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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.Employees paid on a purely commission basis are not entitled to 13th month pay.They are expressly excluded from the coverage of PD 851.However, employees paid on partly commission basis, i.e., those guaranteed with a fixed wage aside from the commission, are entitled to 13th month pay.Commission that take the form of an incentives or encouragement to ensure productivity, e.g., productivity bonus, does not form part of the basic salary.
It provides that a managerial employee is one who is vested with powers of prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall discharge, assign or discipline employees, or to effectively recommend such managerial actions.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 Alfaro, the Court ruled as follows: “Generally, separation pay need not be paid to an employee who voluntarily resigns.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.” [ In addition to the exceptions cited above, there are other cases where the court may award separation pay to voluntarily resigning employee. 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.”The union miner cannot agree to the acceptance of a wage principle which will permit his annual earnings and his living standards to be determined by the hungriest unfortunates whom the non-union operators can employ. Thus, in legal parlance, voluntary resignation is also called “termination by employee just cause.” Resignation letter normally contains explicit words expressing employee’s intention to terminate his employment. 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. The employee may resign for whatever reason, or even for no reason at all.