Separation Pay as Financial Assistance

WHEN IS SEPARATION PAY GIVEN AS FINANCIAL ASSISTANCE?

PD 442 does not provide any rule granting financial assistance. The concept of financial assistance which is sometimes given to employees whose dismissal for cause has been affirmed as legal is not provided under the Labor Code or in the rules implementing it.

Since it is not provided under the Labor Code, separation pay as financial assistance is granted unilaterally by the employer or contractually between the parties. Separation pay in the form of “financial assistance” may be granted by the employer unilaterally by way of a voluntary policy or practice or through negotiated agreement such as a CBA.

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