Claiming Unpaid Final Pay After Resignation (Philippines)

A practical, legally grounded guide for employees (and HR) on what final pay covers, when it must be released, what an employer can deduct, and the exact steps to take if it isn’t paid.

1) What “final pay” means

Final pay (often called “last pay”) is the sum of all monetary amounts an employee is legally or contractually owed up to the separation date. In the Philippines, the Department of Labor and Employment (DOLE) has formally guided employers—through Labor Advisory No. 06-20 (2020)—to release final pay within 30 days from the date of separation, unless a company policy or CBA provides a shorter period. A Certificate of Employment (COE) must be issued within 3 days from request, regardless of the reason for separation.

Resignation can be:

With 30-day notice (the default rule under the Labor Code), or
Immediate, if you resign for just causes (e.g., serious insult or inhuman treatment by the employer or representative, commission of a crime against you, or analogous causes).

Either way, once you are separated, final pay becomes due.

2) Who’s entitled?

All employees—probationary, project-based, fixed-term, casual, or regular—are entitled to the pay and benefits they already earned by law, contract, CBA, or established company practice. (Whether you “deserve” separation pay is a different question—see Section 3.)

3) What should be in your final pay (typical inclusions)

The exact basket depends on laws, your contract/CBA, and company policies/practice:

Unpaid basic wages up to your last working day
- Regular days worked + any differentials (e.g., wage increases that took effect but weren’t reflected).
Overtime (OT), night shift differential (NSD), holiday pay, premium pay
- OT: generally work beyond 8 hours in a day (with required premium).
- NSD: for hours worked 10:00 p.m.–6:00 a.m. (at least 10% premium under the Labor Code).
- Holiday & premium pay: for work on regular/special holidays and rest days, if applicable.
13th-month pay (pro-rated)
- Guaranteed by P.D. 851 for rank-and-file.
- Formula (common practice): (Total basic salary earned in the calendar year ÷ 12). If you resign mid-year, you get the pro-rated equivalent for the months you actually earned basic pay.
Conversion of unused leaves
- Service Incentive Leave (SIL): The Labor Code grants 5 days SIL per year to covered employees (after at least 1 year of service). Unused earned SIL is convertible to cash.
- Company-granted VL/SL: If your company policy/CBA/practice says unused vacation/sick leaves are convertible (often pro-rated), include them.
Note: Some workers are excluded from the statutory SIL (e.g., certain field personnel and those paid on pure results/commission with control criteria). Many employers still grant leave by policy; check yours.
Prorated allowances/bonuses (if contract, CBA, or policy makes them earned at the time you resigned)
- Examples: guaranteed allowances, earned performance incentives/commissions (subject to the scheme and cut-off rules). Discretionary/ex-gratia bonuses are usually not demandable unless they’ve ripened into enforceable company practice.
Separation pay (only if applicable)
- Resignation by itself does not entitle you to separation pay. It is due mainly when the employer terminates you for authorized causes (retrenchment, closure not due to serious losses, redundancy, disease, etc.) or when company policy/CBA promises it even upon resignation.
Retirement pay, if you actually retired under R.A. 7641 (60–65 years old with ≥5 years service) or under a more favorable plan.
Tax adjustments
- 13th-month pay and other benefits are tax-exempt up to ₱90,000 per year (TRAIN law). Amounts beyond that threshold are taxable.
- Your final pay is subject to withholding tax like regular pay; you’re entitled to BIR Form 2316 for the year.
Government-mandated contributions
- Employee shares for SSS, PhilHealth, Pag-IBIG are regular statutory deductions (if not yet remitted, they may still be withheld from your final pay per law).

4) When must it be released?

Target window: Within 30 days from your date of separation (DOLE Labor Advisory No. 06-20), or earlier if your company policy/CBA says so.
COE: Must be issued within 3 days from request.
Clearance: Employers may require clearance/return of property. This internal process should not defeat the reasonable 30-day guidance. If accountabilities remain, the employer may withhold only the reasonable value of what you owe or set-off a properly documented amount—not forfeit your entire final pay without lawful basis.

5) Deductions: what an employer may (and may not) deduct

The Labor Code prohibits deductions from wages except when:

Required by law (tax; SSS/PhilHealth/Pag-IBIG contributions),
Authorized in writing by the employee for a lawful purpose,
Allowed by CBA or valid company policy consistent with law.

Common deduction scenarios:

Unreturned company property (e.g., laptop, tools, uniforms): The documented value may be charged or withheld to that extent.
Salary loans/cash advances: Deductible if you consented in writing or per policy/CBA.
Training bonds/liquidated damages: Enforceable only if reasonable, agreed to in writing, and not a restraint of trade; still subject to rules on wage deductions.
“Pay in lieu of notice” for unserved 30-day notice: Some employers offset pay only if a contract/policy expressly allows it or if you authorize the deduction. Otherwise, the employer must pursue damages separately.

Even with deductions, the employer should be able to show basis and computation. Unilateral or blanket forfeiture is not lawful.

