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Practical Guide to Income Tax 2025. Part 1.

D) Exempt compensation derived from termination of the contract at the will of the worker (cessation)

Regulations: Articles 40, 41 and 50 Workers' Statute

The following assumptions must be distinguished:

1. When voluntary termination is motivated by any of the following causes (Art. 50 Workers' Statute):

  1. Substantial changes in working conditions that result in a loss of the worker's dignity.

  2. Non-payment or continued delays in payment of the agreed salary.

    Without prejudice to other cases that the judge or the court may consider a just cause for these purposes, it will be understood that there is a delay when the date set for the payment of the salary is exceeded by fifteen days, the cause occurring when the worker is owed, in the period of one year, three full monthly salaries, even if not consecutive, or when there is a delay in the payment of the salary for six months, even if not consecutive.

  3. Any other serious breach of contractual obligations by the employer, except in cases of force majeure, as well as the refusal by the employer to reinstate the worker in his or her previous working conditions in cases of geographical mobility and substantial changes in working conditions provided for in articles 40 and 41 of the Workers' Statute, when a court ruling has declared them unjustified.

In these cases the exempt compensation will be the set for the unfair dismissals that were discussed in the previous section .

2. When the termination of the contract at the will of the worker is due to substantial changes in working conditions (working day, schedule and distribution of working time, shift work regime, remuneration system and salary amount, work and performance system and, functions, when they exceed the limits provided for functional mobility) by which the worker is harmed but which do not result in a detriment to his dignity as a worker (Art. 41 Workers' Statute).

In this case, compensation that does not exceed 20 days of salary per year worked is exempt, with periods of time less than a year being prorated by months, with a maximum of 9 monthly payments .

3. Likewise, when the employer notifies the worker of his transfer to a different workplace of the same company that requires a change of residence , the worker will have the right to the termination of his contract receiving compensation of 20 days' salary per year of service, with periods of time less than a year being prorated by months and with a maximum of 12 monthly payments (Art. 40 Workers' Statute).