When you end your employment with a company, whether through dismissal or voluntary redundancy, it's crucial to understand the concepts associated with severance pay. This document reflects your final financial compensation from the company, and it's important to know how to calculate it to ensure you receive what you're legally entitled to.
What is the settlement?
El settlement It is a document generated when the employment relationship between an employee and a company is terminated. It details the amounts the company must pay the employee for services rendered up to the date the contract is terminated. It is a sum of money that includes pending wages, proportional extra payments, unused vacation and in some cases, extraordinary hours.
It's essential to check that all items and amounts are correct before signing the settlement agreement, as this signature represents acceptance of the calculation and waiver of any subsequent claims.
The process for calculate the severance pay correctly It may vary depending on the individual conditions of each employment contract and the context in which it is terminated. Therefore, understanding its composition is essential to know how the severance pay is calculated.
Differences between severance pay and compensation
It's important not to confuse severance pay with compensation. While severance pay covers the amount owed up to the last day of work, severance pay is compensation paid to the employee for the termination of the employment contract under certain conditions, such as unfair dismissal.
Severance pay is calculated based on the type of dismissal and the employee's length of service with the company. For example, in a fair dismissal, the employee is entitled to 20 days' severance pay for each year worked, with a maximum of 12 monthly payments.
Knowing how to distinguish between the two concepts will help you better understand your rights and the amounts you are entitled to when your employment relationship ends.
How to calculate the severance pay step by step
El calculation of severance pay Voluntary termination involves several steps. First, the proportional salary up to the termination date must be calculated. Second, the proportional portion of the bonus payments must be added if they have not been received prorated. Third, the unused vacation days must be added.
It's crucial to have your most recent paycheck and any other documents that certify specific terms of your employment contract, such as bonuses or salary supplements, on hand.
The general formula for calculating severance pay is as follows: Daily salary x days worked in the month + Proportional part of extra pay + Unused vacation + Overtime.
Remember that the settlement agreement must always be signed in person and with a clear understanding of the amounts to be received.
What does the settlement include?
- Pending salaries: The salary corresponding to the days worked in the last month up to the termination date.
- Extra payments: If they have not been prorated, the proportional part must be included according to the time worked in the corresponding period.
- Unused vacations: Every worker is entitled to a minimum of 30 calendar days of vacation per year worked. If not all of them have been taken, they must be paid.
- Overtime: If overtime has been worked, it must be included in the settlement.
How to calculate severance pay
If your contract has been terminated due to dismissal, it's important to understand the different types of dismissals available, as the calculation of your severance pay may vary depending on this circumstance. Dismissals can be disciplinary, objective, collective, or for reasons related to production or the organization.
In the case of a disciplinary dismissal, if it is declared unfair, you will be entitled to severance pay. This circumstance does not affect the calculation of your severance pay, but it does affect the total amount you will receive at the end of your contract.
To calculate your severance pay, you'll need to follow the same steps as any other termination of employment, adjusting the variables according to your particular situation.
How to calculate severance pay for voluntary resignation
If you decide to leave your job voluntarily, you are also entitled to a severance payment. In this scenario, there is no severance pay, but outstanding wages, proportional bonuses, and unused vacation time must be calculated and paid.
It's important to communicate your decision to voluntarily resign with the advance notice required by your contract or applicable agreement to avoid penalties or discounts on your severance pay.
When is the severance pay paid?
The law establishes that severance pay must be paid upon termination of the employment relationship. That is, on the last day of work or upon signing the severance agreement. However, payment may be agreed upon for another date if so stipulated in the contract or collective bargaining agreement.
It's important to understand that severance pay is an employee's right, and the company must provide documentation and payment in accordance with the corresponding legal terms.
Frequently asked questions about the settlement
The most common questions regarding severance pay usually relate to the correct interpretation of the concepts included, payment deadlines, and employee rights in the event of disagreements with the company. It is advisable to consult a labor law expert or union representatives to resolve these issues.
When signing your settlement agreement, verify that all amounts and items are correct and reflect what you agreed to. Keep in mind that once the settlement agreement has been signed, it's difficult to claim amounts that weren't included.
The severance pay: learn how to calculate it easily – Related questions
How to learn to calculate a severance payment?
To learn how to calculate a severance payment, it's essential to understand its components. You can learn through online resources, seminars, and, if necessary, seek the help of a labor law professional.
Additionally, using online severance pay calculators can be a useful first step in getting an estimate of the amount you could receive, but remember that these calculations are guidelines.
How do I calculate my severance pay?
Calculating your severance pay involves reviewing your employment contract, recent paychecks, and the applicable collective bargaining agreement. Add up your outstanding salary, the proportional portion of bonuses, and unused vacation time to get your total.
It's important to make sure you include any other specific concepts that may apply to your case, such as bonuses or perks.
How do I calculate the value of my severance pay?
To calculate the value of your severance pay, first determine your daily wage. Multiply this wage by the number of days worked, add any proportional bonuses and any outstanding vacation pay. Don't forget overtime, if applicable.
It's important to familiarize yourself with current labor laws and seek professional help if you have specific questions.
How do I calculate how much my severance pay will be?
To calculate your severance pay, you'll need to gather all relevant information about your employment relationship, such as start and end dates, salary, bonuses, and vacation time. If you have any questions, consult your human resources department or an employment advisor.
Remember that transparency and communication with your company are essential for the correct calculation of your severance pay.
In this video, you will find detailed information that complements what we have discussed about how to calculate the severance pay.
In conclusion, calculating your severance pay is an important step in ending your employment relationship fairly and correctly. Do you have questions about your severance pay? We recommend visiting the Ministry of Labor's official website for more information and guidance about your rights as an employee.