Redundancy pay, worked out
Being declared redundant is hard news, especially after many years. The law tries to cushion it: under Article 298 of the Labor Code, redundancy gives you one month’s pay for every year of service (at least one month), and that separation pay is tax-free. Let’s go through a real example: ₱30,000 a month, started on 1 August 2016, last day 30 November 2026, 10 unpaid working days and 5 days of convertible leave.
1. Years of service
From 1 August 2016 to 30 November 2026 is 10 yrs 4 mos. A fraction of at least six months counts as a full year; here the extra 4 months don’t reach six, so you are credited 10 years. Had your last day been 31 January 2027 or later, you would reach 10 years and 6 months and be credited 11.
2. Separation pay
1 month × ₱30,000 × 10 years = ₱300,000.00. “One month’s pay” means your latest monthly salary; some courts and CBAs include regular allowances, so if you receive fixed monthly allowances, ask HR whether they are part of it.
3. The rest of your final pay
- Unpaid salary: 10 days × ₱1,379.31 = ₱13,793.10
- Pro-rated 13th month (January to November): ₱27,452.05
- Unused leave: 5 days = ₱6,896.55
Total final pay: ₱348,141.70. Of this, ₱300,000.00 separation pay and the ₱27,452.05 13th month are tax-free; only ₱20,689.65 (salary and leave) is taxable.
How years of service change the amount (₱30,000 salary)
Last day 30 November 2026, redundancy, 10 unpaid days and 5 leave days:
| Start date | Service | Credited | Separation pay | Total final pay |
|---|---|---|---|---|
| 2026-01-05 | 0 yrs 10 mos | 1 yrs | ₱30,000.00 | ₱77,812.94 |
| 2024-06-01 | 2 yrs 6 mos | 3 yrs | ₱90,000.00 | ₱138,141.70 |
| 2023-09-01 | 3 yrs 3 mos | 3 yrs | ₱90,000.00 | ₱138,141.70 |
| 2021-02-01 | 5 yrs 10 mos | 6 yrs | ₱180,000.00 | ₱228,141.70 |
| 2016-08-01 | 10 yrs 4 mos | 10 yrs | ₱300,000.00 | ₱348,141.70 |
| 2011-03-01 | 15 yrs 9 mos | 16 yrs | ₱480,000.00 | ₱528,141.70 |
What your employer must do
- Serve a written notice to you and to DOLE at least one month before the effective date.
- Show that the position is truly redundant and choose fairly who is affected.
- Pay separation pay and release final pay within 30 days of separation (DOLE Labor Advisory No. 06-2020).
If you think the redundancy is not genuine or the notice was not given, you can ask for help through DOLE’s Single Entry Approach (SEnA) — it’s free and usually settles things within 30 days.
FAQ
How much is redundancy pay for 10 years with a ₱30,000 salary?
One month per year of service: ₱30,000 × 10 = ₱300,000.00. With unpaid salary, pro-rated 13th month and 5 leave days, total final pay is about ₱348,141.70 (start 1 August 2016, last day 30 November 2026).
Does 10 years and 4 months count as 11 years?
No. Only a fraction of at least six months counts as a whole year. 10 years and 4 months is credited as 10 years; 10 years and 6 months would be 11.
Is redundancy pay taxable in the Philippines?
No. Separation pay for causes beyond your control, like redundancy, is tax-exempt under NIRC Sec. 32(B)(6)(b). In this example only ₱20,689.65 of salary and leave conversion is taxable.
Sources (checked 5 November 2026): Labor Code of the Philippines, Arts. 95, 297, 298 and 299 (renumbered, DOLE Department Advisory No. 01-2015); PD 851 and its revised guidelines; DOLE Labor Advisory No. 06, series of 2020 (dole.gov.ph); NIRC Sec. 32(B)(6)(b) and 32(B)(7)(e) as amended by RA 10963 (TRAIN), bir.gov.ph.