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Separation pay entitlement

May 4, 2010

BY PERSIDA ACOSTA

Dear PAO,

I just want to know if I am entitled to have a separation pay even if I resigned because of personal reasons? I worked for 4 years in a private firm (trading company) in Makati City.
Scorpio Girl

Dear Scorpio Girl,

Entitlement to separation pay or termination pay requires the termination or separation of the employee from his/her employment by the employer because of an authorized cause. Thus, to be entitled to such, the employee must have been separated or terminated from employment for a cause other that his own act or will and for specific causes as provided by the law.

It will indeed be highly onerous to require employers to pay separation pay to employees who themselves have willingly resigned from their jobs or who have done acts inimical to the employer or the latter’s business. This is not what the law intends. Under the Labor Code, separation pay must be paid to employees who have been separated from employment not by their own fault or choice but because of the exercise of the employers’ prerogative afforded to them by law because of business exigencies or those authorized causes as specified under the law, such as installation of labor saving devices, redundancy or retrenchment to prevent losses. (Art. 283) Therefore, it is sufficiently clear that you may not claim for the payment of separation pay from your employer due to your resignation.

However, if the employer, under contract or through established business practice, grants separation pay to employees who resign, you may then claim for separation benefits from your employer. Thus, the Supreme Court held in the case of Alfaro v. Court of Appeals (G.R. No. 140812, August 28, 2001) that “generally, separation pay need not be paid to an employee who voluntarily resigns. However, an employer who agrees to expend such benefit as an incident of the resignation should not be allowed to renege in the performance of such commitment.”

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

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