Separation Pay

Question 1

What article govern Separation Pay?

Answer 1

Article 298-299

Question 2

Is given to employees on the reason for ground termination if his services. Where termination is for authorized causes.

Answer 2

Separation Pay

Question 3

State the authorized causes where employee is entitled to received separation pay equivalent to one-half pay for every year of service.

Answer 3

1. Retrenchment to prevent losses (i.e., reduction of personnel effected by management to prevent losses);
2. Closure or cessation of operation of an establishment not due to serious losses or financial reverses; and
3. When the employee is suffering from a disease not curable within a period of six (6) months and his/her continued employment is prejudicial to his/her health or to the health of his/her co-employees.
4. Lack of service assignment of security guard for a continuous period of six (6) months.

Question 4

State the authorized causes where employee is entitled to received separation pay equivalent to one-month pay for every year of service.

Answer 4

1. Installation by employer of labor-saving devices;
2. Redundancy, as when the position of the employee has been found to be
   excessive or unnecessary in the operation of the enterprise; and
3. Impossible reinstatement of the employee to his or her former position or to a substantially equivalent position for reasons not attributable to the fault of the employer, as when the reinstatement ordered by a competent authority cannot be implemented due to closure or cessation of operations of the establishment/employer, or the position to which he or she is to be reinstated no longer exists and there is no substantially equivalent position in the
   establishment to which he or she can be assigned.u
4. Lack of service assignment of security guard by reason of age.

Question 5

The employer may terminate the employment of an employee by serving a written notice on the employee and the Department of Labor and Employment through its regional office having jurisdiction over the place of business at least one (1) month before the intended date thereof. TRUE OR FALSE?

Answer 5

TRUE. They should give letter of notice 1 month prior the date of effectivity of the separation.

Question 6

The computation of separation pay of an employee shall be based on his/her latest salary rate. True or False?

Answer 6

True

Question 7

The salary base properly used in computing the separation pay should include not just the basic salary but also the regular allowances that an employee has been receiving. TRUE OR FALSE?

Answer 7

TRUE

Question 8

Any amount received by an official or employee or by his heirs from the employer as a consequence of separation of such official or employee from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee shall not be included in the gross income and shall be exempt from taxation under Title II of the same Code. TRUE OR FALSE

Answer 8

TRUE

Question 9

Accordingly, the separation pay to be received by the retrenched employees as a result of their separation from the service is exempt from income tax and consequently from the withholding tax. TRUE OR FALSE?

Answer 9

TRUE