Termination is always an option that workers must separate from work. This must be voluntary. One of the conditions is that there is an agreement between the parties, as stipulated by the Labor Law.

When a person freely and voluntarily resigns, and the company accepts it, agreement of the parties, one of the forms of termination of employment defined in art. 169 of the Labor Law, points out Vanessa Gómez Mosquera, expert in labor law and associate at Lexvalor Abogados.

“It is important that no one can force you to resign. The worker submits it voluntarily, and the employer accepts it, that is, an agreement between the parties is established, to properly call it when there is a dismissal.”

More than 500,000 new employment contracts were signed in one year in Ecuador, according to data from the Ministry of Labor

The liquidation by resignationwhich is voluntary, includes the payment of 25% of the last full remuneration received multiplied by the number of years that worker has worked for his employer. The amount is paid to the employee as a eviction bonus considered in art. 184 and 185 of the Labor Act.

“All income appearing in the role is taken into account; So you have to look at the last fee and calculate the 25%”.

At the end, that result is multiplied by the number of years of work. In this case the fraction is not taken into account.

That one person worked since February 1, 2022 for the company, you have completed two years of work and your last net income was $460 (current base salary), then you will receive the following items in case resign in January 2024.

1.- The eviction bonus which is calculated from 25% of the last full fee received, which is $460. 25% is $115. This last value is multiplied by two, which is the number of full years of work. The fraction is not taken into account here; so, it would be $230.

2.- The it would be proportional to the thirteenth salary from December 1, 2023 to January 31, 2024. The sum of all income received during that period (two full paychecks of $450 plus $460) is $910. This last value is divided by twelve and what you get is $75.83.

3.- The proportional to the fourteenth salarywhich is $460 if you work a full year, In this case, it would be for the period from March 1, 2023 to January 31, 2024, that is, eleven months of work. The operation is dividing the minimum wage value by twelve, which gives a result of $38.33. This last value is multiplied by eleven, which is the number of months corresponding to the payment (what has been done). So the amount you will get is $421.67.

Ecuador’s $460 base pay increase: That’s the value of overtime, vacations, tithes and night shifts

4.- The total annual leave or proportional annual leave. Given that it was not received in two years of work, it is calculated by adding up all the income of that time:

Which makes a total of $10,535. This last value is divided by 24 as indicated by the standard, so you finally get $ 438.96.

He the final liquidation result due to the resignation in this case is $1,166.46.

These are terms that are generated as income in the settlement document if the termination of the employment relationship is consensual.

Unemployment was 3.5 percent in November 2023: 293,581 Ecuadorians are unemployed

Art. 95 of the Labor Law indicates the concept of remuneration as such, which includes overtime, additional hours, any bonus considered, that is, the total income of the workplace without discounts such as the contribution taken by the employee to the Ecuadorian Social Security Institute (IESS).

Commissions, profit sharing, individual contribution to IESS when taken by the employer or any other compensation that is customary in the industry or services, means the standard, ie. net income without any discount.

It What is not included in the calculation of the 25% eviction compensation is the legal percentage of profit, monthly reserve payment, travel expenses or occasional subsidies, thirteenth and fourteenth compensation, economic compensation for the living minimum, salary components in the process of incorporation into salaries and benefits represented by social services, according to Art. 95 of the Labor Act.

Projections show that Ecuador’s economy will grow by 2% in 2024, while the number of employed people in the region will grow by only 1%.

In addition to 25% of the last received net salary multiplied by the years of work, the employee who resigns receives a proportional amount of the thirteenth and fourteenth salary and unused annual leave that is paid.

For for receiving the thirteenth full salary, the period from December 1 to November 30 of the following year is counted. Therefore, the proportional payment covers the period from the last month of the year to the day of termination of the employment relationship. The calculation is done so that each monthly allowance received in that period until the termination of employment is added up and the result is divided by twelve.

“In general, if a person has no variables or additional value in overtime, additional hours, that would be an additional value of compensation if he completes the entire period,” points out Gómez.

The concept of full compensation defined in Art. 95 of the Labor Law, that is, the calculation does not deduct the employee’s individual contribution to IESS, mortgage and uninsured payments; That’s full compensation.

Same with the fourteenth salary, which is the base salary ($460 as of January 2024). In the Sierra-Amazonía educational regime, you must complete the period from August 1 to July 31 of the following year to receive it in full. If you were fired earlier, you get a proportional amount calculated according to the minimum wage that is in force at that time.

In the Coast-Galapagos regime, the accounting period lasts from March 1 to the last day of February of the following year.

The share of annual leave, if any, is calculated by dividing all income earned during the annual leave period by 24. “That is the calculation of annual leave. If I took them on an annual basis, as it should be, in the calculation I only have to take into account the ratio of the last period until the date of termination of the employment relationship”, he assures.

If there is no age limit, the moving out bonus is not received in case of resignation (agreement between the parties). If the dismissal is before the end of one year, the calculation must include the ratio of thirteenth salary, fourteenth salary and annual leave.

Unemployment was 3.5 percent in November 2023: 293,581 Ecuadorians are unemployed