Worker’s severance pay calculator

24 of February, 2025

The settlement is a business document that reflects the total amount of outstanding accounts that a company has with the worker at the time the relationship established through the employment contract is terminated. Thus, extra payments, days worked in the month and pending vacations must be liquidated. It is a mandatory settlement, whether the worker is fired or if they leave of their own accord.

Confusing the settlement with indemnification is a common mistake. These two concepts are often mixed and cause confusion, indemnification is a compensation for an unfair dismissal, so the settlement always occurs, and the indemnification does not.

The process of employees leaving is as important as the onboarding process for businesses, hence creating memorable offboarding with Sesame HR makes your former workers feel valued.

How is the settlement calculated?

When calculating the settlement there are a number of factors to consider, also, you should know at all times that the amounts are gross, so the corresponding withholdings must be applied later. With all the resulting information, companies generate the settlement document. What should be taken into account when calculating the settlement?

• Salary of the days of the month worked.
• Overtime hours.
• Unenjoyed vacations.
• Extra payments.

👉 Payroll tools, like Sesame, can be used to have all this information available at your fingertips. It offers a series of features such as time control, task tracking or vacation management, and best of all, the information is recorded, so reports can be generated.

Remember that every worker who ends a relationship with the company has a right to a settlement. Temporary contracts and objective dismissals also have the right to a settlement.

Can the settlement calculation be negative?

Yes, the result of the settlement calculation can be negative. This is possible as it is generally paid based on the time worked. However, some bonuses are subject to being received as long as the employee is part of the company, so by ending the relationship with the company they would lose the bonus. Also, if advances on salary have been received, the company has the full right to claim them, so the settlement could turn out to be negative.

How does this settlement calculator work?

The calculator allows to know the outcome of the amount due for the termination of the contract, so it takes into account the salary left to be paid, pending payments or days of pending vacations.

When using this settlement calculator we recommend that you have your payroll at hand in order to know all the necessary data. You will need to know:

• Annual gross salary.
• Number of extra payments per year.
• First day of work as stipulated in the employment contract.
• Last day of work of the labor contract.
• Days of holidays per year.
• Total holiday days taken.
• If you have been dismissed and it is not disciplinary, you can fill in the box for indemnification.

👉 Good talent management is essential for your team to perform at its best. Discover it in our guide to attracting and retaining talent.

Iris Serrador

People Partner | LinkedIn | | Web | +post

Customer-oriented, both internally and externally, specializing in the definition and implementation of HR policies, as well as talent management, recruitment, and retention. Strong leadership, communication, negotiation, organization, and team coordination skills. Over 12 years of experience in Human Resources.

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