A Philippine Labor Law Perspective

I. Context: NC II, Employment, and Why This Question Arises

In the Philippines, NC II (National Certificate II) is a technical-vocational qualification issued by TESDA (Technical Education and Skills Development Authority). Many employers, especially in:

Construction
Hospitality (e.g., housekeeping NC II)
Caregiving / health-related support
Technical trades (welding, electrical, etc.)

treat NC II as:

A pre-employment requirement,
A condition for promotion or regularization, or
A requirement for deployment abroad (e.g., for OFWs).

The common real-life scenario is:

The employee is either required or sponsored by the employer to take NC II. The employee fails the assessment and then resigns (voluntarily or “encouraged”) and wants to know: “Am I entitled to separation pay?”

To answer this, we need to understand:

What separation pay legally is (and is not),
When the law requires it,
How resignation and failed certification fit into those rules, and
When separation pay may arise from contract, company policy, or equity, even if not mandated by law.

II. Separation Pay Under Philippine Law: Basic Concepts

1. Separation Pay vs. Last Pay vs. Other Benefits

Separation pay (in the strict legal sense) is:

Money paid by the employer because the employment is being terminated,
Typically calculated as a number of days of salary per year of service,
Required by law only in specific situations.

It is different from:

Last pay / final pay – unpaid wages, pro-rated 13th month, unused leave convertible to cash, etc.
Retirement pay – under the Labor Code or a company retirement plan.
Financial assistance / ex gratia – given out of “social justice” or compassion, not because the law forces it.

A worker who resigns or is terminated must always be given his/her earned benefits (wages, 13th month, etc.); but separation pay is special and not automatic.

2. When the Law Requires Separation Pay

Under the Labor Code (as renumbered), separation pay is mandatory mainly in authorized causes, such as:

Installation of labor-saving devices
Redundancy
Retrenchment to prevent losses
Closure or cessation of business not due to serious losses
Disease where the employee is found unfit to work and cannot be accommodated

In those cases, the law specifies minimum separation pay formulas (e.g., one month or one-half month per year of service, depending on the ground).

By contrast, just causes (serious misconduct, gross neglect, fraud, etc.) generally do not entitle the employee to separation pay, except in some equitable situations recognized by the Supreme Court.

Resignation, by itself, generally does not entitle an employee to separation pay, unless:

The employment contract says so;
The collective bargaining agreement (CBA) provides it; or
It has become a consistent company practice.

III. Resignation and Separation Pay

1. Resignation in General

Resignation is a voluntary act of the employee; it is the employee’s decision to cut the employment relationship, typically with:

A written resignation letter,
Observance of 30-day notice (or as provided in the contract), unless waived.

As a rule:

An employee who voluntarily resigns is not legally entitled to separation pay.

What the employee is entitled to are:

Unpaid wages up to last day of work
Pro-rated 13th month pay
Conversion of unused leaves if company policy allows
Other accrued benefits under company rules / CBA

2. Exceptions: Contract, CBA, and Company Practice

Separation pay may be given to a resigning employee when:

The employment contract explicitly grants it;
A CBA includes separation pay for resignations under certain conditions (e.g., long service);
Company has an established practice (e.g., consistently granting an equivalent of separation pay for voluntary resignations beyond a certain tenure).

In such cases, the source of the right is contract or practice, not the Labor Code.

IV. Failure to Obtain or Maintain a Required Certification (NC II)

1. Employer’s Right to Set Qualification Standards

Under labor law, employers may set reasonable qualification standards for positions, such as:

Educational attainment
Licenses (e.g., board exam, PRC)
Skills certifications (NC II, NC III, etc.)
Experience requirements

If the job reasonably requires NC II (for safety, regulatory compliance, quality standards, or client requirements), then passing NC II can lawfully be:

A pre-employment requirement, or
A condition for regularization (for probationary employees), or
A continued employment requirement (for certain roles).

2. Failure to Obtain Required Certification as Ground for Termination

Failure to obtain or maintain a required license or certification can be treated as:

Failure to qualify, or
Inability to perform job requirements, or
Absence of necessary legal/technical qualification.

This has been recognized in analogous situations (e.g., failing board exams for professions where a license is mandatory).

In such cases:

The cause is closer to a just cause / valid cause related to qualification, not an authorized cause like retrenchment.
As a rule, no separation pay is required by statute for such termination, unless:
- The company or CBA provides it; or
- A court grants equitable financial assistance in a particular case (usually after litigation).

3. Probationary Employees and NC II

If the employee is probationary and the contract expressly states that:

Passing NC II is a condition for regularization, and
This condition is clearly communicated at the time of hiring,

then failing the NC II may justify:

Non-regularization upon end of probation, or
Earlier termination for failure to meet standards.

For probationary employees properly informed of standards, termination for failure to meet those standards:

Is generally considered valid,
Does not legally require separation pay,
But still requires procedural due process (notice and opportunity to be heard).

V. “Failed NC II Certification Resignation”: Legal Analysis

Now we merge both elements: failed certification and resignation.

1. Scenario A: Truly Voluntary Resignation After Failing NC II

Example: Employee fails NC II, feels embarrassed or discouraged, decides to resign on their own, without pressure or threat from the employer.

In this case:

Legal view: a voluntary resignation.
The cause of resignation (failing NC II) does not change the basic rule:

No statutory separation pay is mandated for voluntary resignation.
Employee is entitled to:
- Last wages
- Pro-rated 13th month
- Convertible unused leave
- Any contractual or policy-based benefits (if applicable).

Unless company policy or contract grants separation pay even on resignation, there is no legal entitlement.

2. Scenario B: “Resign or We’ll Terminate You” – Possible Constructive Dismissal

Sometimes, an employer tells a worker who failed NC II:

“You have to resign because you failed. If you don’t, we’ll terminate you.”

