What Severance Pay Rules Must Employers Follow in Venezuela?

Which Employees Qualify for Severance Pay?

• Employees hired under indefinite-term contracts generally accrue seniority benefits and are entitled to severance-type payments on termination.
• Fixed-term and specific-task employees may qualify for severance if terminated before the agreed end date without just cause.
• Employees dismissed without legally proven just cause are typically entitled to enhanced indemnities in addition to their seniority benefits.
• Employees who resign for employer breach or serious cause recognized by law can be treated similarly to unjustified dismissal for severance purposes.
• Managers and white-collar staff are covered by LOTTT rules unless they fall under a narrow category of true senior executives with different arrangements.
• Probationary or very short-service employees may have reduced entitlements but still accrue seniority benefits from day one of service.

What Are the Legal Timelines for Paying Severance?

In practice, you should aim to pay all severance-related amounts on the employee’s last working day or within a few business days of termination. LOTTT requires prompt settlement of wages and benefits, and labor inspectors expect no undue delay. Many employers in Venezuela finalize calculations in advance, then reconcile any final adjustments shortly after exit. Where disputes arise over the amount, it is common to pay the undisputed portion immediately and document the balance under discussion. Paying late can trigger indexation, interest, and exposure in labor courts, so your company should treat the payment deadline as a top compliance priority.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly in Venezuela, you risk financial, administrative, and reputational consequences. Labor courts and inspectors tend to favor employees, and non-compliance can quickly escalate into costly claims. Beyond the core severance amount, you may also face monetary updates, interest, and potential fines from labor authorities.

• Courts can order payment of outstanding severance plus monetary correction and legal interest.
• Labor inspectors may impose administrative fines for violations of LOTTT obligations.
• Non-compliance can lead to reinstatement orders in cases of unjustified dismissal.
• Repeated or serious breaches can damage your company’s ability to defend future labor claims.
• Public disputes may harm your employer brand and make hiring in Venezuela more difficult.

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 Venezuelan severance rules, but it can shift day-to-day compliance work to the EOR. In most structures, the EOR is the legal employer responsible for calculating and paying seniority benefits and termination indemnities. However, your company, as the economic beneficiary of the work, can still be named in claims if the arrangement is challenged as a disguised employment relationship. You should ensure your EOR contract clearly allocates severance liability, funding obligations, and documentation duties. Regular audits and coordinated termination planning help keep both you and the EOR aligned with LOTTT requirements.

Be 100 Percent Compliant in Offering Severance with Playroll

Playroll helps your company navigate Venezuela’s complex severance landscape by standardizing how you track seniority benefits, base salary, and statutory allowances. Our team monitors LOTTT updates, case law trends, and indexation practices so your severance calculations stay aligned with current expectations. You get clear breakdowns of what is owed on each termination, reducing the risk of underpayment or disputes.

When you use Playroll as your global employment partner, we coordinate closely with local experts and, where relevant, your chosen EOR to execute compliant exits. We help you plan timelines, prepare documentation, and communicate entitlements transparently to employees. That way, your team can focus on business decisions while we help you stay 100 percent compliant with Venezuelan severance rules.