Severance pay given as measure of social justice

1. Dear PAO,
I have been working with a private company for almost 18 years as a sales representative. Every time I ask about separation pay, they always tell me that it is company’s discretion to give or not to give separation pay. Do I have the right to ask for separation pay?
Thanks.
Chad

Dear Chad,
To address your concern, we find it necessary to discuss the concept of separation pay.
In a plethora of cases, the Supreme Court has enunciated that a separation pay is the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during the period that he is looking for another employment. It is also settled that separation pay may be awarded as a measure of social justice in those instances where the employee is validly dismissed but for causes other than serious misconduct or those involving moral turpitude.

In line with this, the Labor Code requires a valid cause to terminate an employment. No valid cause, no termination. If such cause exists, termination may properly be done and no separation pay need be paid. This is the general rule now with regard to separation pay (The Labor Code with Comments and Cases, Volume II, Revised Edition 1996, page 759, C. A. Azucena, Jr.).

Our Labor Code dictates the instances where an employee is entitled to separation pay, although he was lawfully dismissed. In case the employee is dismissed from the service on the basis of any of the authorized causes enumerated in Articles 283 and 284 of the Labor Code, then said employee is entitled to separation pay.

Under Article 283, the following are the authorized causes of employment termination:
1. Installation of labor-saving devices
2. Redundancy
3. Retrenchment to prevent losses
4. Closure or cessation of operation of the establishment or undertaking
In addition to the foregoing, under Article 284, the employee is entitled to separation pay when he has been found suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as the health of his co-employees.

On the contrary, if the termination of the employment is based on a valid ground as those enumerated in Article 282 of the Labor Code, the employee is not entitled to separation pay.
Article 282 of the Labor Code provides, to wit:
“Art. 282. Termination by employer. – An employer may terminate an employment for any of the following just causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.”
Furthermore, as a general rule, an employee who voluntarily resigns from employment is not entitled to separation pay. However, there may be separation pay where there is a stipulation for payment of such in the employment contract or Collective Bargaining Agreement (CBA), or payment of the amount is sanctioned by established employer practice or policy (Travelaire & Tours Corp. et. al. vs. National Labor Relations Commission, G.R. No. 131523, August 20, 1998).

Based from the foregoing, it can be said that the entitlement by an employee of a separation pay depends upon the ground relied upon by the employer in terminating the services of the employee. It does not mainly depend upon the discretion of the employer whether the latter desires to give or not to give separation pay. Nevertheless, the employer out of compassion and generosity may still give the employee a separation pay or financial assistance even if there is a just cause for the employee’s removal from service or even if the employee has resigned from work.

Thus, your entitlement to separation pay depends on the ground that would lead to your severance from service. Apparently, if you voluntary resign, you will not be entitled to separation pay unless there is a stipulation for payment of such in the employment contract or Collective Bargaining Agreement (CBA), or payment of the amount is sanctioned by established employer practice or policy. Neither will you be entitled to separation pay if you are removed from service on a just cause as enumerated under Article 282 of the Labor Code. You will be entitled to separation pay is the reason from your severance from service is one of the grounds enumerated in Article 283 and 284 of the Labor Code.

We hope that we were able to enlighten you on the matter. Please take note however, that all the information contained herein are based on our appreciation of the facts you provided us. A different legal opinion may be given if other facts not included in your query will be discussed. –PERSIDA ACOSTA, Manila Times