Retirement v. Separation Pay

WHAT IS THE DIFFERENCE BETWEEN RETIREMENT BENEFITS AND SEPARATION PAY BENEFITS?

Retirement pay and separation pay are two distinct benefits granted under the law. They are different in these respects:

[1] While both retirement pay and separation pay are fixed by law, retirement pay differs from separation pay in that the former is paid by reason of retirement; while the latter is required in the cases enumerated in Articles 283 and 284 of the Labor Code and as substitute remedy in cases where reinstatement is not possible.
[2] The purpose for the grant of retirement pay is to help the employee enjoy the remaining years of his life thereby lessening the burden of worrying for his financial support. It is also a form of reward for the employee’s loyalty and service to the employer. Separation pay, on the other hand, is designed as funds during the period that an employee is looking for another employment after his termination.

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