Separation Pay v. Reinstatement


Separation pay may [also] be awarded to an illegally dismissed employee in lieu of reinstatement." Section 4(b), Rule I of the Rules Implementing Book VI of the Labor Code provides the following instances when the award of separation pay, in lieu of reinstatement to an illegally dismissed employee, is proper:

[1] when reinstatement is no longer possible, in cases where the dismissed employee’s position is no longer available;
[2] the continued relationship between the employer and the employee is no longer viable due to the strained relations between them; and
[3] when the dismissed employee opted not to be reinstated, or the payment of separation benefits would be for the best interest of the parties involved.

In the instances above-enumerated, separation pay is the alternative remedy to reinstatement in addition to the award of backwages. The payment of separation pay and reinstatement are exclusive remedies. The payment of separation pay replaces the legal consequences of reinstatement to an employee who was illegally dismissed. (Bani Rural Bank v. De Guzman (G.R. No.170904; November 13, 2013)