DO ALL FORMS OF TERMINATION REQUIRE GRANT OF SEPARATION PAY?
An employer-employee relationship, just like most romantic relationships, has to end.
At least employees in certain instances get money called separation pay. I still have to hear separating couples give separation pay to the other for calling it quits in their love affair.
It is better to understand the cases where separation pay applies. Because not all forms of termination of relationship give rise to payment of this nature.
There are two major ways to end the employment relationship. One, the employee cuts it himself. Two, the employer is the one who severs this tie.
On the part of the employee, he can either resign or simply leave the office on account of being seriously insulted by the employer, inhuman and unbearable treatment, commission of a crime or offense against his person, and any other causes analogous to those mentioned. If he opts for the second scenario, he usually files an illegal dismissal case known as constructive dismissal.
While resignation is done by merely serving a written notice on the employer at least one (1) month in advance. This should be voluntary.
In these two ways of termination by employee, should the employer pay separation pay? In a resignation, there is none. In termination by employee due to serious insult, etc., upon him by his employer, the following are the possibilities:
- If he filed an illegal dismissal case without asking for reinstatement and in lieu thereof wants separation pay, then if he wins separation pay can be awarded by the labor tribunal.
- If the case that he filed is dismissed, there is no separation pay as he simply lost the battle.
- If he filed the case asking for reinstatement and it was granted then there is no separation pay as well since he should be taken back to work.
On the part of the employer, he can cut employment relationship in two ways:
a. Just cause
b. Authorized cause.
If the employer validly terminates the employee for just cause, there is no separation pay. Unless there is an agreement, CBA, policy, etc. providing for separation pay despite termination for cause. Just cause means the employee is at fault. For instance, the employee stole employer’s money, was grossly and habitually negligent of his duties, or falsified company receipts, etc.
If the reason for termination is authorized cause there is separation pay, in general. Authorized cause is not the employee’s fault. It is the result of changing business condition that is adverse to employer or alters the way his business operates.
Learn more about Valid Dismissal of Employees
For authorized causes such as redundancy, installation of labor saving device, retrenchment not due to losses, closure not due to financial reverses, there is payment of separation pay.
Another form of termination due to authorized cause is disease. An employee who is terminated due to disease that is prejudicial to his health or co-worker, and as long as the other requisites of the law are complied with, is also entitled to separation pay.
But for termination due to serious financial reverses such as would result in closure of employer’s business, there is no separation pay pursuant to North Davao Mining case and Reahs vs. NLRC.
There are instances in between such as when the company is generous and provides separation pay whenever the employee the employment relationship is severed for whatever reason.
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