When someone leaves the company, the first question is always: how much do we pay? The answer depends on how the employment ends. One part is owed in every case, because the employee already earned it; another part only applies when the dismissal is unjustified.
The first part is called the finiquito (final settlement of earned pay and benefits). The second, the severance, is known as the liquidación.
What is paid on every separation (finiquito)
Whether the employee resigns, is dismissed or reaches the end of a contract, the finiquito covers everything already earned:
- Wages owed and not yet paid.
- The prorated aguinaldo (mandatory year-end bonus).
- Unused vacation days, plus their vacation premium.
- The seniority premium, when it applies (see below).
- Any other pending benefit set out in the employment contract.
What is added on an unjustified dismissal (liquidación)
If the employer terminates the employee without just cause, these items are owed on top of the finiquito:
| Item | Amount | Legal basis |
|---|---|---|
| Constitutional severance | 3 months of salary | Arts. 48 and 50 LFT |
| 20 days per year of service | Applies when the employer does not reinstate, in the cases of art. 49 | Art. 50 LFT |
| Seniority premium | 12 days per year, with salary capped at 2 minimum wages | Art. 162 LFT |
LFT stands for Ley Federal del Trabajo, Mexico's Federal Labor Law.
When is the seniority premium paid?
- Always when the separation is due to dismissal, death or disability.
- On voluntary resignation, only if the employee has 15 or more years of service.
This is one of the most common calculation mistakes: paying it on the resignation of someone with fewer than 15 years, or leaving it out on a dismissal.
Points to watch
- Establish the reason for the separation first: it determines whether there is only a finiquito or a liquidación as well.
- Remember the 2-minimum-wage cap on the seniority premium.
- The 20 days per year do not apply to every dismissal, only to the cases in article 49 when there is no reinstatement.
Legal basis
- Federal Labor Law, articles 47, 48, 49, 50, 79, 87 and 162.
Next comes the tax side: see how ISR is calculated on a finiquito and a liquidación.
In Nomikhor, finiquitos and liquidaciones run as off-cycle payrolls: the system calculates the ISR on each item, splits taxable from exempt amounts and stamps the CFDI payslip with unlimited stamping.