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Dismissal and severance in Uruguay: the one month per year formula, protected workers and final pay

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

Employers in Uruguay can dismiss without stating a cause, but must pay severance of one month's total pay per year or fraction of service, capped at six months (day workers follow a days based formula), unless they prove notorious misconduct. Special tariffs apply on top: six extra months for dismissal during pregnancy absence or after a harassment complaint, three months after paternity leave, triple severance for not readmitting an accident victim, and reinstatement with back pay for anti union dismissals. Final pay always includes the proportional year end bonus, unused leave and vacation bonus; claims time bar one year after exit and reach five years back.

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

Key facts

Severance per year or fraction of service	1 month of total remunerationLey Nº 10.489 art. 4, as of 2026-10-27 · in force
Severance cap	6 monthsLey Nº 10.489 art. 4, as of 2026-10-27 · in force
Severance for day workers with fewer than 240 days a year	2 days' wages per 25 days worked Ley Nº 12.597 art. 1, as of 2026-10-27 · in force
Monthly surcharge on severance owed under a final judgment	1 % per monthLey Nº 12.597 art. 8, as of 2026-10-27 · in force
Extra payment for dismissal during pregnancy absence	6 months of salaryLey Nº 11.577 art. 17, as of 2026-10-27 · in force
Severance multiple if an accident victim is not readmitted	3 times legal severanceLey Nº 16.074 art. 69, as of 2026-10-27 · in force
Special tariff for harassment related dismissal	6 months of payLey Nº 18.561 art. 11, as of 2026-10-27 · in force
Extra payment for dismissal within 30 days after paternity leave	3 months of salaryLey Nº 19.161 art. 8 BIS, as of 2026-10-27 · in force
Time bar for actions after the end of employment	1 yearLey Nº 18.091 art. 1, as of 2026-10-27 · in force
Time bar for labor credits	5 yearsLey Nº 18.091 art. 2, as of 2026-10-27 · in force

The rule

1. A dismissed monthly paid worker covered by Ley 10.489 (commerce) and the related laws recited in Ley 12.597 (including Ley 10.570) is entitled to severance equal to one month of total remuneration for each year or fraction of service, with a limit of three monthly payments if entitled to retirement and six as a maximum otherwise. Workers dismissed for notorious misconduct get nothing. No cause is needed to dismiss; severance is the price of dismissal.
Example: A worker on UYU 80,000 a month dismissed after 3 years and 2 months receives 4 months, UYU 320,000. / About US$7,957.Ley Nº 10.489, Art. 4, 1944-06-06 official text · verified 2026-10-27

2. Day or piece rate workers who did not reach 240 working days in a year, but exceeded 100, earn two days' wages for every 25 days worked in those years, and fractions of a year count at the same rate. Entitlement to retirement exists only with more than ten years of service and 40 years of age, or under special laws. Severance is calculated on the normal salary on the day of dismissal, and household workers need one year of continuous service. Severance ordered by a final judgment bears a 1 percent monthly surcharge. The employer must prove notorious misconduct.
Example: A day worker on UYU 2,500 a day who worked 150 days in the last year earns 12 days' wages (2 days per 25 worked), UYU 30,000, for that year. / About US$746.Ley Nº 12.597, Art. 1, 3, 5, 6, 7, 8 and 10, 1958-12-30 official text · verified 2026-10-27

3. On any termination (resignation, retirement or dismissal, except notorious misconduct) the worker receives the proportional year end bonus, and on any termination the employer pays directly the unused leave days.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

4. A worker dismissed during pregnancy absence is owed six months' salary plus the legal severance. A worker readmitted after an illness caused by work cannot be dismissed for 180 days without serious cause; breach costs three months' salary per year or fraction worked.
Example: Pregnancy absence dismissal of a worker on UYU 80,000 with 2 years: UYU 480,000 special plus UYU 160,000 ordinary. / About US$15,915 in total.Ley Nº 11.577, Art. 10, 16 and 17, 1950-10-14 official text · verified 2026-10-27

