Claiming Underpaid Final Pay After Resignation

Philippine Labor‑Law Guide (2025 edition)

Scope & Purpose – This article gathers in one place the key statutes, rules, jurisprudence, and practical procedures you need when your former employer fails to pay (or underpays) your “final pay” after you resign. It is written for employees, HR practitioners, and lawyers in the Philippines. It is not legal advice; always consult counsel for case‑specific guidance.

1. What Counts as “Final Pay”?

Component	Typical Basis	Notes
Unpaid basic salary & allowances	Labor Code arts. 99‑102 (renumbered)	Up to the last actual day of work.
Pro‑rated 13th‑month pay	Presidential Decree 851; DOLE Handbook §10	Pro‑rate = (basic salary earned ÷ 12).
Service Incentive Leave (SIL) conversion	Labor Code art. 95	5 days/yr if employed ≥1 yr; convertible to cash if unused.
Unused vacation/leave credits (company‑granted)	CBA / company policy	Enforceable if “established benefit.”
Commissions, incentives, night diff., OT pay, holiday pay	Labor Code arts. 86‑96, 100	Must be computed up to separation date.
Deductions & withholdings	Labor Code art. 113; BIR regs.	Only lawful deductions: taxes, SSS/Pag‑IBIG, valid debts, etc.
Separation pay	Only if resignation is due to authorized causes (redundancy, retrenchment, etc.)—rare on voluntary resignation.

Tip: An employee’s “final pay” is broader than “last salary”; it is every sum already earned or already vested on or before the effectivity date of resignation.

2. Legal Bases & Timelines

2.1 Labor Code & Related Laws

Provision	Key Point
Art. 301 [now 296] (Termination by employee)	No forfeiture of earned wages/benefits.
Art. 306 [now 291] (Money-claims prescription)	3‑year prescriptive period counted from employer’s default (i.e., 30th day after resignation if final pay not given).
Art. 302 [now 297] & Art. 303 [now 298]	Criminal liability for willful refusal to pay wages.
PD 851 (13th‑month law)	13th‑month is mandatory, tax‑exempt up to ₱90 000.
Civil Code art. 2209	6 % per‑annum legal interest on money claims, compounded on finality of judgment.
Republic Act No. 10395 (2013)	Raised “small money‑claims” jurisdiction of DOLE RDs to ₱5 000 per employee.

2.2 DOLE Issuances

Issuance	Essence
Labor Advisory No. 06‑20 (Jan 31 2020)	Employers must release final pay within 30 calendar days from date of effectivity of resignation/termination, unless a more favorable CBA or company rule exists.
DO 174‑17 (rules for contracting) & LA 13‑20 (contractor employees)	Contractor must also release in 30 days; principal may be solidarily liable.
SEnA Rules of Procedure (2018 as amended)	Mandatory 30‑day conciliation period before NLRC filing.

3. Most Common Reasons for Underpayment

Pro‑rated benefits miscomputed (e.g., 13th‑month prorated by calendar months instead of actual days).
Unconverted SIL or unused vacation leave ignored.
Improper deductions (e.g., uniform bond, training costs without written agreement).
Delay due to clearance policies beyond 30 days.
Unpaid commissions pending collection from clients.
Quitclaim signed under pressure (may still be annulled; see §8).

4. How Final Pay Should Be Computed

Determine cut‑off: Effectivity date of resignation.
Salary & Allowances: Compute actual days/hours worked after last payroll.
13th Month: (Basic salary actually earned Jan‑Dec ÷ 12).
Unused Leaves: Daily rate × remaining leave credits.
Add differential pay: OT, night shift differential, holiday premium earned but unpaid.
Deduct lawful items only: Taxes, SSS/PhilHealth/Pag‑IBIG, outstanding documented loans.
Issue BIR Form 2316 on release.

Best Practice: Request a detailed computation sheet. You are entitled to this under the employee’s right to information (art. 103).

5. Remedies When Final Pay Is Short or Delayed

5.1 Step‑by‑Step Procedure

Step	What to Do	Timeframe
1. Internal Demand	Send a written demand letter to HR/Finance citing LA 06‑20’s 30‑day rule.	Day 31‑45
*2. DOLE Single‑Entry Approach* (SEnA)**	File Request for Assistance (RFA) at any DOLE Regional Office. Free, no lawyer required.	Within 3 yrs (but sooner is better). 30‑day conciliation.
3. NLRC Arbitration	If SEnA fails, file a Verified Complaint (NLRC RAB). Requires Verification & Certificate of Non‑Forum Shopping; filing fee = 1% of claim exceeding ₱1 000 (min ₱100; max ₱4 000).	Must be within the 3‑yr prescriptive period; NLRC often decides in ~6‑12 mos.
4. DOLE Regional Director (Art. 129)	Only if total claim ≤ ₱5 000 and no reinstatement sought. Summary proceedings.
5. Civil Action	Rare; NLRC has primary jurisdiction.
6. Criminal Complaint (Art. 303)	Requires DOLE Secretary (through RTWPB) endorsement; used for willful, malicious refusal.

