Philippines Separation Pay Calculator
Estimate your separation pay based on DOLE regulations.
Estimated Separation Pay
PHP 0.00
Calculation Breakdown
Note: Enter years of service as a decimal (e.g., 3.5 for 3 years and 6 months). The calculator will automatically round up to the next full year if you have completed at least 6 months of service, as per regulations. This is for estimation purposes only.
What is Separation Pay in the Philippines
Separation pay in the Philippines, also known as severance pay, is a financial compensation provided to employees in case of termination for reasons such as redundancy, retrenchment, closure, or disease. It is calculated based on the employee’s monthly salary and years of service, depending on the reason for termination.
The purpose of separation pay is to provide monetary support to the employee during the transition out of the company. This compensation helps employees cover their financial needs while they are looking for new employment opportunities.
Who is Eligible to Receive Separation Pay / Severance Pay in the Philippines
According to Article 283 of the Philippines Labor Code, severance pay will be provided to employees who are terminated because of authorized reasons such as:
- Redundancy
- Installation of labor-saving devices
- retrenchment to prevent losses
- Closure of business (not due to serious business losses)
- Disease where the employment is prohibited by law
If an employee is terminated because of serious misconduct, habitual negligence of their duties, fraud, or commission of a crime, they are not eligible to receive any separation pay. (Refer to How to Ensure Lawful Termination in the Philippines for more details).
How to Compute Separation Pay in the Philippines?
In the Philippines, the calculation for separation pay depends on the reason for termination and the length of service. Here’s how it works:
1. Full Month’s Salary for Every Year of Service:
- This applies when termination is due to redundancy, installation of labor-saving devices, or when the business closes not due to serious losses.
- Employees are eligible to receive either one month’s salary or one month’s salary for every year of service, whichever is higher.
2. Half Month’s Salary for Every Year of Service:
- This applies when termination is due to retrenchment to prevent losses, business closure not due to serious losses, or when an employee is terminated due to a disease.
- Employees are eligible to receive either one month’s salary or half a month’s salary for every year of service, whichever is higher.
In both cases, if the service duration includes at least six months of a year, you need to round it to the next full year. For example, if the service is 3 years and 7 months, you need to count it as 4 years. However, if it is 3 years and 5 months, you will count it as 3 years.
