In short
Act 80-1976 gives an employee hired without a fixed term who is dismissed without just cause the right to an indemnity — the "mesada" — that today has two parts: an amount equal to three (3) months of salary, provided the applicable probationary period has ended, and an amount equal to two (2) weeks of salary for each full year of service. In no case shall the indemnity exceed nine (9) months of salary, with one important exception: that cap does not apply to employees hired before the Labor Transformation and Flexibility Act took effect, whose indemnity is computed under the prior state of law. For the computation, a month is four weeks and the base is the highest salary rate earned within the three years before the dismissal. The law declares the right non-waivable: any contract in which the employee waives the indemnity is void, although once the dismissal has occurred — or notice of intent to dismiss has been given — the right may be settled. Payment of the indemnity is free of income tax up to the amount the law provides. And the deadline is short: one (1) year from the effective date of the dismissal.
What is it?
The "mesada" is not a punishment of the employer nor damages: it is a fixed amount the law sets for dismissal without just cause. Just cause, per Article 2, is a cause not motivated by legally prohibited reasons and not the product of the employer’s mere whim, and includes a pattern of improper or disorderly conduct; a pattern of deficient, inefficient, unsatisfactory, poor, tardy or negligent performance; repeated violation of reasonable rules of which you were timely given a written copy; total, temporary or partial closing of operations; technological or reorganization changes; and workforce reductions due to falling production, sales or profits. Note the word that repeats: pattern. An isolated incident is not what the law describes.
Who can do it?
Every employee who works for an employer for remuneration, hired without a fixed term, who has completed the probationary period. The law defines who is outside it and it is worth knowing before claiming: it does not include independent contractors, government employees, employees covered by a collective bargaining agreement in force, nor employees under a temporary, fixed-term or project employment contract. And "employer" does not include the Government of Puerto Rico or its three branches, departments, agencies, instrumentalities, public corporations or municipal governments, nor the Government of the United States. The automatic probationary period is twelve (12) months for executives, administrators and professionals under the Federal Labor Standards Act, and nine (9) months for everyone else; employer and employee may agree on a shorter one, and in unionized jobs the one agreed between employer and union governs.
Requirements
- Having been hired without a fixed term and having completed the applicable probationary period: dismissal of a probationary employee is not subject to this law’s indemnity.Verified against the official source
- That the dismissal occurred without just cause, as Article 2 defines it.Verified against the official source
- Claiming within one (1) year from the effective date of the dismissal.Verified against the official source
Documents you need
Cost
Step by step
Step 1: Confirm the law covers you
Before calculating anything: Act 80 does not apply to independent contractors, government employees, employees under a collective bargaining agreement in force, nor to anyone under a temporary, fixed-term or project contract. It also does not apply if you were still in the probationary period. And the employer must be private: the definition excludes the Government of Puerto Rico, its branches, agencies, public corporations and municipalities, and the federal Government.
Step 2: Add the two parts
Three (3) months of salary, plus two (2) weeks of salary for each full year of service. For the computation, a month is four (4) weeks. Years of service are determined on all prior accumulated work periods with the same employer, provided the relationship was not interrupted for more than two (2) years and the services were rendered in Puerto Rico. Years already compensated by an earlier dismissal, separation or transfer are excluded.
Step 3: Apply the nine-month cap — or check it does not apply to you
In no case shall the indemnity exceed nine (9) months of salary. But the cap does not apply to employees hired before the Labor Transformation and Flexibility Act took effect: their indemnity is computed using the state of law prior to that act. If you had been at the company for years before 2017, that sentence can change your number entirely, and it is the main reason to consult a labor attorney before signing anything.
Step 4: If you were pushed to resign, read Article 5 carefully
A dismissal includes, besides termination, indefinite suspension or suspension for more than three months, and a resignation motivated by employer actions aimed at inducing or forcing you to resign: imposing more onerous working conditions, cutting your salary, demoting you, or subjecting you to abuse or humiliation in deed or word. But the law sets the limit in the same sentence: it constitutes a dismissal only when the only reasonable alternative left to you is to leave the post. Any annoyance or unpleasant condition is not enough; the actions must be arbitrary, unreasonable and capricious, generating a hostile atmosphere that entirely prevents your healthy stay at work. And if it is abuse or humiliation, it must be of substantial magnitude. Merely alleging you were forced is not enough: you must show concrete facts.
Step 5: If it was a workforce reduction, check seniority
When the dismissal is for closure, technological or reorganization changes, or a reduction due to falling volume — subsections (d), (e) and (f) — the employer must preferentially retain the most senior employees within their occupational classification, and give them preference in rehiring if within the following six (6) months it needs to employ someone in equal or similar work. The employer may depart from seniority only where there is a reasonably clear or evident difference in favor of the capacity, productivity, performance, competence, efficiency or conduct record of the compared employees. Article 3-A adds that if the employer has several establishments, the comparison is made within each physical establishment impacted, save the exception that article describes.
Step 6: Do not sign away the right
Article 9 declares the right to the indemnity non-waivable and voids any contract, or part of one, in which the employee waives it. What can be done, once the dismissal has occurred or notice of intent to dismiss has been given, is to settle the right, provided all the requirements of a valid settlement contract are present. The difference between the two is timing: a clause signed on hiring is worthless; an agreement negotiated after the dismissal is not.
