Separation Pay Calculator Philippines

Multiply your latest monthly pay (basic salary plus regular allowances) by the rate for your cause of termination and by your credited years of service — a fraction of at least 6 months counts as a whole year. The rate is one month per year for installation of labor-saving devices and redundancy, and half a month per year for retrenchment, closure, disease and the other Art. 299 causes. It can never be less than 1 month's pay (DOLE Handbook, Ch. 14).

Redundancy pays one month per year: ₱25,000.00 × 1 × 7 = ₱175,000.00. Had the cause been retrenchment (half a month per year) it would be ₱87,500.00. Seven years and seven months would count as eight years.

One month per year of service: Installation of labor-saving devices; Redundancy; Impossible reinstatement for reasons not attributable to the employer; Lack of service assignment of a security guard by reason of age. Half a month per year: Retrenchment to prevent losses; Closure or cessation of operations not due to serious losses or financial reverses; Disease not curable within six months where continued employment is prejudicial to health; Lack of service assignment of a security guard for a continuous six months; Lack of service assignment of a contractor's/subcontractor's worker for a continuous three months. (Labor Code Arts. 298–299, as summarised in the DOLE Handbook.)

No. Separation pay is owed only for termination on authorized causes under Arts. 298–299 (and by analogy where a court orders it). Resignation and dismissal for just cause carry no separation pay unless a company policy, CBA or contract grants it; you are still owed your final pay — unpaid salary, pro-rated 13th month and leave conversions.

No. Under Sec. 32(B)(6)(b) of the Tax Code, amounts received because of separation for death, sickness, disability or any cause beyond the employee's control — including redundancy, retrenchment and closure — are excluded from gross income and exempt from income tax (DOLE Handbook, Ch. 14-F).

The employer must serve written notice on both the employee and the DOLE regional office at least one month before the termination date (RKS Form 5 or the DOLE Establishment Report System). Separation pay is part of the final pay, which DOLE Labor Advisory 06-20 says should be released within 30 days of separation.

Depende sa dahilan: redundancy o labor-saving devices = ₱100,000.00 (isang buwan kada taon); retrenchment, closure o sakit = ₱50,000.00 (kalahating buwan kada taon). Hindi ito bababa sa isang buwang sahod, at exempt sa income tax.