Can Employers Charge a Fee for Issuing a Certificate of Employment (COE) in the Philippines?

Introduction

In the Philippine labor landscape, the Certificate of Employment (COE) serves as a crucial document for employees, verifying their work history, positions held, and duration of service with an employer. It is often required for various purposes, such as applying for new jobs, securing loans, processing visas, or claiming social security benefits. A common question arises: Can employers impose a fee for issuing this certificate? This article explores the legal framework surrounding COEs in the Philippines, focusing on the prohibitions against charging fees, the obligations of employers, and the remedies available to employees. Drawing from the Labor Code of the Philippines and relevant Department of Labor and Employment (DOLE) issuances, it provides a comprehensive overview of the topic.

Legal Basis for the Certificate of Employment

The issuance of a COE is mandated under Philippine labor laws to protect workers' rights and ensure transparency in employment records. The primary legal foundation is found in the Labor Code of the Philippines (Presidential Decree No. 442, as amended). Specifically, Article 294 (formerly Article 279) of the Labor Code requires employers to furnish separating employees with a certificate indicating the nature of their employment, the length of service, and the cause of separation, if any. This provision underscores the employer's duty to provide accurate employment documentation without undue burden on the employee.

Beyond the Labor Code, DOLE has issued several department orders and advisories to clarify and enforce these obligations. For instance, DOLE Department Order No. 18, Series of 2002, on the rules implementing Articles 106 to 109 of the Labor Code concerning contracting and subcontracting, indirectly touches on employment verification. However, more directly relevant is DOLE Advisory No. 06, Series of 2020, which addresses the issuance of COEs during the COVID-19 pandemic but reaffirms general principles. Additionally, the Omnibus Rules Implementing the Labor Code, particularly Rule XXIII of Book V, elaborates on the employer's responsibility to maintain and provide employment records.

The COE is not limited to terminating employees. Current employees may also request it for legitimate purposes, such as financial transactions or educational pursuits. The law views the COE as an inherent right tied to the employment relationship, ensuring that workers can access proof of their labor contributions without barriers.

Employer's Obligation to Issue a COE

Employers in the Philippines are legally bound to issue a COE upon request. The process typically involves the employee submitting a written request, after which the employer must respond within a reasonable time—often within three to five working days, as per common DOLE guidelines. The certificate must include essential details such as:

The employee's full name and position(s) held.
The dates of employment (start and end, if applicable).
A brief description of duties and responsibilities.
The reason for separation (e.g., resignation, termination, or end of contract), if the employee has left the company.
The employer's contact information and signature of an authorized representative.

Failure to issue a COE can be considered a violation of labor standards, potentially leading to administrative complaints before DOLE. In practice, many companies have standardized forms for COEs to ensure compliance and consistency.

Prohibition Against Charging Fees for COE Issuance

A key aspect of Philippine labor policy is the prohibition on employers charging any fee for issuing a COE. This stems from the principle that employment documentation is a basic right of workers, and imposing costs could constitute an exploitative practice. DOLE has explicitly stated in various issuances that employers shall not charge employees for the preparation, issuance, or notarization of COEs.

For example, in DOLE Department Advisory No. 01, Series of 2014, and reinforced in subsequent guidelines, it is clear that any fee imposition for employment certificates is unlawful. This aligns with the broader anti-exploitation provisions in the Labor Code, such as Article 116, which prohibits withholding wages or imposing unauthorized deductions. Charging for a COE could be interpreted as an indirect deduction or a barrier to accessing earned rights, violating the spirit of fair labor practices.

Even in cases where the COE requires notarization (which some financial institutions may demand), the employer cannot pass on the notarization costs to the employee. If notarization is necessary, it is the employer's responsibility to handle it without additional charges. Exceptions might arise in highly specialized industries, but these are rare and must still comply with DOLE oversight.

Rationale Behind the No-Fee Policy

The no-fee rule is rooted in protecting vulnerable workers from potential abuse. Many employees, particularly in low-wage sectors, rely on COEs for essential life transitions, such as job hunting or accessing government benefits. Allowing fees could deter requests or create financial hardships, undermining labor equity. This policy also promotes administrative efficiency, encouraging employers to maintain accurate records as part of their routine operations rather than treating documentation as a revenue source.

Furthermore, the Philippine Constitution (Article XIII, Section 3) mandates the State to afford full protection to labor, including ensuring just and humane conditions of work. Charging for COEs contradicts this constitutional imperative by commodifying a fundamental employment right.

Penalties for Violations

Employers who charge fees for COEs face significant penalties under Philippine law. Violations can be reported to DOLE regional offices, leading to investigations and potential sanctions. Under the Labor Code, non-compliance with labor standards may result in:

Fines ranging from PHP 1,000 to PHP 10,000 per violation, as per DOLE's schedule of penalties.
Orders to refund any unlawfully collected fees, with possible interest.
In severe or repeated cases, suspension or cancellation of business permits.

Employees can file complaints through DOLE's Single Entry Approach (SEnA) for conciliation-mediation, or escalate to the National Labor Relations Commission (NLRC) if unresolved. Successful claims may also entitle employees to moral damages if malice or bad faith is proven.

In extreme scenarios involving systematic abuse, criminal charges under Republic Act No. 10022 (Migrant Workers Act) or anti-trafficking laws could apply if the violation affects overseas Filipino workers seeking COEs for deployment.

Exceptions and Special Considerations

While the general rule is a strict no-fee policy, certain nuances exist:

Multiple Requests: If an employee requests multiple copies or repeated issuances without valid reason, employers might impose reasonable administrative fees for duplicates, but only after the first issuance and with DOLE approval in disputed cases.
Archival Retrieval: For former employees seeking COEs years after separation, employers may charge nominal retrieval fees if records are archived off-site, but this must be justified and minimal (e.g., covering actual copying costs, not exceeding PHP 100).
Industry-Specific Rules: In regulated sectors like banking or maritime, additional certifications might involve fees from third-party bodies (e.g., Bangko Sentral ng Pilipinas endorsements), but the core COE remains free.
Pandemic-Era Adjustments: During the COVID-19 period, DOLE allowed digital COEs via email to expedite processes, with no fees permitted even for electronic signatures.

Employers must always document any exceptional charges and provide receipts, ensuring transparency.

Employee Remedies and Best Practices

If an employer demands a fee, employees should:

Politely refuse and cite the relevant DOLE advisories.
Submit a formal written request for the COE, keeping a copy.
Escalate to DOLE if denied, providing evidence of the fee demand.
Seek assistance from labor unions or legal aid organizations like the Integrated Bar of the Philippines.

For employers, best practices include establishing clear HR policies on COE issuance, training staff on compliance, and using templates to streamline the process. This not only avoids penalties but also fosters positive employee relations.

Conclusion

In summary, Philippine law firmly prohibits employers from charging fees for issuing Certificates of Employment, viewing it as an essential obligation inherent to the employer-employee relationship. This policy safeguards workers' rights, promotes fairness, and aligns with constitutional and statutory protections for labor. By understanding these rules, both employers and employees can navigate employment documentation smoothly, contributing to a more equitable workplace. For any disputes, consulting DOLE or legal experts is advisable to ensure adherence to evolving regulations.