Back wages, separation pay

Dear Atty. Joji,

My father won an illegal dismissal case that he filed against his former company. In the court's decision, he was awarded backwages and separation pay instead of reinstatement. The decision became final last November 2022, but it came out as early as June 2022. Will the backwages be computed until June 2022 when the decision came out or until November 2022 when the decision became final? The five-month difference represents a substantial amount. Thank you.

Finn

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Dear Finn,

It is settled that the twin reliefs that should be given to an illegally dismissed employee are full backwages and reinstatement. Backwages restore the lost income of an employee and are computed from the time the compensation was withheld up to actual reinstatement. Anent reinstatement, only when it is not viable is separation pay given.

On the computation of backwages, this depends on the final awards adjudged as a consequence of illegal dismissal, such that when separation pay is ordered in lieu of reinstatement (as in the case of your father), backwages shall be computed from the time of dismissal until the finality of the decision ordering separation pay. The finality of the decision becomes the reckoning point because in allowing separation pay, the final decision effectively declares that the employment relationship ended so that separation pay and backwages are to be computed up to that point.

In your father's case, since there is an order of separation pay in lieu of reinstatement, his employment relationship with his former company terminated only upon the finality of the decision ordering the separation pay. The finality of the decision cuts off the employment relationship and represents the final settlement of the rights and obligations of the parties against each other.

Hence, back wages no longer accumulate upon the finality of the decision ordering the payment of separation pay since the employee is no longer entitled to any compensation from the employer by reason of the severance of his employment. Your father will therefore be entitled to the computation of backwages from the time of his illegal dismissal until the finality of the decision ordering the payment thereof, or in November 2022.

(Angono Medics Hospital Inc. vs Antonina Q. Agabin, G.R. 202542, 9 December 2020)

Atty. Joji Alonso