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Pay
Separation pay
Separation pay is statutory money due when employment ends for certain authorized causes such as redundancy, retrenchment, or closure, computed from tenure and the cause. It is not automatically due on every resignation.
How it works
Just-cause dismissal generally carries no separation pay. Resignation generally carries none. Authorized-cause terminations do, at rates the Code sets per ground - commonly half-month or one-month pay per year of service depending on the cause. Disease has its own rule. Put the computation on the final-pay worksheet and pay it inside the 30-day advisory window. A U.S. ‘severance package’ can be more, not less, than the statute. For a U.S. company hiring one Filipino teammate, write this into the brief, the employment contract, and the peso payroll file before the start date. Slack habits do not override the Labor Code, BIR, or NPC. If the local employer of record holds the paper, they run the statutory step; you still owe a clean operating definition so the seat does not fail in week three. Put a number on the example when you budget loaded cost, because a nameless allowance always returns as a December surprise or a missed SLA.
Example: redundancy after two years six months. If the applicable rate is one month per year, expect 2.5 months of pay plus unpaid wages, SIL cash, and prorated 13th month.
How it differs
Final pay is the full last envelope. Retirement pay is a long-service rule. Quitclaim is the release paper, not the amount.
Common errors
Calling a performance firing ‘redundancy’ to skip process. Withholding separation pay pending a laptop that is already depreciated.