Separation Pay is when the company or your employer has to let you go due to labor-saving devices, redundancy, retrenchment, closure, disease or cessation of operations of the establishment. Janna’s separation pay computation is: PHP 60,000 (monthly basic compensation) divided by 2 X 10 (years of service)= PHP 300,000 Janna will receive a separation pay of PHP 300,000 instead of just PHP 60,000 because the former amount is higher. The employer should have taken other measures prior or parallel to retrenchment to forestall losses such as cutting other costs other than labor cost. This is how to terminate an employee due to retrenchment in the Philippines. Termination for authorized cause is provided under Art. There must be fair and reasonable criteria to be used in selecting employees to be dismissed on account of retrenchment such as (a) less preferred status (i.e. The “last in first out“(LIFO) rule indicates that as between two or more employees affected by a retrenchment program, the last one employed will be the first to go; seniority of the ones hired earlier therefore prevails. If employee A lost his job due to retrenchment, was with the company for three years and gets Php10,00.00 a month at the time of his termination, his separation pay will be calculated as: One month salary = Php10,000, or. The retirement pay shall be computed as follows: Minimum Retirement Pay = Daily Rate x 22.5 days x number of years in service. These cookies do not store any personal information. Specifically, the purpose of such previous notice to DOLE must be to enable it to ascertain the verity of the cause for termination of employment. From a displaced worker at a loss on what’s going to be the future like after the retrenchment, I have become more confident about myself. The Computation. computation of retirement pay The minimum retirement pay shall be equivalent to one-half (1/2) month salary for every year of service, a fraction of at least six (6) … How much will his separation pay be? It bears great emphasis that failure to comply with the requirements mandated by the Labor Code will render the retrenchment invalid and illegal. This category only includes cookies that ensures basic functionalities and security features of the website. Computation applicable to employees terminated due to retrenchment, disease, closure, and similar grounds . Careers @ DOLE General Luna St., Intramuros, Manila, 1002, Philippines. How To Compute Back Pay In The Philippines: 2020 Update 6 min. With DOLE’s help, we took on the challenge of rising above the loss of employment in 2009 and found a stable source of income that is slowly giving us an improved quality of life, today. One-month income for every year of service = P5000.00 x 0 = 0.00. For termination of employment based on health reasons, employers are allowed to terminate employees found 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-workers (Art. Such rule has its merits but its observance is not a statutory duty of the employer. Firstly, the losses expected should be substantial. 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 (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. On 2 April 2013, the retrenched employees sought assistance from the RCMB 7 on the correct computation of their separation pay. This is on top of the other monetary compensation and benefits such as your last salary, pro-rated 13th month pay, tax refund, vacation and sick leave conversions if applicable. “For the implementation of a redundancy program to be valid, the employer must comply with these requisites: (1) written notice served on both the employee and the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever … Thirdly, because of the consequential nature of retrenchment, it must be reasonably and necessary and likely to effectively prevent the expected losses. Companies involved opted to pay the entire one-month salary of … Programs Finally, the more important aspect in the termination of employment is the payment of the employee’s separation pay equivalent to at least one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. 1/2 month of salary x Years of service This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. But as the old saying says, “the only permanent thing in this world is change”. Hotline: 1349, Labor Code “Instead of 5,600 workers retrenched, the number was reduced to 4,400. DOLE-Central Visayas also said they have successfully convinced the MEPZ firms to reconsider the retrenchment of hundreds of employees. (2) The employer serves written notices both to the employees and the DOLE at least one month prior to the intended date of retrenchment; (3) The employer pays the retrenched employees separation pay equivalent to one month pay or at least ½ month pay for every year of service, whichever is higher; Retrenchment to prevent losses; Cessation of operation or closing of the establishment; Health risks to the employee or to his/her co-employees due to illness or disease; Take note that you may not receive separation pay should the company close due to financial losses, or if you were terminated due to just causes stipulated by DOLE including: Cruz said with the current cash position of the SSS at P21 billion, it can well afford to pay unemployment benefits, given that P660 million is just a fraction of the more than P16 billion that SSS paid monthly for members’ pensions in 2019. Thus, the employer must not arbitrarily or speedily implement a retrenchment program. In accordance with the Labor Code, for a valid implementation of a retrenchment program, the employer must serve written notices on the employees and DOLE at least thirty (30) days prior to the intended date of retrenchment. Submit Establishment Report. In Department Order No. The Labor Department should look into the mass retrenchment of nearly 500 regular workers of canned pineapple producer and exporter Dole Philippines Inc. (Dolefil) earlier this year, Senator Risa Hontiveros said on Friday. Management countered that their move did not constitute termination due to redundancy but retrenchment, which entitles the affected workers to only ½ month pay for every year of service. 