Glossary

What is Separation pay?

A payment made to an employee whose employment ends for certain reasons, such as redundancy, retrenchment, closure or a disease that makes continued work harmful.

The amount depends on the reason and the length of service, often one month's pay or half a month's pay per year of service, whichever is higher, depending on the cause. It is separate from the final pay that covers earned wages and benefits.

Related terms

  • Rest day: The weekly day off an employee is entitled to after six consecutive days of work. Work on a rest day is paid at a premium of at least 30% of the regular rate.
  • Retroactive pay: Pay owed for an earlier period that was underpaid or not yet paid, usually after a salary increase or a correction.
  • Service incentive leave (SIL): Five days of paid leave a year for covered employees who have worked at least one year, convertible to cash if unused at year-end.
  • Special non-working day: A day on which the rule is no work, no pay unless company policy says otherwise. An employee who works is paid 130% of the daily wage, or 150% if it is also the rest day.

Compute it in OneHRIS

OneHRIS applies Philippine pay and compliance rules in every payroll run. See the Help Center for step-by-step guides, try the free calculators, or see pricing.

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