Question 1

What is severance pay in Guatemala?

Accepted Answer

Severance pay (indemnización) is the payment an employer must make when dismissing an employee without just cause. It equals one month's salary per year worked, per Article 82 of the Labor Code.

Question 2

What does a full severance package include?

Accepted Answer

A complete severance package includes: indemnización (1 month per year), unused vacation (15 working days), proportional aguinaldo (Christmas bonus), and proportional Bono 14.

Question 3

How is proportional severance calculated?

Accepted Answer

If you worked less than a year, severance is calculated proportionally. For example, 6 months = half a monthly salary in severance.

Question 4

Is severance pay subject to income tax?

Accepted Answer

Severance pay is exempt from ISR up to a certain limit. Labor benefits like aguinaldo, Bono 14, and vacation pay are fully exempt.

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