Severance Pay for Unjust Dismissal in Colombia: Calculation under the CST and Contract Type

Quick answer: if the employer terminates the contract without just cause, it must pay the severance under Article 64 of the CST in addition to the ordinary settlement. How much depends on three things: the type of contract, whether the salary is less or more than 10 SMMLV, and the time worked.

A Friday afternoon, a termination letter with no reason, and a calculator that everyone uses their own way: this is how many labor disputes begin. Almost always the problem is not bad faith, but that the wrong table gets applied. Here I leave you the formulas, with examples in days of salary so they don't go out of date.

What is dismissal without just cause (Articles 62 and 64 of the CST)

Article 62 of the CST exhaustively lists the just causes. If the employer ends the contract for a reason that is not there, or cannot prove it, the dismissal is without just cause and Article 64 requires it to pay severance. A voluntary resignation is something else: it does not generate this severance (here we explain how a resignation is settled).

My advice to employers: don't improvise the cause. If you cannot prove it, it is healthier to assume the dismissal is without just cause, calculate it correctly and pay on time. A fixed severance costs far less than losing a lawsuit.

Indefinite-term contract: the two tables of Article 64

This is where most mistakes happen. There are two regimes depending on the salary:

• Less than 10 SMMLV: 30 days of salary for the first year and 20 additional days for each following year or proportional fraction.
• 10 SMMLV or more: 20 days of salary for the first year and 15 additional days for each subsequent year or proportional fraction.

The fraction of a year is calculated as follows: (días trabajados en el año incompleto × días de indemnización) / 360, using 20 days in the first regime and 15 in the second.

Example: less than 10 SMMLV

A person with an indefinite contract has worked 2 years and 6 months (180 days of the third year). Their salary is below 10 SMMLV.

• First year: 30 days.
• Second year: 20 days.
• Fraction: (180 × 20) / 360 = 10 days.
• Total: 60 days of salary.

Example: 10 SMMLV or more

Same seniority, but with a salary of 10 SMMLV or more.

• First year: 20 days.
• Second year: 15 days.
• Fraction: (180 × 15) / 360 = 7.5 days.
• Total: 42.5 days of salary.

To convert days into money, divide the base monthly salary by 30 and multiply by the resulting days. If you are unsure what counts as salary and what is a deduction, check our guide on how to calculate net salary and payroll deductions.

Fixed-term and project or task-based contracts

Here the logic is different and, in my view, more intuitive.

Fixed term: the severance equals the value of the salaries corresponding to the time remaining until the agreed term ends. If a one-year contract has 4 months left when the worker is dismissed without just cause, 4 months of salary are paid.

Specific project or task: the salaries for the time remaining to complete the task are paid, with a floor that cannot be less than 15 days of salary. If the project was almost finished, the floor prevents the severance from being zero. In this guide on project or task-based contracts we expand on the settlement of rights.

An honest warning: calculating the remaining time of a project is where the most disputes arise, because the completion date is usually an estimate. Put the scope of the task in writing from the start.

Salary base: what adds up and what doesn't

The base is the last basic salary plus the fixed or variable payments that constitute direct salary (Article 127 of the CST). For example, commissions, overtime and surcharges that are salary are included. The transportation allowance is not included in the base for the Article 64 severance, according to the Supreme Court's criterion.

When income is variable, the Labor Cassation Chamber clarified in December 2025 the criterion for calculating the base salary, and ruled out counting periods of contract suspension (Corte Suprema de Justicia, consulted in October 2026). If your case involves variable income, review that decision or consult a labor lawyer.

Severance is not the settlement: both are paid

The Article 64 severance does not replace the ordinary settlement. Severance pay, interest on severance, service bonus and compensated vacation are acquired rights that are always paid, whether or not there is just cause. If you pay only the severance and "forget" the rest, you open the door to a claim.

The Article 65 risk: back wages

If salaries and social benefits are not paid immediately when the contract ends, the worker can claim the late-payment penalty of Article 65 of the CST: one day of salary for each day of delay, up to 24 months. It is the most expensive part of a poorly managed dismissal.

The solution is not glamorous: have the settlement calculated and the payment ready before handing over the letter, and also prove payment of social security and payroll contributions.

Reinforced job stability: here paying compensation is not enough

With pregnancy, breastfeeding, disability or union protection, dismissal without prior authorization from the Ministry of Labor is ineffective and gives the right to reinstatement. Paying the Article 64 amount does not fix it. My advice is clear: in any of these situations, do not dismiss without advice. It also applies to pre-retirees and people with health protection, according to the case law of the Constitutional Court.

If there is disagreement and you need to replace the team

Differences about the classification of the dismissal or the settlement can be conciliated before authorized conciliation centers or Ministry of Labor inspectors. This procedure is public and free: be wary of intermediaries who charge commissions for filing a complaint.

Watch out for intermediaries: conciliation before the inspector is free, and a management salesperson on WhatsApp will not speed up your payment. If after the dismissal you need to fill the position, according to active listings on Colombia Move (October 2026), the technology jobs category has 1 active listing and the education category has zero.

Sources to cross-check: the CST text on Función Pública and the inspection, surveillance and control page of the Ministry of Labor. If your case depends on particular details, confirm with a labor lawyer.

Frequently asked questions

❓ What is the difference between a labor settlement and dismissal severance?

The settlement covers severance pay, interest, service bonus and vacation, which are always owed. The Article 64 severance is an additional payment that only applies when the contract ends unilaterally and without proven just cause. Both are paid separately (verify with the official source).

❓ How are fractions of a year calculated in an indefinite contract?

Multiply the days worked in the incomplete year by 20, or by 15 if the salary is 10 SMMLV or more, and divide the result by 360. For example, 180 days with the 20-day table give 10 days of salary (verify with the official source).

❓ Is the transportation allowance added to the severance?

No. The transportation allowance is not part of the base for the Article 64 severance, according to the Supreme Court's criterion. Only the ordinary salary and payments that constitute direct salary, such as commissions or overtime, are taken into account (verify with the official source).

❓ How much time does the employer have to pay, and what happens if it is late?

Payment must be made when the contract ends. If the employer is late, the worker can claim the Article 65 penalty: one day of salary for each day of delay, up to 24 months (verify with the official source).

❓ What happens if a pregnant worker is dismissed without just cause?

Dismissal without prior authorization from the Ministry of Labor is ineffective and gives the right to reinstatement. Paying the severance does not correct the violation, because reinforced job stability also protects breastfeeding, disability and union protection (verify with the official source).

❓ How do I avoid scams from intermediaries when claiming my severance?

Go directly to the Ministry of Labor or an authorized conciliation center, where conciliation is public and free. Be wary of anyone who charges a commission for filing the complaint or promises guaranteed results (verify with the official source).

❓ Where can I post a vacancy to replace someone?

You can post the vacancy on a job board in your sector or on a labor classifieds portal, without intermediaries. Your own network of contacts also works if the position is technical and local. Avoid paying a commission to someone who only forwards the ad and does not show you real candidates (verify with the official source).