Steer Workforce

Separation Pay Calculator

Cause-driven, transparent.

The Labor Code sets different separation-pay rules for redundancy, retrenchment, closure, disease, and just-cause terminations. This tool walks through each cause, applies the correct multiplier, and surfaces the tax treatment.

Two professionals reviewing notes and figures together at a shared workspace — the moment of decision-making.

Separation pay by cause, computed live.

Labor Code Articles 297, 298, 299. The cause determines the multiplier; tenure with the 6-month rounding rule determines the year count.

The DOLE Handbook treats this as basic salary; employers may include the 1/12 share of 13th-month and leave conversions as a benefit

6 or more rounds up to a full year

Labor Code Art. 298 (formerly 283). Position is no longer necessary — duplication, overhiring, decreased volume, reorganization.

Formula applied
₱35,000 × 1 × 5 years
Separation pay due
₱175,000
Tax-exempt. Separation pay for causes beyond the employee's control is fully exempt under NIRC §32(B)(6)(b). No withholding tax, no inclusion in BIR Form 2316.
Notice + final pay rules apply. For authorized causes (Art. 298), at least 30 days' written notice to both employee AND DOLE is required. Final pay (including separation pay, last salary, prorated 13th-month, unused leave conversions) is due within 30 days of separation (DOLE LA 06-20).

Sources. Labor Code Articles 297 (just causes), 298 (authorized causes), 299 (disease). DOLE Handbook on Workers' Statutory Monetary Benefits. Tax treatment under NIRC §32(B)(6)(b) — separation pay due to causes beyond the employee's control is fully exempt from income tax.

Important nuance. "Serious business losses" requires documented proof (audited financials, declining revenue trend, evidence of imminent insolvency). Employers claiming this cause to avoid separation pay without proof often lose at the NLRC and end up paying full retrenchment-equivalent pay anyway, plus damages.

What we don't model. Constructive dismissal claims, regularization disputes, CBA-mandated separation packages exceeding statutory minimums, retirement-fund-vs-separation-pay overlaps, OFW separation rules. Specialized cases require counsel.

Running terminations the right way?

Steer Workforce's Termination Compliance Copilot drafts the right notice for each cause, flags the procedural risks (twin-notice rule for just causes, 30-day notice + DOLE filing for authorized causes), and computes the final pay automatically.

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