Document background
A Severance Contract is a crucial document used when formally ending an employment relationship in the Philippines, whether through mutual agreement, redundancy, or other legitimate business reasons. This document must strictly comply with the Labor Code of the Philippines and related employment regulations, which set mandatory minimum requirements for separation benefits and procedural fairness. The contract typically comes into play during corporate restructuring, redundancy situations, or negotiated exits, providing comprehensive documentation of the separation terms, including financial compensation, benefit continuations, and mutual releases. It serves to protect both employer and employee interests while ensuring compliance with Philippine labor laws, tax regulations, and social security requirements. The document becomes particularly important in the context of potential labor disputes and future legal proceedings, as it establishes clear evidence of the agreed-upon terms of separation.
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