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.
How the severance estimate works
This tool follows the common educational criterion of one monthly salary for each year of service, including a proportional final year. With a last monthly salary of 4,500,000 and 3 years 6 months of service, the estimate is 4,500,000 × 3.5 = 15,750,000.
It is not a legal settlement. Notice pay, unused leave, prorated bonus, salary caps, collective agreements, misconduct findings and country rules can materially change an amount. Check the actual jurisdiction before relying on the estimate.
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.
Notice can be a separate entitlement from seniority severance. When the employer ends employment without the notice required by local law, payment in lieu of notice may be added; when notice is worked, the treatment can differ. Its length often depends on seniority and the country or state. Check the termination letter, contract and applicable local rules rather than assuming the one-month-per-year estimate includes it. This calculator does not add notice pay automatically.
Employment law is local: countries and, in some cases, states or collective agreements set different salary bases, caps, rounding rules, limitation periods and treatment of partial years. A valid dismissal, resignation, mutual agreement or protected leave can also change what is owed. Use the result to organize questions and compare a proposed figure, then obtain advice from a qualified local labor professional before signing a release or accepting a final settlement.