Dismissal and severance in Uruguay: how much is owed and how it's calculated

Dismissal under the common regime has a clear severance rule. Whether you face it as an employer (to budget) or as a worker (to know what you're owed), it's worth knowing. Here are the essentials.

How much: one month per year, capped at six

The base formula is set by the MTSS:

Per the MTSS:

«monto de la indemnización: remuneración total correspondiente a un mes de sueldo por cada año o fracción de actividad, con un límite de seis mensualidades como máximo»

In English: amount of severance: total remuneration of one month's salary per year or fraction of activity, with a maximum limit of six monthly salaries

Monthly vs day-rate worker

The calculation differs by arrangement. For a monthly worker (mensual) no minimum seniority is required and you count one month per year or fraction. For a day-rate worker (jornalero) the computation uses a formula on the day-wages and requires having generated a certain number of them. The method's detail is at the MTSS:

What counts in the calculation

The base isn't just the salary: the “total remuneration” includes everything of a salary nature, such as the aguinaldo and salario vacacional, plus other items. We cover this in our aguinaldo and salario vacacional post.

When it isn't owed

There's a classic case where severance is lost: dismissal for notorious bad conduct (notoria mala conducta). It's a specific cause and must be provable — merely alleging it isn't enough.

Don't confuse it with unemployment benefit

Severance is paid by the employer. It's different from the unemployment benefit (seguro de paro), which the BPS pays to a worker who loses their job. They're two separate things and can coexist.

At a glance

In short: common-regime severance is one month's pay per year worked, capped at six, on the total remuneration. Day-rate workers are calculated differently and notorious bad conduct excludes it. Verify your case with the MTSS or a labour adviser.