The default and most common employment relationship in Puerto Rico. It has no fixed end date and, once the probationary period ends, may only be terminated for 'just cause' under Act 80 of 1976 (as currently in force) without triggering statutory severance; termination without just cause requires payment of the Act 80 severance formula.
Fixed-term/project contracts are allowed for genuinely temporary, seasonal, or specific-project work and end automatically on the agreed date without triggering Act 80 severance. If a role is in fact permanent in nature, or fixed-term contracts are renewed repeatedly without legitimate business justification, courts and the Department of Labor may recharacterize the relationship as indefinite, restoring just-cause and severance protections.
The standard workday is 8 hours and the standard workweek is 40 hours. Non-exempt employees who work beyond 8 hours in a day or 40 hours in a week are entitled to overtime pay at 1.5x their regular rate; work on the seventh consecutive day in a workweek must be paid at double time. A meal period of no less than one hour (which can be reduced to 30 minutes by mutual agreement in some cases) is required, generally to be taken between the 3rd and 6th hour of the shift.
Under Act 4-2017's (currently reinstated) framework, employees hired on or after January 26, 2017 are presumed to be in a probationary period for up to 9 months (non-exempt) or up to 12 months (exempt), unless a shorter period is agreed in writing. During probation, employment can generally be ended by either party without triggering Act 80 just-cause protections or severance.
Puerto Rico mandates an annual Christmas bonus for eligible private-sector employees, paid between November 15 and December 15. Its rules have had a genuinely confusing recent history: Act 41-2022 (June 2022) tried to significantly rework/reduce these obligations (changing hour thresholds and percentage/cap tiers). However, the U.S. District Court for Puerto Rico declared Act 41-2022 null and void ab initio on March 3, 2023, on PROMESA fiscal-oversight grounds (the Governor failed to certify the law's consistency with the 2022 Fiscal Plan, which itself barred rolling back the 2017 labor reform). That ruling restored Act 4-2017's ORIGINAL Christmas bonus formula, which remains the current, unchanged law through 2026: (1) Employees hired BEFORE January 26, 2017 who worked 700+ hours in the Oct 1-Sept 30 reference year: 6% of up to $10,000 in wages (max $600 bonus) if the employer has more than 15 employees, or 3% of up to $10,000 in wages (max $300) if the employer has 15 or fewer employees. (2) Employees hired ON OR AFTER January 26, 2017 who worked 1,350+ hours in the reference year: 2% of wages, capped at $600 (employers with more than 20 employees) or $300 (employers with 20 or fewer employees); a first-year employee's bonus is capped at 50% of the otherwise-applicable amount. An employer's total bonus obligation is capped at 15% of its annual net income, and employers with insufficient profits may apply to the PR Department of Labor for a full or partial exemption (certified financial statements due by ~Dec 1). Late payment penalties (50%-100% of the amount owed) apply.
Puerto Rico does not generally regulate private-sector job titles beyond standard anti-discrimination and (for certain licensed professions such as law, medicine, engineering, and accounting) professional-licensing rules tied to the title used. Employers otherwise have discretion in title assignment; titles do not by themselves determine exempt/non-exempt overtime status, which instead depends on actual duties and salary level.
Approximate statutory employer add-ons as % of gross salary (subject to wage-base caps noted): Federal Social Security (OASDI) 6.2% (2026 wage base US$184,500) + Federal Medicare (HI) 1.45% (no cap) + PR Unemployment Insurance/SUTA 1.2%-5.4%, new-employer rate 2.8% (2026 wage base US$7,000) + PR Non-Occupational Disability Insurance/SINOT 0.3% employer share (2026 wage base US$9,000) + PR Workers' Compensation/CFSE, which varies by industry risk classification (roughly 0.5%-5%+, averaging ~1.5%-2% for office-type roles). Using new-employer/average-risk figures: 6.2 + 1.45 + 2.8 + 0.3 + ~1.55 ≈ 12.3% of gross salary; the total can run materially higher for hazardous-occupation CFSE classes or experienced employers at the top of the SUTA range, and lower in effective terms for salaries well above the SUTA/SINOT wage-base caps. A small, separate Chauffeur's Social Security assessment applies only to employees who drive as part of their job.
Approximate statutory employee withholdings as % of gross salary: Federal Social Security (OASDI) 6.2% (2026 wage base US$184,500) + Federal Medicare (HI) 1.45% (plus an extra 0.9% Additional Medicare Tax on wages above US$200,000, not matched by the employer) + PR Non-Occupational Disability Insurance/SINOT employee share 0.3% (2026 wage base US$9,000). Total ≈ 6.2 + 1.45 + 0.3 = 7.95% of gross salary (up to the respective wage-base caps).
In addition to statutory leave, employees are entitled to the following statutory benefits:
Puerto Rico employees and employers are subject to the U.S. federal Social Security and Medicare system (FICA) in addition to Puerto Rico's own non-occupational disability insurance (SINOT).
Workers' compensation in Puerto Rico is administered exclusively through the state-run Corporación del Fondo del Seguro del Estado (CFSE) — private workers' comp insurance is not permitted.
Puerto Rico does not require severance for ordinary contract expiration or a just-cause dismissal. Where an indefinite-term employee (past probation) is dismissed without just cause, Act 80 of 1976 (as currently in force, following the 2023 nullification of Act 41-2022's amendments) requires a statutory severance payment (the "mesada"):
Puerto Rico has a mandatory annual Christmas bonus (not a 13th-month salary) under the Christmas Bonus Law (Act 148-1969, as amended by Act 4-2017), payable between November 15 and December 15 each year.
Legislative history, briefly: Act 41-2022 (June 2022) attempted to significantly rework and, in several respects, reduce these obligations. On March 3, 2023, the U.S. District Court for Puerto Rico declared Act 41-2022 null and void ab initio on PROMESA fiscal-oversight grounds (failure to certify consistency with the 2022 Fiscal Plan, which barred repealing the 2017 labor reform). This restored Act 4-2017's original bonus framework, which remains the governing law through 2026.
Current (2026) rules:
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Your employee's hours, time off, holidays, bonuses, and commissions are automatically calculated into payroll. RemoFirst will invoice you in either US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), Australian Dollars (AUD), or Singapore Dollars (SGD) around the 15th of each month to make sure your employees are paid on time. To make it even easier, you can summarize your entire global team's salaries to aggregate them into one payment (instead of many individual payments).
Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.
Whenever the employee or employer has a question about, or anything else related to international employment, they can speak with our customer support team to get answers from our team of experts.
