The seniority indemnity, as a social benefit in favor of the workers, is regulated in our labor legislation in art. 45 of the CT, which establishes in which type of employment contract the same can be accrued, being these the undetermined ones, what amount must be paid and under what circumstances one is entitled to receive it. The above provision is complemented by art. 43 of the CT, which extends such benefit, not only to persons who are dismissed without cause but also to those who resign from their job or who terminate their employment by mutual agreement with their employer.
The jurisprudence of the National Labor Court of Appeals has established that workers who retire and those who are declared with permanent total disability and who for that reason terminate their employment contract are also entitled to such indemnity. Likewise, the relatives of the deceased worker are entitled to receive such an amount. The National Labor Court of Appeals has also provided that, in the event of resignation, such resignation must be in writing and with fifteen days’ notice, under the provisions of art. 44 CT.
The purpose of such social benefit is to allow the employee to have a certain amount of money to help him/her meet his/her economic needs once the salary income ends at the end of the employment contract.
On some occasions, and for certain types of work, the employer, to reduce the labor liability, pays the social benefits (vacations, thirteenth month, and seniority indemnity) together with the salary, in what is known in practice as pre-allocated salary. On other occasions, the employee requests a partial or total advance of the salary to meet needs that he/she considers can be met by receiving such an amount in advance.
Given these situations that occur in practice, the question that this small contribution intends to answer is whether the seniority indemnity can be paid partially or totally in advance without economic consequences for the employer. The answer is no, based on the abundant jurisprudence of the National Labor Court of Appeals on the subject, among others, judgments 378/2016 of March 29th, 2016, and 648/2018 of June 7th, 2018.
Said authority, unlike the possibility of payment of vacations and thirteenth month together with the salary, has established that the severance payment for seniority must be canceled only when the labor relationship ends, per the provisions of art. 45 of the CT.
Taking into consideration the above criterion, if the employer pays the seniority indemnity in installments together with the salary, or an advance or its totality is granted during the existence of the labor relationship, it could be considered that this amount is an additional benefit granted by the employer. In the event of a claim by the employee for this benefit, the labor authority may order the payment of the total corresponding amount without considering the credit, advance, or payment that has already been made by the employer under this concept.
The exception to the above criterion is regulated in Law 677 and its amendments, “Special Law for the Promotion of Housing Construction and Access to Social Interest Housing”, which, in chapter XII, articles 85 to 95, establishes under what circumstances the seniority indemnity may be partially or totally paid by the employer for the purposes established in said law and the requirements that the worker must comply with for the employer to be obligated to deliver said amount.