Short answer up front

No—merely reaching one (1) year of service does not, by itself, entitle a non-regular employee to separation pay. In the Philippines, separation pay is generally due only when employment is ended for specific “authorized causes” under the Labor Code (e.g., redundancy, retrenchment, closure not due to serious losses, installation of labor-saving devices, or termination due to disease), or as a judicial/administrative remedy (e.g., in lieu of reinstatement after an illegal dismissal finding). It is not owed for resignation, expiration of a valid fixed-term, completion of a project/season, or termination for just cause (e.g., serious misconduct), subject to limited equitable exceptions recognized in case law.

Below is a complete guide tailored to the Philippine legal framework.

Key concepts and definitions

Separation pay: A monetary benefit paid when employment ends due to authorized causes or as equitable relief ordered by tribunals. It is distinct from final pay (last wage, pro-rated 13th month pay, unused leave, etc.) and from retirement pay.
Authorized causes (Labor Code):
1. Installation of labor-saving devices
2. Redundancy
3. Retrenchment to prevent losses
4. Closure/cessation of business (not due to serious losses)
5. Disease (employee cannot continue without risk and no suitable work is available)
Just causes: Employee fault (serious misconduct, willful disobedience, gross neglect, fraud, loss of trust, and analogous causes). No separation pay is legally required when termination is for just cause (tribunals seldom grant “financial assistance,” and never for grave misconduct or offenses reflecting moral turpitude).
Non-regular employee: Anyone who is not a regular employee—e.g., probationary, project, seasonal, casual, fixed-term, part-time, or agency-deployed. Note: some categories become regular by operation of law.

The “one-year” issue explained

One year of service does not automatically trigger separation pay.
What matters is why and how employment ended.
The one-year mark can affect status:
- Casual employees who have rendered at least one year in work usually necessary or desirable to the employer’s business become regular with respect to that activity.
- Probationary employment ordinarily cannot exceed six (6) months (unless a valid longer period applies by law, e.g., apprenticeship/learnership). If a worker continues beyond a valid probation without being properly terminated or assessed against reasonable standards made known at hiring, they usually become regular.
- Project/seasonal/fixed-term status does not convert solely by length of service if the arrangement is validly structured and observed (e.g., genuine project work ending upon project completion).

Implication: If by (or before) the first year the worker has become regular, then they are entitled to separation pay only if their termination falls under an authorized cause (or as adjudged relief). If they validly remain non-regular, entitlement still hinges on the cause of termination—not on tenure.

Who typically gets separation pay (and who doesn’t)

Entitled (by statute or order)

Authorized causes
- Labor-saving devices / Redundancy: at least one (1) month pay or one (1) month pay per year of service, whichever is higher.
- Retrenchment / Closure not due to serious losses / Disease: at least one (1) month pay or one-half (1/2) month pay per year of service, whichever is higher.
- Rounding: A fraction of at least six (6) months is counted as one whole year.
- Notice: Written notice to the employee and to DOLE at least 30 days before effectivity.
Illegal dismissal cases
- If reinstatement is no longer feasible (strained relations, business closure, position long abolished, etc.), tribunals often award separation pay in lieu of reinstatement (commonly one month per year of service) plus backwages.
Equitable financial assistance
- Rare and discretionary; not allowed where the offense is grave (e.g., serious misconduct, fraud). Award depends on jurisprudence and case facts.

Not entitled (as a rule)

Resignation (voluntary)
Expiration of a valid fixed term
Completion of project/season (genuine project or seasonal employment ending naturally)
Just-cause dismissals (serious misconduct, etc.), subject to the strict limits on equitable relief noted above

How the rules apply across non-regular categories

Status	After one year, do they become regular?	Separation pay upon termination?
Probationary	Typically becomes regular by 6 months unless validly extended by law; one year usually means they’re already regular (unless special regimes).	If authorized cause → Yes (rates above). If just cause → No.
Casual	If work is usually necessary/desirable and they’ve served ≥1 year, they become regular with respect to such activity.	As regulars, same rule: Yes for authorized causes; No for just causes/expiration not applicable.
Project	No automatic regularization if the project scheme is valid and the employee is released upon project completion.	No separation pay for completion of project. Yes if terminated before completion due to authorized causes (use statutory rates).
Seasonal	Work is by season; no automatic regularization for off-season; may be considered “regular seasonal” for recurring seasons.	No separation pay for end of season. Yes if authorized cause ends the employment mid-season or abolishes seasonal complement.
Fixed-term	Valid fixed-term does not regularize solely by time.	No for term expiry. Yes if the employer ends it early due to an authorized cause.
Part-time	Hours affect pay, not status; can become regular depending on nature of work.	Same cause-based rule as others.
Agency-deployed (legitimate job contracting)	The agency is the employer; principal has joint/several liability for certain claims.	On authorized causes, agency typically pays separation pay; if labor-only contracting is found, the principal may be deemed the employer and liable.

