What Severance Pay Rules Must Employers Follow in Bolivia?

Which Employees Qualify for Severance Pay?

• Employees with an indefinite-term contract who are dismissed without just cause are generally entitled to statutory severance.
• Employees who resign for employer breach or serious modification of essential terms may claim constructive dismissal and severance.
• Fixed-term employees may be owed compensation if the contract is ended early without a legally valid reason.
• Employees with at least three months of continuous service typically qualify for seniority-based severance calculations.
• Pregnant employees, union leaders, and other specially protected workers may be entitled to reinstatement or enhanced compensation if dismissed unlawfully.
• Foreign employees working in Bolivia under local employment contracts are usually covered by the same severance rules as Bolivian nationals.

What Are the Legal Timelines for Paying Severance?

In Bolivia, severance and all final payments should be made as soon as the employment relationship ends, and in practice employers aim to pay on the termination date or within a few days. Labour authorities and courts expect no unjustified delay, especially where dismissal is unilateral. If there is a dispute, you should still pay any undisputed amounts promptly and document your calculations. Interest and monetary updating can apply if payment is late, increasing your eventual liability. To stay safe, your company should target payment within the same pay cycle and keep signed receipts or bank proof of payment.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly in Bolivia, you risk administrative sanctions, court-ordered back payments, and additional financial burdens. Labour inspectors and courts tend to interpret protections in favor of the employee, so non-compliance can quickly become expensive and reputationally damaging.

• Labour courts can order payment of outstanding severance, accrued benefits, and monetary updating or interest.
• You may face fines or sanctions from labour authorities for non-compliance with termination procedures.
• Employees can seek reinstatement in cases of unlawful or discriminatory dismissal, especially for protected categories.
• Legal disputes can add attorney fees, court costs, and management time to the overall cost of termination.
• Repeated violations can damage your employer brand and increase scrutiny of all your employment practices.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (EOR) such as https://www.playroll.com/employer-of-record does not remove the need to follow Bolivian severance rules, but it can shift day-to-day compliance work. In a typical EOR model, the EOR is the legal employer on paper and is responsible for calculating and paying severance under Bolivian law. However, your company, as the client, usually bears the economic cost through your service fees and remains exposed if you instruct an unlawful or discriminatory termination. Bolivian authorities may look at the substance of the relationship, so sham arrangements that try to avoid labour rights can be challenged. A reputable EOR will align contracts, policies, and termination practices with local law to reduce these risks.

Be 100 Percent Compliant in Offering Severance with Playroll

Playroll helps your company navigate Bolivia’s strict severance framework by standardizing contracts, tracking tenure, and applying the correct statutory formulas. Your team gets clear visibility into estimated severance costs before you make termination decisions, so you can plan budgets and avoid surprises. We also help you document just cause, notice, and settlement agreements in a way that aligns with Bolivian labour practice.

With Playroll as your global employment partner, you can outsource payroll, benefits, and severance administration while keeping strategic control over your workforce. Our local experts monitor legal changes, from new Supreme Decrees to updated minimum wage and indexation rules, and update your processes automatically. That means fewer disputes, cleaner audits, and a smoother exit experience for your employees in Bolivia.