Separation pay: one month per year, or half a month

Article 283 of the Labor Code (Article 298 after renumbering) covers termination for business reasons. The employer must serve a written notice on the workers and on the labor department at least one month before the intended date.

Redundancy or labor-saving devices: at least one month pay or one month pay for every year of service, whichever is higher. Retrenchment to prevent losses, or closure not due to serious losses: one month pay or at least half a month pay for every year of service, whichever is higher. A fraction of at least six months counts as one whole year.

Example

Illustrative example only. Monthly pay ₱20,000, service of 3 years and 7 months, so 4 years count. Redundancy: 4 × ₱20,000 = ₱80,000. Retrenchment: 4 × ₱10,000 = ₱40,000.

Important

Read the reason on your notice letter. The reason decides the formula.

If you got a notice

• ☐ Check the date: at least one month ahead
• ☐ Read the stated reason
• ☐ Count your years of service
• ☐ Keep the notice and your payslips

Pay not released? Final pay demand letter 👇

Basis: Labor Code of the Philippines, Art. 283 (now Art. 298).