{"id":58032,"date":"2025-06-19T11:00:00","date_gmt":"2025-06-19T10:00:00","guid":{"rendered":"https:\/\/www.fairlabor.org\/?post_type=resource&p=58032"},"modified":"2025-08-18T19:55:51","modified_gmt":"2025-08-18T18:55:51","slug":"advance-severance-payments-to-garment-workers-in-el-salvador-2","status":"publish","type":"resource","link":"https:\/\/www.fairlabor.org\/resource\/advance-severance-payments-to-garment-workers-in-el-salvador-2\/","title":{"rendered":"Advance severance payments to garment workers in El Salvador (Update)"},"content":{"rendered":"
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In El Salvador\u2019s garment sector, employers frequently pay workers an additional month\u2019s salary per year, labeled as an advance severance payment. Employers are not required by Salvadoran law to provide these payments in advance. However, employers see this practice as a way to reduce the risk of being unable to pay the legally required severance that would normally follow termination without cause. This risk is especially high in cases of mass layoffs or unexpected factory closures.<\/p>\n\n\n\n

The country is currently facing disruptions to its apparel industry from low domestic production and reallocation of production to other countries. This has resulted in an increased risk of non-compliance with local labor regulations and FLA\u2019s Workplace Code of Conduct<\/a>, also known as the Fair Labor Code, and Compliance Benchmarks.<\/p>\n\n\n\n

According to Article 58 of the Salvadoran Labor Code and Article 38, No. 11 of the Salvadoran Constitution, employers are required to pay severance in accordance of the law to workers that they terminate without cause (indemnizaci\u00f3n). <\/em>Workers are entitled to one month\u2019s salary for each year of employment. The law does not prohibit advancing severance payments.<\/p>\n\n\n\n

The lack of regulation by Salvadoran labor laws on advancing workers’ severance payments has allowed employers to implement practices that do not align with FLA standards or national regulations, raising concerns about the practice’s effectiveness despite the constructive intent behind these payments.<\/p>\n\n\n\n

Workers and unions support these payments because workers view them favorably \u2013 they feel like they are receiving an additional month\u2019s salary each year. However, because many workers\u2019 incomes are insufficient to meet their basic needs, most workers use the advance payment to meet current financial obligations rather than saving the money in case of termination.<\/p>\n\n\n\n

Through monitoring labor conditions at factories and investigating allegations from Salvadoran unions of persistent and systemic labor violations, FLA has identified cases of non-compliance with national regulations and FLA\u2019s Workplace Code of Conduct and Compliance Benchmarks in connection with advance severance payments.<\/p>\n\n\n\n

Three key issues are:<\/p>\n\n\n\n

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  1. Incorrect final severance payments<\/li>\n\n\n\n
  2. Unlawful agreements to avoid paying full severance <\/li>\n\n\n\n
  3. Opaque documentation and inequitable criteria<\/li>\n<\/ol>\n\n\n\n

    With the knowledge that advance severance payments are a common practice in El Salvador, companies sourcing from the country should work with their suppliers to ensure that the issues outlined in this brief are avoided, and all legal regulations and FLA standards are followed. <\/p>\n\n\n\n

    In the brief, FLA lays out five recommendations for companies and affiliates to correctly implement the practice of providing advance severance payments to garment workers in El Salvador.<\/p>\n\n\n <\/div>\n<\/div>\n\n\n\n

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