SEVERANCE PAY

I would like to ask about severance pay. My sister had been working for a private company for 5 years and then one day, the board of directors announced that they would need to close down the company in a month because of bankruptcy. The company mentioned that regular employees will be given a severance pay which is not more that 1/2 of their monthly basic pay. We have asked a couple of govt employees and they mentioned that a severance pay should be 1/2 total basic pay per year of service. The employees of this company were confused and utterly disappointed on where this is going to. We are hoping for you help.

Note: Is the amount of the severance pay depends on the reason why the company is closing down? Does filing for a bankruptcy and financial losses makes a difference - pertaining to the amount of the severance and back pay.

yes, it makes a difference. if the company is having financial difficulties, then the employer is required to pay only 1/2 month for every year of service.

In relation to that, so the company needs to pay the employee 1/2 month for each year of service and NOT just 1/2 of 1 month's basic salary?

So when the company mentioned that they will only be paying that amount, are they violating labor law? and can file a complaint?

i recommend you clarify first with the company what they meant.