Step by step to calculate your settlement, according to your salary and time worked

When an employment contract ends, generally a liquidation process begins. This corresponds to the payment made to the worker once the employment relationship ends and its calculation varies depending on some factors.

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As explained by the Substantive Labor Code, a work agreement can be terminated for any of the following reasons:

– Death of the worker.

– Mutual consent.

– Termination of the agreed fixed term.

– Completion of the work or contracted work.

– Definitive closure of the company or establishment.

– Suspension of activities by the employer for more than 120 days.

– Termination of contract for just cause or without just cause.

Now, for the liquidation process to be done correctly, it is important to take into account some key elements. These include the outstanding salaries, severance pay, interest on severance pay, vacations and service premiums.

(Read more: Does a worker who is paid daily have the right to severance pay?)

The settlement corresponds to the sum of all the aforementioned elements. In that sense, it must be taken into account that each of these benefits must be calculated based on the salary that the worker earned.

The formulas are:

– Layoffs: monthly salary x days worked / 360.

– Severance interest: layoffs x days worked x 0.12 / 360.

– Premium services: days worked in the semester x value of half salary / 180.

– Vacation: salary x days worked / 720.

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Colombian money

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To better exemplify this calculation, the case of a worker who earned the minimum wage and who worked a full year will be taken as a reference. Considering that The current minimum wage was set in 2024 at $1,462,000 (including transportation assistance), the corresponding figure for each item would be:

– Layoffs: $1,462,000.

– Severance interest: $175,440.

– Premium services: $1,462,000.

– Vacation: $650,000.

In that order of ideas,The settlement for a person who earns the minimum would be equivalent to $3,749,440.

If you have doubts regarding the way in which the process is carried out, the Ministry of Labor has a tool intended to calculate the settlement. The platform is free to use and all you have to do is fill out the data requested by the form.

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