How to Use An Employer of Record in
Cuba

Cuba's employment system operates under Decree-Law No. 326 of 2014 and its 2016 amendments, which mandate that all labour contracts be registered with the Ministerio de Trabajo y Seguridad Social (MTSS) and require foreign entities to pay social security contributions at rates reaching 14% of gross salary. An Employer of Record in Cuba becomes your legal employer on record, handling all statutory filings, payroll in Cuban pesos, and compliance with collective agreements while you direct day-to-day work without establishing a Cuban subsidiary. The EOR removes the administrative burden of navigating Cuba's dual-currency legacy issues, mandatory trade union consultation requirements, and the strict just-cause termination framework that exposes non-compliant employers to reinstatement orders and financial penalties from labour tribunals.

What Is an Employer of Record in Cuba?

An Employer of Record in Cuba is a third-party organisation that becomes the legal employer of your staff under Cuban law, holding the employment contract, processing payroll, remitting all statutory contributions, and ensuring compliance with the Código de Trabajo and related regulations while you retain full operational control over the employee's daily tasks, performance management, and role responsibilities. The EOR appears as the employer on all government filings, payroll records, and social security registrations with the Oficina Nacional de Administración Tributaria (ONAT) and MTSS.

Cuba's employment law framework under Decree-Law No. 326 requires every employment contract to specify job classification under the national wage scale system, include mandatory clauses on working hours and disciplinary procedures, comply with applicable collective agreements negotiated through the Central de Trabajadores de Cuba (CTC), and provide statutory benefits including 30 calendar days of annual leave and maternity protection of 18 weeks. Foreign companies hiring directly must register with MTSS, open a local bank account for peso-denominated payroll, and navigate foreign investment approvals depending on sector and business structure.

You retain complete control over hiring decisions, work assignments, project deadlines, performance standards, and promotion decisions. The EOR owns all legal employer responsibilities: issuing compliant contracts, calculating and withholding income tax under the progressive scale administered by ONAT, remitting social security contributions to the Instituto Nacional de Seguridad Social (INSS), managing termination procedures that comply with just-cause requirements, and defending any labour tribunal claims filed against the Employer of Record.

How Does an Employer of Record Work in Cuba?

When you engage an EOR in Cuba, you define the role, salary, and employment terms while the EOR takes on the legal employer position and manages every compliance step from contract drafting through termination. The process follows a structured sequence that ensures your hire is compliant with Cuban labour law before their first day and remains so throughout the employment relationship.

Step 1: Define Role and Terms

You provide the job title, responsibilities, salary, and start date to the EOR. The EOR reviews your proposed terms against the applicable collective agreement for the sector and the national minimum wage to ensure the compensation package meets or exceeds statutory and negotiated floors. In sectors covered by foreign investment joint ventures or specific economic zones, additional approvals or classification requirements may apply. The EOR confirms all terms are compliant before proceeding to contract preparation.

Step 2: EOR Compliance Check

The EOR verifies that your proposed salary meets the national minimum wage of 2,100 Cuban pesos per month (effective January 2026 under Resolution No. 26/2025 of MTSS) and that working time does not exceed 44 hours per week or 8 hours per day as set by the Código de Trabajo. The EOR confirms correct job classification under the national wage scale and identifies whether the role falls under hazardous work categories that trigger additional health and safety obligations administered by the Dirección de Inspección del Trabajo. Any misclassification or failure to meet minimum standards exposes the legal employer to fines, back-pay orders, and contract nullification by labour inspectors.

Step 3: Employment Contract

The EOR prepares a written employment contract in Spanish, the only legally recognised language for labour contracts in Cuba, governed by Decree-Law No. 326 and subsequent amendments. The contract must include: the employee's full identification details and residential address, a precise description of job duties and workplace location, the agreed salary broken into base and any supplements, the working schedule with daily and weekly hours, the probationary period which cannot exceed 90 days for most roles, and the termination notice provisions. Fixed-term contracts are permitted only for temporary projects or seasonal work and cannot exceed two years in total duration including renewals. The employee reviews and signs the contract, which the EOR retains and registers with MTSS within the statutory deadline.

