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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice (Philippine Long Distance Telephone Co. v. NLRC, G.R. No. 80609 August 23, 1988)
What is separation pay?
Separation pay refers to an additional pay given to employees who are separated from their employment due to authorized causes (e.g. installation of labor-saving devices, redundancy, retrenchment, etc.) as these employees are not at fault since their employment was ended due to legitimate business reasons.
In Claudia’s Kitchen, Inc. v. Tanguin (G.R. No. 221096, June 28, 2017), the Court has summed up the instances where such award of separation pay is warranted:
In sum, separation pay is only awarded to a dismissed employee in the following instances: 1) in case of closure of establishment under Article 298 [formerly Article 283] of the Labor Code; 2) in case of termination due to disease or sickness under Article 299 [formerly Article 284] of the Labor Code; 3) as a measure of social justice in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character; 4) where the dismissed employee’s position is no longer available; 5) when the continued relationship between the employer and the employee is no longer viable due to the strained relations between them or 6) when the dismissed employee opted not to be reinstated, or the payment of separation benefits would be for the best interest of the parties involved. In all of these cases, the grant of separation pay presupposes that the employee to whom it was given was dismissed from employment, whether legally or illegally.
Is employee status relevant in order to claim for separation pay?
The employee’s status is not relevant.
Simply, so long as they are employees, they are entitled to separation pay. Thus, it does not matter whether they are regular, probationary, casual, project, seasonal, or fixed-term.
Social justice and entitlement to separation pay
In Philippine Long Distance Telephone Co. v. NLRC (PLDT) (G.R. No. 80609 August 23, 1988), the Court laid down the parameters in awarding separation pay to dismissed employees based on social justice:
There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. x x x It is not the employee’s fault if he does not have the necessary aptitude for his work but on the other hand the company cannot be required to maintain him just the same at the expense of the efficiency of its operations. He too may be validly replaced. Under these and similar circumstances, however, the award to the employee of separation pay would be sustainable under the social justice policy even if the separation is for cause.
But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his offense is misappropriation of the receipts of his sales. This is no longer mere incompetence but clear dishonesty. x x x.
We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice.
Non-entitlement to separation pay
Based on pertinent laws and jurisprudence, there are instances wherein an employee is not entitled to separation pay.
In the subsequent case of Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission (G.R. NOS. 158786 & 158789 : October 19, 2007), the Court expanded the exclusions and elucidated that separation pay shall be allowed as a measure of social justice only in instances where the employee is validly dismissed for causes other than serious misconduct, willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, commission of a crime against the employer or his family, or those reflecting on his moral character. In the same case, we instructed the labor officials that they must be most judicious and circumspect in awarding separation pay or financial assistance as the constitutional policy to provide full protection to labor is not meant to be an instrument to oppress the employers (Solidbank Corporation v. NLRC, 631 Phil. 158, 168-175 (2010). The commitment of the court to the cause of the labor should not embarrass us from sustaining the employers when they are right, as here. In fine, we should be more cautious in awarding financial assistance to the undeserving and those who are unworthy of liberality of the law (Security Bank Savings Corporation v. Singson, G.R No. 214230, February 10, 2016).
Related Article/s:
Prescription of Claims in Illegal Dismissal Cases and Money Claims
Resignation vs. Constructive Dismissal
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