Computation guide

Identify the cause of termination (authorized vs. just; project completion, etc.).
Choose the correct rate:
- 1 month pay per year (or at least 1 month) → redundancy; labor-saving devices.
- 1/2 month pay per year (or at least 1 month) → retrenchment; closure not due to serious losses; disease.
Count service: Include the entire credited service period; count ≥6 months as one (1) year.
Base pay: Use the employee’s latest salary rate (basic pay; exclude purely discretionary benefits unless company policy/CBAs specify otherwise).
Taxes: Separation pay due to involuntary causes beyond the employee’s control (e.g., authorized causes; disease; death) is generally tax-exempt under tax rules; other payments may be taxable—confirm with payroll or a tax professional.

Example: A casual worker performing necessary/desirable work becomes regular after a year. If later retrenched with 1 year and 8 months of service at ₱20,000/month:

Count 2 years (≥6 months rounds up).
Rate for retrenchment: 1/2 month per year → 0.5 × 2 = 1 month pay minimum, but the law also sets at least 1 month, so separation pay = ₱20,000.

Procedure and documentation (for authorized causes)

30-day written notice to the employee and the DOLE—stating the authorized cause and effective date.
Separation pay must be paid on or before the effectivity of termination (best practice: release on final day).
Proof of cause: redundancy study, new technology roll-out, financial statements for retrenchment, medical certification for disease, board resolution for closure, etc.
Final pay and documents: release quitclaim (if any), COE, last pay/13th month/leave conversions per company policy and law.

Common scenarios

“I’m a project employee; the project finished after 14 months.” → No separation pay for completion of a genuine project. Final pay only.
“I’m a fixed-term hire; my 12-month contract simply ended.” → No separation pay for term expiry.
“I’m a seasonal worker; the season ended.” → No separation pay for season end. If the employer abolishes the seasonal roles due to redundancy, then separation pay applies.
“I’m casual, over a year in a necessary/desirable role.” → You likely became regular for that role. If the employer lets you go due to redundancy, separation pay applies at the redundancy rate.
“I was dismissed for serious misconduct after one year.” → No separation pay (and equitable financial assistance is generally not granted for grave offenses).
“I resigned after a year.” → No separation pay. You’re due final pay items only.
“The company closed due to poor sales (not catastrophic losses).” → Separation pay applies at 1/2 month per year (or at least 1 month).
“I won an illegal dismissal case but returning is impractical.” → Tribunals often award separation pay in lieu of reinstatement (commonly 1 month per year of service), plus backwages.

Employer policy, CBAs, and contracts

Company policies or CBAs may grant better benefits than the Labor Code (never less). If a handbook promises separation pay on events beyond those in the Code—e.g., even for term expiry—that policy controls in favor of the employee.
Fixed-term/project contracts must be genuine. Labels do not control; tribunals look at substance over form.

Practical tips for employees

Identify your true status (project/seasonal/fixed-term vs. regular by law).
Ask for the written notice stating the exact termination ground and effectivity date.
Check the computation: rate used, years counted (6-month rounding rule), base pay.
Keep records: contracts, payslips, notices, evaluations, and any policy/handbook/CBAs.
Seek advice promptly** if the ground is unclear or feels pretextual.

Practical tips for employers

Choose and document the correct authorized cause; do not mix grounds.
Serve the twin notices properly (employee and DOLE, at least 30 days ahead).
Compute correctly (use the proper rate; apply rounding; pay on or before effectivity).
Consider alternatives (reassignment, retraining) to avoid disputes.
Honor CBAs/policies granting higher benefits.

FAQs

Q: Does one year of service automatically grant separation pay? A: No. Entitlement turns on cause of termination, not tenure.

Q: If I’m a non-regular worker for 12 months straight, am I already regular? A: Often yes (for casual/probationary in necessary/desirable work), but not for genuine project, seasonal, or valid fixed-term roles.

Q: How is the “year of service” counted for separation pay? A: Count actual service; any ≥6-month fraction counts as one (1) year.

Q: Is separation pay taxable? A: Generally tax-exempt if due to involuntary separation beyond the employee’s control (e.g., authorized causes or disease). Other payouts may be taxable—confirm with payroll/tax professionals.

Q: Can tribunals grant separation pay even for just-cause dismissals? A: Rarely, and not for grave offenses. It’s a narrow, equitable remedy applied case-by-case.

Bottom line

Tenure alone (even ≥1 year) does not create a right to separation pay.
Cause controls: Pay is mandatory for authorized causes and may be ordered in lieu of reinstatement after illegal dismissal; it is not due for resignation, fixed-term expiry, project/season completion, or just-cause dismissals.
Before acting, assess status, cause, and company/CBA rules, and apply the correct rate and procedures.