redundancy

good day po.

ask lang po, last January 2013, may plan n ang company A n alisin un mga tao s finance due to management decision and i outsource n un finance s india. n explain nmn po s min un case and we will be paid of a certain amount. then i have applied to a sister company of company A, lets call it company b.
I receive my final pay from company A then this day, feb 11, 2014, i have received a notice from HR that they will deduct an amount of 12k, payable in full or salary deduction because of the final pay that I have received from company A.

as far as I know, redundancy is not subject to tax, am i correct?
ano po kaya ang pedeng gwin?

salamat po

jiehaze

henjie espiritu wrote:good day po.

ask lang po, last January 2013, may plan n ang company A n alisin un mga tao s finance due to management decision and i outsource n un finance s india. n explain nmn po s min un case and we will be paid of a certain amount. then i have applied to a sister company of company A, lets call it company b.
I receive my final pay from company A then this day, feb 11, 2014, i have received a notice from HR that they will deduct an amount of 12k, payable in full or salary deduction because of the final pay that I have received from company A.

as far as I know, redundancy is not subject to tax, am i correct?
ano po kaya ang pedeng gwin?

salamat po

jiehaze

Clarify first what the deduction is all about. Also, since separate company yan, dapat wala na silang pakialam sa nangyari sa kabila.

thanks po, un deduction daw po is tax deficit which i have incurred dahil daw po s final pay n nreceive ko s company A which is 40k lng plus po, which in short, parang naging part sya ng income ko for 2013. which i believe n hindi dapat ganun. prng bonus un lumalabas n nrcv ko s company A.

thanks po.

henjie espiritu wrote:thanks po, un deduction daw po is tax deficit which i have incurred dahil daw po s final pay n nreceive ko s company A which is 40k lng plus po, which in short, parang naging part sya ng income ko for 2013. which i believe n hindi dapat ganun. prng bonus un lumalabas n nrcv ko s company A.

thanks po.

Dapat sa final pay adjusted na yan nila, bawasan ang dapat, etc.

How long did you stay with Company A?
Redundancy ba talaga ang sinabi nila - so ilang months na sweldo ang binigay nila?

Ano ang nakalagay sa BIR form 2316 na binigay nila kasama ng final pay mo?

Maybe you should provide more details so we can determine if you do owe them anything.

redundancy pay is taxable.. only 10 days of leave credits if included is not taxable.

AFAICR, separation pay due to redundancy is non-taxable.

Separation of Employee due to Redundancy - Under Section 32(B)(6)(b) of the Tax Code of 1997, any amount received by an official or employee or by his heirs from the employer as a consequence of separation of such official or employee from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee shall not be included in the gross income and shall be exempt from taxation under Title II of the Tax Code of 1997 regardless of age or length of service. The phrase "for any cause beyond the control of said official or employee" connotes involuntariness on the part of the official or employee. The separation from the service of the official or employee must not be asked for or initiated by him.

Since the separation of the employees/workers is due to redundancy program resulting in restructuring/reorganization, such separation is beyond the control of employees/workers. Hence, any and all amounts received as a result thereof, are exempt from all taxes and consequently from the withholding tax prescribed by Section 79, Chapter XIII, Title II of the Tax Code of 1997 and implemented by Revenue Regulations No. 2-98. (BIR Ruling No. 089-99 dated July 6, 1999)

What are supposed to be included in the redundancy pay? aside from your last salary? thanks!

Separation pay:
1 month salary x number of years serve

13th month

VL & SL if any

tax refund if any

separation pay should be 1 month salary x number of years in service...what if po less than a year? like in my case 7 months?

Thank you.

liz22 wrote:separation pay should be 1 month salary x number of years in service...what if po less than a year? like in my case 7 months?

Thank you.

Labor Code Art 283.

In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher.

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.

A fraction of at least six (6) months shall be considered one (1) whole year.

Try reading this, to know more about redundancy as an authorized cause for termination, and the amount of separation pay required by law to be paid to the terminated employee. https://www.alburovillanueva.com/discipline-suspension-termination