The Ecuadorian labor regime has moved toward a highly worker-protective system, characterized by significant severance payments and a progressive expansion of the cases of enhanced job stability.

In this article, we analyze the cost of the unilateral termination of the employment relationship in Ecuador -known as wrongful dismissal-, as well as the new protections introduced in recent years.

Ecuador has consolidated a markedly protective labor model. This phenomenon responds to a public policy aimed at protecting vulnerable groups, but it poses significant challenges in terms of domestic or foreign investment.

How much does a wrongful dismissal cost in Ecuador?

The general rule for unilateral termination by the employer is the payment of severance calculated on the basis of the worker’s remuneration. This includes: (i) up to three years of service: three monthly remunerations; and (ii) more than three years: one remuneration for each year worked or fraction of a year (up to a maximum of 25 remunerations). In addition, there is the termination notice bonus (bonificación por desahucio), equivalent to 25% of the last remuneration for each full year of service.

This compensation scheme, already burdensome in itself, may increase considerably when additional protection conditions concur. This requires employers to carry out a prior and ongoing assessment of potential labor contingencies, since failure to identify them in a timely manner may result in substantially greater financial obligations.

Enhanced job stability in Ecuador: which workers are protected

One of the most relevant changes in Ecuadorian labor law has been the expansion of the cases of enhanced job stability, which limit the employer’s power to unilaterally terminate the employment relationship.

In particular, the following cases stand out:

• Pregnancy, maternity and breastfeeding: The legal system recognizes the concept of ineffective dismissal against pregnant or breastfeeding women, which has been extended from 9 to 15 months, significantly extending the protection period. Once ineffectiveness is declared, the employment relationship is deemed not to have been interrupted, and the employer must pay the outstanding remunerations with a 10% surcharge. If the worker decides not to continue the employment relationship, she is entitled to compensation equivalent to one (1) annual remuneration, in addition to the general severance payments for wrongful dismissal.
• Union leaders: They are also protected under the concept of ineffective dismissal, with the right to reinstatement and the corresponding remunerations.
• Persons with disabilities and those who support a person with a disability: Following the 2025 amendment to the Organic Law on Disabilities, in case of dismissal, in addition to the additional compensation equivalent to 18 times their best historical remuneration, workers may request reinstatement to their job, as in the previous case. However, the absence of secondary regulations creates uncertainty regarding their possible concurrent application.
• Persons with catastrophic or serious occupational diseases and with HIV: These workers enjoy enhanced stability and cannot be dismissed.
• Workers with cancer, caregivers and substitutes: Since 2026, protection has been recognized for these groups. Enhanced stability is triggered especially when it is shown that the termination is due to the health condition, although there is still no secondary regulation that clearly defines its scope.

Additional compensation: discriminatory dismissal, workplace harassment and occupational disease

Less visible, but equally relevant in terms of financial contingency, are the compensation payments arising from:

• Discriminatory dismissal: Additional compensation equivalent to one (1) year of remuneration.
• Proven workplace harassment: It also gives rise to additional compensation of one (1) year of remuneration.

In both cases, these circumstances must be proven before the competent labor authority.

Additionally, in situations such as refusing to reinstate a worker after an occupational disease, the employer may face additional compensation of up to six (6) months of remuneration, without prejudice to other applicable rights.

How employers can anticipate these contingencies

In this context, the Ecuadorian labor regime shows a clear trend toward strengthening enhanced job stability and increasing termination costs.

This scenario requires employers to adopt a preventive approach, based on the early identification of protection conditions through periodic information gathering, and on the design of hiring strategies that allow the worker to be adequately assessed during the initial stages of the employment relationship.

Frequently asked questions about wrongful dismissal in Ecuador

How much is paid for wrongful dismissal in Ecuador?

With up to three years of service, the severance equals three monthly remunerations. With more than three years, one remuneration is due for each year worked or fraction of a year, up to a maximum of 25 remunerations. In addition, there is the termination notice bonus, equivalent to 25% of the last remuneration for each full year of service.

What is enhanced job stability?

It is the set of cases in which the law limits the employer’s power to unilaterally terminate the employment relationship. In Ecuador, it protects, among others, pregnant or breastfeeding women, union leaders, persons with disabilities and those who support them, workers with catastrophic or serious diseases and with HIV and, since 2026, workers with cancer, caregivers and substitutes.

What happens if a pregnant or breastfeeding worker is dismissed?

The dismissal is considered ineffective: the employment relationship is deemed not to have been interrupted, and the employer must pay the outstanding remunerations with a 10% surcharge. If the worker decides not to continue, she is entitled to compensation equivalent to one annual remuneration, in addition to the general severance payments for wrongful dismissal.

What compensation applies for discriminatory dismissal or workplace harassment?

In both cases, additional compensation equivalent to one year of remuneration, provided that the circumstance is proven before the competent labor authority.

This document does not constitute a legal opinion; it is merely a general informational bulletin. Should you require specific advice, please contact us at the following addresses: