Puerto Rico is a Caribbean island and unincorporated territory of the United States. Puerto Ricans have been considered U.S. citizens since 1917, and can move freely between the island and the US mainland.

However, since they are residents of an unincorporated territory, American citizens of Puerto Rico do not vote for the president or vice president, and generally do not pay federal income tax. Puerto Rico is considered a developed jurisdiction with an advanced, high-income economy.

The minimum wage in Puerto Rico is USD 8.50 per hour in 2022, and will increase to USD 9.50 per hour in July 2023. A standard workweek is 40 hours at 8 hours per day. Overtime work is regulated by the employment contract or collective agreement.

Parental Leave

Pregnant employees are entitled to 8 weeks of maternity leave, usually split as 4 weeks before the birth and 4 weeks after. Fathers who work in the private sector can choose to take 6 months of unpaid paternity leave. Adoptive parents are entitled to maternity leave as well.

Sick Leave

Employees in Puerto Rico are entitled to sick leave, accrued at 1 day per month for 12 days per year.

Paid Leave

Puerto Rico has 18 public holidays, and employees are entitled to annual paid time off (PTO). The amount of paid time off is accrued based on how long the employee has worked at the company:

• 0-1 years = 0.5 days of PTO accrued per month
• 2-5 years = 0.75 days of PTO accrued per month
• 6-15 years = 1 days of PTO accrued per month
• 15+ years = 1.25 days of PTO accrued per month

Process

The termination process varies based on the employment contract or collective agreement and the reason for termination. Employers must have just cause to terminate an employee based on their conduct or behavior.

Notice Period

Notice periods are not mandatory in Puerto Rico.

Severance Pay

There is no severance pay if there is “just cause” for termination.  If there is no “just cause” the severance pay is dependent on the seniority of the employee as follows:

• If the termination occurs within the first five years; two months’ pay is required
• Within 5-15 years of employment; three months’ pay is required
• After 15 years of employment; three months’ pay is required

It is mandatory to pay out 13th-month salary bonuses in Puerto Rico, equal to 2% of the employees’ wages (not more than USD 600) at the end of the year.