Certificate of Employment & Clearance Requirements in the Philippines

A comprehensive legal primer for HR managers, counsel, and workers

1. Overview

In Philippine practice an employee normally exits with two companion documents:

Certificate of Employment (CoE) – a short statement of one’s tenure and position, issued by the employer.
Company Clearance – an internal sign-off sheet confirming the employee has no outstanding accountabilities (e.g., unreturned tools, cash advances).

Although the two often travel together, only the CoE is expressly mandated by law; clearance is a creature of company policy that may legitimately be required provided it does not defeat the statutory right to receive the CoE and final pay promptly.

2. Legal Foundations

Source	Key Provisions
Labor Code, Art. 289 (old numbering) Art. 303 (renumbered by DOLE Department Advisory 01-19)	“A dismissed or separated worker shall be entitled to a certificate from his employer specifying the dates of his employment and the type or types of work on which he was employed.”
Labor Advisory No. 06-20 (4 May 2020) – “Payment of Final Pay and Issuance of Certificate of Employment”	1. CoE must be issued within 3 calendar days from the date the employee requests it, regardless of the reason for separation. 2. Final pay (separation pay, 13th-month differential, etc.) must be released within 30 calendar days from date of separation unless company CBA or policy provides a shorter period. 3. Employers may conduct clearance procedures, but these must be completed within the same 30-day window.
Data Privacy Act (RA 10173)	Limits the personal data that may appear on the CoE; only information necessary to prove employment should be disclosed.
E-Commerce Act (RA 8792) & Supreme Court A.M. No. 01-7-01-SC	Electronic signatures and digitally signed CoEs are valid if the company maintains secure authentication and integrity measures.
*Jurisprudence (e.g., Star Paper v. Simbol, G.R. 164774, 12 Apr 2006)*	CoE must be factual and must not contain derogatory remarks that impair the employee’s right to seek work elsewhere.

Important: No statute or regulation empowers an employer to permanently withhold a CoE or final pay until clearance is obtained. Clearance may regulate, but not destroy, the right.

3. What Exactly Is a Certificate of Employment?

Nature: A ministerial document; the employer exercises no discretion once the employee requests it.
Mandatory contents:
1. Complete name of employee
2. Inclusive dates of employment (start and separation dates)
3. Last position(s) held (or all positions, if company prefers)
4. Signature and designation of the authorized signatory
Optional but customary: Monthly or basic salary, brief good-standing statement, company letterhead.
Must not include: Cause of separation, pending administrative cases, or negative performance judgments (unless requested by the employee).

4. Uses & Practical Importance

Purpose	Typical Requiring Body
Proof of work experience for new employers	Corporate recruiters, principal contractors
Visa, immigration, or overseas work deployment	DOLE POEA, foreign embassies
Government benefit claims	SSS unemployment insurance, Pag-IBIG housing loans
Bank loan or credit card application	Commercial banks
Labor litigation evidence	NLRC, arbitral proceedings

5. Company Clearance: Policy‐Driven but Lawful

5.1 What Is It?

A checklist (IT assets, tools, cash advances, security card, etc.) that must be signed by responsible units before HR processes final pay and records the employee as fully separated.

5.2 Legal Status

Not required by the Labor Code, but a legitimate exercise of management prerogative.
Must be reasonable: procedures, fees (none), and timelines must not nullify rights granted by Article 289 and Labor Advisory 06-20.
DOLE inspection findings often uphold clearance policies as long as:
- they are published in the company handbook or CBA;
- the employee had fair notice and opportunity to comply;
- they do not exceed the prescribed 30-day window for final pay.

5.3 Interaction with CoE

CoE cannot be conditioned on the completion of clearance. Even if inventory losses are under investigation, the CoE must still be issued within three (3) days upon request.
If the employee refuses to sign clearance, the company may:
1. Withhold contested portion of final pay (e.g., lost tool cost) but release the uncontested amount, and
2. Pursue civil action for restitution if losses are proven.

6. Timelines at a Glance

Trigger Event	Action	Deadline
Resignation / termination / project completion	Release of separation documents & computation of final pay	Within 30 calendar days
Employee requests CoE (verbal or written)	HR issues CoE	Within 3 calendar days
Employee disputes withheld amount	File money claim / complaint	Within 3 years from cause of action (Art. 306)

7. Employer Liability for Non-Compliance

Money Claim: Employee may file with the DOLE Regional Office (if ≤ ₱5 million) or the NLRC.
Moral & Exemplary Damages: When refusal is in bad faith and causes distress.
Fines via DOLE Inspection: For general labor standard violations (up to ₱100,000 per day of non-compliance under DO 229-22).
Criminal Liability: Unfair labor practice (ULP) if refusal amounts to discrimination or interference with the employee’s right to self-organization.

8. Best-Practice Checklist for Employers

Area	Recommended Action
Policy drafting	Publish clear CoE & clearance procedures in employee handbook; align with Labor Advisory 06-20.
Automation	Offer an online request portal; generate CoE with digital signature and QR verification.
Data privacy	Limit CoE contents to job-related information; obtain written consent for salary disclosure when banks require it.
Training	HR & line managers must know the 3-day rule; refusal or delay creates potential liability.
Exit interviews	Schedule promptly to give time for clearance routing without eating into the 30-day payroll deadline.

9. Employee Remedies & Practical Tips

Put the request in writing (email is sufficient) and keep a timestamped copy.
Follow up after the 3-day period; politely cite Art. 289 / Labor Advisory 06-20.
Escalate to the DOLE – Legal Service or regional Single‐Entry Approach (SEnA) if still refused.
For clearance delays: offer to pay or replace lost items under protest to avoid career disruption, then litigate later if disputed.

10. Frequently-Asked Questions (FAQ)

Question	Short Answer
Is a notarized CoE required?	No. Only signature of an authorized officer is necessary unless the receiving entity (e.g., foreign embassy) insists.
Can an employer charge a “processing fee”?	No. CoE must be issued free of charge. Photocopy or notarization costs may be passed on if expressly requested by the employee.
May the CoE show “dismissed for cause”?	Only if the employee expressly asks for cause to be stated. Otherwise, best practice is to omit the reason for separation to avoid defamation claims.
What if the employee still has an outstanding loan?	Employer may deduct the balance from final pay (subject to Art. 113 rules), but must still issue the CoE within 3 days.
Does the 3-day period run on holidays?	Yes. The advisory says calendar days, not working days.

11. Conclusion

The Certificate of Employment is a statutory right anchored on Article 289 (now 303) of the Labor Code and clarified by Labor Advisory 06-20. Clearance procedures, while allowed, must never be weaponized to delay or deny issuance of the CoE or release of final pay.

Employers who streamline their exit process, respect the 3-day and 30-day rules, and observe data-privacy boundaries not only comply with law—they also strengthen their employment brand and avoid needless litigation.

This article is for educational purposes and does not constitute legal advice. For specific situations, consult qualified labor counsel or the nearest DOLE field office.