5.2 Evidence Checklist

Employment contract / appointment letter.
Resignation letter with employer’s receipt or e‑mail acknowledgement.
Latest payslips & payroll registers.
Timecards, attendance records.
HR clearance forms, if any.
Company handbook/CBA pages on leave, commissions, separation procedures.
Demand letters & replies.

6. Prescriptive Period & Accrual of Claim

Accrual: On the 31st day after resignation effectivity if no full payment was made (per LA 06‑20).
Money Claims: 3 years (Labor Code art. 306) from accrual.
Illegal Deductions or Wage Non‑Payment: also 3 years.
Enforcement of quitclaim annulment: 4 years (Civil Code actions).
Criminal action: 3 years (Revised Penal Code art. 90).

7. Interest, Damages, Attorney’s Fees

Legal Interest: 6 % per annum from date of extrajudicial demand (or NLRC filing if none), until full satisfaction (Supreme Court Nacar v. Gallery Frames, G.R. 189871, Aug 13 2013).
Attorney’s Fees: 10 % of award is standard if employee is assisted by counsel and was forced to litigate.
Exemplary Damages: Granted if employer acted in bad faith or employed “delay tactics.”

8. Quitclaims & Releases

General Rule: Quitclaims are valid if executed voluntarily, with full understanding, and for a reasonable consideration.
Grounds for Annulment: Fraud, coercion, the amount is unconscionably low, or the waiver covers future/contingent rights.
Key Cases:
- Periquet v. NLRC, G.R. L‑101406 (Jun 22 1992) – guidelines on validity.
- Land Bank v. CA, G.R. 149308 (Feb 7 2012) – receipt does not bar claim for omitted benefits.
Best Practice: Do not sign unless computation is attached; you may insert “Without prejudice to claims discovered later.”

9. Selected Jurisprudence

Case	G.R. No. & Date	Doctrine
Millares v. NLRC	110524, Jul 29 2002	Signing resignations does not waive money claims.
Nakpil v. Phil. Long Distance Tel. Co.	182714, Jan 19 2011	Delay beyond 30 days unreasonable; interest imposed.
Intercontinental Broadcasting Corp. v. Benedicto	197762, Apr 29 2014	Commissions form part of wage; recoverable post‑resignation.
Reyes v. Maxim’s Tea House	219798, Jan 17 2018	Quitclaim set aside; night‑shift differential recoverable.
Reyes v. First Futaba	2020 CA‑G.R. SP 161290	Company clearance cannot defeat Labor Code rights.

(Include citations in pleadings; above table is for study reference.)

10. Practical Tips for Employees

Document Everything. Send resignation via e‑mail and request HR acknowledgement.
Do Your Own Computation, attach to demand letter; mistakes usually surface here.
Invoke LA 06‑20 explicitly; many HR units overlook it.
Don’t Wait Too Long; earlier action often leads to conciliation settlement with less friction.
Stay Professional. Polite follow‑ups keep bridges unburnt; you may need references.
Use SEnA. It is quick, free, and resolves ~70 % of money‑claim disputes without full‑blown litigation (per DOLE 2024 data).
If Amount ≤ ₱5 000, the DOLE Regional Director route may finish in weeks.
Compute Prescriptive Deadline: note accrual date + 3 years; set reminders six months prior.

11. Frequently Asked Questions

Question	Short Answer
Q: Can the employer delay payment pending clearance of company property?	A: They may withhold equivalent value of unreturned items, but cannot delay all final pay beyond 30 days.
Q: Are resigned employees entitled to separation pay?	A: Generally no, unless resignation is due to an authorized cause under art. 299 or provided in CBA/company policy.
Q: What if the employer already closed business?	A: File against the corporation (still extant until dissolved), then directors/officers may be held solidarily liable if closure was done in bad faith.
Q: Does the 3‑year prescription stop when I file SEnA?	A: Yes, SEnA filing tolls prescription (LA 02‑11 §17). The clock resumes after termination of SEnA proceedings.
Q: Can I represent myself at the NLRC?	A: Yes, the process is labor‑friendly; but lawyer assistance helps with position papers and appeals.

12. Sample Timeline

Day	Action
Day 0	Last day of work (resignation takes effect)
Day 1‑30	Employer computes & releases full final pay per LA 06‑20.
Day 31	If underpaid/unpaid ⇒ Send demand letter.
Day 45	If no satisfactory reply ⇒ File SEnA RFA.
Day 75	SEnA mediation may settle; otherwise issue Certificate of Non‑Settlement.
Day 80‑85	File NLRC complaint (prescription tolled).
~Month 6‑12	NLRC decision; may award wages + 6 % interest + fees.

13. Conclusion

Under Philippine labor law, employers must release a resigning worker’s complete final pay within 30 days. Failure—whether by delay, under‑computation, or illegal deductions—gives rise to money claims that can be pursued swiftly through DOLE’s SEnA, the NLRC, or (for small sums) the DOLE Regional Director. The 3‑year prescriptive period, the 6 % legal interest, and strong jurisprudence favoring labor mean you have solid leverage—provided you document your claim and act promptly.

Stay vigilant, know your rights, and assert them in the proper forum.

Claiming Underpaid Final Pay After Resignation