Employer Refusal to Issue Employment Clearance in the Philippines – A 2025 Legal Primer

1. What “employment clearance” means in Philippine practice

Document	Purpose	Legal status
a. Company (HR) Clearance	Confirms the employee has returned company property, settled cash advances, and completed exit processes.	Purely contractual and procedural; no statute obliges an employee to secure it, and no statute lets an employer treat it as a condition precedent to legal entitlements.
b. Certificate of Employment (COE)	States dates of engagement and nature of work; sometimes basic pay.	Mandated by: Section 10, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code (“Omnibus Rules”) and DOLE Labor Advisory No. 06-20 (Payment of Final Pay and Issuance of COE). Must be released within three (3) working days from request, whether separation was voluntary or involuntary.
c. DOLE/PEZA/BIR/SSS, etc. clearance forms	Sector-specific clearances; usually needed only if statutory liabilities are involved.	Covered by the agency’s own rules; they are independent of the COE.

Throughout this article “employment clearance” is used broadly but the legal controversy almost always centres on the COE; contractual “HR clearances” have no direct statutory footing.

2. Statutory and regulatory foundations

Labor Code of the Philippines, as amended Article 303 [formerly 289] empowers DOLE to penalise any violation of the Code or its rules with administrative fines of ₱5,000 – ₱100,000, and to order compliance.
Omnibus Rules, Book V, Rule XIV, § 10 (1976; still in force)

“A dismissed worker shall be entitled to receive, upon request, a certificate from his employer specifying the dates of his employment and the type or class of work in which he was employed.” Courts long ago extended the benefit to resigned and constructively-dismissed workers in the spirit of social justice.
DOLE Labor Advisory No. 06-20 (14 March 2020) – superseding a 2019 advisory
- Employers must:
  - release final pay within 30 calendar days from termination date, unless a more beneficial CBA or company rule exists; and
  - issue the COE within three (3) working days from the date of the request, regardless of pendency of clearance or turnover procedures.
- The advisory reiterates that a COE is a matter-of-right and may not be withheld to compel the employee to sign quitclaims, waivers, or clearance documents.
Data Privacy Act of 2012 (RA 10173) A COE discloses personal data. Employers must implement reasonable safeguards and may release only the fields requested by the employee (or a prospective employer) unless a subpoena, court order, or statutory duty justifies wider disclosure.
POEA Standard Employment Contracts / Migrant Workers Act (for OFWs) Recruiters and foreign principals must provide a certificate of service upon completion of contract; refusal is contractual breach and ground for administrative sanction.

3. When can an employer legitimately delay or annotate a COE?

Scenario	Allowed action	Reasoning
Outstanding property or cash accountabilities	May pursue civil or criminal remedies; may NOT withhold COE.	DOLE holds that the COE merely confirms employment facts and does not prejudice collection.
Pending administrative / criminal investigation for acts committed before separation	May issue COE with a disclaimer (“This certification is issued without prejudice to…”)	Protects employer against estoppel while preserving the employee’s statutory right.
Trade-secret protection concerns	May restrict disclosure of proprietary details of work; cannot refuse basic COE.	Balanced by Data Privacy Act and freedom to contract.

4. Consequences of refusal or unreasonable delay

Front	Potential liability	Statutory basis / precedent
Administrative	Fine of ₱5k–₱100k per affected employee; compliance order; possible preventive closure under Art. 304.	Art. 303-304 Labor Code; DOLE Department Order 218-22 (Rules on General Labor Standards Inspection).
Civil	Moral and exemplary damages; attorney’s fees if refusal shown to be in bad faith; possible award of back pay if dismissal later ruled illegal.	St. Michael Academy v. NLRC (G.R. 107215, 26 Jul 1994); Citytrust Bank v. NLRC (G.R. 117438, 24 Jan 1997); subsequent rulings up to 2024 follow the same doctrine.
Criminal	Article 288 (now 303) also carries imprisonment of one (1) day to six (6) months if the fine is not paid.	Labor Code penal clauses are criminal in nature but prosecuted by the State through DOLE Regional Directors.
Reputational	Loss of employer brand, DOLE watch-listing, difficulty maintaining ISO/ESG or PEZA certifications.	Evidenced in many arbitral awards where companies were named and shamed.

