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In April 2026, the National Court of Justice of Ecuador issued Resolution No. 04-2026, through which it unified the legal criterion regarding the method for calculating the lump-sum employer retirement benefit (“global fund”), thereby putting an end to the contradictory rulings that had existed for years within the Specialized Labor Chamber.
Article 216 of the Ecuadorian Labor Code grants employees with 25 or more years of service the right to employer-sponsored retirement benefits (jubilación patronal). When the parties agree to settle this benefit through a single payment, such modality is referred to as a “global fund” or lump-sum payment.
The controversy arose from the lack of a uniform criterion to determine the employee’s life expectancy for purposes of calculating such global fund, which resulted in conflicting judicial decisions:
- Criterion A: Applied the life expectancy published by the National Institute of Statistics and Census (INEC) in force as of the date of termination of the employment relationship. Under this criterion, the ministerial resolutions regulating the calculation of employer retirement benefits were considered merely illustrative or referential.
- Criterion B: Applied the ministerial resolutions in force as of the date of termination of the employment relationship. In the absence of applicable ministerial resolutions, pension payments were projected until the employee reached 89 years of age, pursuant to the coefficient table set forth in Article 218 of the Labor Code, plus one additional year in accordance with Article 217 of the same legal body.
What did the Court decide?
The Full Bench of the National Court of Justice adopted Criterion B in order to guarantee legal certainty and consistency.
Consequently, the binding criterion distinguishes between two scenarios depending on the date of termination of the employment relationship:
- If the employment relationship ended during the validity of the ministerial resolutions, the applicable ministerial resolution in force as of the termination date shall govern the calculation. Currently, the applicable regulation is Ministerial Resolution MDT-2016-0099.
- If the employment relationship ended prior to the enactment of the ministerial resolutions, the calculation shall project pension payments until the employee reaches 89 years of age, plus one additional year.
This resolution is mandatory and binding upon all judges and courts throughout Ecuador.
For further information or legal advice regarding the application of this ruling, please contact TobarZVS at laboral @ tzvs.ec.
© TobarZVS
This publication contains information of general interest and does not constitute legal opinion on specific issues. Any analysis will require legal advice from the Firm.