Department of Labor and Employment(DOLE)

January 20, 2023 Dear Hyacinth Anne Cabading, Thank you for your request dated Jan 20, 2023 12:08:43 PM under Executive Order No. 2 (s. 2016) on Freedom of Information in the Executive Branch. Employees separated from their employment due to an authorized cause are entitled to separation pay. Articles 298 and 299 of the Labor Code of the Philippines, as renumbered, provide that separation pay is given to an employee who was terminated due to any of the following authorized causes: installation of labor-saving devices, redundancy, closure of the establishment, reduction of personnel or when an employee is suffering from any disease not curable within a period of six (6) months and his/her continued employment is prejudicial to his/her health and the health of his co-employees. Depending on the authorized cause of termination, separation pay should be equivalent to either one-half (1/2) month or one (1) month of pay for every year of service, a fraction of at least six (6) months is considered one (1) whole year. Moreover, the basis for the computation of separation pay shall be the latest salary rate of the affected employee, including the regular allowances that the employee has been receiving. One month’s pay or to at least one-half (1/2) month’s pay for every year of service, whichever is higher, should be paid to an employee who is separated from the service due to: 1. Retrenchment to prevent losses; 2. Establishment closure or cessation of operation not due to serious losses or financial reverses; and, 3. Contracting a disease untreatable within six (6) months and the employee’s continuous employment is detrimental to his/her own or his/her co-employees’ health. Anent your sample case, the computation of separation pay of an employee shall be based on his/her latest salary. The number of years of service meanwhile, shall be the aggregate of months rendered, as 4 mos x 5 years = 20 mos./12 mos = 1.66 mos. Assuming that the current monthly rate is P10,000.00, The computation shall be (.5) P10,000 x 1.66 = P8,300.00. However, in no case will an employee get less than one month’s pay. Thus the separation pay of the employee in this particular case shall be one month’s salary of the employee which is P10,000.00. We hope that we have clarified your concerns. For further queries, you may reach us through the DOLE Hotline: 1349 Help us to continuously improve our FOI Program Implementation by accomplishing the DOLE-FOI Request Feedback Form through this link: bit.ly/DOLE-FOIFeedbackForm Thank you. Respectfully, Mark Valeros FOI Receiving Officer