No severance compensation for public servants in cases of voluntary retirement to benefit from retirement: New binding jurisprudential precedent for Ecuador

The Resolution No. 03-2025 of the National Court of Justice of Ecuador, issued on January 29, 2025, establishes the impropriety of severance compensation in cases of voluntary retirement for the public sector.

According to the ruling, “a worker who has decided to terminate their employment relationship through voluntary retirement to benefit from retirement cannot receive the severance compensation provided for in the second paragraph of Article 184 of the Labor Code,” arguing that they would be benefiting twice from the termination of the employment relationship.

What is severance?
This legal concept arises when the worker notifies the employer in writing of their intention to terminate the employment relationship. The law also considers severance when both the worker and the employer mutually agree to the termination in writing.

How is severance compensation calculated?
When a worker terminates their employment through severance, the employer must pay them a bonus equal to 25% of their last monthly salary for each year worked. The employer has 15 days to pay this bonus and other rights owed to the worker.

At Quevedo & Ponce, we advise public servants to ensure compliance with legal provisions and protect their labor rights. Contact us for guidance on this important precedent and its impact on the labor field.