Quevedo & Ponce - Legal News
The National Court of Justice establishes a new binding jurisprudential precedent on employer retirement compensation
- November 12th, 2025
- Quevedo & Ponce
On October 8, 2025, the National Court of Justice issued Resolution No. 16-2025, by which it declared a binding jurisprudential precedent regarding the application of Article 216 of the Labor Code, related to employer retirement compensation. This resolution consolidates the uniform criterion sustained by the Specialized Labor Chamber in several rulings and has general and binding effects as of its publication in the Official Gazette on November 7, 2025.
This precedent arises from the Court’s repeated analysis of cases discussing the employer’s right to deduct certain amounts from the employer retirement fund. According to the Court’s interpretation, the employer may only deduct amounts corresponding to reserve funds, whether deposited in the Ecuadorian Social Security Institute (IESS) or directly paid to the employee. On the other hand, employer contributions to the IESS are not part of the employee’s individual retirement fund, as they constitute obligations of a different legal nature.
This distinction is based in Rule 1 of Article 216 of the Labor Code, which establishes that the individual fund used to calculate employer retirement compensation consists of two components: the reserve fund and an amount equivalent to five percent of the average annual remuneration received during the last five years, multiplied by the years of service. Based on this framework, the Court emphasizes that the deduction of reserve funds is the only one permitted, in observance of the principle of favorability provided in Article 326(3) of the Constitution, which establishes that the most favorable interpretation to the worker must always prevail.
The resolution strengthens the system of binding precedents in Ecuador, ensuring consistency in the application of labor law and reinforcing legal security, pursuant to Article 82 of the Constitution. From now, all courts and judges are required to observe this criterion when resolving disputes concerning employer retirement compensation, thereby guaranteeing equitable and predictable treatment in similar cases.
At Quevedo & Ponce, where Dr. Marcos Ponce—Specialist and Professor of Labor Law—has recently joined our team, to provide specialized advisory services to employers and employees, ensuring compliance with current regulations and proper management of employer obligations.
Más Artículos
Corporate Transformation and Sports Joint Stock Companies: Effects of the Constitutional Court Decision that Invalidated the Organic Law of National Solidarity
The Constitutional Court of Ecuador declared the total unconstitutionality of the Organic Law of National Solidarity, determining that it was enacted in violation of the principle of unity of subject matter and the ordinary legislative procedure. This decision nullifies the obligations imposed upon Simplified Stock Companies (S.A.S.) and Sports Joint Stock Companies (S.A.D.), restoring the previous regulatory framework and reaffirming both the supremacy of constitutional review and the need of maintaining normative coherence within the Ecuadorian legal system.
Transformación Societaria y Sociedades Anónimas Deportivas: Efectos de la sentencia constitucional que dejó sin vigencia la Ley Orgánica de Solidaridad Nacional
La Corte Constitucional del Ecuador declaró la inconstitucionalidad total de la Ley Orgánica de Solidaridad Nacional, al determinar que fue aprobada vulnerando el principio de unidad de materia y el procedimiento legislativo ordinario. Esta decisión deja sin efecto las obligaciones impuestas a las Sociedades por Acciones Simplificadas (S.A.S.) y a las Sociedades Anónimas Deportivas (S.A.D.), restableciendo el marco normativo previo y reafirmando la supremacía del control constitucional y la necesidad de mantener la coherencia normativa en el sistema jurídico ecuatoriano.
Mediation: An effective and legal way to resolve conflicts in Ecuador
Mediation is a conflict resolution process whereby the parties, assisted by a neutral third party called a mediator, seek to reach a voluntary agreement on a negotiable matter, in an extrajudicial and definitive manner. This mechanism promotes fast, confidential, and fair solutions that have the same legal validity as a final judgment, fostering dialogue and a culture of peace in Ecuador.
Mediación: una vía eficaz y legal para resolver conflictos en Ecuador
La mediación es un método alternativo de solución de conflictos mediante el cual las partes, asistidas por un tercero neutral llamado mediador, procuran un acuerdo voluntario sobre materia transigible, de carácter extrajudicial y definitivo. Este procedimiento permite alcanzar soluciones ágiles, confidenciales y con el mismo valor jurídico que una sentencia ejecutoriada, fomentando el diálogo y la cultura de paz en Ecuador.
New Rules for Communal and Savings Funds: A Framework of Control and Transparency
The Superintendence of Popular and Solidarity Economy (SEPS) has established new rules for the incorporation, governance, and liquidation of communal and savings funds, effective as of November 20, 2025. This regulatory framework strengthens the transparency, monitoring, and financial security, ensuring that these community-based entities can manage resources, grant loans, and contribute to the development of the popular and solidarity economy.
