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El Salvador Severance Calculator 2026

Last updated: January 2026

The labor settlement (liquidación) in El Salvador for 2026 is calculated according to the Labor Code in US dollars. Components include: severance for unjust dismissal (30 days of salary per year of service, no cap), proportional vacation (15 days plus 30% bonus), proportional aguinaldo (10-21 days depending on tenure tier), and any pending wages. The daily salary is calculated by dividing monthly salary by 30. For a worker earning $800/month with 5 years of service, severance alone would be $800 × 5 = $4,000. Severance is exempt from ISR up to the legal limits. In case of voluntary resignation, the worker only receives proportional vacation and aguinaldo without severance. El Salvador has one of the most generous severance formulas in Central America.

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FAQ

What does a labor settlement include in El Salvador?
A settlement includes: severance (30 days per year, unjust dismissal only), proportional vacation (15 days + 30% bonus), proportional aguinaldo (10-21 days by tenure), and pending wages. Voluntary resignation excludes severance but includes all proportional benefits.
How is severance calculated in El Salvador?
Severance equals 30 days of salary per year of service with no maximum cap. Partial years are calculated proportionally. It only applies for unjust dismissal (despido injustificado). The salary base is the regular monthly salary. Example: $800/month × 5 years = $4,000.
Is severance taxable in El Salvador?
Severance is exempt from ISR within the legal limits established by the Labor Code. Any amount exceeding the legal formula may be subject to income tax. The proportional aguinaldo in the settlement is also partially exempt (up to 2 minimum wages).
What happens with the vacation bonus in the settlement?
The settlement includes proportional vacation: 15 days of salary proportional to time worked, plus the 30% vacation bonus on those days. If you worked 6 months of the current vacation period, you receive half of the 15 days plus the 30% bonus.
How long do I have to claim my settlement in El Salvador?
In El Salvador, the statute of limitations for claiming labor rights is 60 business days from the date of termination for filing with the labor court. For individual payment claims, the period is 180 calendar days. It is recommended to file promptly at the Ministry of Labor.
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