Laid-off? How to Compute Your Separation Pay?

If you have been laid-off or permanently terminated from your employment due to business reasons such as downsizing, you should be guaranteed to receive a full separation pay package. We will show you how to compute your separation pay.

For example, your monthly salary is Php 15,000, and you have worked to the company for 4 years, you should receive a separation pay amounting to 1/2 of your monthly salary multiplied by the number of years you have worked for the company.

How to Compute Your Separation Pay

Separation Pay Formula

Php 15,000/2 = Php 7,500 (half of your monthly salary)

Php 7,500 x 4   (half of your monthly salary multiplied by the no. of years you have worked for the company)

= Php 30, 000  (your computed Separation Pay)

If you received an amount that is lower than your computed Separation Pay, you should contest this with your employer. If for some reasons your company is unable to pay you with the full amount, they may request you to pay you the full amount in installment within 6 months. This formula also applies if you receive a salary that is on a daily basis (arawan). You will base your separation pay computation from your monthly average salary.

According to the Employers Confederation of the Philippines (ECOP), your company should pay you the exact amount of your separation pay.

Based from the Department of Labor and Employment’s Summary of Local Job Displacement as of January 2020 to June 14, 2020:

  • Businesses that have Closed – 2,611 businesses
  • Laid-off workers – 79,647 workers
  • Possible Business Closures as of June 15, 2020 – 1,231 businesses
  • Possible Affected Workers due to Possible Business Closures – 25,500 workers
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