Yes, the employer is not compelled by law to pay its employees' separation pay in event of a business closure due to serious losses1. However, it should be noted that the closure of a business due to serious losses has strict requirements and must be followed to the letter so as not to be construed as a retrenchment or redundancy. The amount of separation pay depends on the reason, which is summarized as follows: a. Retrenchment – one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. b. Redundancy – equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. c. Closure due to bankruptcy – the employer is not obligated to pay separation pay. This is commonly handled by lawyers so I suggest that you consult one just to make sure.