GUIDE ON WHERE AND HOW TO APPLY FOR LOAN WHEN RETRENCHED

Guidelines How to Apply Loan

The Philippines is no exception from the outbreak of the coronavirus disease 2019 (COVID-19) that significantly impacted the world economy, causing it to slow down. With the public’s health at risk, the government took the necessary steps to mitigate the spread of the disease, including suspending public transportation, closing most businesses, and imposing lockdowns. The economy has reached a level that no one could have predicted due to lost earnings and considerable costs incurred by businesses.

Employers have had to come up with solutions to make ends meet. Alternative work methods were implemented to keep operations running and, to the extent possible, reduce costs. Despite all efforts to limit losses, many businesses, large and small, may be forced to cut their workforces or permanently close their doors forever.

Under Article 283 of the Labor Code, the employer may terminate an employee for the installation of labor-saving devices, redundancy, retrenchment, or the closure or cessation of operations of the establishment or undertaking.

IS THE SEPARATION PAY OF A RETRENCHED EMPLOYEE SUBJECT TO TAX?

Under Section 32(B)(6)(b) of the Tax Code, any amount received by an official or employee or by his heirs as a consequence of separation from the service of the employer because of death, sickness or other physical disability or for any cause beyond the control of the said official or employee shall be exempt from tax.

WORKERS AFFECTED BY COVID-RELATED FIRM LAYOFFS AND CLOSURES WILL RECEIVE UNEMPLOYMENT COMPENSATION FROM THE SSS

The Social Security System (SSS) is prepared to pay unemployment benefits to 30,000 to 60,000 workers who are expected to lose their jobs as a result of anticipated layoffs or closures of private enterprises hit by the economic fallout from the rapidly spreading coronavirus disease in 2019. (COVID-19).

SSS Senior Vice President and Chief Actuary Edgar Cruz stated that the SSS is prepared to offer at least P660 million in jobless compensation to impacted SSS members, and up to P1.2 billion in the worst-case scenario.

The average unemployment payout for qualifying members is around P11,000 

Assuming that 60,000 workers are laid off in the worst-case scenario and take use of the incentive, Cruz estimates that the cost will be around P660 million. According to him, if the maximum cash benefit of P20,000 per applicant is used, the total sum will be P1.2 billion.

UNEMPLOYMENT BENEFIT

Also known as Unemployment Insurance or Involuntary Separation Benefit. This is a cash benefit given to covered personnel, such as kasambahays and OFWs (sea-based and land-based), who have been forced to leave their jobs. (e.g. due to retrenchment or downsizing, closure or cessation of operation, installation of labor-saving devices, redundancy, etc.)

QUALIFYING CONDITIONS

Guidelines How to Apply Loan

At the time of involuntary separation, a member should not be more than 60 years old; if an underground or surface mineworker, not more than 50; and if a racehorse jockey, not more than 55.

Member has made at least 36 monthly contributions, 12 of which must have been made in the 18 months before to the month of involuntary separation.

Note: An employee is not eligible for the benefit if he or she has been involuntarily terminated from employment for the following reasons:

  • Serious misconduct;
  • Willful disobedience to lawful orders;
  • Gross and habitual neglect of duties;
  • Fraud or willful breach of trust/loss of confidence;
  • Commission of a crime or offense; or
  • Analogous cases like abandonment, gross inefficiency, disloyalty/ conflict of interest/ dishonesty.

AMOUNT OF BENEFIT

If the employee qualifies, he or she will receive a credit equal to twice the member’s average monthly salary credit (AMSC).

The benefit is paid out in one lump sum, and the claim must be made within one year of the involuntary separation date.

Find the nearest suitable employee for your company. Check out this website called LapitTauhan! LapitTauhan

LapitTauhan is a website for company employers to post jobs and reach the nearest potential applicants in the area. On the website, type in your company details to sign up for an account. Your posted jobs will be seen on a map-based app and website called LapitJobs which now has over a thousand downloads.

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Subscribe to your desired Job Post Subscription Plan with the lowest rates you’ll ever find online. Not only is the LapitTauhan website time-saving and cost-effective, but also, the chances to hire employees that live near the office or company’s workplace will effectively increase.

 

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