Resignation, as the unilateral decision freely expressed by the worker to terminate the employment contract, is present in the different legislations in Central America with common principles and differences by country. In all countries, resignation is regulated in the Labor Codes, with the exception of El Salvador, where there is a special regulation called the “Law Regulating Financial Compensation for Voluntary Resignation” (Decree 592).
Among the common aspects are the following:
- The employer must be informed of the resignation, with a period of notice;
- The worker is not required to state the reasons for the resignation, nor is the employer’s acceptance required.
This resignation gives rise to obligations for both the worker to comply with the notice period and for the employer to pay social benefits as regulated by the legislation of each country.
Each country has different regulations regarding the notice period, with most establishing different periods depending on the length of service, with the exception of El Salvador and Nicaragua, whose criteria for setting the notice period differ from the rest of Central America.
In relation to the notice period, Guatemala regulates the following:
- 1 week if the employee has not completed six months of service.
- 10 days between 6 months and one year.
- 2 weeks for periods of 1 to 5 years.
- 1 month after five years.
In the case of Honduras, the following periods apply, with this country having the shortest and also the longest notice period:
- Less than 3 months of work, 24 hours’ notice.
- From 3 to 6 months, one week.
- From 6 months to one year, 2 weeks.
- From 1 to 2 years, 1 month.
For Costa Rica, we have the following periods:
- More than three months and less than six months.
- More than six months and less than one year, two weeks.
- More than one year, one month.
- More than two years, 2 months.
Also, in Costa Rica, during the notice period, the worker is entitled to one day per week of paid leave to look for employment. If notice is not given, the equivalent of the corresponding salary must be paid in cash. Case law allows for verbal resignation, including notice, when the contract is verbal and there are witnesses.
El Salvador differentiates the notice period according to the position or job functions performed, so that directors, managers, and specialized personnel, understood to be those who have been specially trained for the job in the last twelve months, must give 30 days’ notice, and the rest of the workers 15 days.
According to the special regulations in El Salvador, advance notice does not equate to resignation, which must be submitted in accordance with the formal requirements established, such as using the MITRAB form, or the form provided by a labor court and/or in a private authenticated document together with a copy of the identity document.
As advance notice is an obligation of the employee, once this has been fulfilled, the employer has a corresponding obligation to pay the social benefits to which the employee would be entitled under national legislation.
In Guatemala and Costa Rica, workers who resign are not entitled to severance pay and/or compensation, as this benefit is called in each of the countries mentioned. However, they are entitled to payment of salary, unused vacation time, a thirteenth month’s salary or bonus, and, in the case of Guatemala and Honduras, a proportional fourteenth bonus. In the latter country, in addition to the above benefits, they are entitled to receive 4% of the labor reserve fund deposited with the RAP and, if the person has worked for more than 15 years, they are entitled to 35% of the severance pay (except for companies with fewer than 10 employees).
El Salvador’s special law establishes that, in the event of resignation and valid notice and more than two years of service, the worker will receive fifteen days’ basic salary per year worked, but no salary may exceed twice the current legal minimum daily wage for the sector; which, in the opinion of the labor authorities, is equivalent to one minimum monthly wage (by multiplying two minimum daily wages by fifteen), which is the number of days covered by the benefit.
In Nicaragua, if the worker complies with the notice period, they are entitled to receive severance pay for length of service in the same proportion as they would have received if they had been dismissed, which corresponds to a maximum of five months’ salary for six years of work.
In both Costa Rica and Honduras, if the worker does not comply with the notice period, the employer may claim the amount of salary corresponding to the notice period of the resignation and, in the case of Honduras, if the worker does not give the full notice period, they must pay half of the time they should have given as notice.
In Nicaragua and Costa Rica, the employer may release the employee from the requirement to give notice. In Nicaragua, when this circumstance arises, the employer must pay the employee the equivalent in salary for the days for which they were released from the requirement to give notice.
Although there are common trends in Central America on the issue of resignation, such as notice and proportional payment of social benefits, the legal differences are significant. Companies operating in more than one country should consider these variations in order to properly manage voluntary termination processes and mitigate legal and financial risks.