I have an office staff who has been working for me for around three years already. She recently told me of her intention to resign sometime next year. In preparation for her planned resignation, I want to know if I am required to give her a separation pay aside from her salary and 13th month pay which I give regularly and on time. I will appreciate any advice on this matter. Thank you!
Whether you are required to give your employer a separation pay primarily depends on the manner of the termination of the services of your office staff. From your narration, you mentioned that your staff plans to resign soon. The act of resignation is considered a voluntary mode of severance of an employee-employer relationship to which the Supreme Court ruled that:
“Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has no other choice but to disassociate himself from his employment.” (Virgen Shipping Corp. vs. Barraquio, G.R. No. 178127, April 16, 2009 citing Valdez vs. NLRC.)
Considering this, it is important to note that the Labor Code of the Philippines does not contain a provision granting separation pay to voluntarily resigning employees. Separation pay is granted only in cases where the reason for separation from employment is beyond the control of the employee such as in cases of retrenchment or dismissal by the employer. Since your staff voluntarily resigned, her separation from employment is completely within her control. Therefore her voluntary decision to severe your employer-employee relationship does not entitle her for a separation pay.
There are, however, certain occasions when an employee who voluntarily resigns is entitled to a separation pay such as when grant of separation pay to resigning employees has been an established business practice by the employer or when a written agreement to such effect has been made between the employer and employee. As held by the Supreme Court:
“ . . . 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” (Alfaro vs. Court of Appeals G.R. No. 140812, August 28, 2001).
Thus, if you have an agreement or practice of giving separation pay to resigning employees, then you can still be required to give a separation pay to your resigning employees, otherwise the law does not oblige you to give them separation pay.
Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.
We hope that we were able to enlighten you on the matter.
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