Written and Revised by Sara Chaca, Attorney – Abogada
January 20th, 2020
As this article shall be a two to three pronged discussion regarding the various and intermingled aspects of, as the title states, “Ecuadorian Construction Contracts & Hiring Employees vs. Independent Contractors in Ecuador”, do please hold onto your hats, as this one may get a little blustery!
In the event that you “venture” to build, remodel or otherwise substantially alter/effect (including erect) an apartment, house or other type of structure in Ecuador, unless you personally are a seasoned Architect or General Contractor and well know how to obtain the required local permits so as to do all at self here in your city or town within Ecuador, you’ll probably need to select an Ecuadorian Builder, Constructor or even “jack of all trades” Handyman to get your project off the ground (mind the pun) and so naturally in such case an Ecuador Construction Contract should come to mind, so as to outline all of the matters that can or will be reasonably anticipated and prepared for. The first of these, which is paramount above all else, is whether or not you have vetted your prospective Builder in Ecuador, seen or toured one or more of their other sites of construction in Ecuador, and been able to verify that they are legitimate and not a fly by night one man show or shoddy operation. Beyond that point, you’ll want to make sure that you can communicate with your Ecuadorian Constructor, and so if they don’t speak much English and/or you don’t speak much Spanish, be sure to have a translator take part in any and all conversations you have with them. Notably, the all-important Construction Contract in Ecuador is par for the course, and not just a formality to be waived or yawned at. It’s absolutely vital that you and your Ecuadorian Construction Worker(s), even plain “John or Jane” Ecuadorian Handyman, have a written document that cites each party’s respective obligations, representations and warrants with respect to the amount of monies, timing and way of doing (or not doing) be plainly laid out so as to avoid problems or quarrels (whether of pen or of sword), so that in the end everyone gets what they signed on for, or at least can reliably and straightforwardly avenge any failures, frauds or substantial delays. For example, a tried and true one that comes to mind is a penalty clause for any lack of timely performance in the case of a failure by the Ecuadorian Contractor to honor deadlines for the timely completion of any or all of the building matters contemplated/hypothecated by virtue of your Construction Contract. And of course, usually your Contractor in Ecuador for any building or remodeling project will in fact (or at least customarily) be an Independent Contractor and NOT your Ecuadorian Employee, especially if they are one who as their day job or otherwise regularly constructs buildings in Ecuador and/or remodels existing Ecuadorian building structures. Which at that, now brings us to our next related yet separate topic, that being the differentiation of Employees in Ecuador vs. Ecuadorian Independent Contractors..
The issue of whether to contract Employees or Independent Contractors in Ecuador, is best described as a “mathematical, procedural and philosophical” balance. This is because, when determining which of the two options will work best for you, you’ll have to take into account the basic costs, governmental requirements and underlying politics of relations between owner(s), operator(s) and worker(s), respectively. While it can be less expensive to contract Ecuadorian Independent Contractors for purposes of any project or ongoing work relationship, by electing so you lose the ability to control or have a say as per any such person’s hours, protocol and general way of getting the work done. As well, the Ecuadorian Labor Ministry usually looks upon others with a jaundice eye if/when they attempt to classify persons as Independent Contractors, because they know and understand that this can (and often is) done so as to not have to pay Social Security (“IESS”), mandatory bonuses (such as the annually required year end “13th monthly salary”), provide paid holidays off and give severance to the Ecuadorian Worker in the event of any of unwinding of a genuine Employer/Employee relationship. The quintessential type relationship that most comes to mind as per the preceding sentence (and as a practical matter even if a foreigner doesn’t own or operate a business/company in Ecuador) is that of the Ecuadorian Housekeeper quandary, as unless your Housekeeper in Ecuador has their own RUC (that being an Ecuadorian Tax Identification Number issued by Ecuador’s Internal Revenue Service known as “SRI”) can provide you with “Facturas” (Ecuadorian Tax Receipts) each time they clean your abode, then technically that person is/will technically be your employee, even if on a part time basis rather than a full time one.
In conclusion, and with respect to the matters discussed herein this article, the issues of how and what your relationship will be/consist of with any Ecuadorian Workers and the way that each person feels about it in the end, will go a long distance in determining which option “will be best” for you to pursue, in conjunction with your aiming for a happy all around working relationship with your Ecuadorian Workers so as to “do your best” to avoid being sued, and consequently both you and them “feeling best” about each other as well as the mutually agreeable work situation entered into by both (or all) parties as a direct result.
Sara Chaca (Attorney – Abogada) is a seasoned Ecuadorian Lawyer, who principally serves Expats in making their moves to Ecuador, as well as for any legal issues that arise or become actionable for her Expat clients to undertake in their new lives here in her beautiful country. Sara resides in Cuenca with her family, which consists of her American husband and 2 daughters (as well as her parents and siblings), and when not working, she enjoys spending time with her family in Cuenca’s majestic Cajas Mountains and local parks & fairs of Cuenca, plus visiting the coast as well as the many gem towns of Ecuador. Sara’s personal email address is firstname.lastname@example.org and her law office’s fully informative website is www.ecuadorvisas.com for you to visit at any time of day or night – plus, her personal Ecuadorian cell phone number is 099-296-2065 and her Toll Free “800” phone number for US & Canadian callers is 1-(800)-655-1581. Sara has a less than 24 hour first response policy, in that if you email or call her, she WILL return your first email or first phone call in less than 24 hours (more typically in closer to 24 minutes). Most importantly, all first time consultations with Expats for any type Visa or Legal matter(s) are always FREE OF CHARGE.