Separation Pay

Separation pay is an additional pay provided to a covered employees who have been separated from employment through no fault of their own. Employees may be separated from their employment due to authorized causes. Separated employees are not at fault, instead due to legitimate business reasons, their employment had to be severed.

1. Concept

Separation pay is an additional pay given to employees who are separated from their employment due to authorized causes (e.g. installation of labor-saving devices, redundancy, retrenchment, etc.) as these employees are not at fault since their employment was ended due to legitimate business reasons.

Employees who resigned are not entitled to separation pay as they themselves decided to leave their employment.

As a general rule, employees who are terminated from their employment due to just causes (e.g. serious misconduct, willful disobedience, gross and habitual neglect of duty, etc.), are not entitled to separation pay, as these employees are at fault. However, there are exceptions as discussed below.

2. The benefit

The benefit consists of either ½ month or 1 month pay per year of service, depending on the authorized cause.

3. The Computation

Regardless of the computation below, a fraction of at least six (6) months is considered as one (1) whole year.

a. Higher of one month pay or one-half (1/2) month pay for every year of service

Whichever is higher of one month pay or one-half (1/2) month pay for every ye...

 



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