Separation Pay – Instances when it should be Awarded

Separation Pay – Instances when it should be Awarded

Separation pay warranted when the cause for termination is not attributable to the employee’s fault, such as those provided in Articles 298 and 299 of the Labor Code, as well as in cases of illegal dismissal where reinstatement is no longer feasible.

Grab a re-numbered copy of the Labor Code with Comments and Notes by Atty. Villanueva

The Labor Code of the Philippines by Atty. Elvin B. VillanuevaOn the other hand, an employee dismissed for any of the just causes enumerated under Article 297 of the same Code, being causes attributable to the employee’s fault, is not, as a general rule, entitled to separation pay.

The non-grant of such right to separation pay is premised on the reason that an erring employee should not benefit from their wrongful acts.

Learn more about separation pay in a book Guide to Valid Dismissal of Employees by Atty. Elvin B. Villanueva.

Separation pay is only awarded to a dismissed employee in the following instances:

1) in case of closure of establishment under Article 298 [formerly Article 283] of the Labor Code;

2) in case of termination due to disease or sickness under Article 299 [formerly Article 284] of the Labor Code;

3) as a measure of social justice in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character;

4) where the dismissed employee’s position is no longer available;

5) when the continued relationship between the employer and the employee is no longer viable due to the strained relations between them; or

6) when the dismissed employee opted not to be reinstated, or the payment of separation benefits would be for the best interest of the parties involved.

In all of these cases, the grant of separation pay presupposes that the employee to whom it was given was dismissed from employment, whether legally or illegally.

In fine, as a general rule, separation pay in lieu of reinstatement could not be awarded to an employee whose employment was not terminated by his employer. (Claudia’s Kitchen, Inc. and Enzo Squilantini vs. Ma. Realiza S. Tanguin, G.R. No. 221096, June 28, 2017)

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