LEGALINK CROSS-BORDER LAYOFFS QUESTIONNAIRE

Employers have the right to dismiss employees at any time without need of any justification or motive.  Acts 10.489 and 10.570 apply in cases of layoffs of employees. If a layoff of employees is taken into effect, the employer must pay each worker a dismissal indemnity (IPD) with the only exception of the following cases:  probation contracts (for not more than three months); term contracts; contracts for  specific work; and for day labourers dismissed before the 100th day of work (this is commonly referred to as "período de carencia"). 

The dismissal indemnity that employers should pay dismissed employees, consists on an amount equal to one salary for each year or fraction of work at the company, with a ceiling of 6 years (in the case of monthly workers).  To this effect, an employee’s salary is considered as the usual salary plus the average overtime, vacation pay, vacation bonus, car allowance, meal allowance, housing allowance, and any other salary benefits.

In the case of “day labourers”, salary is considered as described for monthly workers, but in proportion to 1 day's work.  As well, the indemnity dismissal varies according to the number of days effectively worked.  For each year during which they have worked more than 240 days they are entitled to 25 day’s wages; and for each year during which they have worked less than 240 days they are entitled to 2 day’s wages for every 25 days effectively worked.  Day labourers have an IPD ceiling equal to 150 day's wages.

There are some special situations in which employees are entitled to receive “special” indemnity dismissals.  If a mother to be is dismissed, no matter the motive, the employer must pay, in addition to the dismissal indemnity, an amount equal to 6 monthly salaries or 150 day’s work, calculated as stated hereinabove.  If any woman is dismissed within 6 months of having given birth she will be also entitled to this additional indemnity.

If a employee is not reincorporated after a labour related injury, he will be entitled to an additional indemnity equal to double dismissal indemnity, i.e., he would receive, in short, an amount equal to triple the dismissal indemnity.  If an employee is dismissed within 180 days of reincorporation he will be entitled to the referred additional indemnity and to the salary of those 180 days.  If a sick employee is not reincorporated after illness or within 30 working days of reincorporation he will be entitled to an additional indemnity equal to the dismissal indemnity, i.e., he would receive, in short, an amount equal to the doubled dismissal indemnity.