What Severance Pay Rules Must Employers Follow in Dominican Republic?

Which Employees Qualify for Severance Pay?

• Employees with an indefinite-term contract whose employment is terminated by the employer without serious misconduct generally qualify for severance.
• Employees dismissed without being given or paid statutory prior notice are entitled to both notice pay and severance pay.
• Employees with at least three months of continuous service gain protection to notice and severance under the Labor Code.
• Employees terminated for economic, technological, or organizational reasons usually qualify, provided the dismissal is not for proven just cause.
• Employees on fixed-term or project-based contracts may qualify only if the contract is ended early by the employer without a lawful reason.
• Employees who resign with cause attributable to the employer (constructive dismissal) can, in some cases, claim severance as if they were dismissed.

What Are the Legal Timelines for Paying Severance?

In the Dominican Republic, severance and related termination payments should be made promptly once the employment relationship ends, and in practice employers aim to pay within a few days. The Labor Code expects immediate settlement of accrued wages, unused vacation, and the Christmas bonus portion, and delays can trigger claims before the labor courts. Many employers document the termination date and payment date in a signed settlement (desistimiento) to show compliance. To reduce risk, your company should target payment on the termination date or within a maximum of 10 working days, keeping clear proof of calculation and receipt. For mass layoffs or complex cases, seek local legal advice before finalizing amounts and timelines.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly in the Dominican Republic, you risk labor claims, court-ordered payments, and additional financial exposure. Labor courts tend to interpret the Labor Code in favor of employees, so underpayment or late payment can quickly become expensive and reputationally damaging.

• Employees can file claims for unpaid severance, notice, and benefits, plus interest.
• Courts may award surcharges or indexation on overdue amounts.
• Non-compliance can trigger inspections or scrutiny from labor authorities.
• Disputes can lead to legal fees, management time, and potential settlement costs.
• Repeated issues may harm your employer brand and make hiring harder.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (EOR) such as the service described at https://www.playroll.com/employer-of-record does not remove the need to follow Dominican severance rules, but it can shift day-to-day compliance tasks. In a typical EOR model, the EOR is the legal employer on paper and is responsible for calculating and paying statutory severance, notice, and accrued benefits. However, your company, as the client, usually bears the economic cost of those payments under the commercial agreement with the EOR. If the EOR miscalculates or delays severance, employees may still bring claims against the legal employer, and the EOR can then seek reimbursement from you. You should ensure your EOR contract clearly allocates liability, requires local-law compliance, and gives you visibility into how severance is calculated and paid.

Be 100 Percent Compliant in Offering Severance with Playroll

Managing Dominican severance correctly means tracking each employee’s start date, salary history, and any changes in role or working hours so you can apply the Labor Code formulas accurately. Your company also needs a clear internal process for documenting the reason for termination, issuing written notices, and calculating all components owed, including accrued vacation and the proportional Christmas bonus. With Playroll, you get structured workflows and local expertise that help standardize these steps across your team.

Playroll’s platform centralizes employment data so severance calculations are based on up-to-date salary and tenure information, reducing the risk of disputes. Our local specialists can flag when a termination scenario may be considered unjustified, when additional documentation is needed, and what payment timelines are safest in practice. By combining automation with in-country guidance, Playroll helps your company stay fully compliant while giving your HR team clear, auditable records for every termination.