Short answer. It depends on how bad the losses really were. The Labor Code requires separation pay for closures not due to serious business losses or financial reverses. A company escapes the obligation only by actually proving losses of that severity, and merely saying business was slow does not qualify.
What the law says
In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher.
Labor Code, Article 283 — Closure And Personnel Reduction. Read the full provision →
The exemption is narrower than employers suggest
Read the qualifier carefully. Separation pay is due for closures not due to serious business losses or financial reverses. The negative phrasing is what creates the exemption, and it is deliberately demanding. The statute does not say "losses", it says serious business losses or financial reverses. Ordinary red ink, a bad year, a lost client, a landlord raising the rent, or a decision that the business is no longer worth the trouble does not reach that standard. Many closures that feel financially driven to everyone involved still fall on the paying side of the line. If your employer claims the exemption, it is claiming a legal position, and it carries the burden of establishing it.
What proving serious losses actually takes
An assertion in a closure memo is not evidence. An employer relying on this exemption is expected to show the financial condition of the business through credible records — audited financial statements covering a meaningful period, not a single unaudited spreadsheet prepared for the dispute. The losses should be substantial and continuing rather than a one-off dip, and the closure should plausibly be the response to them. Behaviour also tells. A company that pays out bonuses, buys assets, opens a related outfit, or continues the same operations under another name while pleading ruin is asserting two inconsistent things at once, and that inconsistency is usually where these cases turn.
If the exemption does not apply, what you get
Where the closure is not due to serious losses, the entitlement is one month's pay or at least half a month's pay for every year of service, whichever is higher. A fraction of at least six months counts as one whole year, so nine years and seven months is computed as ten. Note that this is the same rate as retrenchment, and half the rate that applies to redundancy or the installation of labor-saving devices — so the ground named in your notice matters a great deal. These figures are minimums; a collective bargaining agreement, company policy, or established practice of paying more remains enforceable above them.
Notice, final pay, and the limits of this rule
Separation pay is not the only obligation. The employer must serve written notice on the workers and on the labour department at least one month before the intended closure date — the statutory text still uses the department's older name — and paying wages in lieu of notice does not cure a notice that was never served on the department. Separately from all of this, your unpaid wages, proportionate 13th month pay, and any accrued convertible leave are money you already earned and are owed regardless of the ground. Do not sign a quitclaim you do not understand, and act promptly, since money claims run on deadlines and a closing company becomes harder to pursue over time.