Severance Calculator (Unjustified Dismissal)

Código de Trabajo Art. 82 + Constitutional Court doctrine (integrated salary: +1/12 Bono 14 and +1/12 Aguinaldo). Math runs in your browser — no data sent anywhere.

Severance
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Aguinaldo prop.
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Bono 14 prop.
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Vacation cash
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TOTAL OWED
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Show the formula
Severance = (Avg salary × 7/6) × Years
The 7/6 factor (≈1.1667) adds the twelfth parts of Bono 14 and Aguinaldo to the base — required by Constitutional Court jurisprudence (exp. 1630-2004, 1061-2010, 2822-2011). Plus partial-year proportional aguinaldo, bono 14, and vacation cash (15 days × partial year ÷ 30 × salary).

What Severance Is in Guatemala

In Guatemala, severance pay (indemnizacion por despido injustificado) is a mandatory payment an employer owes when they terminate a worker without justified cause. It’s regulated by Article 82 of the Labor Code (Decreto 14-41) and works out to one month of salary for each year of continuous service — computed on the integrated salary (ordinary average x 7/6), per Constitutional Court jurisprudence.

Severance is NOT owed when:

  • The worker resigns (renuncia voluntaria).
  • The employer dismisses the worker with justified cause under Article 80 (e.g., repeated unjustified absences, dishonesty, serious negligence) AND provides written notice.
  • The contract was for a fixed term that has naturally expired.
  • The worker dies (instead, beneficiaries receive proportional benefits).

In all other cases — most notably “I let you go because we’re restructuring” or “we don’t need you anymore” — severance is owed in full.

The Severance Formula

Integrated salary = (avg ordinary monthly salary last 6 months) x 7/6

Severance proper = integrated salary x (years and fractions of a year worked)

For incomplete year: integrated salary x (months worked / 12)

Total finiquito = Severance + Proportional Aguinaldo + Proportional Bono 14
                + Accrued vacation cash + Any unpaid salary

The Labor Code (Art. 82) specifies the salary average is from the last 6 months of ordinary income, NOT the contract’s nominal salary. If you received a raise 3 months ago, the average reflects that. The x 7/6 factor comes from Constitutional Court jurisprudence: the severance base must integrate one twelfth of Bono 14 and one twelfth of Aguinaldo on top of the ordinary average (see the integrated-salary section below). The proportional Aguinaldo, Bono 14, and vacation components are computed on the ordinary salary, not the integrated one.

What Counts in the Salary Average

INCLUDED (ordinary salary):

  • Base monthly salary
  • Habitual commissions
  • Regular overtime (when habitual, not occasional)
  • Regular productivity bonuses above Q250

ADDED ON TOP (the x 7/6 integration, per Constitutional Court jurisprudence):

  • One twelfth of Bono 14
  • One twelfth of Aguinaldo

EXCLUDED:

  • The Q250 monthly incentive bonus (Decree 78-89)
  • Aguinaldo and Bono 14 as full payments (only their twelfth parts are integrated, via the 7/6 factor)
  • Occasional extraordinary bonuses
  • Per diems and reimbursements

The Integrated Salary: Why Most Calculators Understate Severance by 16.67%

Most online calculators (and many employer settlement offers) compute severance as plain salary x years. That understates the amount by 16.67%. Guatemala’s Constitutional Court — in case files (expedientes) 1630-2004, 1061-2010, and 2822-2011 — established that the Article 82 base is the integrated salary (salario integrado): the average ordinary salary plus one twelfth of Bono 14 plus one twelfth of Aguinaldo. Since each twelfth equals 1/12 of a monthly salary, the integrated base works out to salary x 7/6.

Put plainly: the plain salary x years figure is the floor an employer might offer; the integrated figure is what courts award.

MethodCalculation (Q5,000 salary, 3.5 years)Result
Plain salary (the floor employers often offer)Q5,000 x 3.5Q17,500.00
Integrated salary (what courts award)Q5,000 x 7/6 x 3.5Q20,416.67
Difference+16.67%+Q2,916.67

The same worker’s full package: severance Q20,416.67 + proportional Aguinaldo Q2,500 + proportional Bono 14 Q2,500 + accrued vacation cash Q1,250 = Q26,666.67 total finiquito.

A real-world example published by Guatemalan labor advisors: a worker earning Q7,300 (Q6,500 base + Q800 habitual commissions) with 4 years, 7 months, and 12 days of service (~4.6167 years). Integrated salary: Q7,300 x 7/6 = Q8,516.67. Severance: Q8,516.67 x 4.6167 ≈ Q39,319 — not the ~Q33,702 a plain-salary calculation would produce.

If you’re offered a settlement computed on plain salary, you’re not obligated to accept it — the difference is claimable at the General Labor Inspection and the Labor Courts.

