Countries › Uruguay › Guide › 15. Exiting › Closing down and the workforce: severance, final pay and claims after exit

Closing down and the workforce: severance, final pay and claims after exit

Last verified: 2026-10-27 · Status: Stable

Closing a Uruguayan business does not reduce severance: monthly paid staff get one month of pay per year or fraction of service, capped at six months, plus proportional year end bonus and untaken leave. Late payment adds an automatic 10 percent surcharge, and former employees can sue for a year after leaving and claim credits for five years from when they fell due. The DGI and BPS closure requires an MTSS closure certificate where there were employees and no outstanding BPS debts, and in insolvency a BPS fund protects workers up to UI 105,000 each.

USD figures use UYU 40.214 per US dollar, the BCU quotation for DLS. USA BILLETE on 26 October 2026. UI amounts use UYU 6.6792 per UI, the BCU quotation for 27 October 2026. Both were retrieved from the BCU quotations service on the verification date; conversions are for orientation only.

Key facts

Severance per year of service (monthly paid)	1 month of payLey 10.489 art. 4, as of 2026-10-27 · in force
Severance cap	6 monthsLey 10.489 art. 4, as of 2026-10-27 · in force
Surcharge on unpaid labour credits	10 %Ley 18.572 art. 29, as of 2026-10-27 · in force
Time bar for employment claims after the relationship ends	1 yearsLey 18.091 art. 1, as of 2026-10-27 · in force
Time bar for individual labour credits	5 yearsLey 18.091 art. 2, as of 2026-10-27 · in force

The rule

1. Closing the business does not remove severance: a dismissed monthly paid worker is entitled to one month of total remuneration for each year or fraction of service, capped at three months if entitled to retirement and six months otherwise; workers dismissed for notorious misconduct get nothing and the employer must prove it. For day or piece rate workers, years with fewer than 240 but more than 100 working days, and fractions of a year, pay two days' wages for every 25 worked. Retirement entitlement for the cap means more than ten years of recognized service and age 40, or under special laws. Severance is calculated on the normal wage on the dismissal day.
Cost to do it: Up to six months of total pay per worker.
Example: A manager on UYU 80,000 a month with 8 years of service is owed six months: UYU 480,000. / About US$11,936.Ley Nº 10.489; Ley Nº 12.597, Ley 10.489 art. 4; Ley 12.597 art. 1, 3, 5, 6 and 10, 1958-12-30 official text · verified 2026-10-27

2. On any termination (resignation, retirement or dismissal, except notorious misconduct) the worker receives the proportional year end bonus (aguinaldo), and on termination for any reason the employer pays directly the wages for untaken leave.
Cost to do it: Proportional bonus and unused leave paid with the final settlement.
Example: A worker leaving at the end of September with 15 untaken leave days on UYU 80,000 a month is owed the bonus accrued since the last payment plus 15 days of leave wages. / Settle in full on the last day to avoid the surcharge below.Ley Nº 12.840; Ley Nº 12.590, Ley 12.840 art. 3; Ley 12.590 art. 9, 1960-12-22 official text · verified 2026-10-27

3. Unpaid labour credits automatically carry a 10 percent surcharge from the moment they are due. Severance paid under a final judgment increases by 1 percent a month.
Cost to do it: 10 percent surcharge on late labour credits.
Example: Delaying the UYU 480,000 severance adds UYU 48,000 at once. / About US$1,194 extra.Ley Nº 18.572; Ley Nº 12.597, Ley 18.572 art. 29; Ley 12.597 art. 8, 2009-09-13 official text · verified 2026-10-27

4. Claims arising from employment are time barred one year after the day following the end of the relationship, and individual labour credits five years after they became payable; a request for conciliation at the MTSS or the filing of a claim interrupts the period.
Cost to do it: Keep cash or a guarantee for at least one year after the last termination.
Example: A company that dismissed its staff on 31 December 2026 can face claims until about 1 January 2028. / Same at any amount.Ley Nº 18.091, Art. 1, art. 2, art. 3 and art. 4, 2007-01-07 official text · verified 2026-10-27

5. To close an S.A. with DGI and BPS where it hired employees, the company must present the MTSS certificate of closure of activities. The BPS special certificate, which requires no debts of any kind with the BPS, is needed to dissolve, liquidate or close a company.
Cost to do it: UYU 270 professional stamp for the DGI closure filing in 2026.
Example: The closure cannot be filed until all BPS contributions on final pay are settled. / UYU 270 is about US$7.DGI and BPS procedure sheet Clausura de sociedades anónimas (updated 9 September 2026); Ley Nº 16.170, Requirements; Ley 16.170 art. 664 numeral 2, 2026-09-09 official text · verified 2026-10-27

6. If the employer becomes insolvent, the BPS Labour Credit Guarantee Fund pays verified claims of private sector workers (last six months' wages, two years of leave, vacation pay and bonus, legal severance and the 10 percent surcharge) up to UI 105,000 per worker, excluding senior managers and close relatives, and then claims against the employer. In the concurso, labour claims of the last two years rank first among general privileges up to UI 260,000 per worker.
Cost to do it: Financed by a 0.025 percent employer contribution (Ley 19.690 art. 10).
Example: UI 105,000 is about UYU 701,316. / About US$17,440.Ley Nº 19.690; Ley Nº 18.387, Ley 19.690 art. 5, 6, 8 and 12; Ley 18.387 art. 110, 2018-10-29 official text · verified 2026-10-27

Item	Rule	Amount
Severance	One month per year, cap six	UYU 480,000 (US$11,936)
Proportional year end bonus	Accrued share	Depends on months since last payment
Unused leave	Paid directly	Depends on days owed
Late payment surcharge	10 percent from due date	UYU 48,000 on the severance alone

Final settlement for a monthly paid worker on UYU 80,000 with 8 years of service (Ley 10.489 art. 4; Ley 12.840 art. 3; Ley 12.590 art. 9; Ley 18.572 art. 29). UYU at 40.214 per US dollar.

Worked example

Closing a 20 person office where each worker has five or more years and earns on average UYU 80,000: severance alone is roughly 20 x 5 to 6 months, between UYU 8,000,000 and UYU 9,600,000 (about US$198,936 to US$238,723), before bonus, leave and employer contributions.

Step by step

List each worker's start date, pay, untaken leave, accrued bonus and any special protection (pregnancy, accident, union officers; see the labour section page on severance and dismissal).
Give notice and pay the full final settlement on the last day to avoid the 10 percent surcharge (Ley 18.572 art. 29).
File the final payroll declarations and pay BPS contributions.
Obtain the MTSS closure of activities certificate before the DGI and BPS closure filing (gub.uy S.A. closure sheet).
Keep funds or a guarantee for claims for at least one year after the last termination (Ley 18.091 art. 1).

Common traps

Dismissing protected workers (for example during pregnancy or after a work accident) costs extra tariffs on top of ordinary severance; see the labour section before any closure.
The six month cap is per worker; long serving staff are not capped by total seniority but by six months of pay.
In an insolvent wind down, directors' own labour credits are unsecured (Ley 18.387 art. 110), and senior managers are outside the guarantee fund (Ley 19.690 art. 5).

Sources

← Closing the Uruguayan branch of a foreign companyClosing the company with the DGI and BPS and cancelling the registration →