Separation pay calculator
The Labor Code sets separation pay by the reason for separation: one month or half a month of pay for every year of service, with a fraction of six months or more counted as a whole year, and never less than one month.
Calculator
The salary at the time of separation, including regular allowances.
Separation pay
- Years of servicesix months or more counts as a whole year
- 7
- Pay per year of serviceone month
- ₱20,000.00
- Computed
- ₱140,000.00
- Separation pay
- ₱140,000.00
Labor Code Art. 298: one month pay per year of service, or one month, whichever is higher.
Separation pay is on top of the final pay: unpaid salary, prorated 13th month pay and the cash value of unused service incentive leave. Final pay is due within 30 days of separation under DOLE Labor Advisory 06-20.
Separation pay by cause
| Cause | Separation pay | Legal basis |
|---|---|---|
| Redundancy, labor-saving devices | 1 month per year of service, minimum 1 month | Art. 298 |
| Retrenchment, closure not due to serious losses | ½ month per year of service, minimum 1 month | Art. 298 |
| Disease | ½ month per year of service, minimum 1 month | Art. 299 |
| Security guard floating beyond six months | ½ month per year of service, minimum 1 month | Art. 301, DO 150-16 |
| Closure due to serious losses | None | Art. 298 |
| Dismissal for just cause, resignation | None, unless granted by contract, CBA or company practice | Art. 297, 300 |
Questions
How is separation pay computed in the Philippines?
Multiply the monthly pay by the years of service, using a full month per year for redundancy or labor-saving devices and half a month per year for retrenchment, closure not due to serious losses, or disease. A fraction of at least six months counts as one year, and the result can never be less than one month of pay.
Do employees who resign get separation pay?
Not by law. A resigning employee is owed final pay, but separation pay only if the employment contract, a collective bargaining agreement or an established company practice grants it.
What is included in final pay?
Unpaid salary up to the last day, prorated 13th month pay, the cash value of unused service incentive leave, any separation or retirement pay due, and refunds such as cash bonds, less any accountabilities. DOLE expects it within 30 days of separation.
Is separation pay taxable?
Separation pay received because of death, sickness or other causes beyond the employee's control, such as redundancy or retrenchment, is exempt from income tax. Separation at the employee's own initiative is not covered by that exemption.
Final pay, done right the first time
Payslip.ph computes final pay with separation pay, prorated 13th month and leave conversion. First 5 workers free.