Entitlement to Separation Pay

As already noted, separation pay is required to be paid to the employee when there is termination of employment by the employer for an authorized cause, the amount of which depends on the cause. If the termination is due to the installation of labour-saving devices or redundancy, the separation pay is one month’s pay for every year of service or one month pay, whichever is higher (art. 283, LC). If the termination is due to retrenchment to prevent losses, or closure or cessation of operation of the establishment not due to serious business losses, or due to disease, the separation pay is one-half month’s pay for every year of service or one month pay, whichever is higher (arts. 283 and 284, LC). However, there is no requirement for separation pay if the closure is due to serious business losses.

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