The Letter of Retrenchment is a crucial document in Philippine employment law, used when companies need to reduce their workforce due to financial losses, business downturn, or organizational restructuring. This document must strictly comply with the Labor Code of the Philippines and DOLE regulations, which require proper notice periods, justification, and separation benefits. When implementing retrenchment, employers must demonstrate that it is a measure of last resort and that they have applied fair selection criteria for affected employees. The Letter of Retrenchment must be issued at least 30 days before the effective date of termination and should include comprehensive details about separation benefits, final pay computation, and clearance procedures. It serves as both a legal notice and a formal communication tool, protecting both employer and employee interests during the workforce reduction process.

1. Letter Header: Company letterhead, date, and formal addressing to the employee including their name, position, and department

2. Subject Line: Clear indication that this is a Notice of Retrenchment

3. Opening Statement: Professional and direct statement indicating the purpose of the letter

4. Business Justification: Clear explanation of the economic or business circumstances necessitating the retrenchment

5. Notice Period: Specification of the 30-day notice period and the effective date of retrenchment

6. Separation Benefits: Detailed breakdown of separation pay and other benefits as required by law

7. Return of Company Property: Instructions regarding the return of company assets and documents

8. Final Clearance Process: Overview of the clearance procedure and final administrative requirements

9. Expression of Gratitude: Acknowledgment of the employee's service and contribution

10. Closing and Signatures: Formal closing, space for authorized signatory and acknowledgment receipt by employee