Termination of Contract

I have a friend from Germany. Their company opened a position here in the PH for local employment so she accepted it. It was stated in her contract that she is a continouos employee, she's been working on the same company in Germany for 5yrs and 3yrs here in PH. Her contract is continouos but she was advised week ago that her contract will be terminated by April this year. The position is still open but they will be replacing her with a local resource which is more cheaper. My question is, will she be able to receive separation pay which is equivalent to 1month pay every 1yr of service in the company as stated in our labor code for the whole 8yrs of her service in the company? Thank you in advance.

The Labor Code prescribes the payment of separation pay only in the following four (4) situations:

When termination is due to authorized causes:
(1) installation of labor-saving devices;
(2) redundancy;
(3) retrenchment; or
(4) closing or cessation of business operations; and
(5) disease.

In accordance with jurisprudence, the following separation pay may be cited:

(1) Separation pay in lieu of reinstatement; and
(2) Separation pay as financial assistance in cases where the dismissal was held valid and legal but the employee is given financial assistance by reason of long years of service, unblemished record, substantial justice, etc.

If your friend can prove that her firing is due to retrenchment, in which she was terminated because the company wanted to minimize losses since they wanted to hire somebody else with lower pay in the same position, then she should be entitled to separation pay.

Secondly, the second ground as mentioned in jurisprudence can be used as well for basis of separation pay, but that will entail litigation in order to acquire said ground and that also works in the presumption that the labor arbiters and courts will side with her and grant such separation pay under said ground.

You may tell your friend to go to the nearest Regional DOLE and seek legal advice on her rights regarding separation pay. Furthermore, she should also clarify with her employer's HR regarding the grounds used to terminate her and put such in writing. A copy of her employment contract, if existing, should also be secured for evidence.

Good luck, and may fortune favor your friend's current legal dilemma.