Backwages Should be Computed Up to Finality of Decision in Case of Separation Pay in Lieu of Reinstatement
Backwages and reinstatement are among those awarded to illegally dismissed employees under Art. 294 of the Labor Code.
An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. (See page 363, Guide to Valid Dismissal of Employees, 2nd Edition by Atty. Villanueva)
Backwages are granted on grounds of equity to work- ers for earnings lost due to their illegal dismissal from work. (See page 361, Guide to Valid Dismissal of Employees, 2nd Edition by Atty. Villanueva citing Paguio vs. NLRC, G.R. No. 154072, December 3, 2002, citing Asia Fancy Plywood Corporation v. National Labor Relations Commission, 301 SCRA 189 (1998).
Backwages as a concept is not private compensation or damages but is awarded in furtherance and effectuation of the public objective of the Labor Code. Nor is it a redress of a private right but rather in the nature of a command to the employer to make public reparation for dismissing an employee either due to the former’s unlawful act or bad faith. (Equitable Banking Corporation (now known as Equitable-PCI Bank, G.R. No. 164772, June 8, 2006).
In case of separation pay in lieu of reinstatement, up to when shall the computation end? Considering that the backwages of an illegally dismissed employee should be computed up to actual reinstatement should separation pay in lieu thereof be also computed up to the same time?
No. The Supreme Court in the case of Bookmedia Press, Inc. vs. Sinajon [G.R. No. 213009. July 17, 2019], held that the end point of backwages will no longer be the actual reinstatement but the finality of the instant decision. In other words, the complainants’ backwages should now be reckoned from the time of illegal dismissal up to the time the instant decision becomes final.
The reason behind such computation was laid down in the case of Session Delights Ice Cream and Fast Foods vs. Court Appeals Sixth Division (G.R. No. 172149, February 8, 2010, 612 SCRA 10). The SC explained that the finality of the decision becomes the reckoning point because in allowing separation pay, the final decision effectively declares that the employment relationship ended so that separation pay and backwages are to be computed up to that point.
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