In Honduras, the constitutional obligation to pay unpaid wages, commonly referred to as “back pay”, remains one of the most sensitive liabilities in labor matters. This provision requires that when a dismissal is declared unjustified, the employer must cover the wages accrued from the date of termination until the final judgment is issued.
The practical challenge stems from judicial delays: in labor courts, particularly in Francisco Morazán, hearings may be scheduled six months to a year apart, significantly increasing the amount an employer may ultimately face in an unfavorable lawsuit.
Why this matters for companies
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Greater financial exposure:
In cases that extend 12 to 18 months, unpaid wages can far exceed the amount of statutory benefits or severance payments.
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Budgetary and financial impact:
This risk should be considered when planning labor contingencies, assessing internal disputes, and conducting audits or due diligence processes.
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Influence on hiring and termination decisions:
A poorly documented or rushed termination can result in substantial liability, even when the company acted in good faith.
Best practices to mitigate risks
- Thoroughly document any disciplinary process or grounds for termination.
- Review employment contracts, internal policies, and disciplinary regulations to ensure they are applicable and compliant with current laws.
- Exhaust conciliation mechanisms when feasible to avoid long and costly proceedings.
- Train middle management and Human Resources teams to prevent formal errors that may lead to litigation.
- Conduct periodic labor audits to identify exposure points before they escalate into claims.
Where could regulation evolve?
Various sectors are discussing the possibility of establishing a time limit for unpaid wages, aiming to balance worker protection with business sustainability. Although no formal proposal exists yet, the issue will remain on the agenda due to its impact on competitiveness and the investment climate.
