Separation Pay

Dear Atty.
In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. Atty. for example my basic pay is 20,000 a mo. Does it mean I am entitled to receive 20,000 x 4 years? My company told me that it will only be half mo x 4 since it is bigger compared to getting 20,000 only... Pls help me. Thank you!

that's not a correct interpretation. they have to prove business losses if they will pay you only 1/2 month per year of service.

Hi!

Just to give insights re: Retrenchment Pay.

As per Labor Code: "In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher."

Meaning it's EITHER 1 month basic salary mo OR 1/2 ng basic salary mo X number of years in the company. Kung ano ang mas malaki ang value yun ang makukuha mo.

Ex.
Basic Sal=P20,000.
1/2 Basic Sal x Number of Years
P10,000 X 4 years = P40,000

Retrenchment / Separation Pay = P40,000


Hope this helps,

but gelo, note that there is an additional requirement to prove that the company is in financial distress, absent which, it should be considered redundancy and computed at 1 mo for every year of service.

Hi! Atty.,

Is the the company required to present this to its employee or just to DOLE/NRC?


Thank you!

not if you just ask, you have to file a case against the company.

AttyLLL,

i'm working for an NGO as its Executive Director. I requested our Board to review a salary upgrade request for the staff. They formed an ad hoc committee for that issue. I filed my resignation last June 27, with July 27 as effectivity date. They haven't come up of a decision yet regarding the matter.

As i was reading the labor code re the separation pay, i learned that we should have been paid a separation pay in 2010 by this NGO for applying a new registration with SEC.
i.e. old name = bicol mktg assoc; new name = Phil mktg Assoc - Bicol. As i was the person who transacted with the SEC for this registration, i'm quite sure it is not a change of name, therefore, a new organization.

They filed a new name because of government compliance problems with the old one; No SSS, philhealth, SEC cert has been revoked, etc.

This NGO, aside from membership fees has other income generating projects, as of this time, has more than half a million fund, paying only 2 staf, me and another one.

Would my demand for a separation pay from that old organization be granted? would they argue that the organization is just a non-profit entity?

your immediate response will be highly appreciated. thank you so much.

if the new company carried over your tenure then i would argue that separation pay is not necessary and that the employees agreed to it.

nevertheless, you can demand for it and file a money claim at nlrc before 3 years expire

Thank you so much Atty LLL for your reply. The present organization did not signed with us a new contract for the new organization, so i guess i can say there was no continuation of tenure.

I am employed for 5 years with my current Company but on my 3rd year, my Company (Manages 4 separate companies)was consolidated with these 4 Company's and the new name of the Corporation came out. The same business line and no other changes except names. Maybe its for tax purposes.
We were paid with 1/2 month salary multiplied by number of years employed plus 13th month pay and tax refund.