What separation pay must an employer give if they terminate employees due to retrenchment to prevent losses or cessation of operations?

An employer may terminate employees due to retrenchment to prevent losses or when closing the business completely. If the closure is not due to serious business losses or financial reverses, the affected workers are entitled to separation pay. The mandated amount is equivalent to one month pay or at least one-half month pay for every year of service, whichever is higher. A fraction of at least six months of service shall be considered as one whole year for this computation. This compensation is detailed in Article 298 Labor Code of the Philippines. “In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.” 02-Jun-26

About Nicolas and De Vega Law Offices

 Nicolas and De Vega Law Offices is a full-service law firm in the Philippines.  You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines.  You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website https://ndvlaw.com/.