If the pressure is strong enough, and the employee resigns against his/her real will, this can be seen as constructive dismissal rather than true voluntary resignation.

In constructive dismissal:

The resignation is not truly voluntary;
The law treats it as an employer-initiated termination, possibly illegal if no valid ground or due process.

Consequences, if a court or arbiter later finds illegal dismissal:

Employee may be entitled to backwages and reinstatement, or
If reinstatement is not viable, separation pay in lieu of reinstatement (this is different from statutory separation pay for authorized causes).

So, if NC II failure is not a lawful ground under the contract and job requirements, and the employer forces resignation instead of following correct termination procedures, the employee might actually be entitled to remedies larger than separation pay.

3. Scenario C: Proper Termination for Failure to Qualify (After Due Process)

If the job legitimately and reasonably requires NC II, and:

The requirement was clearly explained at hiring;
The employee was given a reasonable chance to obtain it (e.g., training, exams);
The employer followed due process (notice and opportunity to explain) in ending employment;

Then termination for failure to qualify can be valid.

In such a case:

As a general rule, there is no mandatory separation pay since the cause is akin to a just cause / valid cause related to qualification standards.
The employer may voluntarily give financial assistance or separation pay as a matter of policy or compassion, but it is not legally compelled to do so.

VI. TESDA Sponsorship, Training Bonds, and Resignation

1. Company-Sponsored NC II (Training Agreements)

Many employers sponsor NC II training and assessment, often with a training bond or scholarship agreement that says, for example:

The employee must serve the company for X years after passing;
If the employee resigns earlier, he/she must reimburse training costs.

Key points:

Failing the exam may change or delay the service obligation, depending on the agreement’s wording.
The agreement usually focuses on reimbursement, not on separation pay.

2. Resignation After Failed NC II and Training Costs

If the employee resigns after failing NC II:

The company may not recover training costs if the contract makes service obligation conditional on passing.
If the agreement says costs are reimbursable regardless of result, the company might still demand payment (subject to fairness and interpretation).

This topic is largely about possible reimbursement liability, not entitlement to separation pay.

VII. Special Cases: Equitable or Ex Gratia Separation Pay

1. Equitable Financial Assistance in Court Decisions

Philippine jurisprudence has, in some cases, granted financial assistance to employees:

Legally dismissed for certain just causes, but
Who had long years of service and no serious moral depravity.

This is a matter of equity and social justice, not strict statutory entitlement.

Applied to NC II:

If an employee with long, clean service fails NC II late in career and is terminated, a court might, in an appropriate case, allow some form of financial assistance.
But this is case-by-case, often after litigation, and not automatic.

2. Voluntary Ex Gratia Separation Pay by the Employer

Even if law does not require separation pay, employers sometimes grant:

Ex gratia financial assistance
Service awards on exit
Goodwill packages

to maintain morale, protect company reputation, or in recognition of long service.

In NC II failure resignation scenarios, a company may offer such assistance, but:

It is an act of management prerogative,
Not a legal obligation, unless it has hardened into company practice over time.

VIII. Practical Guidance: For Employees and Employers

For Employees

Read your contract and company handbook. Check if there is any provision on separation pay for resignation, or rules related specifically to NC II or certifications.
Clarify the nature of your resignation.
- If you truly want to resign, your letter should reflect that.
- If you were pressured or threatened, keep copies of messages or communications—this may support a claim of constructive dismissal later.
Don’t assume separation pay is automatic. Statutory separation pay is usually tied to authorized causes, not resignation or failed certification.
Ask about ex gratia assistance, politely and in writing. Even if not mandatory, some companies are willing to extend financial help especially for long-term employees.
If in doubt, seek legal advice. Particularly if:
- You feel forced to resign,
- You suspect your termination is unfair or without due process, or
- You had many years of service and suddenly lost employment solely due to one certification failure.

For Employers

Clearly communicate NC II as a qualification standard. Especially for probationary hires, standards must be made known at the time of engagement.
Follow due process for termination due to failure to qualify.
- Written notice specifying the ground (failure to obtain NC II).
- Opportunity for employee to explain, retake, or present mitigating factors.
- Final notice of decision.
Avoid forcing “resignations.” Pressuring employees to resign to avoid proper termination procedures risks illegal dismissal claims.
Be transparent about separation pay and financial assistance.
- State clearly when separation pay is or is not available.
- If providing ex gratia assistance, document it carefully to avoid unintended company practice implications (if that is a concern).
Consider humane treatment in appropriate cases. Particularly for long-serving employees who made good-faith efforts to pass NC II.

IX. Summary

In the Philippine setting, Separation Pay for Failed NC II Certification Resignation is governed by the general rules on separation pay, resignation, and qualification requirements, not by any NC II–specific statute.

Resignation, even if prompted by a failed NC II, generally does not entitle an employee to separation pay, unless:
- Contract, CBA, or company policy says otherwise, or
- Company voluntarily grants ex gratia assistance.
Failure to obtain NC II can be a valid ground for non-regularization or termination, particularly when NC II is a reasonable and clearly communicated job requirement. In such terminations:
- Separation pay is not automatically required by law;
- The employer must still observe due process.
If the “resignation” was actually forced or coerced, it may be constructive dismissal, potentially entitling the worker to remedies such as backwages and separation pay in lieu of reinstatement, but this flows from illegal dismissal principles, not from NC II failure itself.

Ultimately, the right to separation pay in this context depends less on the fact of failing NC II and more on the legal nature of the separation (voluntary vs. employer-initiated, authorized cause vs. just cause, legal vs. illegal) and the specific terms of the employment contract, company policies, and any applicable CBA.