Legal Disclaimer
This calculator provides estimates only. Computations are based on Labor Code Articles 298–299 and DOLE guidelines. Consult a labor lawyer or DOLE for your specific situation.
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Frequently Asked Questions
About This Separation Pay Calculator
FinalPay.ph's Separation Pay Calculator is a free, browser-based tool designed specifically for Filipino employees navigating involuntary separation from employment. All computations follow Labor Code of the Philippines Articles 298 and 299, as well as DOLE guidelines — no registration, no data collection, and 100% private.
Separation pay is a monetary benefit owed to employees who are dismissed for authorized causes such as redundancy, retrenchment to prevent business losses, installation of labor-saving devices, closure of the establishment not due to serious losses, or separation due to disease. The amount depends on the cause: redundancy entitles you to one (1) month's pay per year of service, while retrenchment and closure entitle you to one-half (½) month's pay per year of service.
A critical rule under Philippine labor law is the "at least six months" rounding rule: if you have worked a fraction of a year of at least six (6) months, it is rounded up to one full year for separation pay computation purposes. If you have worked less than six months, that period is not counted. This calculator applies that rule automatically.
Separation pay from authorized causes is generally tax-exempt under BIR rulings and the National Internal Revenue Code. This means it is not subject to withholding tax, unlike regular compensation income. Voluntary separation packages offered outside of the authorized-cause framework may have different tax treatment.
If you believe your employer has failed to pay your separation pay or final pay, you may file a Request for Assistance (RFA) at any DOLE office under the Single Entry Approach (SEnA), or escalate to the National Labor Relations Commission (NLRC) if mediation fails.
What is the legal basis for separation pay in the Philippines?
Separation pay is mandated under Articles 298 and 299 of the Labor Code of the Philippines (formerly Articles 283 and 284). It applies when employees are separated for authorized causes, which are business-related reasons beyond the employee's control.
How is separation pay different from retirement pay?
Separation pay is triggered by authorized-cause dismissal, while retirement pay (under RA 7641) applies when an employee reaches at least 60 years of age with at least 5 years of service. Both are tax-exempt under specific conditions.
Can I receive both separation pay and final pay?
Yes. Separation pay is one component of your total final pay. You may also be entitled to pro-rated 13th month pay, unpaid wages, and conversion of unused leave credits on top of your separation pay.
What if my employer refuses to pay separation pay?
You can file a complaint with DOLE through the SEnA process. If unresolved, the case may be referred to the NLRC for adjudication. Keep all employment documents, payslips, and correspondence as evidence.