Comprehensive Employment Law: Hiring Subsidies and Key Takeaways for Companies
On June 24, 2026, Parliament approved the Law for the Promotion of Dignified and Decent Work (Ley de Promoción del Trabajo Digno y Decente), which unifies and updates the subsidized employment schemes currently in force in Uruguay.
The approval of the new law known as the "Comprehensive Employment Law" (Ley de Empleo Integral) was promoted by the Executive Branch in March of this year. It consolidates into a single regulatory body the various employment promotion schemes that Uruguay has been applying since 2013 (Laws No. 19,133, 19,689, and 19,973), with the aim of updating them and improving their design based on accumulated experience.
Its purpose is to promote decent and dignified work for those groups facing the greatest obstacles or restrictions in accessing the labor market. It seeks to update and strengthen active employment policies, adapting the instruments to the current realities of the job market.
The Employment Policy Coordinating Commission (Comisión Coordinadora de Políticas de Empleo), created by Art. 401 of Law No. 20,446 under the scope of the MTSS (Ministry of Labor and Social Security), will be responsible for implementing the scheme.
Target Groups
The individuals who face the greatest obstacles and restrictions in accessing the labor market are those included in the following categories:
Youth between 15 and 29 years old.
People over 50 years old.
Women who are heads of single-parent households.
Afro-descendant individuals.
Transgender individuals.
People with disabilities.
Incarcerated individuals or those subject to alternative measures to deprivation of liberty.
Formerly incarcerated individuals (up to three years after their release).
The Subsidy Scheme
The main instrument is a subsidy on monthly remuneration, the percentages of which vary depending on the target group and, in some cases, the gender of the hired worker.
Unemployed Youth: The subsidy reaches up to 33% for women and up to 25% for men.
Socioeconomic Vulnerability: The percentages rise up to 66% and 50%, respectively.
Highest Cap (80%): Applies to transgender individuals, people with disabilities, or recently released individuals, with no gender distinction.
Key Limits & Deadlines: > * The benefit has a cap of 3.7 BPC (Contribution and Benefit Benefits) per worker.
Companies with more than 19 workers can access the subsidy for up to 12 months.
Smaller companies can extend the term to 18 months, utilizing a decreasing scheme starting from the second year.
The Executive Branch retains the authority to raise the percentages up to 80% in exceptional situations.
Hiring Quotas
The maximum quota of individuals that each company can hire under this law varies according to the total number of staff on their permanent payroll:
| Company Size (Permanent Staff) | Maximum Hiring Quota |
|---|---|
| Companies with no hired staff | Up to 1 person |
| Companies with 1 to 4 workers | Up to 50% of their workforce |
| Companies with 5 to 19 workers | Up to 40% of their workforce |
| Companies with 20 to 49 workers | Up to 25% of their workforce |
| Companies with 50 to 99 workers | Up to 20% of their workforce |
| Companies with more than 99 workers | Up to 15% of their workforce |
Specific conditions apply to worker cooperatives and social cooperatives. Additionally, there is a specific chapter dedicated to promoting the hiring of young people within the public sector.
Nature of the Employment Relationship
Hiring carried out under the protection of this law is covered by the benefits and protections established in current labor and social security regulations. The subsidy operates exclusively on the employer's cost.
The regulations establish specific contract terms (between 6 and 12 months) and a probation period (which cannot exceed 45 days). It dictates that if an employer dismisses a worker after the probation period has passed but before the scheduled contractual term is completed, a standard statutory severance pay (indemnización por despido tarifada) will apply.
Access Conditions
To join the scheme, companies must meet the following requirements:
Be up to date with their obligations before the BPS (Social Security Institute) and the DGI (General Tax Directorate).
Not have laid off workers or sent workers to unemployment insurance in the 30 days prior to the hiring, nor during its validity, regarding workers in the same category (except in cases of proven misconduct).
Exclusions: Staffing/recruitment agencies are excluded (with certain exceptions), as well as the hiring of direct relatives of the business owner.
Scheduling Restrictions: The law establishes certain scheduling constraints regarding the hiring of some of the targeted groups. For instance, a rotating shift schedule cannot be established for hired youth or for women who are heads of single-parent households.
Regulation
The Executive Branch is expected to issue the specific regulations for this law within a period of 180 days from its publication in the Official Gazette (Diario Oficial).