The post is surplus to a business that can still afford to pay, so the higher rate applies.
Separation pay is owed when an employer ends employment for an authorised cause — redundancy, retrenchment, closure, the installation of labour-saving devices, or disease. It is not owed when you resign, and it is not owed when you are dismissed for a just cause.
The ground decides the rate, and not in the direction most people expect. Redundancy pays a full month for every year of service; retrenchment pays half. Both are authorised causes and both look the same from where the employee is standing, so a single "separation pay formula" is wrong for one of them whichever rate it picks.
Two rules then bend the arithmetic in the employee's favour. A fraction of six months or more counts as a whole year, so four years and seven months is paid as five. And there is a floor: one month pay or the per-year rate, whichever is higher, so a few months of service still produces a month.
Because retrenchment presupposes an employer already losing money, and the law asks less of a business in trouble. Redundancy and the installation of labour-saving devices pay one month per year of service; retrenchment, closure and disease pay half a month. The two look alike from the outside, which is why the ground is the first thing this page asks for.
Not under the Labor Code. Separation pay is owed when the employer ends the employment for an authorised cause, not when you leave voluntarily. Company policy or a collective agreement may still provide something, and unused leave is a separate entitlement.
No separation pay is due. Serious misconduct, wilful disobedience, gross neglect, fraud and the other just causes in article 297 carry none, which is why this page does not offer them as a ground — quoting a figure would be answering the wrong question.
Only if the losses are real. Closure due to serious business losses is the one authorised cause that carries no separation pay, but the exemption is narrow: the losses must be serious, actual and proven with audited financial statements, not merely asserted. A closure that is not proven to be loss-driven pays half a month per year.
A fraction of at least six months counts as one whole year. Four years and seven months is credited as five, which is worth a full year of pay — this is the single most common place a hand-worked figure comes out short.
You get one month. The law says one month pay or the per-year rate, whichever is higher, so a short tenure does not produce a fraction of a month. This page applies that floor and says when it is what produced the answer.
Separation pay for a cause beyond the employee’s control is generally exempt from income tax, but the treatment is a BIR matter with conditions attached and this tool does not model it. The figure here is gross. Ask the BIR or your accountant before assuming either way.
The seven months round the service up to five years. Truncating to four would lose ₱30,000 — a full year of the entitlement.
This is an estimate of the statutory minimum, not legal advice. A collective agreement or company policy may provide more, and the tax treatment is not modelled. Nothing you type here is sent to our servers — the calculation runs entirely in your browser.
