In this case, actual animosity already existed between Arnie and Mang Pepe as a result of the filing of the illegal dismissal case. Clearly then Mang Pepe is entitled to back wages and separation pay as his reinstatement has been rendered impossible due to strained relations.
The normal consequences of illegal dismissal are reinstatement without loss of seniority rights and award of back-wages from the time the salary is withheld up to actual reinstatement. But can separation pay be also awarded aside from back-wages?
The basis for the payment of back wages is different from the basis for the payment of separation pay. Back wages represent compensation that should have been earned but were not collected because of the unjust dismissal. Separation pay is granted where reinstatement is no longer advisable because of strained relation between employer and employee. Separation pay may avail in lieu of reinstatement if reinstatement is no longer practical or in the best interest of the parties. It may likewise be awarded if the employee decides not be reinstated.
Under the doctrine of strained relations, the award of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. Such payment liberates the employee from what could be a highly oppressive work environment, in much the same way that it releases the employer from the grossly unpalatable obligation of maintaining in its employ, a worker it could no longer trust.
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