Executive summary

Resigning employees are entitled to timely final pay (a.k.a. back pay) and to a Certificate of Employment (COE) upon request. As a baseline administrative practice in the private sector, employers should release final pay within 30 days from separation, or earlier if company policy/CBA provides. “Clearance” may be required to account for company property and advances, but it cannot be used to indefinitely withhold wages or statutory benefits. Only lawful, properly supported, and reasonable deductions may reduce final pay. Quitclaims and releases must be truly voluntary and for fair consideration; otherwise, they can be set aside.

1) What “final pay” should include

Final pay is the sum of all amounts due up to the effectivity date of resignation, less lawful deductions. Typical components:

Unpaid basic salary up to last day worked (including differentials from recent wage orders, if any).
Overtime, night shift differential, holiday/rest-day premiums, and earned commissions/incentives already determinable.
Pro-rated 13th-month pay (Jan 1 through separation date).
Conversion to cash of unused Service Incentive Leave (SIL)—at least the statutory 5 days/year if covered; if the company grants more leave convertible to cash by policy/CBA, include the excess.
Unused vacation/sick leave convertible to cash under company policy/CBA.
Tax refund (if year-to-date withholding exceeds computed tax on separation).
Reimbursable business expenses (properly receipted) and approved allowances not yet liquidated.
Separation-related pay (if contract/CBA/policy grants any upon resignation—note: resignation is not involuntary separation).
Other accrued benefits that are unconditional and earned (e.g., attendance bonuses already qualified for).

Not included by default: separation pay (that’s for authorized causes), discretionary bonuses not yet earned/declared, and benefits conditioned on future service after the resignation date.

2) Timing and deliverables

Final pay release: Good practice standard is within 30 calendar days from effectivity of separation, unless an earlier period is set by policy/CBA/contract. Complex items (e.g., sales commissions) can follow the normal cut-off cycle if the plan so provides and amounts are not yet ascertainable at the time of separation.
Certificate of Employment (COE): Upon employee’s request, issue within a few days (promptly; do not make COE contingent on clearance or quitclaim). COE states dates of employment and position(s); it need not state reason for separation unless the employee asks.
BIR Form 2316: Provide the signed copy upon separation or by the statutory year-end deadline so the worker can transfer tax credits to the next employer.
Government reporting: Employer updates statutory reports (SSS/PhilHealth/Pag-IBIG) to reflect separation; these do not excuse delayed final pay.

3) Clearance rules: what’s fair and lawful

Purpose of clearance is to settle property/accountabilities, not to strip wage rights. Best-practice rules:

Reasonable scope & period. Limit to actual accountabilities (devices, ID, uniforms, tools, cash advances, liquidations). Avoid endless signature chains.
Access while on clearance. Allow the worker to retrieve payslips, tax forms, and personal files needed to close out.
No coercion. Do not force signing of a quitclaim, NDA, non-compete, or “clean bill of health” as a pre-condition to releasing earned wages/benefits.
Medical/data privacy. Clearance forms should not solicit unnecessary medical or sensitive personal information.

4) Deductions: allowed vs. prohibited

A. Allowed (if documented, reasonable, and compliant)

Government-mandated withholdings: taxes; SSS/PhilHealth/Pag-IBIG loan amortizations with signed authorizations.
Employee-authorized deductions: written, specific amount/obligation (e.g., company loan, salary advance).
Value of unreturned company property or cash shortages—only after (i) due process, (ii) proof of employee fault/neglect (not mere loss), and (iii) fair valuation (no mark-ups).
Training bonds/tuition clawback—only if: (i) there is a prior written agreement; (ii) the amount represents actual, reasonable costs; (iii) the service period is reasonable; and (iv) deduction does not drive take-home pay below what labor standards protect for hours already worked.

B. Prohibited / risky

Blanket “liquidated damages” or penalties not tied to proven loss.
Withholding wages to compel return of property without valuation/due process.
Deductions that defeat minimum wage for hours actually worked.
Unilateral set-off of alleged losses while a dispute is pending, without hearing or evidence.
Forfeiture of earned 13th-month/SIL cash conversion just because the employee resigned (not allowed).

