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Computation of Separation Pay

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1 Computation of Separation Pay on Fri Feb 07, 2014 9:22 pm


Arresto Menor
I am working at a BPO company in Makati and I support a Japanese account (I speak Japanese).

My monthly salary has these components:
Basic pay 25k
Language Premium 50k*
Allowances about 2k per month
* the language premium is fixed, given every month regardless of absence from work.
Total: About 77k net

Our account will close and I have been formally informed that I will be retrenched since there are no other accounts that need Japanese support. I am with the company for 2 years and 9months.

Now, how will my separation pay be calculated?
- Will it be based on my basic pay only?
- Will it be basic pay (25k) + language premium (50k)?

Our 13th month pay is only based on our basic pay. I have no problems with this since the labor code clearly states that it is based on the basic pay only. However, the computation of the separation pay written in the labor code does not specifically state “basic salary”. Instead, it uses the term “ one month pay”.

Laor Code Art. 283
In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher.

One kind person from another forum said that it should include the language premium. He mentioned the following cases:

In G.R. No. 76721 Santos vs. NLRC, "in the computation of backwages and separation pay, account must be taken not only of the basic salary of petitioner but also of her transportation and emergency living allowances". This was reiterated in Soriano v. NLRC, et al., G.R. No. 75510, October 27, 1987, 155 SCRA 124 and recently, in Planters Products, Inc. v. NLRC, et al., G.R. No. 78524, January 20, 1989.

The salary base properly used in computing the separation pay should include not just the basic salary but also the regular allowances that an employee has been receiving. (Insular Life Assurance Co., Ltd. v. National Labor Relations Commission, 156 SCRA 740 [1987]; and Soriano v. National Labor Relations Commission, 155 SCRA 124 [1987]).

However, our HR said that the separation pay will only be based on the basic salary because it is within the company policy.

If I were to file a case with NLRC, what do you think of my possibility of winning the case? How long will it possibly take?

Kindly enlighten me regarding this.

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2 Re: Computation of Separation Pay on Mon Feb 10, 2014 10:11 am


Reclusion Perpetua
If there is a company policy then that will be hard to question. Also - the language premium is given by the company as token for your japanese expertise. Also - since it's not part of the 13th month pay, that will be hard to contest.

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