• Separation pay – a month’s pay for each year of service

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    Persida Acosta

    Persida Acosta

    Dear PAO,
    I have been working as a seaman for one of the shipping companies stationed in Manila since 1990. I just want to know whether I will receive any separation pay if I stop working.
    Nicanor

    Dear Nicanor,
    An employee’s entitlement to separation pay is dependent on the basis of the termination of his or her employment contract. If you stopped working because your company terminated your employment in connection with any of the just causes provided for under Article 282 of the Labor Code of the Philippines, you will not be entitled to receive any separation pay because the law does not grant such benefit. These causes are as follows: “(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and (e) Other causes analogous to the foregoing.”

    On the other hand, if your employment as a seaman is terminated by reason of the company’s installation of labor-saving devices or by reason of redundancy, you are entitled to receive separation pay that is equivalent to at least one month pay or to at least one month pay for every year of service, whichever is higher. If your employment is concluded on account of retrenchment to prevent losses on the part of the company or in view of closures or cessation of operations of the company not due to serious business losses or financial reverses, the separation pay that you are entitled to receive shall be equivalent to one month pay or at least one-half month pay for every year of service, whichever is higher. Please be advised that a fraction of at least six months shall be considered one whole year (Article 283, Labor Code of the Philippines).

    You may also be entitled to receive separation pay that is equivalent to at least one month salary or to one-half month salary for every year of service, whichever is higher, if you are found to be suffering from any disease and your continued employment is prohibited by law or is prejudicial to your health as well as to the health of your co-employees (Article 284, Labor Code of the Philippines).

    However, if you initiated the termination of your contract of employment by filing your resignation, we regret to inform you that you will not be entitled to any separation pay, unless the grant of such benefit is expressly provided in your contract of employment.

    We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

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