Clearance Requirement After Termination and AWOL in the Philippines
A comprehensive overview for HR practitioners, employees, and counsel
1. Overview
In Philippine practice the word “clearance” refers to the employer’s internal process of verifying that a departing employee has:
- returned all company-owned property;
- settled financial accountabilities; and
- obtained sign-off from the departments (IT, Finance, Admin, etc.) that had custody of those assets or records.
Although clearance is not expressly mandated by the Labor Code, it has become an entrenched management prerogative, recognized by the Department of Labor and Employment (DOLE) and by jurisprudence—provided it is exercised reasonably and in good faith.
2. Statutory and Regulatory Anchors
| Source | Key provision relevant to clearance |
|---|---|
| Labor Code, Art. 297–299 | Lists just and authorized causes for dismissal; requires due process. Nothing prohibits a clearance system, but neither may it defeat statutory benefits. |
| Labor Advisory No. 06-20 (4 May 2020) Payment of Final Pay and Issuance of Certificate of Employment | Final pay (unpaid wages, prorated 13th-month pay, unused SIL, etc.) must be released within 30 calendar days from date of termination “or of the employee’s demand, whichever comes earlier.” Employers may still require clearance, but it cannot be an excuse to exceed 30 days. |
| DOLE Labor Advisory No. 06-2024 (supersedes portions of the 2020 advisory) | Re-affirms the 30-day rule; requires employers to post their clearance flow-chart in a conspicuous place or electronic portal. |
| BIR Regs. Sec. 2.83.1 | Last wages are subject to withholding tax; employer must include them in the year-end alpha list. |
| SSS, PhilHealth, Pag-IBIG rules | Employer must transmit R-5, RF-1, and MDR updates for separated workers, but there is no “government-clearance” delaying final pay. |
| Data Privacy Act (RA 10173) | HR must protect personal data in the clearance documents and ensure that IDs or biometrics are de-provisioned. |
3. Termination Scenarios vs. Clearance
| Scenario | Are clearance and final pay owed? | Practical notes |
|---|---|---|
| Just-cause dismissal (e.g., serious misconduct) | Yes. Monetary benefits cannot be forfeited unless expressly allowed by law (e.g., fraud causing loss). | |
| Authorized-cause termination (redundancy, retrenchment) | Yes, plus separation pay mandated by Art. 298. | |
| Employee-initiated resignation | Yes, on or before the 30-day effectivity unless waived by the employer. | |
| Abandonment / AWOL | Yes. Abandonment is a just cause (Art. 297[e]), but after due process the employee must still receive earned benefits. |
4. Focus on AWOL (Absence Without Official Leave)
Twin-notice requirement still applies. Notice to Explain (often styled “Return-to-Work Order”) → employee is given at least five (5) calendar days to comment. If no response, a Notice of Termination on the ground of Abandonment follows.
Clearance may proceed in absentia. When the employee cannot be located, HR completes the clearance administratively using inventory records. Any accountability (e.g., unreturned laptop) is deductible from final pay under Art. 113(b) (employer may deduct for losses if the employee is “clearly shown to be responsible”).
Service of documents. Send notices—and later the check or release advice—via registered mail or courier to the last known address. This satisfies the employer’s duty of tender.
5. What Clearance Can and Cannot Do
| ❌ Prohibited | ✅ Permitted |
|---|---|
| Withhold statutory benefits beyond 30 days. | Offset the documented value of unreturned property against final pay. |
| Require a quitclaim before releasing the Certificate of Employment (COE). | Require the employee to sign for receipt of wages and COE. |
| Condition release of government documents (SSS records, Form 2316) on signing a quitclaim. | Provide a quitclaim form as an option; best practice is to separate it from the payroll release. |
| Impose penalties not found in company policy or CBA. | Follow a clear, written clearance SOP filed with DOLE (for transparency). |
6. Release, Waiver & Quitclaim
The Supreme Court routinely upholds quitclaims if they are:
- Voluntary;
- Supported by reasonable consideration (normally, at least what the law already guarantees); and
- Executed with full understanding (translated into the employee’s vernacular if needed).
A quitclaim signed under duress, for a lower amount than legally due, or coupled with an unconscionable waiting time is void.
7. Timing Matrix
| Milestone | Calendar-day limit* | Governing rule / best practice |
|---|---|---|
| 1. Serve Notice to Explain (AWOL) | Within reasonable time after unauthorized absence is established (often 3–5 days). | DOLE Book VI Regs. |
| 2. Serve Notice of Termination | At least 5 days after NTE; must state findings. | §2, DO 147-15 |
| 3. Compute final pay & finish clearance | 30 days from termination date or from employee’s written demand. | Labor Advisory 06-20/24 |
| 4. Issue COE | Same 30-day period. | Labor Advisory 06-20/24 |
*Calendar days, not working days.
8. Case Law Highlights
| Case | G.R. No. / Date | Take-away |
|---|---|---|
| Digital Telecommunications v. Soriano | G.R. 168059, Jan 19 2011 | Clearance requirement is valid per se but cannot nullify an employee’s right to final pay. |
| Aliling v. Feliciano & Servier Phils. | G.R. 195804, Feb 12 2014 | Quitclaims are not a bar to illegal-dismissal claims when executed for a grossly inadequate amount. |
| Lagahit v. Pacific Concord | G.R. 242784, Sept 30 2020 | Even AWOL employees are entitled to labor standards benefits; deductions must be proven. |
9. Interaction with Government-Mandated Benefits
- SSS unemployment benefit: The employer’s Report of Separation must state the cause accurately (e.g., redundancy; AWOL does not qualify).
- Pag-IBIG MP2 withdrawals: Requires company-signed notice of separation; clearance delays can frustrate members—another reason to finish within 30 days.
- PhilHealth: No clearance, but HR must update the RF-1 to avoid contribution gaps.
10. Practical Steps for Employers
- Publish the clearance workflow (per Labor Advisory 06-2024) in the handbook or intranet.
- Automate routing via HRIS; digital timestamps help prove compliance with the 30-day period.
- Create a “deemed-clear” rule: If no department objects within x days, the employee is automatically cleared.
- Segregate quitclaim signing from payroll release—avoid the optics of coercion.
- Document attempts to contact AWOL employees (emails, SMS, courier receipts).
- Coordinate with IT to disable accounts as soon as AWOL is suspected, reducing potential losses.
11. Common Pitfalls for Employees
- Ignoring the NTE and losing the chance to contest AWOL.
- Failing to surrender gadgets (the depreciated value can wipe out the last paycheck).
- Assuming that the COE is optional—the Labor Code recognizes the right to a COE.
- Over-signing quitclaims without verifying computations (use DOLE’s Final Pay template).
12. Remedies for Delay or Non-Payment
- DOLE Single Entry Approach (SEnA)—informal mediation within 30 days.
- Money claims case under Art. 224 before a Labor Arbiter (4-year prescriptive period).
- Criminal sanctions (Art. 303) apply only when the employer willfully refuses to pay wages.
13. Key Take-aways
- Clearance is customary, not compulsory, but it cannot override statutory wage and benefit rights.
- The 30-calendar-day clock for final pay and COE is firm; clearance must fit inside it.
- AWOL employees still enjoy labor-standards protection; only due process distinguishes legitimate deductions from illegal withholding.
- A well-designed clearance policy protects both company assets and employee rights, minimizing litigation risks.
Disclaimer: This article is for educational purposes only and does not constitute legal advice. For case-specific guidance, consult a Philippine labor lawyer or the DOLE Field Office having jurisdiction over your workplace.