A weak economy sees the emergence of more small and medium enterprises and the closure or re-engineering of large companies. To stay afloat, a business establishment usually resorts to cutting costs, including that of manpower.
Termination of employment by retrenchment is usually to prevent serious business losses. Existing labor laws require the employer to give a 30-day notice to the employee regarding management’s decision to terminate the employment and to submit an Employment Retrenchment Report to the Department of Labor and Employment at least 30 days prior to the intended date of termination. Click here for a template of this report.
Upon the expiry of the 30-day notice, the employer then becomes liable to pay the terminated employee his separation pay, computed at a minimum of a half-month’s salary for every year of service. Those employed for less than a year with the company shall be entitled to the equivalent of one month’s salary.