In Puerto Rico, employees in the private sector are generally subject to the provision of the Island’s wrongful discharge or termination law. which provides, among other things, that covered employees who are discharged without just cause are entitled to statutory remedies.

In Puerto Rico, any oral or written agreement by which the employee binds him/herself to perform  work for wages or any other economic remuneration creates an employment relationship.  Unless otherwise specified, all employment contracts are deemed to be without a fixed- term duration and subject to Puerto Rico’s wrongful discharge/termination statute, Law No. 80 of May 30, 1976 (“Law No. 80”), P.R. LAWS ANN. tit. 29, § 185, et seq.

The statute specifies that every employee  contracted without a fixed term, who is discharged from his/her employment without just cause, shall be entitled to receive from his/her employer, in addition to the salary he/she may have earned:

(a) The salary corresponding to two (2) months, as indemnity, if discharged within the first five (5) years of service; the salary corresponding to three (3) months if discharged after five years (5) and up to fifteen (15) years of service; the salary corresponding to six (6) months if discharged after fifteen (15) years of service.

(b) An additional progressive compensation equal to one (1) week for each year of service, if discharged within the first five (5) years of service; to two (2) weeks for each year of service, if discharged after five (5) years and up to fifteen (15) years of service; to three (3) weeks for each year of service if discharged after fifteen (15) years of service.

The years of service shall be determined on the basis of all the preceding accrued periods of work during which the employee worked for the employer prior to his/her discharge, but excluding those which, because of a previous discharge or severance, have been compensated or have been subject to judicial adjudication.

The indemnity must  be paid on the basis of the highest rate of salary earned by the employee during the three (3) years immediately preceding his/her wrongful discharge.