10966 declaring December 8 (Feast of ... sickness or other physical disability or for other cause beyond the control of said employee such as retrenchment, redundancy or cessation of business operations. Some of our pages use cookies and similar technologies. Choose file. However, before one can dismiss employees on the ground of retrenchment, four elements must be proven. Let’s say James has rendered four years of service to the company and his salary is P9,000. Even his acceptance of the retrenchment pay does not amount to estoppel which does not bar him from contesting his separation. The computation will be based on how you were terminated. You also have the option to opt-out of these cookies. In case of termination due to the installation of labor saving devices or redundancy, the employee affected is 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. The requirements discussed above must be fully complied with so as to preclude any problems in the future. 1/2 month salary for every year of service = (1/2) x P8,000 x 3 years = P12,000. One-month salary = P5000.00, or. 284, Labor Code). Closure or cessation of operation of an establishment not due to serious losses or financial reverses; and 3. temporary employees); (b) efficiency rating; and (c) seniority. We also added Republic Act No. 215-2020, DoLE said “in case of declaration of war, pandemic, and similar national emergencies, the employer and the employees, through the union, if any, or with the assistance of the DOLE, shall meet in good faith for the purpose of extending the suspension of employment for a period not exceeding six months.” If the retrenched employee signed quitclaims, they may be declared invalid. “They were informed of the termination as early as 14 March 2013,” he added. It means that a written notice shall be given to the workers and to the DOLE at least one month from the intended date of the retrenchment,” she said, adding that the effectivity of the retrenchment is 4 October 2020. A Separation Pay is an amount of money paid by the employer to the employee upon the termination of employment. Separation Pay is mandated by the Philippine Labor Code. 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, ... DOLE: Basis of computation of separation pay. 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Separation, especially when employer-employee relationships are already well-established within the workplace, is one happening that can be heartbreaking. 298 of the Labor Code, as amended. Law Firm in Metro Manila, Philippines | Corporate, Family, IP law, and Litigation Lawyers, How to Terminate an Employee on the Ground of Retrenchment, Welcome to NDV Law! 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 including termination of employment on the ground of disease, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. read By eCompareMo on January 6, 2020 After weeks or even months of thinking, you’ve done it. This resulted in reducing the number of displaced workers from the original number of 5,600. Retrenchment to prevent losses (i .e., reduction of personnel effected by management to prevent losses); 2. If an employee on the above salary scale has only been working for the company for only five months, the separation pay computation is as below. P.D. DOLE Central Office. Citation: 2016 Handbook on Statutory Monetary Benefits by DOLE-BWC 3. It bears emphasis that serious business losses should be proven by financial statements duly audited by an independent external auditor. General Luna St., Intramuros, Manila, 1002, Philippines, Monday - Friday: 8:00 am - 5:00 pm 442 and DOLE regulations are the legal bases for separation pay. Retrenched employees get separation pay, thanks to DOLE-NCMB’s SENA Cebu City – Seventy-one retrenched employees of Goji Industries Philippines, Inc., a manufacturer of camera parts and accessories located at the Mactan Economic Zone 1, have received their separation pay through the Single Entry Approach program, NCMB Executive Director Reynaldo R. Ubaldo reported to Labor and … When the emplo… Department Orders COLA is not included in the computation. As an example, if the retrenched employee’s salary is P8,000.00 and he has been working for 3 years, he is entitled to separation pay equivalent to whichever is higher of his: one month salary = P8,000; or. Labor Code of the Philippines. He will be paid P5000.00. 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Necessary cookies are absolutely essential for the website to function properly. The computation of separation pay is based on the ground on which it is based. If the computation is based on the maximum cash benefit of P20,000 per applicant, the total amount will reach P1.2 billion, he said. But opting out of some of these cookies may have an effect on your browsing experience. In reference to Labor Advisory No. We are located at the bustling Ortigas Central Business District in Pasig City, Metro Manila, Philippines. “The employees were terminated from employment effective 5 April 2013 as a result of impending business losses caused by the pull out of orders from Pentax for its camera parts assemblies,” Ubaldo said, quoting the report.