No. Puerto Rico does not recognize at-will employment. A termination without just cause in Puerto Rico creates a statutory severance obligation under Act No. 80 of May 30, 1976 (29 L.P.R.A. §§ 185a–185m): an employee hired for an indefinite period who is discharged without just cause is entitled to the payment known as the mesada.
This is the single most common mistake mainland companies make when they open operations in Puerto Rico. A termination that would be routine in Florida or Texas can create a severance obligation here.
What counts as just cause
Law 80 defines just cause by reference to the employee’s conduct and to the employer’s legitimate business needs. In general terms it includes:
- A pattern of improper or disorderly conduct
- Inefficient, negligent, late, or deficient performance
- Repeated violation of reasonable rules the employer has established and communicated in writing
- Full, temporary, or partial closing of operations
- Technological or reorganizational changes, or changes in the style, design, or nature of the product
- Reductions in employment made necessary by a decline in production, sales, or profits
- What the statute expressly excludes is equally important: a discharge made at the mere whim of the employer, or for reasons unrelated to the proper and normal operation of the business, is not just cause.
The other half of the analysis: what the employee owes
Most discussions of just cause stop at the Law 80 list, which is framed around what the employer may do. That leaves out the affirmative side.
Act 4-2017 codified the basic duties of every employee at Article 2.15 (29 L.P.R.A. § 122n). An employee is required to:
– (a) Fulfill the responsibilities and obligations of the position, consistent with the employer’s rules, good faith, and diligence
– (b) Observe the safety and hygiene measures the employer has established
– (c) Refrain from improper, disorderly, criminal, or immoral conduct that could reasonably affect the employer’s best interests
– (d) Comply with the employer’s orders and instructions in the regular exercise of its managerial authority
– (e) Not compete with the employer’s business, unless otherwise provided by law or by an employment agreement
– (f) Contribute to improving the productivity and competitiveness of the employer’s business
– (g) Comply with any other duties arising from the employment contract or from the employer’s rules, provided they are not contrary to law, morals, or public order
Read together, the two provisions form a single analysis. The conduct-based grounds for discharge under Law 80 are, in substance, the consequence of breaching one of these duties. Just cause is not a list the employer selects from — it is the failure of the employee to meet an obligation the statute itself imposes.
This has a practical consequence for employers. Handbooks, performance improvement plans, and disciplinary documentation are considerably stronger when they are written against these statutory duties rather than against generic policy language. A termination supported by a documented breach of a duty the Legislature defined is a materially different case from one supported only by an employer’s internal rule.
What the severance costs
The formula depends on when the employee was hired.
Hired on or after January 26, 2017: three months’ salary plus two weeks per full year of service, capped at nine months’ salary. Salary is calculated on the highest salary earned during any 30-day period in the year preceding the discharge.
A point online sources get wrong
Act 41-2022 changed these rules — briefly. It applied a single formula to all employees regardless of hire date and repealed the nine-month cap.
On March 3, 2023, Judge Laura Taylor Swain of the U.S. District Court for the District of Puerto Rico declared Act 41-2022 null and void ab initio, on the Financial Oversight and Management Board’s motion, for failure to comply with Section 204(a) of PROMESA. Because the nullification was ab initio, Act 41 is treated as never having had legal effect, and the Act 4-2017 framework governs.
Related points employers ask about
How long does an employee have to sue? One year from the date of discharge for terminations after January 26, 2017. The prior period was three years.
Is there a probationary period? Yes, and it is automatic — twelve months for executive, administrative, and professional employees, nine months for all others. No written probationary agreement is required. An employee discharged during a valid probationary period is not owed the mesada.
Is the mesada the only exposure?
No. It is the exclusive remedy under Law 80 itself, but it does not bar claims under other statutes — discrimination under Law 100, retaliation under Law 115, or federal claims under Title VII, the ADA, or the ADEA. A single termination can generate several parallel claims.
This article is general information about Puerto Rico law and is not legal advice. Employment terminations turn on specific facts. Fleming Law Offices advises employers on termination decisions, documentation, and dispute containment. Contact us to discuss a specific situation.
Employers who document performance and discipline against these statutory duties are in a materially stronger position if the termination is later challenged. Learn more about our labor and employment risk defense practice in Puerto Rico.
Robert Alex Fleming is a corporate and trial attorney with over 35 years of experience advising and representing clients in Puerto Rico. He leads Fleming Law Offices, LLC, where his practice is informed by decades of experience in commercial matters, litigation, governance, and dispute resolution. Mr. Fleming is admitted to practice before the courts of Puerto Rico, several federal courts, and the state courts of New York and Texas. He holds an LL.M. in Commercial Law and an MBA from the Kelley School of Business at Indiana University.