Separation Pay in Employment Termination and Resignation in the Philippines

Separation pay may refer to two distinct labor-related concepts, to wit: (a) separation pay in lieu of reinstatement in illegal dismissal cases; and (b) separation pay in cases of termination based on authorized causes. Before discussing these concepts, we dispose of two issues connected with separation pay. First, the payment of separation pay is not a ground for termination; without a just or authorized cause, the dismissal is illegal notwithstanding the payment of separation pay. Second, an employee who voluntarily resigns is not entitled to separation pay, except when granted by the company or expressly provided in the company policy or Collective Bargaining Agreement (CBA).

Separation Pay in Termination and Resignation Philippines


An illegally dismissed employee is entitled to reinstatement as a matter of right. However, where reinstatement is no longer advisable because of strained relations between the employee and the employer, separation pay is granted, computed at one (1) month pay for every year of service. 

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. 

Strained relations must be demonstrated as a fact. There must be substantial evidence to show that the relationship between the employer and the employee is indeed strained as a necessary consequence of the judicial controversy.


Separation pay is warranted when the cause for termination is not attributable to the employee’s fault (e.g., Articles 298 to 299 of the Labor Code). Otherwise stated, separation pay is not demandable when the cessation of employment resulted because of the employee’s action (i.e., resignation) or the employee’s fault (just causes for termination).

Authorized causeComputation
* Installation of labor-saving devices1 month pay, or at least 1 month pay for every year of service, whichever is higher
* Redundancy1 month pay, or at least 1 month pay for every year of service, whichever is higher
* Retrenchment1 month pay, or at least 1/2 month pay for every year of service, whichever is higher
* Closure or cessation of business operation not due to serious business losses1 month pay, or at least 1/2 month pay for every year of service, whichever is higher
* Closure or cessation of business operation is due to serious business losses or financial reversesNo separation pay
* Disease1 month pay, or at least 1/2 month pay for every year of service, whichever is higher

In computing the separation pay for the causes enumerated above, a fraction of six (6) months of service is considered as one (1) whole year.

Due process in these cases involves the service of a written notice to both the employee and the appropriate Regional Office of the Department of Labor and Employment (DOLE) at least thirty (30) days before the effectivity of the termination, specifying the ground or grounds for termination. For due process in just causes for termination, see Twin-Notice Rule and Procedural Requirements in Employment Termination Proceedings.


4 thoughts on “Separation Pay in Employment Termination and Resignation in the Philippines

  1. AvatarCzarkhan

    Hi, i just want to ask if I can ask for seperation pay, i filed my resignation last aug 2020 with the effectivity on Sept 2020, around end of aug, i was asked by my sales manager if i would reconsider my resignation, when i said yes, he asked me to write a letter withdrawing my resignation, after submitting the withdrawal letter, i waited for around a couple of weeks, but unfortunately was asked to push thru with my resignation. I was told that there may be a “pakunswelo” for my 12yrs of service,.. fast forward Jan 21, 2021… 100+ days after my resignation, last pay was given, 367pesos… when i asked if there is a seperation pay, i was told none.
    will there be a possibility, even the lightest, to receive a compensation for my years in service?

    1. AvatarJerome

      Hi.magtatanung lang po sana ako im planning po kc na tapusin nalang yung year nato ang mag file na po sana ako nang resignation sa work ku.13years na po ako sa work ku regulat emoloyee po ako.tanung ku lang po kung entitled po ba ako makatanggap nang separation pay for my years of service?salamat po.

  2. AvatarApril

    Hi,good evening po..ask ko lang po if my separation pay ako..almost 7yrs na po aq sa agency namin(topserve services inc.)kinakailangan ko po magresign this march 31, kadahilanan na ililipat na ulet yun Client nla (robinsons land corp. Check prep (aking pinagtatrabahuhan)sa mismong rlc company..
    Ililipat po kasi ako sa ibang agency (Fieldmen Janitorial Services)na my hawak sa janitorial/messenger ng robinsons land corp..
    Ayaw ko po sana pumayag na magresign o magbago ng agency pra tuloy tuloy po ang years in service ko sa agency ko na topserve.
    Kaya lang po ay hindi dw ppwede dahil nga Fieldmen lng my hawak sa robinsons land corp. Wala ng iba pa na agency..
    Hassle nga nman sa kanila kung ako lang mag’isa ang billing nla..
    Bottom line:
    Kaylangan ko magresign sa Agency ko na topseeve..
    Dahil nga iba agency na ang my hawak sa robinson land na lilipatan ng aking duty work na rlc checkprep.

    Meron po ba ako makukuha na separation/backpay kpag nagfile na ako ng resignation sa agency hindi ko naman kagustuhan ito ay kinakailangan lamang talaga..
    Salamat po sa inyong magiging katugunan..


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