On a ₱35,000 monthly salary, 5 years of service, and a redundancy separation, gross final pay plus separation pay comes to roughly ₱262,902, leaving a net of approximately ₱262,902 after withholding tax on the taxable components. Select your reason for separation below and enter your own numbers.
Redundancy
1 month/year
or 1 month, whichever higher
Retrenchment
0.5 month/year
or 1 month, whichever higher
Just cause
No pay
not a matter of right
Tax on separation
Exempt
authorized causes only
Separation pay: higher of 1 month's pay or (1 month × 6 years), tax-exempt.
6+ months rounds up to a full year for separation pay.
First 10 days/year are a tax-exempt de minimis benefit.
Total final pay + separation pay received (after tax)
₱262,902
Gross total
₱262,902
Withholding tax
₱0
Effective rate
0.0%
How your ₱262,902 payout is split
₱52,902
20.1%
₱210,000
79.9%
₱0
0.0%
Final pay (always owed)
| Unpaid salary (10 days) | ₱16,092 |
| Pro-rated 13th month pay | ₱17,500 |
| Unused leave conversion (12 days) | ₱19,310 |
Separation pay
| Separation pay (6 years, tax-exempt) | ₱210,000 |
| Gross total | ₱262,902 |
| Withholding tax (combined excess) | -₱0 |
| Total received | ₱262,902 |
Assumes a standard 5-day workweek daily-rate divisor (261). Separation pay for redundancy or retrenchment/disease/closure-not-due-to-losses is fully exempt from withholding tax under NIRC Sec. 32(B)(6)(b). Unpaid salary, 13th-month excess over the shared ₱90,000 cap, and leave-conversion amounts beyond the 10-day de minimis threshold are combined into one incremental tax calculation using the same 2026 TRAIN Law brackets as our other Philippines calculators. Doesn't model SSS/PhilHealth/Pag-IBIG refunds, a year-end tax annualization refund, or company-specific packages above the statutory minimums. This is an estimate, not legal or payroll advice.
Final pay and separation pay get used interchangeably in everyday conversation, but they answer different questions. Final pay is what every departing employee is owed, regardless of why they left: unpaid salary for days already worked, a pro-rated 13th month payment for the months actually worked this year, and the cash value of any unused leave. DOLE Labor Advisory No. 06-20 recommends releasing this within 30 days of separation.
Separation pay is a different, narrower entitlement that only applies to specific "authorized causes" under the Labor Code, none of which are the employee's fault. Redundancy and installation of labor-saving devices pay the higher of 1 month's salary or 1 month per year of service. Retrenchment, closure not due to serious losses, and termination due to disease pay the higher of 1 month's salary or half a month per year of service. A fraction of at least 6 months rounds up to a full year in both formulas. Closure due to genuinely serious business losses requires no separation pay at all, and neither does just-cause dismissal or a plain resignation.
The tax treatment is where a lot of quick estimates go wrong. Separation pay for an authorized cause is completely exempt from withholding tax under Section 32(B)(6)(b) of the National Internal Revenue Code, since the law treats it as compensation for a circumstance beyond the employee's control. Final pay is different: unpaid salary is fully taxable, 13th month pay is exempt only up to the shared ₱90,000 cap, and unused leave conversion is exempt only for the first 10 days per year under the BIR's de minimis rule. This calculator combines every taxable excess into one incremental calculation against the 2026 TRAIN Law brackets, the same approach used by our standalone 13th Month Pay Calculator.
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Final pay (unpaid salary, pro-rated 13th month, unused leave conversion) is owed to every departing employee, no matter why they left, and DOLE recommends releasing it within 30 days. Separation pay is only owed for specific authorized causes: redundancy, retrenchment, closure not due to serious losses, or disease. Resignation and just-cause dismissal don't come with separation pay.
For redundancy or installation of labor-saving devices, it's the higher of 1 month's pay or 1 month's pay per year of service. For retrenchment, closure not due to serious losses, or disease, it's the higher of 1 month's pay or half a month's pay per year of service. A fraction of at least 6 months of service rounds up to a full year for both formulas.
No. Closure due to serious, actual business losses (proven by financial statements) doesn't require separation pay under the Labor Code. Closure for other reasons (not due to serious losses) still requires the retrenchment-style formula.
Not as a matter of right. Just cause dismissal (serious misconduct, fraud, and similar Article 297 grounds) doesn't entitle you to separation pay, since the termination is attributable to your own conduct. Philippine courts have occasionally awarded discretionary financial assistance in cases not involving moral turpitude, but that's a court-awarded exception, not something you can compute in advance.
Separation pay for redundancy, retrenchment, disease, or closure not due to serious losses is completely exempt from income tax under NIRC Section 32(B)(6)(b), since it's paid for a cause beyond your control. There's no cap on this exemption, the entire amount is tax-free.
The first 10 days of unused leave converted to cash each year are a tax-exempt de minimis benefit under BIR RR 11-2018. Anything beyond 10 days is ordinary taxable compensation income.
With 6 months worked in the final year, 12 unused leave days, and 10 unpaid days worked, separation pay alone comes to about ₱210,000 (6 rounded years x 1 month), fully tax-exempt. Combined with final pay, gross totals roughly ₱262,902, with a net of approximately ₱262,902 after withholding tax on the smaller taxable components. Enter your own numbers above for your exact figures.
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