Dear PAO,
When is a separation pay paid by an employer to his employee? Can a resigned employee get a separation pay? My brother who has just resigned from work was promised a separation pay. However, when the time came to collect it, his employer did not pay him. Can he file a case to compel his employer to give what was promised to my brother?
Jimmy
Dear Jimmy,
According to the Labor Code, separation pay is required to be given to an employee by an employer in cases of authorized causes of termination of employment. These are specifically provided under Articles 283 and 284 of the said law which provides:
“ARTICLE 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. 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. A fraction of at least six (6) months shall be considered one (1) whole year.
“ARTICLE 284. 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 pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year.”
Likewise, separation pay is paid in case of illegal dismissal and reinstatement is not possible due to strained relationship between the employer and the employee.
On the other hand, when an employee resigns, he severs the employee-employer relationship. Thus, such employee cannot claim separation pay because of his/her voluntary resignation.
However, if there is a contract between the employer and the employee providing for a separation pay once the latter resigns or the same is reflected in a Collective Bargaining Agreement, a separation pay may be recovered. The same may also be recovered if it is the practice of the employer for a long period of time to provide a separation pay to resigned employees. Other than these instances, a resigned employee may not receive a separation pay.
The Supreme Court in the case of Travelaire & Tours Corp. and/or Christine B. Ojeda vs. National Labor Relations Commission and Nenita I. Medelyn (G.R. No. 131523 August 20, 1998) had the occasion to pronounce the foregoing as follows:
“The general rule is that an employee who voluntarily resigns from employment is not entitled to separation pay unless, however, 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.xxx”
Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.
We hope that we were able to guide you with our opinion on the matter. –Persida Acosta, Manila Standard Today
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