Law News

Separation pay

“Art. 298. (283) Closure of establishment and reduction of personnel. — The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. xxx A fraction of at least six (6) months shall be considered one (1) whole year.” (Emphases supplied)

Thus, under Article 298 of the Labor Code, employees who are laid-off from work due to authorized causes such as installation of labor-saving devices, redundancy, retrenchment, closure or cessation of business operations, and disease shall be entitled to a separation pay.  In your case, since you mentioned that the management terminated your employment because of redundancy, your separation pay shall be equivalent to at least one-month pay or one-month pay for every year of service, whichever is higher.

As an employee of the company for eight years and seven months, you shall receive your separation pay which is equivalent to nine months of your salary because the law provides that a fraction of at least six months is considered as one whole year.  Further, the basis for the separation pay will be your latest salary rate.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

By: Chief Public Attorney Persida Acosta

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

Separation pay

 Article 298 provides:

“In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one month pay for every year of service. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one month pay or at least one-half  month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one whole year.

“Article 299. Disease as ground for termination. An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, that he is paid separation payequivalent to at least one month salary or to one-half month salary for every year of service, whichever is greater, a fraction of at least six months being considered as one whole year.” (Emphasis and underscoring supplied)

As can be gleaned from the previously cited laws, the common denominator of the instances wherein payment of separation pay is warranted dictates that it is given whenever an employee was dismissed by the employer. In your case, however, there was no dismissal to speak of since what transpired based on your narration is that you voluntarily applied elsewhere without waiting to be recalled. As such, you are deemed to have resigned from your previous employer, and thus, would not be entitled to separation pay.

The Supreme Court in JPL Marketing Promotions vs Court of Appeals(GR 151966 July 8, 2005), ponencia of Associate Justice Dante Tinga, with a similar factual milieu as in your query, held that an employee is not entitled to separation pay if he applied elsewhere while on a valid floating status, to wit:

“Furthermore, Art. 286 (now Art. 301) of the Labor Code allows the bona fide suspension of the operation of a business or undertaking for a period not exceeding six months, wherein an employee/employees are placed on the so-called ‘floating status.’ When that “floating status” of an employee lasts for more than six months, he may be considered to have been illegally dismissed from the service. Thus, he is entitled to the corresponding benefits for his separation, and this would apply to suspension either of the entire business or of a specific component thereof.

“As clearly borne out by the records of this case, private respondents sought employment from other establishments even before the expiration of the six-month period provided by law. As they admitted in their comment, all three of them applied for and were employed by another establishment after they received the notice from JPL. JPL did not terminate their employment; they themselves severed their relations with JPL. Thus, they are not entitled to separation pay.”(Emphasis and underscoring supplied).

We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

By: Chief Public Attorney Persida Acosta