The Severance Aid is an indemnity ordered in our Labor Code for the benefit of workers, who maintain contracts for an indefinite period and who have been terminated from their work with employer responsibility or for reasons that are not attributable to them and are beyond their control.

The Ministry of Labor and Social Security compares it to the existing Unemployment Insurance in other legislations, and its main objective is to assure the person who has been laid off with an amount of money to be able to support himself while he manages to get a new job.

How much should the unemployment benefit be paid?

Our labor laws determine that the Severance Aid is calculated and paid as follows:

● After continuous work for not less than three months nor more than six months, an amount equal to seven days’ wages.
● After continuous employment for more than six months but less than one year, an amount equal to fourteen days’ wages.
● After continuous work for more than one year, with the amount of salary days indicated in the following table:

YEAR 1 – 19.5 days per year worked.
YEAR 2 – 20 days per year worked or fraction greater than six months.
YEAR 3 – 20.5 days per year worked or fraction greater than six months.
YEAR 4 – 21 days per year worked or fraction greater than six months.
YEAR 5 – 21.24 days per year worked or fraction greater than six months.
YEAR 6 – 21.5 days per year worked or fraction greater than six months.
YEAR 7 – 22 days per year worked or fraction greater than six months.
YEAR 8 – 22 days per year worked or fraction greater than six months.
YEAR 9 – 22 days per year worked or fraction greater than six months.
YEAR 10 – 21.5 days per year worked or fraction greater than six months.
YEAR 11 – 21 days per year worked or fraction greater than six months.
YEAR 12 – 20.5 days per year worked or fraction greater than six months.
YEAR 13 or next– 20 days per year worked or fraction greater than six months.

In no case may said severance pay be compensated for more than the last eight years of the employment relationship.

No type of deduction for social charges is applied to the severance pay.

To determine the severance aid, the average of the ordinary and extraordinary wages received by the worker in the last six months must be taken as the basis (the wages of the last six months are added and divided by 6 to obtain a monthly average), or smaller fraction of time if said time has not been adjusted.

If the worker was disabled, that time should not be taken into consideration because the benefits received are not wages.

We recommend from the beginning as a preventive way, to seek advice on these legal issues before making a decision or to ensure that the worker-employer items that correspond by law to your employees are being paid correctly, in order to avoid possible conflicts.

At ERP Lawyers we can gladly advise you on the exact calculation of your severance pay and/or that of your collaborators. We can also provide you with extensive advice on labor matters, do not hesitate to contact us at info@erplawyers.com