5. A work accident or occupational illness victim must be readmitted on request once recovered and cannot be dismissed for 180 days after returning, save notorious misconduct or serious supervening cause; if the company does not readmit within 15 days after the worker reports back, it owes triple the legal severance.Ley Nº 16.074 (Work accidents), Art. 69, 1989-10-10 official text · verified 2026-10-27

6. Dismissal within 30 days after return from paternity, adoption or adoptive legitimation leave costs three months' salary on top of the legal severance unless the employer proves notorious misconduct or that the dismissal is unrelated.Ley Nº 19.161 as reworded by Ley Nº 20.364, Art. 8 BIS, 2024-09-20 official text · verified 2026-10-27

7. A victim of sexual harassment may claim moral damages of at least six months' pay from the person responsible, or treat the situation as indirect dismissal with a special six month tariff on top of ordinary severance. Dismissal of the victim or witnesses within 180 days of a complaint is presumed retaliatory and triggers the same six months, save notorious misconduct.Ley Nº 18.561 (Sexual harassment), Art. 11 and 12, 2009-09-11 official text · verified 2026-10-27

8. Any dismissal or prejudice for union membership or activity is null; courts order effective reinstatement with all wages for the period of the proceedings, through the extraordinary process or, for union officers, delegates, negotiators and founders (until one year after the union is created), the fast amparo procedure.Ley Nº 17.940 (Union freedom), Art. 1, 2 and 3, 2006-01-02 official text · verified 2026-10-27

9. Actions arising from employment time bar one year from the day after the relationship ends, and individual labor credits five years after they became payable; a request for conciliation at the MTSS or filing a claim interrupts the period.Ley Nº 18.091, Art. 1, 2, 3 and 4, 2007-01-07 official text · verified 2026-10-27

Situation	Severance	UYU	USD	Norm
Ordinary dismissal	4 months (4 years or fraction)	320,000	7,957	Ley 10.489 art. 4
Proven notorious misconduct	None	0	0	Ley 12.597 art. 10
During pregnancy absence	4 months + 6 months	800,000	19,894	Ley 11.577 art. 17
Within 30 days after paternity leave	4 months + 3 months	560,000	13,925	Ley 19.161 art. 8 BIS
Harassment victim, indirect dismissal	4 months + 6 months	800,000	19,894	Ley 18.561 art. 11
Accident victim not readmitted	3 x 4 months	960,000	23,872	Ley 16.074 art. 69
Anti union dismissal	Reinstatement plus back wages	Varies	Varies	Ley 17.940 art. 3

Termination cost by situation, worker on UYU 80,000 a month with 3 years and 2 months of service (about US$1,989 a month)

Worked example

A company dismisses a sales manager on UYU 150,000 a month after 7 years and 5 months: ordinary severance hits the six month cap, UYU 900,000 (about US$22,380), plus proportional year end bonus, unused leave and vacation bonus.
If the manager sues and wins after two years, severance in the judgment carries the 1 percent monthly surcharge, unpaid items carry the 10 percent automatic surcharge, and the judgment adds 6 percent annual interest and indexation.

Step by step

1. Check protected status first: pregnancy, recent paternity leave, accident or illness readmission, harassment complaint, union role.
2. Compute service in years and fractions and total monthly remuneration including regular variable pay.
3. Apply the formula and cap, or the day worker formula.
4. Add proportional year end bonus, unused leave and vacation bonus.
5. Pay with a detailed pay slip and keep evidence; consider a conciliation agreement at the MTSS to close claims.
6. Diary the one year claim window from the day after exit.

Common traps

Each fraction of a year counts as a full year for monthly workers.
Notorious misconduct must be proven by the employer; weak evidence turns into full severance plus surcharges.
Union related dismissals can be reversed by the courts with back pay.
Special tariffs stack on top of ordinary severance rather than replacing it.
The literal text of Ley 10.489 art. 4 lowers the cap to three months for workers entitled to retire, as defined in Ley 12.597 art. 5; take advice before applying it.

Sources

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