Step 7: Claim within the year
The rights this law grants prescribe upon the passage of one (1) year from the effective date of the dismissal. It is a short term and it does not stop on its own. If you file a suit founded exclusively on this law, the court will hold a conference no later than sixty (60) days after the complaint or claim is answered, with the parties required to appear or send someone authorized to settle.
Where to do it
The severance claim goes to court, and the law itself contemplates a suit founded on it. The Department of Labor and Human Resources administers the law — the Secretary is empowered to adopt the necessary regulation — and its Labor Standards Bureau handles wage and benefit claims. Many dismissal claims are also processed under the summary procedure of Act 2-1961. If your dismissal also has a discrimination component, a retaliation-for-testimony component, or a harassment component, those are separate laws with their own deadlines and remedies, and they are worth evaluating before the year runs out.
How long it takes
What to do if something goes wrong
The first thing to say about this law is which version is in force. OGP’s compilation carries a warning up front: it is compiled omitting Act 41-2022’s amendments, which were annulled by a decision of Judge Laura T. Swain issued on March 3, 2023. That is, the numbers that govern are Act 4-2017’s — three months plus two weeks per year, capped at nine months — not the ones circulated in 2022. Any article or summary written between 2022 and 2023 may be citing an annulled law. Two money details the law puts in writing: payment of the indemnity, and any equivalent voluntary payment the employer makes by reason of the dismissal, is free of income tax — anything paid in excess of the law’s amount is taxable — and no deduction or withholding shall be made on the indemnity, except those required by acts of Congress. A separate protection living in Article 2 that almost nobody cites: an employee’s collaboration or statements about the employer’s business in an investigation before any administrative, judicial or legislative forum in Puerto Rico shall not be considered just cause, when they are not defamatory and do not disclose privileged information; and an employee dismissed that way is entitled to an order of immediate reinstatement and compensation for wages and benefits lost from the dismissal until reinstatement. What we do not publish: the state of law before Act 4-2017, which is what applies to those hired before it. The compilation does not restate it and we are not going to reconstruct it from memory.
Common mistakes
- Using Act 41-2022 numbers: it was annulled in 2023 and the official compilation expressly omits it.
- Assuming the nine-month cap without checking whether you were hired before Act 4-2017, in which case it does not apply.
- Letting the year lapse: the right prescribes one year from the effective date of the dismissal.
- Calculating on your current salary instead of the highest salary rate of the last three years.
- Signing a clause on hiring that waives the severance: it is void.
- Believing any unbearable boss equals a dismissal: Article 5 requires that resigning be the only reasonable alternative.
- Forgetting that a voluntary employer payment for the dismissal is credited against the law’s indemnity.
- Claiming under this law as a government employee, an independent contractor, or while under a collective bargaining agreement in force.
Frequently asked questions
How much is the severance?
An amount equal to three (3) months of salary, provided you completed the probationary period, plus two (2) weeks of salary for each full year of service. In no case shall it exceed nine (9) months of salary, except for employees hired before the Labor Transformation and Flexibility Act, to whom the cap does not apply. A month is four weeks for this computation.
How long do I have to claim?
One (1) year from the effective date of the dismissal itself. Claims for dismissals prior to the Labor Transformation and Flexibility Act’s effective date are subject to the prescription term previously in force.
If I was forced to resign, does it count as a dismissal?
It can count, but the standard is narrow. A resignation motivated by employer actions aimed at forcing you — more onerous conditions, a pay cut, a demotion, abuse or humiliation — constitutes a dismissal only when the only reasonable alternative left to you is to leave the post, and the abuse must be of substantial magnitude. Merely alleging it is not enough: you must show concrete facts establishing the employer’s intent to harm your standing as an employee.
Is the severance taxed?
Payment of the indemnity this law provides, and any equivalent voluntary employer payment by reason of the dismissal, is free of income tax, whether paid at the time of dismissal or later, by settlement agreement or by judgment. Any amount paid in excess of the law’s amount is subject to tax.
How long is the probationary period?
Twelve (12) automatic months for executives, administrators and professionals under the Federal Labor Standards Act and DTRH regulation; nine (9) automatic months for other employees. Employer and employee may agree on a shorter one, and in unionized jobs the one agreed between employer and union governs. Dismissal of a probationary employee is not subject to this law’s indemnity, but the probationary period does not limit vacation accrual and is automatically interrupted if you take a leave authorized by law.
What if the company was sold?
In the transfer of a going business, if the new acquirer keeps using your services you are credited the time worked under the previous owners. If the acquirer chooses not to continue with you, the previous employer answers and the buyer must withhold the corresponding amount from the sale price. If the new owner dismisses you without just cause after the transfer, they answer, and the law establishes a lien on the sold business to cover the claim amount.
Official sources
These are the government pages this guide is based on.
- Departamento del Trabajo y Recursos Humanos (DTRH)
Departamento del Trabajo
bvirtualogp.pr.gov
- Department of Labor and Human Resources
DTRH
www.trabajo.pr.gov
Last verified
August 23, 2026
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