lower than those profits, and who, during the fiscal year, did not pay their employees at least the amount of the living wage are obligated to pay an economic compensation to reach the living wage.
  • The compensation amount is the difference between the living wage and the monthly income that the employee or former employee received during 2020.
  • – To calculate the monthly income, the following must be added together:
    • Monthly salary or wage for 2020
    • Thirteenth salary, amount proportional to the time worked in 2020
    • Fourteenth salary, amount proportional to the time worked in 2020
    • Variable commissions paid in 2020
    • Profit sharing for the fiscal year 2019 and paid in 2020
    • Additional benefits received in cash in 2020
    • Reserve funds for 2020
  • The calculation of the living wage for employees or former employees who have worked under a permanent part-time contract will be calculated proportionally to the weekly working hours stipulated in the contract.
  • The economic compensation to reach the living wage must be paid by March 31, 2021. For this purpose, employers must allocate up to 100% of the profits for 2020. If the amount is not enough to cover the living wage, it must be distributed proportionally.
  • To calculate the compensation, an annual period of 360 days must be considered, including vacations. A working month is equivalent to 240 hours.
  • Employers have the obligation to pay the economic compensation to reach the living wage to each employee or former employee, for which they must exhaust all legal means, including communications addressed to the homes of employees or former employees, their e-mail addresses, and through at least two notices in various local or national media.

[1] Ministerial Agreement No. MDT-2021-087. Available at: https://www.trabajo.gob.ec/acuerdos-ministeriales/


Lexmundi Logo - PBP Law
Interlaw Logo - PBP Law
Club de Abogados Logo - PBP Law
Employment Law Alliance Logo - PBP Law
Insuralex Logo - PBP Law
Riela Logo - PBP Law
Lexmundi Logo - PBP Law
Interlaw Logo - PBP Law
Club de Abogados Logo - PBP Law
Employment Law Alliance Logo - PBP Law
Insuralex Logo - PBP Law
Riela Logo - PBP Law