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Termination and Severance Policies

Learn about the legal processes for employee termination and severance in Bolivia

Notice period

In Bolivia, the General Labor Law (Ley General del Trabajo) does not mandate a universal notice period for termination. The notice requirements can vary depending on the type of employment.

No Mandatory Notice Period

The Bolivian General Labor Law does not establish a mandatory notice period for either employers or employees initiating termination. This means termination can occur with immediate effect.

Notice Periods in Employment Contracts

While not mandated by law, notice periods are often stipulated within individual employment contracts. These pre-determined notice periods provide both parties with time to prepare for the separation. Examples of contractual notice periods include a specific number of days (e.g., 30 days) or a period based on the length of service (e.g., one month's notice for each year of employment).

If a Bolivian employment contract lacks a notice period clause, the legal principle of good faith (principio de buena fe) applies. This implies both employer and employee should act reasonably and in good faith during termination, including providing a fair amount of notice.

Additional Considerations

Certain industries might have sector-specific collective bargaining agreements outlining notice periods. It's crucial to consult these agreements if applicable.

Severance pay

In Bolivia, severance pay, also known as desahucio, is a legal right for employees who are terminated without just cause. This entitlement and its calculation are outlined in Bolivia's General Labor Law (Ley General del Trabajo).

Entitlement to Severance Pay

Employees are entitled to severance pay in cases of unjustified dismissal, where their employment is terminated by the employer without a valid reason as defined by law. Additionally, severance pay is also due in cases of indirect dismissal, where an employee resigns due to significant changes in working conditions or harassment that constitutes a constructive dismissal.

Exceptions to Severance Pay

However, there are certain situations where severance pay is not required. These include cases where employees voluntarily resign, when an employee is dismissed for a valid reason outlined in the General Labor Law, when fixed-term contracts expire on their agreed end date, and during certain probationary periods (typically the first 90 days).

Calculation of Severance Pay

The calculation of severance pay is based on the length of service and the final salary. Employees are entitled to one month's salary for each year of continuous service with the employer, including partial years of service. The calculation is based on the employee's average salary over the last three months of employment.

Additional Entitlements

Besides severance pay, dismissed employees in Bolivia are also entitled to payment for any worked days that have not yet been compensated, compensation for any unused vacation time, and a pro-rated amount of the annual thirteenth-month bonus, if applicable.

Termination process

In Bolivia, employment termination can be categorized into resignation, mutual agreement, and dismissal. Resignation is a voluntary termination initiated by the employee. Mutual agreement is when both the employer and employee agree to terminate the employment relationship. Dismissal is an involuntary termination initiated by the employer, which can be further classified into justified dismissal and unjustified dismissal.

Justified Dismissal

Justified dismissal is a termination with a valid cause outlined in Article 16 of the General Labor Law, such as serious misconduct or repeated performance issues. The reasons for justified dismissal include repeated failure to perform job duties, serious misconduct or insubordination, theft, fraud, or intentional damage, disclosure of company secrets, and habitual absences or lateness.

Unjustified Dismissal

Unjustified dismissal is a termination without a valid legal reason. If an employer terminates an employee without a valid reason under the law, the employee is entitled to accrued salary, vacation, and applicable bonuses.

Termination Procedure

The termination procedure in Bolivia generally involves the following steps:

  1. Notice (If Applicable): If providing notice, the employer (or employee in the case of resignation) issues a written notice.
  2. Documentation: The employer prepares a termination letter outlining the reason for termination (if applicable), and detailing any final payments due to the employee.
  3. Final Payment: The employer provides the employee with all outstanding payments.
  4. Record Keeping: The employer maintains records of the termination process for legal compliance.

Important Considerations

Disputes over termination can be brought before specialized labor courts in Bolivia. It's advisable for both employers and employees to seek legal advice in complex termination situations or potential disputes.

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