Proportional Benefits at Termination

When the labor relationship ends, the worker also receives proportional Aguinaldo, Bono 14, and vacation cash — regardless of who terminated the contract or why.

Proportional Aguinaldo: (monthly salary x months worked since Dec 1) / 12. Proportional Bono 14: (monthly salary x months worked since Jul 1) / 12. Vacation cash: 15 working days per year worked, prorated.

These are owed whether you resigned, were dismissed for cause, or dismissed without cause. Severance proper is only owed in the unjustified-dismissal case.

Worked Examples for 2026

Case 1 — Worker dismissed without cause after 3 full years at Q6,000/month

  • Salary average (last 6 months): Q6,000
  • Integrated salary: Q6,000 x 7/6 = Q7,000
  • Years of service: 3.0
  • Severance: Q7,000 x 3 = Q21,000
  • Proportional Aguinaldo (5 months since Dec 1, on ordinary salary): (Q6,000 x 5) / 12 = Q2,500
  • Proportional Bono 14 (10 months since Jul 1, on ordinary salary): (Q6,000 x 10) / 12 = Q5,000
  • Accrued vacation (3 years x 15 days unused, assume 30 days pending): Q6,000 / 30 x 30 = Q6,000
  • Total finiquito: Q34,500

Case 2 — Minimum wage worker dismissed after 8 months

  • Salary: Q4,002.28
  • Integrated salary: Q4,002.28 x 7/6 = Q4,669.33
  • Time worked: 8 months = 8/12 of a year
  • Severance proper: Q4,669.33 x 8/12 = ~Q3,112.88
  • Proportional Aguinaldo (assume 5 months since Dec 1): Q1,667.62
  • Proportional Bono 14 (8 months since Jul 1): Q2,668.19
  • Vacation cash (15 days x 8/12): Q1,334.09
  • Total: ~Q8,782.78

Case 3 — 10-year employee dismissed at Q12,000/month

  • Integrated salary: Q12,000 x 7/6 = Q14,000
  • Severance: Q14,000 x 10 = Q140,000
  • Plus proportional benefits = Q15,000 to Q25,000 depending on month
  • Total: Q155,000-Q165,000

Justified Dismissal: When Severance Is NOT Owed

Article 80 of the Labor Code lists 13 grounds where the employer can dismiss without paying severance, including:

  • Dishonesty, fraud, or serious lack of probity
  • Repeated unexcused absences (more than 2 in a 30-day period)
  • Insults or physical aggression against the employer or co-workers
  • Willful damage to company property
  • Refusing to follow safety rules after warnings
  • Disclosing confidential information

The employer must give written notice (Article 78) stating the specific Article 80 cause. Without written notice, the dismissal is automatically unjustified — even if the employer had a valid reason.

The Finiquito Laboral

When the contract ends, the employer must prepare a finiquito laboral — an itemized settlement showing each component separately:

  1. Pending salary (days worked in the current month)
  2. Severance (indemnizacion) — if unjustified dismissal
  3. Proportional Aguinaldo
  4. Proportional Bono 14
  5. Accrued vacation cash
  6. Q250 bonus for any pending month
  7. Any other accrued benefits

Sign the finiquito only after reviewing each line. Never accept a global figure (“here’s Q15,000, sign here”) — you may be waiving rights.

How to Claim Severance

If the employer refuses to pay or pays less than owed:

  1. File a complaint at the General Labor Inspection (Inspeccion General del Trabajo, MINTRAB).
  2. Bring your contract, recent paystubs, DPI, and the unsigned finiquito if any.
  3. The inspection schedules a conciliation hearing within 5-15 days.
  4. If conciliation fails, the inspection issues a certification allowing you to file a demanda ordinaria laboral in the Labor Court.
  5. You have 30 working days from dismissal to file in the Labor Court for severance claims.

Severance Doesn’t Pay ISR or IGSS

Article 81 of Decree 10-2012 (the ISR law) and Article 27 of Decree 295 (IGSS) both exempt severance from withholdings. You receive 100% of the calculated amount.

  • Codigo de Trabajo de Guatemala (Decreto 14-41 of the Congress), Articles 78, 80, 82.
  • Decreto Numero 42-92 — Ley del Bono 14, Article 2 (proportional benefit).
  • Decreto Numero 78-89 — Q250 bonus excluded from severance calculations.
  • Corte de Constitucionalidad — Case files (expedientes) 1630-2004, 1061-2010, and 2822-2011: integrated-salary doctrine (the severance base includes the twelfth parts of Bono 14 and Aguinaldo).
  • Ministerio de Trabajo y Prevision Social (MINTRAB) — Inspeccion General del Trabajo, central office Zone 5 and departmental delegations.

This page provides general guidance on Guatemala labor law. For complex cases (executive contracts, collective bargaining, foreign workers, group layoffs), consult a labor attorney before signing any finiquito.