5) Quitclaims, releases, and NDAs

A quitclaim is valid only if: (1) the employee fully understands it; (2) no fraud, coercion, or concealment; and (3) the consideration is reasonable compared to potential claims. Even signed quitclaims can be annulled if those conditions are missing. Good practice: separate the quitclaim (if any) from the payroll release; never condition COE or statutory benefits on signing a quitclaim.

6) Special pay situations

Sales/commissioned staff: Pay earned commissions already determinable under the plan. If the plan pays after client payment or post-period KPIs, release on the contractual cycle with a final accounting.
Leave and offsets: If the company permits offsetting late-posted leave, reflect it. Otherwise, pay earned leave convertible by policy.
Loans and device programs: Deduct remaining balances only per signed amortization agreement; return of device reduces balance by fair depreciated value (documented).
Company car/fuel cards/credit cards: Liquidate based on receipts/usage up to last day; dispute items require transaction-level discussion, not blanket forfeiture.

7) Employer roadmap (to stay compliant)

Acknowledge resignation in writing (with effectivity date).
Issue clearance instructions (short, specific) and a cut-off timeline.
Compute final pay (wages, premiums, 13th-month prorata, SIL conversion, commissions, reimbursements) and lawful deductions with back-up.
Release final pay within the administrative standard 30 days (or earlier per policy). Provide final payslip/statement of account.
Provide COE promptly upon request; issue BIR 2316 and government separation reports.
If offering a separation sweetener (e.g., goodwill ex-gratia), document it separately from earned wages.

8) Employee roadmap (to protect your rights)

Resign properly (written notice observing the contractual/Code notice period unless excused).
Return property and liquidate expenses quickly; keep turnover receipts.
Ask HR for a final pay breakdown and release date; request COE and BIR 2316.
If payment is delayed or items are missing, send a polite demand (email is fine) requesting release within a definite date and attaching turnover proofs.
Persisting issues? Use SEnA (Single-Entry Approach) at the DOLE Regional/Field Office for conciliation-mediation. If unresolved, pursue money claims before the proper forum (labor arbiter/NLRC or DOLE Regional Office, as applicable). Bring payslips, contract, policy extracts, and correspondence.

Sample short demand (adapt):

Subject: Request for Release of Final Pay and COE – [Name] I resigned effective [date] and completed clearance on [date] (proof attached). Kindly release my final pay (salary to last day, prorated 13th-month, SIL conversion, and reimbursements) and issue my COE and BIR 2316 by [date]. Thank you.

9) Frequently asked questions

Can the company wait for a replacement to start clearance? No. Clearance is about accountabilities, not staffing.
Can final pay be withheld until the outgoing trains the replacement? No—training is not a lawful basis to withhold earned wages.
If I did not finish the notice period, can they deduct? They may recover actual, provable loss if your contract/policy allows (e.g., pay in lieu), but cannot impose punitive forfeiture unrelated to loss.
Are resignations eligible for unemployment insurance (SSS)? No; that benefit requires involuntary separation.
Can COE state “resigned due to disciplinary case”? COE is typically neutral; employers should limit it to dates and positions unless the employee requests more detail.

10) One-page checklists

Employer

☐ Written acceptance of resignation (effectivity)
☐ Simple clearance list & deadline
☐ Compute: unpaid wages, premiums, commissions, 13th-month prorata, SIL cash conversion, reimbursements
☐ Deduct only authorized/ lawful/ evidenced items
☐ Release within 30 days (or earlier per policy) with final payslip
☐ COE upon request; BIR 2316 provided; SSS/PhilHealth/Pag-IBIG updates filed

Employee

☐ Formal notice of resignation (observe notice period)
☐ Turnover & return of assets (get receipts)
☐ Request COE + 2316; ask for final pay computation & date
☐ Follow up in writing; escalate via SEnA if delayed
☐ Keep copies of all emails, payslips, policy pages

Key takeaways

30 days from separation is the common administrative standard to release final pay; earlier if policy/CBA says so.
Clearance is not a weapon to delay wages; only lawful, proven, and proportionate deductions may be applied.
13th-month (pro-rated) and SIL cash conversion remain payable despite resignation.
COE must be issued upon request and should be neutral.
If release is delayed or amounts are short, use SEnA promptly, then file a money claim if needed—documentation wins cases.