10. What is Seperation pay and who can Acquire it?
          Following the labor code of the Philippines, articles 283 and 284 state that an employee can claim separation pay if his contract is ended under authorized causes. According to article 282 an employee terminated for just cause (neglect of duties, fraud, crime…) is generally not entitled to separation pay.

 

          A separation pay of ½ month pay for every year of service can be claimed under the following authorized causes:
– Retrenchment of person for loss prevention.
– Cessation of operation of a branch not due to serious losses or financial difficulties.
– If the employee has contracted a disease not curable within 6 months and that his presence at work can be harmful to himself or his co-workers.

         

          A separation pay of 1 month pay for every year of service can be claimed under the following authorized causes:
– Labor-saving devices installed by the employer.
– Redundancy of the employee’s services for the company.
– Impossibility to reinstate the employee to his former position or to an equivalent position, for reasons outside of the employer’s power.

 

          The employer has the right to terminate the contract of an employee following any of the above authorized causes through a written notice to both the employee and the Department of Labor and Employment of the Philippines at least one month before the contract cessation date.

 

 

11. What is Retirement pay and who can Acquire it?
          All employees from the private-sector may retire from age 60 up to age 65, at which retirement becomes compulsory, and must have served the establishment for at least 5 years.

Retirement pay must at least be equivalent to half of a month’s salary for each year of service and a fraction of at least 6 months is therefore considered as one whole year.

 

          One “half month salary” must include the following: a) 15 days salary based on the last salary pay, b) the pay equivalent of a five days of incentive leave, c) 1/12 of the 13th month pay. Therefore, one ½ month salary is equivalent to 22.5 days.

 

          Minimum Retirement pay = Latest daily pay rate x 22.5 days per month x number of years of service

Depending on the agreements between the employer and employee other benefits can be included in the retirement pay such as a Collective Bargaining Agreement (CBA).