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On March 18th, the Ministry of Labor – by Ministerial Agreement MDT-2021-087- set the living wage for 2021 and established the payment procedure.

  • Living wage

The value of the monthly living wage for 2021 was set at US$447.41.

  • Economic compensation calculation period

To calculate the economic compensation of the living wage, employer shall consider income received by the employee from January 1st to December 31st, 2021.If employees worked for a shorter period than the aforementioned, calculation will be proportional to the time worked.

  • Procedure to calculate economic compensation

The economic compensation to which workers whose monthly income is not less than the living wage are entitled, is the difference between the living wage for the year 2021 and the monthly income that the worker received during 2021.To calculate employee´s monthly income, the following amounts received during the calculation period must be added and divided by 12:

  • Salary
  • Thirteenth remuneration
  • Fourteenth remuneration
  • Commissions or incentives paid by the employer.
  • Profit sharing
  • Additional benefits paid in cash by the employer
  • Reserve funds

In the case of part-time employees, economic compensation will be calculated proportionally to the hours worked. The ordinary workday is 240 hours per month.

  • Payment deadline

The economic compensation shall be paid until March 31, 2022.

  • Registration before the Ministry of Labor

Once the employer registers the labor profit sharing form of year 2021, the Ministry of Labor’s platform will generate the payroll of the employees entitled to the economic compensation to reach the living wage.

Edmundo Ramos

Specialist in Labor Law
Edmundo Ramos, partner at CorralRosales
+593 2 2544144

Marta Villagómez

Specialist in Labor Law
Marta Villagómez, associate at  CorralRosales
+593 2 2544144

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NOTE: The above text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a consequence of acting or not acting on the basis of the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm in Quito / Guayaquil, Ecuador.