In the Philippine legal landscape, the end of an employment relationship—whether through resignation, termination for cause, or authorized causes—triggers specific statutory obligations for the employer. For years, the timeline for releasing a disgruntled or departing employee’s final compensation and professional credentials was a frequent point of contention.

To standardize these processes and protect workers' rights, the Department of Labor and Employment (DOLE) issued Labor Advisory No. 06, Series of 2020. This remains the primary regulatory framework governing the release of final pay and certificates of employment.

1. Defining "Final Pay"

Commonly referred to as "backpay" or "last pay," final pay is the sum of all wages and monetary benefits due to an employee regardless of the cause of termination. Under DOLE rules, this typically includes:

Unpaid Wages: Salary earned for actual days worked prior to the effective date of separation.
Pro-rated 13th Month Pay: Calculated by taking the total basic salary earned during the calendar year divided by 12.
Unused Service Incentive Leaves (SIL): The cash conversion of unused SIL (5 days per year of service) for those who have worked at least one year.
Separation Pay: Only applicable if the termination is due to authorized causes (e.g., redundancy, retrenchment, or disease) or as provided by company policy/CBA.
Tax Refunds: Excess taxes withheld from the employee’s salary.
Cash Bond/Deposits: Any other deposits or garnishments that are due for return.

2. The 30-Day Mandatory Deadline

Before the 2020 Advisory, there was no uniform period for the release of final pay, leading many employers to withhold funds for months.

The Rule: Employers are now strictly mandated to release the final pay within thirty (30) calendar days from the date of separation of the employee.

While a company may have a shorter internal policy, it cannot exceed this 30-day window without risking a labor complaint.

3. Certificate of Employment (COE)

Every employee, regardless of the nature of their resignation or termination, has a statutory right to a Certificate of Employment.

Timeline: The COE must be released within three (3) days from the time of the request.
Content Requirements: By law, the COE must state the period of employment, the positions held, and the type of work performed.
Restriction: The employer is generally prohibited from including derogatory remarks or the reason for termination in the COE unless requested by the employee or required by law, as its primary purpose is to attest to the employee’s professional history.

4. The Issue of "Clearance"

A common practice in the Philippines is the "Clearance Procedure," where an employee must return company property (laptops, IDs, uniforms) and settle accountabilities before receiving final pay.

Legal Standing: The Supreme Court has recognized the employer's right to "clearance" as a valid exercise of management prerogative. An employer may withhold the final pay only to the extent necessary to satisfy the employee’s outstanding liabilities to the company (e.g., unreturned equipment or liquidated damages).
The Caveat: The clearance process must be conducted in good faith. An employer cannot use a tedious or "hanging" clearance process to indefinitely delay the 30-day deadline set by DOLE.

5. Enforcement and Remedies

If an employer fails to comply with the 30-day rule for final pay or the 3-day rule for the COE, the aggrieved employee may take the following steps:

Single Entry Approach (SEnA): The employee can file a Request for Assistance (RFA) at the nearest DOLE Regional or Provincial Office. This is a mandatory conciliation-mediation process.
Labor Arbitration: If SEnA fails, the case may be elevated to the National Labor Relations Commission (NLRC) for compulsory arbitration.
Penalties: Employers found in violation may be liable for the principal amount plus legal interest, and potentially moral or exemplary damages if the withholding was proven to be malicious or in bad faith.

Summary Table of Deadlines

Requirement	Mandatory Timeline	Basis
Final Pay / Backpay	Within 30 Calendar Days	Labor Advisory No. 06-20
Certificate of Employment	Within 3 Days of Request	Labor Advisory No. 06-20
Separation Pay	Upon Termination	Art. 298-299, Labor Code