When analyzing employees’ right´s on redundancy, caused by the unilateral termination on behalf of the employer, Colombian legislation has determined that the compensation to be paid must include amounts derived from lost profits and direct damages. Redundancy rights in Colombia will vary depending on the time worked and the salary accrued.

In fix term labor agreements, the indemnification amount will be equal to the sum of the monthly salaries that would have been accrued until the end of the term of duration of the agreement.

For specific work or task labor agreements the indemnification amount will be equal to the sum of the monthly salaries that would have been accrued until the end work or task, but under no circumstance may be calculated for less than 15 days.

On another note, for indefinite term duration agreements, redundancy rights will be calculated as follows: (a) for employees earning a salary of less than ten (10) legal monthly minimum salaries: (i) thirty (30) days of salary when the employee has been engaged for a period not exceeding one (1) year, and (ii) if the employee has been engaged for more than one (1) sequent year, he/she will be entitled to thirty (30) days of salary for the first year, and twenty (20) days for every additional year or fraction thereof; and (b) for employees earning a salary of more than ten (10) legal monthly minimum salaries: (i) twenty (20) days of salary when the employee has been engaged for a period not exceeding one (1) year, and (ii) if the employee has been engaged for more than one (1) sequent year, he/she will be entitled to twenty (20) days of salary for the first year, and fifteen (15) days for every additional year or fraction thereof. Many would think that redundancy rights would cover entirely those damages derived from the termination of the labor relationship (loss of profit and direct damages). However, this situation has been dismissed by the Court according to several rulings where it has acknowledged additional moral damages.

Thus, employers not only have to take into account the amount of the legal indemnity on account of the labor dismissal, but also, the costs that could arise for moral damages. The probability of being condemned to pay moral damages –in addition to the legal indemnity- is becoming stronger when employers proceed with dismissal procedures, given that some former employees try to allege that the above mentioned criterion has been triggered and that they are entitled to an additional compensation for this concept. Nonetheless, as mentioned in the Constitutional Court Ruling C- 150 of 2000, in order to be entitled to moral damages, the interested party must evidence that the dismissal did not only cause material damages, but also, a moral impact, which was even greater than the one estimated by the employer when terminating the agreement. Thus, moral damages should be considered by employers, if and only if, the applicable criteria’s give reason to take them into account, case in which it would be advisable to terminate the relationship my mutual consent formalized by means of a settlement agreement avoiding any judicial claims.