Step 4: Government Registrations

The EOR registers the employee with the Oficina Nacional de Administración Tributaria (ONAT) for income tax withholding purposes and with the Instituto Nacional de Seguridad Social (INSS) for social security coverage within 5 business days of the employment start date as required by Resolution No. 353/2018. The EOR also notifies the Ministerio de Trabajo y Seguridad Social of the new hire and ensures the employment contract is filed in the employer's labour registry maintained by the Dirección de Empleo. Late registration triggers penalties ranging from 500 to 5,000 Cuban pesos per violation and can result in suspension of the employer's ability to hire additional staff until compliance is achieved.

Step 5: Payroll in Local Currency

The EOR processes payroll in Cuban pesos on a monthly cycle, the standard pay frequency in Cuba. The EOR calculates and withholds income tax under the progressive scale ranging from 15% to 50% on monthly income above 9,000 pesos as administered by ONAT under Law No. 113 of 2012 (Sistema Tributario). The EOR remits withheld tax and employer social security contributions of 14% of gross salary to INSS by the 10th day of the following month. The employee receives a compliant payslip detailing gross salary, all deductions, and net pay in pesos.

Step 6: Ongoing Compliance

The EOR manages recurring compliance obligations including monthly remittance of income tax withholdings and social security contributions to ONAT and INSS, quarterly reporting of workforce composition and wage data to MTSS, annual leave accrual and scheduling in compliance with the 30-day statutory minimum, and participation in mandatory workplace safety inspections conducted by the Dirección de Inspección del Trabajo with 48 hours' notice. The EOR also monitors changes to collective agreements negotiated through the Central de Trabajadores de Cuba that may impose sector-specific wage increases, benefit enhancements, or procedural requirements. Non-compliance with filing deadlines or inspection requirements results in escalating fines and can trigger suspension of business activity for serious or repeated violations.

Step 7: Termination

Termination in Cuba requires just cause as defined in Article 51 of the Código de Trabajo, which includes serious misconduct, repeated unjustified absences, failure to meet performance standards after documented warnings, economic redundancy following MTSS approval, or mutual agreement. Notice periods vary by length of service and are often specified in collective agreements, but typically range from 30 to 60 days unless the contract is terminated for cause. Severance is calculated as one month's salary for each year of service with a minimum of three months' pay for employees with at least one year of tenure, paid from gross salary including all regular allowances. The EOR must document all disciplinary steps, obtain employee acknowledgment of warnings, and follow procedural requirements including consultation with the workplace trade union section before finalising termination to avoid reinstatement orders from labour tribunals.

Employment Laws and Compliance an Employer of Record Handles in Cuba

When you hire through an EOR in Cuba, they assume full legal responsibility for employment compliance so you do not need to build an in-country HR function, interpret Cuban labour legislation, or manage filings with multiple government bodies.

