Resignation after four years of continuous employment in the Philippines triggers a defined set of monetary benefits, clearances, and government-mandated contribution settlements under the Labor Code (Presidential Decree No. 442, as amended), Presidential Decree No. 851 (13th Month Pay), Republic Act No. 7641 (Retirement Pay), Republic Act No. 8282 (SSS Law), Republic Act No. 11199 (Social Security Act of 2018), Republic Act No. 9679 (Pag-IBIG Law), and Republic Act No. 11223 (Universal Health Care Act).
This article comprehensively discusses everything an employee is legally entitled to (and not entitled to) upon voluntary resignation after exactly four years of service, assuming regular private-sector employment and full compliance by the employer.
1. Resignation Procedure and Notice Requirement
- Employee must tender a written resignation letter with at least 30 calendar days’ advance notice (Article 300, Labor Code, formerly Article 285).
- Failure to give 30 days’ notice makes the employee theoretically liable for damages, but in practice employers rarely pursue this and instead simply withhold final pay until the notice period is served or waived.
- The 30-day notice may be waived or shortened by mutual agreement or by the employer unilaterally.
- Rendering during the notice period is required unless the employer places the employee on garden leave or immediately releases them.
2. Final Pay Components (Money Claims Upon Separation)
The employee is entitled to receive the following in the final pay, which must be released not later than the next regular payday or within 15 days after clearance, whichever comes earlier (DOLE Handbook on Workers’ Statutory Monetary Benefits).
| Benefit | Legal Basis | Entitlement After Exactly 4 Years | Remarks |
|---|---|---|---|
| Unpaid salaries/wages up to last day worked | Art. 103, Labor Code | 100% of earned wages | Includes overtime, holiday pay, night differential if applicable |
| Pro-rated 13th Month Pay | PD 851, as amended | (Monthly basic salary × 4 years + fraction of year resigned) ÷ 12 | Example: Resigns June 30 after exactly 4 years → entitled to ½ of current year’s 13th month (6/12) |
| Cash conversion of unused Service Incentive Leave (SIL) | Art. 95, Labor Code | Minimum 5 days per year = 20 days (if none used in 4 years) | Many companies provide more than 5 days VL/SL; all unused convertible to cash upon separation if company policy or practice allows. DOLE considers it mandatory if company has established practice. |
| Cash conversion of unused company-provided Vacation Leave / Sick Leave | Company policy / CBA | Whatever the company policy provides (commonly 15 VL + 15 SL per year) | Almost always paid out upon separation |
| Pro-rated performance bonus, productivity bonus, Christmas bonus, etc. | Company policy / practice | Pro-rated if policy states “upon separation” or “regular employees in good standing” | Not statutory; depends entirely on company policy |
| Reimbursement of unused business expenses, allowances | Company policy | Full amount | — |
| Separation Pay | Art. 298–299, Labor Code | NONE in pure voluntary resignation | Separation pay is mandatory only in authorized causes (retrenchment, redundancy, closure, disease, installation of labor-saving devices). Voluntary resignation does not qualify. |
Important: The P90,000 tax exemption on 13th month pay and “other benefits” (TRAIN Law, now P100,000 starting 2023 per latest BIR issuance) covers the 13th month, cash conversion of leaves, and de minimis benefits. Excess is taxable.
3. What the Employee is NOT Entitled To
| Item | Reason |
|---|---|
| Separation pay | Only for authorized causes or illegal dismissal |
| Retirement pay | RA 7641 requires at least 5 years of service AND attainment of retirement age (60–65) or optional retirement |
| Unemployment benefits / separation benefits from SSS | Philippines has no unemployment insurance equivalent (the proposed EASE bill has not been enacted as of 2025) |
| Immediate total withdrawal of Pag-IBIG contributions | Allowed only upon retirement, permanent total disability, insanity, death, permanent departure abroad, or separation due to health reasons |
| Immediate lump-sum SSS contributions refund | SSS is a social insurance system, not a provident fund |
4. Government-Mandated Contributions Upon Separation
| Agency | Status Upon Resignation | Employee Options After Separation |
|---|---|---|
| SSS (Social Security System) | Employer must remit contributions up to the last day worked. Employee receives updated SSS R-1 and payslips. | May register as Voluntary Member (VM) or Overseas Filipino Worker (OFW) member to continue contributions. After 4 years (48 posted months), employee already has substantial credits toward future pension, sickness, maternity, disability, or death benefits. |
| PhilHealth | Employer remits final premium. Coverage continues until end of the month of separation + 3 more months (if at least 3 months contributions in last 6 months). | May continue as Voluntary/Individually Paying Member or be covered as dependent/indigent under UHC. |
| Pag-IBIG (HDMF) | Employer remits final contributions including employer share. Updated Member’s Data Form and contributions reflected. | May continue as Voluntary Member. Total accumulated value (employee + employer + dividends) remains credited. Can be withdrawn only upon occurrence of any maturity ground (retirement at 65, actual retirement, permanent departure, etc.). After only 4 years, employee is still far from the 240-month (20-year) optional maturity withdrawal. |
Employer is required to issue the following documents upon request or as part of clearance:
- Certificate of Employment (COE) with inclusive dates, position/s, and salary
- SSS R-1 (Employer’s Contribution Report) copy for the last quarter
- PhilHealth MDR (Member Data Record) updated
- Pag-IBIG Member’s Data Form updated
- BIR Form 2316 (for tax filing purposes)
5. Clearance Process and Quitclaims
Most companies require clearance (HR, Accounting, IT, Property/Equipment). Final pay is released only after clearance is signed.
Many employers present a Quitclaim/Deed of Release stating that the employee waives any further claims.
Legal position (Supreme Court jurisprudence – Wesman Talent Agency v. Casile, G.R. 240719, 2019; Bueno v. NLRC, 2000, etc.):
- A quitclaim is valid only if voluntary and for reasonable consideration.
- If the employee did not receive full statutory benefits (e.g., unpaid SIL cash, pro-rated 13th month), the quitclaim is not binding for the unpaid amounts.
- Employees may still file a labor complaint within 3 years (money claims) or 4 years (illegal dismissal) even after signing a quitclaim if it is unconscionable.
Best practice: Do not sign the quitclaim until you have verified that the final pay computation is complete and correct.
6. Prescription Periods (When Claims Expire)
| Claim | Prescription Period | Starts From |
|---|---|---|
| Money claims (unpaid wages, 13th month, SIL, etc.) | 3 years | Date of separation |
| Illegal dismissal / constructive dismissal | 4 years | Date of dismissal |
| SSS contribution disputes | 20 years | Date contribution was due |
| PhilHealth / Pag-IBIG disputes | Generally 4–10 years depending on nature |
Summary Checklist for an Employee Resigning After Exactly 4 Years
- Serve 30-day written notice.
- Demand computation sheet showing:
- Final wages
- Pro-rated 13th month
- Cash equivalent of all unused leaves (minimum 20 SIL days + company VL/SL)
- Any pro-rated bonuses per policy
- Ensure employer remits final SSS, PhilHealth, Pag-IBIG contributions.
- Obtain COE, BIR 2316, updated contribution records.
- Verify tax withholding is correct (P100,000 exemption applied).
- Do not sign quitclaim until full payment is received and verified.
- File SEnA (Single Entry Approach) or labor complaint if any amount is short-paid.
An employee who has rendered four faithful years is entitled to full and prompt settlement of the above benefits. Voluntary resignation forfeits separation pay and retirement benefits, but all accrued earnings and government contribution credits remain intact and portable to the next employment or to voluntary membership status.