Broanded basis for computation of severance pay
It used to be widely held by the courts that employers’ contributions to workers’ life insurance, medical insurance and pension plans had to be left out of the basis for computation of severance pay.
Their reasoning was that according to the definition of salary contained in article 26 of the Workers’ Statute (Estatuto de los Trabajadores), those contributions qualified as “discretionary benefits improving social security benefits” and accordingly were treated as non-salary items.
On October 2, 2013, the Supreme Court turned the existing majority view on its head by treating employers’ contributions to life and accident insurance as includable in the basis for computation of severance pay.
Read more on Garrigues Labor and Employment Blog