Separation pay is due in lieu of reinstatement where relations are strained
If an employee wins a labor case but cannot be reinstated due to strained relations with the employer, then separation pay is due in lieu of reinstatement.
“[The employees] reinstatement, however, is no longer feasible as antagonism has caused a severe strain in their working relationship. Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. Payment liberates the employee from what could be a highly oppressive work environment, and at the same time releases the employer from the obligation of keeping in its employ a worker it no longer trusts. Therefore, a more equitable disposition would be an award of separation pay equivalent to at least one month pay, in addition to his full backwages, allowances and other benefits.”
– SHS Perforated Materials, Inc. v. Diaz, G.R. No. 185814, 13 October 2010