When final pay must be released
Under DOLE Labor Advisory No. 06 of 2020, final pay is released within 30 days from the date of separation or termination, unless a company policy or agreement provides a shorter period.
The rule
DOLE Labor Advisory No. 06 of 2020 says final pay should be released within thirty days from the date of separation or termination of employment, unless the company's policy, the employment contract or a collective bargaining agreement provides a different period.
What final pay usually includes
- Unpaid salary up to the last day worked
- Prorated 13th month pay
- Cash value of unused leave that is convertible, such as service incentive leave
- Separation pay, where the law or the contract requires it
- Tax refund, if the year-end adjustment shows excess withholding
- Any other benefit the employee has earned under a contract or policy
What may be deducted
Amounts the employee owes the company, such as an outstanding loan or unreturned equipment, can be offset only as allowed by law and by the employee's agreement. Keep the documentation.
Certificate of employment
The same advisory tells employers to issue a certificate of employment within three days from the employee's request.
Practical checklist
- Confirm the last day worked and the reason for separation.
- Compute the salary due, the prorated 13th month pay and the convertible leave.
- Note any loans or accountabilities and how they will be settled.
- Release the final pay and issue the certificate of employment within the required time.
Questions people ask
How soon must final pay be released?
Within 30 days from the date of separation or termination of employment, unless a more favorable company policy, contract or collective bargaining agreement applies.
How soon must a certificate of employment be issued?
DOLE's advisory says within three days from the employee's request.
What does final pay include?
The unpaid salary up to the last day worked, the prorated 13th month pay, the cash value of convertible unused leave, and any separation pay or other benefits the employee is entitled to under the law, contract or policy.
Sources
- DOLE Labor Advisory No. 06, Series of 2020, Guidelines Governing the Payment of Final Pay and Issuance of Employment Certificate