Certificate of Employment (COE) vs. Unpaid Company Debt
(Philippine labour-standards perspective, updated 1 June 2025)
1. Statutory roots of the right to a COE
| Instrument | Key rule |
|---|---|
| Labor Code, Art. 5 & 128 – rule-making & visitorial powers of DOLE | Empower the Secretary of Labor to issue binding regulations on post-employment documentation. |
| DOLE Labor Advisory 18-18 (29 Aug 2018) | First formal 3-day deadline for releasing a COE. (Respicio & Co.) |
| DOLE Labor Advisory 06-20 (17 Mar 2020) | Re-states the 3-day rule, extends it to all employees (current or separated) and forbids any fee. (Lexology, Respicio & Co.) |
Bottom line: Every employer must issue a COE, free of charge, within three (3) calendar days of any written or electronic request, even if other exit formalities remain unfinished.
2. What exactly is a COE?
A COE is a neutral, factual certificate that must contain at least:
- employee’s full name;
- position(s) held / nature of work;
- start date and, if separated, end date.
Salary and performance ratings are optional and should be added only at the employee’s request. (Labor Law Philippines)
Digital (PDF / e-mail) issuance is expressly allowed. (Respicio & Co.)
3. Can an employer lawfully withhold a COE because the employee still owes money?
No. The 3-day duty is unconditional. Neither:
- unpaid cash advances, loans, gadget amortisations; nor
- unreturned tools, uniforms or company housing
can be used as leverage to delay or refuse a COE. (RESPICIO & CO., RESPICIO & CO.)
The employer’s legitimate remedies for collecting a debt are separate (see § 4) and do not suspend the COE obligation.
4. How employers may lawfully recover or offset debts
| Scenario | Allowed? | Legal basis / limits |
|---|---|---|
| Set-off against final pay (separation pay, bonuses, etc.) | ✔ | Milan v. NLRC, G.R. 202961, 4 Feb 2015 – SC upheld withholding of benefits pending return of company property. (Jur.ph) |
| Salary deductions while still employed | Limited | Labor Code Art. 113 allows deductions only with written employee consent, for insurance, union dues, or those “authorised by law.” (AMSLAW) |
| Co-op loans with payroll-deduction agreement | ✔ | R.A. 9520, s. 2008 (Co-op Code) permits continuing deductions until the loan is settled. (Cooperative Development Authority) |
| Unilateral withholding of COE to force payment | ✖ | Violates LA 06-20; exposes employer to compliance orders and fines (up to ₱100 k per affected worker under DO 238-23). (Labor Law Library) |
5. Enforcement & employee remedies
- Document the request – keep a dated e-mail or letter.
- Follow up politely.
- SEnA conciliation at the DOLE Field / Provincial Office (usually resolved in days). (Lexology)
- NLRC complaint (money claims, damages) if the employer still refuses.
- Administrative fines & compliance order – DOLE inspectors can impose civil money penalties under the 2023–2024 rules. (RESPICIO & CO.)
Courts have even awarded moral damages when refusal to release employment documents was done in bad faith. (RESPICIO & CO.)
6. Employer best-practice checklist
| ✔︎ | Action |
|---|---|
| 🗎 Prepare a standard COE template (neutral wording, no disciplinary history). | |
| ⏱ Automate a 3-day SLA in HRIS / help-desk. | |
| 💻 Accept requests via e-mail or HR portal; send PDF to avoid printing delays. | |
| 🔒 Keep debt collection documents separate from COE workflow. | |
| 📚 Maintain clear records to support any lawful offsets from final pay. | |
| 🤝 Train HR staff on LA 06-20 & Art. 113 to avoid inadvertent violations. |
7. Frequently asked questions
| Question | Quick answer |
|---|---|
| Can the COE include a remark that I still owe money? | Only if you request it. Otherwise the COE must stay neutral. |
| May the employer charge ₱50 for the printed copy? | No. Fees are prohibited. (Respicio & Co.) |
| Does the 3-day clock run during holidays? | Yes – the advisory says calendar days. If the 3rd day falls on a Sunday, release on Monday AM is safest. |
| I resigned without 30-day notice, can the company refuse my COE? | Still no. Contractual breaches don’t erase the right to a factual COE. (RESPICIO & CO.) |
| Where do I file a complaint? | Start with SEnA at the nearest DOLE office; escalate to NLRC if unresolved. |
8. Key take-aways
- COE ≠ Clearance. The former is compulsory and unconditional; the latter deals with debts and property.
- Employers may offset debts from money due to the employee (subject to Art. 113 / case law), but may never ransom a COE.
- Non-compliance is a labor-standards violation risking administrative fines, damages, and bad publicity—far costlier than simply issuing the certificate.
Practical tip: If you are HR, treat the COE like a birth certificate: purely factual, quickly issued, and never weaponised.
This article reflects DOLE issuances and Supreme Court doctrine up to 1 June 2025. Always check for newer advisories or jurisprudence before taking action.