Separation Pay

Separation pay is given to employees whenever the cause of termination of employment is attributable to authorized causes,[1] as well as in cases where employment of an employee who initiated a labor complaint is no longer feasible due to strained relations.[2]

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Statutory Monetary Benefits


Similar to the rule on working conditions, labor laws on statutory monetary benefits do not apply to all employees. As such, unless otherwise stated, the succeeding provisions of laws and rules on statutory monetary benefits apply to employees in all establishments and undertakings whether for profit or not, except to the following:[1]

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Due Process Termination: Legal Way to Dismiss an Employee

Due process termination is the legal way to terminate an employee. Without due process, the employer will be liable for illegal dismissal, full backwages, reinstatement, separation pay if reinstatement is not feasible, moral and exemplary damages, nominal damages, and attorney’s fees. Illegal dismissal could result in a huge monetary award.

United Tourist Promotions (UTP) v. Harland B. Kemplin

An employee’s guilt or innocence in a criminal case is not determinative of the existence of a just or authorized cause for his dismissal.

G.R. No. 205453, 05 February 2014

Complainant Harland B. Kemplin initiated a labor complaint against his employer defendant United Tourist Promotions (UTP), and its sole proprietor defendant Ariel D. Jersey. Sometime in 1995, Complainant and the late Mike Dunne formed UTP with the help of two American expatriates. In 2002, UTP engaged Complainant to be its President for five years. Even after the period, Complainant retained his position. In 30 July 2009, UTP sent Complainant a letter informing him of the lapse of his contract and its non-renewal resulting in his no longer being employed. Further, the letter directed Complainant to cease and desist from entering the premises due to the various criminal cases filed against him arising of his “inhuman treatment… of the rank and file employees, which caused great damage and [prejudice] to the company.”

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Manila Water Company v. Carlito Del Rosario

By way of exception, legally dismissed employee may be awarded separation pay provided that the dismissal (1) was not for serious misconduct; and (2) did not reflect on the moral character of the employee.

G.R. No. 188747, 28 January 2014

Previously, complainant was hired as an Instrument Technician. Sometime afterwards, Defendant discovered that 24 meters were missing in its stockroom. “Upon initial investigation, it appeared that [complainant] and his co-employee, a certain Danilo Manguera, were involved in the pilferage and the sale of water meters to the company’s contractor. Consequently, Manila Water issued a Memorandum dated 23 June 2000, directing [complainant] to explain in writing within 72 hours why he should not be dealt with administratively for the loss of the said water meters. In his letter-explanation, [complainant] confessed his involvement in the act charged and pleaded for forgiveness, promising not to commit similar acts in the future.”

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University of Pangasinan, Inc. v. Florentino Fernandez

In computing the backwages and benefits awarded to the employees, the reckoning period is not interrupted by the NLRC’s reversal of the Labor Arbiter’s finding of illegal dismissal.

G.R. No. 211228, 12 November 2014

Complainants Sps. Florentino and Nilda Hernandez initiated a complaint for illegal dismissal against their employer defendant University of Pangasinan Inc. (UPI), and certain concerned officers. The labor arbiter ruled in favor of complainants who were removed without just and valid cause. The NLRC initially affirmed the labor arbiter’s decision; however, on motion for reconsideration, the decision was reversed and the complaint was dismissed. Continue reading here.

Goodyear Philippines, Inc. et al, v. Marina L. Angus

“In the absence of an express or implied prohibition against it, collection of both retirement benefits and separation pay upon severance from employment is allowed. This is grounded on the social justice policy that doubts should always be resolved in favor of labor rights.”

G.R. No. 185449, 12 November 2014

Complainant Marina L. Angus filed a labor complaint against her previous employer Defendants Goodyear Philippines, Inc. and its Human Resource Director Remigio M. Ramos. Continue reading here.