• Employment Contracts: The EOR drafts and issues written contracts in Spanish that comply with Decree-Law No. 326 and include all mandatory clauses covering job duties, salary, working hours, and termination notice. Failure to provide a compliant written contract within 5 days of the start date results in the contract being deemed indefinite and exposes the employer to tribunal challenges and fines from labour inspectors.
• Income Tax Withholding: The EOR calculates and withholds personal income tax under Law No. 113 using the progressive scale from 15% to 50% on monthly income above 9,000 Cuban pesos, remits withheld amounts to ONAT by the 10th of each month, and files annual reconciliation returns by March 31. Late remittance triggers interest charges of 1% per month plus penalties up to 50% of the tax due.
• Social Security Contributions: The EOR pays employer contributions of 14% of gross salary to the Instituto Nacional de Seguridad Social covering pensions, disability, maternity, and workplace injury insurance as required by Law No. 105 of 2008 (Seguridad Social). Employees contribute 5% of gross salary, withheld by the employer and remitted together with employer contributions by the 10th of the following month.
• Statutory Leave: The EOR tracks and administers 30 calendar days of paid annual leave under the Código de Trabajo, 18 weeks of maternity leave paid at full salary with 6 weeks mandatory before birth and 12 weeks after, and up to 12 months of unpaid parental leave available to either parent. Denying statutory leave or failing to pay leave entitlements results in back-pay orders and fines from MTSS inspectors.
• Termination and Severance: The EOR ensures all terminations comply with just-cause requirements in Article 51 of the Código de Trabajo, follows procedural steps including trade union consultation, provides statutory notice ranging from 30 to 60 days depending on service length, and calculates severance at one month's salary per year of service with a three-month minimum after one year. Unjustified termination leads to reinstatement orders or compensation awards of 6 to 12 months' salary determined by labour tribunals.
• Working Time Limits: The EOR monitors compliance with the 44-hour standard working week and 8-hour daily maximum under the Código de Trabajo, pays overtime premiums of 100% for hours beyond daily limits and 150% for Sunday or holiday work, and ensures employees receive at least 24 consecutive hours of rest per week. Systematic breach of working time limits triggers fines and stop-work orders from the Dirección de Inspección del Trabajo.
• Health and Safety: The EOR complies with workplace health and safety standards under Resolution No. 39/2007 of MTSS, registers workplace hazards with the Dirección de Higiene y Epidemiología del Ministerio de Salud Pública (MINSAP), provides mandatory occupational health examinations at hiring and annually for hazardous roles, and reports workplace injuries within 24 hours. Non-compliance results in fines and can lead to criminal liability if serious injury or death occurs.
• Data Protection and Privacy: The EOR handles employee personal data in compliance with Decree No. 360/2019 on data protection and cybersecurity, which requires written consent for data processing, secure storage of payroll and identification records, and restrictions on cross-border data transfers. Unauthorised disclosure or misuse of employee data results in penalties up to 10,000 Cuban pesos and potential criminal prosecution under the Código Penal.
• Collective Agreements: The EOR monitors and complies with collective agreements negotiated by the Central de Trabajadores de Cuba that may impose sector-specific wage scales, additional leave days, enhanced severance terms, or procedural requirements for disciplinary actions and terminations. Failure to apply collective agreement provisions that improve on statutory minimums results in grievances filed with workplace trade union sections and potential labour tribunal claims.
• Trade Union Consultation: The EOR consults with the workplace trade union section on disciplinary actions, terminations, workplace safety measures, and changes to working conditions as required by the Código de Trabajo and the statutes of the CTC. Failure to consult before terminating an employee or implementing significant changes provides grounds for the union to challenge the decision and seek reversal through labour tribunals or MTSS intervention.

How Much Does It Cost to Use an Employer of Record in Cuba?

The total cost of hiring through an EOR in Cuba consists of two components: statutory employer costs fixed by Cuban law and the EOR service fee. Statutory costs include social security contributions, workplace accident insurance, and other mandatory charges calculated as a percentage of gross salary. Playroll's EOR service fee starts from $399 per employee per month and is billed separately from the employee's salary and statutory on-costs.

Let's look at an example that includes a base salary and the EOR service fee.

Playroll's service fee covers contract preparation in Spanish with all mandatory clauses, monthly payroll processing in Cuban pesos, all government registrations and filings with ONAT and INSS, ongoing compliance monitoring including changes to collective agreements and labour law, employee onboarding and offboarding management, and dedicated support for your team and the employee throughout the employment relationship.

Employer of Record vs Setting Up an Entity in Cuba

The choice between using an EOR and establishing your own entity in Cuba depends on your hiring scale, timeline, and tolerance for administrative complexity. Foreign companies typically establish a Sociedad de Responsabilidad Limitada (S.R.L.) or participate in a joint venture with a Cuban state entity under Law No. 118 of 2014 (Ley de la Inversión Extranjera), which requires approval from the Ministerio del Comercio Exterior y la Inversión Extranjera (MINCEX), registration with the Registro Mercantil, and capital contribution in convertible currency. Realistic timelines range from 6 to 12 months with setup costs exceeding $25,000 when accounting for legal fees, notarisation, MINCEX approval processes, and initial registrations.

