However, if a worker has between twenty (20) and twenty-four (24) years of service with the same employer and is dismissed without cause, they acquire the right to a proportional employer-sponsored retirement, calculated according to the time worked.
Article 216 of the Labour Code regulates the calculation, rules, and payment of Employer-Sponsored Retirement.
To calculate this benefit, the basis is the average of the last five years of the employee’s basic remuneration, not the general Unified Basic Salary (SBU).
According to Article 95 of the Labour Code, remuneration includes any payment the worker receives in money, services, goods, commissions, profit-sharing, the individual employer contribution to IESS when assumed by the employer, and any other compensation normally paid in the industry or service.
Payment of Employer-Sponsored Retirement must be monthly, and must also include the 13th and 14th salaries.
The worker may request the employer to pay a “Global Fund”, which is subject to the employer’s approval. This fund equals the value of the monthly pension multiplied by the person’s life expectancy, according to the table in Article 218 of the Labour Code.
The agreement between the parties must be formalized in a record signed before a notary or competent judicial or administrative authority, which definitively extinguishes the employer’s obligation.
