There are always cases of dismissals and in those moments the indemnities must be applied. However, as it involves other terms, it is often confusing and tends to generate various doubts. That is why this article will explain what is job settlement and how it should be calculated.
Settlement is compensation based on specific concepts
What is settlement?
It is known that the settlement is a corresponding compensation proposal given to the worker by a specific institution. This process is applied at the moment in which the employment contract with a person is terminated and it is not renewed, being dismissal also a case, for which the employment of the settlement is generated.
This document presents that both the company and the worker agree to end their employment relationship and that a monetary delivery will be made by the organization as a salary of accounts according to the concepts and also the amounts that will be made in liquidation. Any person who is going to leave their position in a company must ensure that they receive the payments established by law for these kinds of situations.
This labor aspect is known because the terms in the employment relationship can no longer be maintained, so the company and the worker decide to break the bond they have. But by law, monetary compensation must be given since the person would be left without a job, therefore, they would not have an income until they get a new job.
The settlement is based on the LFT, which stands for the Federal Worker Law, where the worker is responsible for ending the employment relationship with the company. These benefits correspond to the contracts as established by the LFT. But not only must this payment be given, the company must also deliver a document where the concepts for which the income is being granted are stated.
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Concepts showing the settlement
Generally, the settlement is often confused with the liquidation, but this is not true, they are very different. Each one presents a series of specific characteristics, it is therefore very essential that it is understood that it is settlement. However, these terms share a set of concepts that apply to their objectives. Workers have the right to acquire these monetary compensations in order to be able to support themselves financially until they find a new job.
It is highlighted that both the liquidation and the settlement have a series of concepts by which the payments are made. Each one of these concepts is added to give the correct amount to the person at the time of his resignation or his dismissal. That is why the concepts on which the settlement is based are shown below, as well as its main characteristics:
The salary acquired in the month of dismissal
- This concept refers to the days worked during the month in which the dismissal or reluctance occurred.
- The number of working hours must be determined to deliver the corresponding payment.
extraordinary payments
- These are the payments that the worker does not enjoy
- Generally, this part must be directly proportional to the overtime in labor
Vacations generated
- This is part of the payment in which the vacations that were not taken by the person during their work period are counted.
- Vacation days are added together to determine the appropriate and fair number or amount
severance pay
- Applied in the case in which the company is the one that prosecuted in cutting off the employment relationship with the worker
- However, this concept does not apply when the dismissal is due to a disciplinary aspect or due to a dismissal given by the worker.
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How should the settlement be calculated correctly?
The first thing is to know what a settlement is, and then you can proceed to know the procedure to calculate the settlement correctly. For this, it is necessary to know what the concepts applied in this term are to determine the amount that must be paid to the worker, in this way the law can be complied with and in turn the company's relationship with the person is ended.
Apart from the compensation generated by the dismissal, the amount that is determined for the settlement is based on the contribution and, in turn, on the personal income tax withholding, being very similar to the normal payroll. However, it should be noted that in the event that the company fires a worker for an improper cause, this process is much more complex, since the concepts that are applied are modified.
To calculate the settlement, the signed contract must be taken into account, if it was before 2012, the compensation is for 45 days per year worked and the settlement is 33 days from that day. If the contract is after 2012, there are 33 days per year of compensation and 24 months for the settlement, for the person's working time in the company.