Retrenchment pay in the Philippines: half a month per year of service, at least one month
Estimates only, not financial advice. What you type stays on your device. Checked against sources on 16 Oct 2026.A worker retrenched to prevent losses in the Philippines, or let go when a business closes for reasons other than serious losses, is owed half a month of pay for every year of service or one month of pay, whichever is higher (article 298 of the Labor Code). Six months or more of a part year count as a whole year. A closure due to serious losses carries no separation pay.
2026 · Rates and rules read from Labor Code of the Philippines, articles 298 and 299 (283 and 284 before renumbering), LawPhil on 16 Oct 2026; they may have changed since.
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When an employer in the Philippines ends a job for an authorised cause, the Labor Code sets a minimum separation pay. This page applies articles 298 and 299, which were articles 283 and 284 before the code was renumbered.
Redundancy and labour-saving devices. One month of pay for every year of service, or one month of pay, whichever is higher.
Retrenchment and closure. Retrenchment to prevent losses, and a closure or cessation of business that is not due to serious losses, give half a month of pay for every year of service, or one month, whichever is higher. A closure due to serious business losses carries no separation pay.
The rest of the article, and all 6 questions about Philippines Separation Pay Calculator, are on the Philippines Separation Pay Calculator page.
Multiply your monthly pay by the years of service and by the rate for the cause: one month per year for redundancy or labour-saving devices, half a month for retrenchment, closure not due to serious losses, or disease. Six months or more of a part year count as a year, and the result is never below one month of pay.
One month of pay for every year of service, or one month, whichever is higher (article 298). On ₱30,000 a month after 7 years and 6 months that is 8 years, ₱240,000.
Half a month of pay for every year of service, or one month, whichever is higher. The same rate applies when a business closes for reasons other than serious losses, and for termination because of disease.
Only if the closure is not due to serious business losses or financial reverses. Then it is half a month per year or one month, whichever is higher. A closure because of proven serious losses carries no separation pay under the Labor Code.
Rates and rules change; check the source before you rely on a figure.
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