Minimum Wage
Labour code defines minimum wage as the minimum remuneration that every worker is entitled for the services rendered in an ordinary working day, capable to ensure the satisfaction of the basic and vital needs of a family in the material, moral cultural order and in accordance with the cost of living in the different regions of the country. National Minimum Wage Commission periodically determines the minimum wage rate in accordance with the law. The minimum wage rate has been set differently for different sectors of economy. Minimum wage rate may also be set by collective agreement between the parties, provided that the wages cannot be lower than the minimum wage fixed by National Wage Commission. National Minimum Wage Commission, composed of representatives from worker, employer and government organizations (Ministry of Labour, Ministry of Industry & Commerce, Ministry of Finance, and Nicaraguan Central Bank), is charged with the responsibility of adjusting minimum wage rate. A resolution passed by the Commission has legal force once it is signed by representatives of workers, employers and Ministry of Labour.
Minimum wage should be sufficient enough to fulfill the basic needs of average workers and their families. Other factors that are considered while determining the minimum wage include cost of living (a representative basket of 53 food products, that fulfill the basic needs of workers and their families, is taken into account), level of wages in the country, social security benefits, economic development, productivity of the country and the inflation rate officially provided by the Nicaraguan Central Bank. The lowest minimum wage is in the agriculture sector while the highest is in the financial and insurance sector.
Minimum wage rates are adjusted every 6 months according to the particularities of each economic sector. The sectors include agriculture; fishing; mining and quarrying; manufacturing; micro and small cottage industry and national tourism; electricity, gas and water, trade, restaurants and hotels, transport, storage and communications; construction, financial institutions and insurance; social and personal community services; central and municipal Government.
This fixation is made per unit of time or per piece-rate, and may be calculated on hourly, daily, weekly, fortnightly or monthly basis.
Compliance with labour laws including minimum wage is ensured by the labour inspection system, i.e., the General Directorate of Labour Inspection. The Directorate may impose fines, depending on the seriousness of offence committed by the employer, ranging from five to twenty times the minimum wage rate for the slightest offences and forty to eighty times the minimum wage for most serious offences. In accordance with the minimum wage law, violation of minimum wage by employers will be punished by a minimum fine equivalent to 25% of the amount of payroll at the time of offence. Other than fine, workers also need to be paid their overdue wage by the employer.
Source: §82 of the Constitution of Nicaragua; §85 of the Labour Code 1996; §2, 4 & 8 of the Minimum Wages Act No. 625 of 2007; §57 of the Law No. 664 of 2008 on Labour Inspection
For updated minimum wage rates, please refer to the section on minimum wage.
Regular Pay
Labour Code defines wage as the remuneration which the employer shall pay to the employee by virtue of the employment contract or labour relation. Pay period can't exceed 07 days (one week) for workers and 15 days for employees.
Wages must be paid in legal tender (Cordoba) at the workplace, in compliance with the amount and date of payment as established in the labor agreement. Payment cycle varies for different types of workers, in the following manner:
- Manual workers (agricultural workers, construction workers, textile workers, etc.) are paid on weekly basis;
- Intellectual workers are paid fortnightly (every 15th day); and
- Domestic workers are paid monthly.
Government employees are paid on monthly basis to avoid the complexity in processing the payroll. In kind allowances or the compensation with goods or other means of payment are not permitted. However in some cases, such as for domestic workers or agricultural workers, in kind-allowances may be accepted as a part of the remuneration.
In the event of delayed payment of wages for reasons attributable to the employer, the employee may receive for each of the two weeks subsequent to the date of payment, a tenth of what was due per week until the actual pay day.
1. 13th Month (Christmas Bonus). Nicaraguan Labor Code, articles 93 to 97.
- Nature: This is a mandatory additional payment equivalent to one month's salary for each year worked.
- Payment Deadline:
- Must be paid no later than December 10 of each year.
- If the contract ends earlier (resignation, dismissal, termination), the worker is entitled to a proportional share of the 13th month.
- Calculation: The average of regular and extraordinary salaries (including overtime, commissions, permanent bonuses, etc.) received in the previous 12 months is taken.
- Protection: The Christmas bonus is non-attachable (it cannot be deducted or garnished, except for alimony).
2. 14th Month
Some companies, through collective bargaining agreements or voluntary benefits, may grant an additional bonus (sometimes called the "14th month" or "annual bonus"), but it is not required by law.
3. Other Mandatory Bonuses
In addition to the 13th month, workers in Nicaragua are entitled to:
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Annual Vacation (Art. 76 et seq. CT): 15 continuous days of paid vacation for every 6 months of effective work.
During the vacation, the regular salary plus an additional 25% is paid.
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Termination Compensation (Art. 45 et seq. CT): in cases of dismissal without just cause, compensation is payable based on seniority, in addition to the proportional bonus and outstanding vacation pay.
- Other benefits (according to collective bargaining agreements or internal policies):
- Productivity bonuses.
- School bonuses (support for supplies or tuition).
- Transportation or food bonuses.
Source: §86, 146 of the Labour Code 1996