For companies hiring fewer than 10 employees in Cuba, an Employer of Record is almost always the faster and more cost-effective route.

Playroll also supports your long-term growth through its Global Entity Setup product, which handles entity incorporation and local payroll in 120+ countries so you can transition from EOR to your own compliant entity in Cuba when the time is right, without switching providers or rebuilding your HR processes.

How Long Does It Take to Hire Someone in Cuba Through an Employer of Record?

You can hire an employee in Cuba through an EOR in 10 to 15 business days from the moment you provide final employment terms to the employee's first working day.

• Stage 1: Contract preparation and signing (2 to 3 business days): The EOR drafts a compliant employment contract in Spanish including all mandatory clauses under Decree-Law No. 326, reviews it with you and the employee, and collects signatures. Timing depends on how quickly the employee provides identification documents and reviews the terms.
• Stage 2: Government registrations (3 to 5 business days): The EOR registers the employee with ONAT for income tax withholding and INSS for social security within the statutory 5-business-day deadline from the employment start date, and files the contract with MTSS. Missing the registration deadline results in penalties and prevents the employee from legally commencing work until filings are complete.
• Stage 3: Payroll configuration and first cycle (2 to 4 business days): The EOR configures the employee in the payroll system with correct salary, deductions, and bank details for monthly peso payments. The first payslip is issued on the last business day of the month or earlier depending on the agreed pay date.
• Stage 4: Cuba-specific requirements (3 to 5 business days): If the role requires workplace trade union notification under collective agreement provisions or sector-specific approvals for foreign-employed staff in joint ventures, the EOR handles these filings which can add 3 to 5 business days. These steps often run in parallel with contract preparation and government registrations.

Timelines can extend if the employee lacks required documentation such as a valid cédula de identidad (national ID card) or proof of address, if collective agreement interpretation requires consultation with the workplace CTC section, or if the role falls under restricted sectors requiring additional approvals from MINCEX or sector ministries. International bank transfers for salary payment in convertible currency (if applicable under special regimes) can add 3 to 7 business days depending on correspondent banking arrangements.

By comparison, establishing your own entity in Cuba to hire directly takes 6 to 12 months including MINCEX approval, joint venture negotiation if required, Registro Mercantil registration, and operational setup.

How Playroll's Employer of Record Process Works in Cuba

Playroll manages the entire employment lifecycle in Cuba so you can focus on your business while we handle compliance, payroll, and government filings.

You define the hire

You tell us who you want to hire, the job title, responsibilities, salary in Cuban pesos, and the proposed start date. We confirm your terms meet the national minimum wage of 2,100 pesos, comply with working time limits of 44 hours per week, and align with any applicable collective agreement for the sector.

We prepare a compliant contract

Playroll drafts an employment contract in Spanish governed by Decree-Law No. 326 that includes all mandatory clauses covering job duties, salary breakdown, working schedule, probationary period capped at 90 days, and termination notice provisions. We send the contract to you and the employee for review and signature, ensuring every clause meets Cuban labour law requirements.

Employee onboarded and payroll goes live

Within 10 to 15 business days of contract signing, we register the employee with ONAT for income tax withholding and INSS for social security coverage, notify the Ministerio de Trabajo y Seguridad Social, and configure the employee in our payroll system for monthly peso payments. Your new hire receives their first compliant payslip showing gross salary, income tax and social security deductions, and net pay.

We manage ongoing compliance

Playroll handles all recurring obligations including monthly remittance of tax and social security contributions by the statutory 10th-of-the-month deadline, quarterly workforce reporting to MTSS, annual leave tracking and payment, trade union consultation on terminations and disciplinary matters, and defence of any labour tribunal claims filed against us as the legal employer. If your hiring in Cuba grows to where establishing your own entity makes commercial sense, Playroll can support that transition through our global entity setup service so you maintain continuity and compliance as you scale.