Voluntary Resignation and Separation Pay
Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has no other choice but to disassociate himself from his employment. (Virgen Shipping Corp. vs. Barraquio, G.R. No. 178127, April 16, 2009 citing Valdez vs. NLRC.)
The key is that resignation must be a “voluntary act”, and that the employee must have knowingly and voluntarily dissociate himself from his employment for his own personal reasons. It does not cover cases where the employee is forced to resign with the use of threats, intimidation, coercion or manipulation, or where resignation is imposed as a penalty for an offense.
The common practice of allowing an employee to resign, instead of terminating him for just cause so as not to smear his employment record, also fall under the category of voluntary resignation. (See J Marketing Corp. vs. Taran, G.R. No. 163924, June 28, 2009).
The Labor Code requires the employee to give an advance notice to the employer of his intention to resign. The notice of resignation must be in writing and must be served to the employer at least one month prior to the effective date of his resignation.
Resignation notice usually takes the form of a letter (commonly called “resignation letter”) addressed to the employer, expressing the employee’s intention to terminate his employment. It must state the date when resignation is to take effect because of the 30-day notice requirement under the law. It may also contain the reason or justification of the employee for filing his resignation, although legally, this is not important. The employee may resign for whatever reason, or even for no reason at all. Thus, in legal parlance, voluntary resignation is also called “termination by employee without just cause.”
Resignation letter normally contains explicit words expressing employee’s intention to terminate his employment. However, lack of explicit words stating the employees intention to resign is deemed not crucial, as long as the employees intention to resign can be deduced from letter itself. In one case, the Supreme Court held that a memorandum written by the employee containing his deep resentment towards his superior juridically constituted a letter of resignation. Even if the employee did not expressly indicate his intention to resign (neither of the words “resign” or “resignation” was mentioned), the resentful and sarcastic tone of the memorandum was held to be sufficiently indicative of such intention.
Effect of Failure to Tender Resignation Notice
If the employee fails to give the employer one month advance notice of his intention to resign, he may be held liable for damages.
Instances when Notice of Resignation is Not Required
The employee may resign even without serving any notice on the employer for any of the following reasons:
- Serious insult by the employer or his representative on the honor and person of the employee;
- Inhuman and unbearable treatment accorded the employee by the employer or his representative;
- Commission of a crime or offense by the employer or his representative against the person of the employee or any of the immediate members of his family; and
- Other causes analogous to any of the foregoing.
Resignation under any of the instance enumerated above is also called “termination by employee with just cause.”
An employee who voluntarily resigns from his work is not entitled to separation pay. There is no provision in the Labor Code which grants separation pay to voluntarily resigning employees.
Separation pay as a rule is paid only in those instances where the severance of employment is due to factors beyond the control of the employee. Thus, in case of retrenchment to prevent losses where the employee is forced to depart from the company due to no fault on his part, separation pay is required by law to be paid to the dismissed employee.
The case is totally different in case of voluntary resignation where severance of employment is due to employee’s own initiative. The law does not oblige the employer to give separation pay if the initiative to terminate employment comes from employee himself.
However, by way of exceptions, there are at least two instances where an employee who voluntarily resign is entitled to receive separation pay, as follows:
- When payment of separation pay is stipulated in the employment contract or Collective Bargaining Agreement (CBA, for companies with existing bargaining agent or union);
- When it is sanctioned by established employer practice or policy.
In Hinatuan Mining Corporation, et al. vs. NLRC, et al., G.R. No. 117394, February 21, 1997, the court ruled viz.:
“It is well to note that there is no provision in the Labor Code which grants separation pay to voluntarily resigning employees. Separation pay may be awarded only in cases when the termination of employment is due to: (a) installation of labor saving devices, (b) redundancy, (c) retrenchment, (d) closing or cessation of business operations, (e) disease of an employee and his continued employment is prejudicial to himself or his co-employees, or (f) when an employee is illegally dismissed but reinstatement is no longer feasible. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or CBA, or it is sanctioned by established employer practice or policy.” [Citations omitted.]
In Lilia Pascua, et al. vs. NLRC, et al., G.R. No. 123518, March 13, 1998, the Supreme Court, reiterated that:
“The grant of separation pay, however, is inconsistent with existing employment or voluntary resignation, for it presupposes illegal dismissal.”
In addition to the exceptions cited above, there are other cases where the court may award separation pay to voluntarily resigning employee. For example, in Alfaro vs. CA, G.R. No. 140812, August 28, 2001, the Court ordered the payment of separation pay despite holding that the employee voluntarily resign from service, and although such payment was not mandated under the CBA or employment contract. Same conclusion was arrived at in J Marketing.
In both of the above cases, the employer agreed to give separation pay to the employee as an incident of the latter’s resignation, but later on renege in the performance of such commitment. The Court held that such practice should not be countenanced.
In Alfaro, the Court ruled as follows:
“Generally, separation pay need not be paid to an employee who voluntarily resigns. However, an employer who agrees to expend such benefit as an incident of the resignation should not be allowed to renege in the performance of such commitment.”
- Article 285, Labor Code of the Philippines
Caveat: Subsequent court and administrative rulings, or changes to, or repeal of, laws, rules and regulations may have rendered the whole or part of this article inaccurate or obsolete.