6) How to claim unpaid final pay (step-by-step)

Do your own computation
- List each item in Section 3 that applies to you and compute conservatively.
- Gather documents: contract/CBA, handbook or policy on leaves/bonuses, resignation letter & employer’s acceptance (if any), last payslips/timesheets, proof of overtime/holiday work, leave ledger, emails/HR tickets, clearance forms, and prior 2316s.
Send a written demand (email + hard copy if feasible)
- Be firm but professional. Cite Labor Advisory No. 06-20 (30-day release) and any policy promising an earlier date.
- Attach your computation and give a reasonable deadline (e.g., 5–10 business days). Ask for your COE (if not yet given) and BIR Form 2316.
File a DOLE SEnA Request for Assistance (RFA) if unpaid after your deadline
- The Single-Entry Approach (SEnA) is a free DOLE conciliation-mediation. Fill out the RFA at your DOLE Regional Office/Field Office (or online, if available).
- Bring your evidence. Many final-pay issues settle here quickly.
If unresolved, elevate:
- Pure labor-standards monetary claims (wages, 13th-month, SIL, OT/holiday/NSD): DOLE Regional Office may act under its visitorial and enforcement powers.
- Mixed or non-standards issues (e.g., illegal dismissal, damages, enforcement of quitclaims): File a complaint with the NLRC (Labor Arbiter).
Execution and legal interest
- Money judgments generally earn 6% per annum legal interest from default until full payment.

7) Deadlines (prescriptive periods)

Money claims arising from employer-employee relations (e.g., unpaid wages, 13th-month, SIL): 3 years from the time each claim accrues (usually your separation date for final pay components).
Illegal dismissal and similar actions for damages: generally 4 years (as an injury to rights under the Civil Code).
File sooner, not later—evidence is easier to obtain while fresh.

8) Quitclaims/releases: should you sign?

Employers often condition release of final pay on a quitclaim. Philippine jurisprudence generally upholds quitclaims if:

The employee voluntarily signed,
There’s no fraud, coercion, or mistake, and
The consideration is reasonable and not contrary to law/policy.

But quitclaims can be invalidated if those conditions are missing. If the amount offered is far below what’s legally due, you can accept under protest (note it in writing) or decline and pursue your claims. When in doubt, seek counsel before signing.

9) Practical computations (illustrative only)

Suppose you resign effective 15 March. Your monthly basic is ₱30,000, 26 working days/month equivalent. You worked 10 NSD hours and 4 OT hours in your last cut-off. You have 2 unused SIL days (earned) and 3 unused VL days convertible per policy. No holidays worked.

Unpaid basic wages (1–15 March): ₱30,000 ÷ 26 × (actual days worked)
NSD: (Hourly rate × 10%) × NSD hours
OT: (Hourly rate × OT premium) × 4
13th-month (pro-rated Jan–Mar 15): (Basic actually earned Jan 1–Mar 15) ÷ 12
Leave conversion: (Daily rate × 2 SIL) + (Daily rate × 3 VL per policy)
Less lawful deductions (tax; SSS/PhilHealth/Pag-IBIG; documented loans/property, etc.)

Keep your math transparent and attach it to your demand.

10) Frequently asked questions

Q: My employer says “no clearance, no release.” Can they hold everything? They may complete clearance and withhold only what’s reasonably necessary to cover documented accountabilities. The rest of your final pay should be released within the 30-day window (or earlier if policy says so).

Q: I didn’t finish the 30-day notice. Can they deduct a month’s pay? Only if there’s a contract/policy you agreed to (or you authorize the deduction). Otherwise, the employer should claim damages separately, not unilaterally take your wages.

Q: Do probationary or project employees get 13th-month pay? Yes, rank-and-file get 13th-month on a pro-rata basis for the period they actually earned basic pay.

Q: Am I entitled to SIL if I worked less than a year? The statutory 5-day SIL vests after at least 1 year of service for covered employees. Company policies may grant earlier or additional leave (follow the more favorable rule).

Q: The company is closing and won’t pay. Who do I sue? You can file at DOLE/NLRC against the employer (and responsible corporate officers in certain cases). Money claims still accrue and may earn interest.

Q: Can the employer refuse to issue a COE because I resigned? No. COE is a right and must be issued within 3 days from your request.

11) Employee checklist (quick use)

Copy of resignation and acceptance (if any)
Timesheets, payslips, leave ledger, OT/holiday logs
Company policy/CBA on leaves, bonuses, pay in lieu, clearances
Computation of entitlements (attach)
Demand letter citing LA 06-20 (30-day rule) and asking for COE + BIR 2316
If unpaid: SEnA RFA at DOLE (bring all documents)
If unresolved: File case (DOLE enforcement or NLRC, as appropriate)

12) HR compliance (for employers)

Release final pay within 30 days from separation (or earlier per CBA/policy).
Issue COE within 3 days of request; 2316 within the year (or upon separation if you issue immediately).
Apply only lawful deductions with clear documentation; avoid blanket forfeitures.
Keep cut-offs and clearance timelines realistic so you meet the 30-day guidance.
If using quitclaims, ensure voluntariness and reasonable consideration.

Final notes (not legal advice)

This guide reflects Philippine labor standards and widely applied rules up to recent years (e.g., DOLE Labor Advisory No. 06-20). Particular facts, policies, or CBAs can change outcomes. For complex cases (e.g., large commissions disputes, training bonds, or contested deductions), consult a labor lawyer or seek help at your DOLE Regional Office.