How does the severance pay calculator work?
Severance for an unjustified dismissal compensates the worker for the time devoted to the company. The most used criterion in the region is one month of salary per year of service. This calculator takes your last monthly salary and your seniority (full years plus the months of the current year) to give you a quick, realistic estimate.
Important: each country has its own labor law, with caps, formulas and extra items. This result is a guideline; consult a labor lawyer for your specific case.
Severance formula
Worked example
A worker with a last salary of 5,000,000, with 2 years and 6 months of seniority:
- Computed seniority = 2 + 6/12 = 2.5 years
- Severance = 5,000,000 × 2.5 = 12,500,000
What to check before accepting a settlement
- The computable salary: confirm your full salary is used, including regular pay items.
- Exact seniority: review hire and end dates; a month of difference changes the amount.
- Extra items: prorated bonus, unused vacation and notice pay are usually added separately.
- Legal caps and deadlines: some countries limit the computable salary or require claims within a certain time.
Frequently asked questions about severance pay
The most widely used criterion in Latin America is one month of salary per year of service. This calculator multiplies your last monthly salary by your seniority (full years plus the fraction of the current year). Each country has specific rules, caps and extra items, so treat it as a guideline estimate.
This tool prorates the fraction of the last year by the months worked. In several jurisdictions, a fraction larger than six months is counted as a full year; check your country rules for the exact case.
In an unjustified dismissal (without cause) the worker is usually entitled to severance. In a dismissal with proven just cause, severance for seniority generally does not apply, although pending settlements such as vacation and prorated bonus still do.
Not directly. Severance for seniority is a separate item. In addition to it, when employment ends the prorated bonus, unused vacation and, depending on the country, notice pay are usually paid. Calculate those items separately.
It is common to use the last monthly salary or the average of the last months, including regular pay items. Some countries apply a cap to the computable salary. Use your best estimate of the monthly base salary.