5. How employees enforce the right

Written demand to HR citing Omnibus Rules § 10 and Labor Advisory 06-20; keep proof of service.
SEnA request for assistance (RFA) at the DOLE Regional/Field Office – a 30-day mandatory conciliation.
Complaint before the NLRC under Art. 129 (money claims ≤ ₱5,000) or Art. 224 (all other cases), praying for specific performance (issuance of COE) plus damages.
Petition for mandamus in the RTC if the COE is the only relief sought and there is no employer-employee relationship issue (rare).
Administrative complaint seeking fines under Art. 303; this may run concurrently with an NLRC case.

6. Employer defences (and why most fail)

“Not yet cleared” – DOLE: COE is ministerial; clearance may run parallel.
“Still under investigation” – Accepted only if the alleged misconduct relates to falsification of attendance records or identity fraud that would render the COE factually inaccurate. Even then, the employer must issue a limited-scope COE (e.g., start date only).
“Company policy” – Cannot override a statutory duty (civil code principle lex superior derogat legi inferiori).
“Trade secret” – Reasonable redaction is fine; wholesale refusal is not.

7. Selected Supreme Court rulings (chronological snapshot)

Case	G.R. No. & Date	Key takeaway
Stolt-Nielsen Marine Services, Inc. v. NLRC	90548, 28 Aug 1991	COE is part of post-employment rights; refusal may justify moral damages.
St. Michael Academy v. NLRC	107215, 26 Jul 1994	COE refusal plus withholding of 13th-month pay constituted bad faith; exemplary damages affirmed.
Citytrust Banking Corp. v. NLRC	117438, 24 Jan 1997	Employer cannot condition COE on quitclaim; doing so is an unlawful pressure tactic.
Intercontinental Broadcasting Corp. v. Court of Appeals	128636, 27 Jan 1999	Technicalities of corporate receivership cannot suspend the worker’s right to a COE.
Sesbreño v. Court of Appeals	135009, 27 Mar 2001	Illegally dismissed employees entitled to reinstatement and, pending that, a COE to mitigate employability damage.
Digital Telecommunications Phils., Inc. v. Soriano	159636-37, 28 Jun 2005	COE denial used by Court as evidence of employer’s bad faith, inflating attorney’s fees.
Edgar S. Raymundo v. AFPI	246433, 20 Apr 2022	Reiterated doctrine in the age of pandemic; SC noted DOLE Advisory 06-20 in ratio.

(Older citations remain good law; there were no reversals up to June 2025.)

8. Practical compliance checklist for HR teams (2025 update)

Standard request form – but also recognize verbal/email requests.
COE template containing:
- full name (per PSA record),
- start and end dates (or “present”),
- last position title,
- optionally last salary if employee consents in writing.
Turn-around time – 3 working days; auto-timestamp requests in HRIS.
E-copy policy – PDF with qualified electronic signature suffices; no notarisation required unless per CBA.
Data-privacy protocol – redact SSN/TIN, performance ratings, or disciplinary history unless employee opts-in.
Special notes field – allowed only for factual notes (e.g., “employee was on floating status due to pandemic from 21 Apr 2020 – 31 Jan 2021”); no value-judgments.
Audit trail – keep COE log for 5 years per DOLE Handbook record-retention timetable.
Integration with clearance – run in parallel, never sequential; release COE even if clearance not yet signed.

9. Policy recommendations and emerging issues

Digital COE repositories – Pending DOLE’s e-CBA platform roll-out, companies may use block-chain-hashed COEs to prevent tampering; this is already piloted in IT-BPM sector.
Gig-economy workers – Current rules cover “employees.” Bills filed in the 19th Congress propose extending COE-like certificates to platform freelancers; monitor legislative updates after mid-2025.
AI-generated references – Employers experimenting with automated reference letters must still obtain employee consent under RA 10173 and ensure output is truthful.
Inbound cross-border data transfer – Multinational HR shared-service centres issuing COEs for PH exits must follow NPC Circular 2022-01 on standard contractual clauses.

10. Conclusion

In Philippine labor law, refusal to issue a Certificate of Employment—or conditioning its release on “clearance,” quitclaims, or other extraneous acts—has no legal basis and exposes the employer to fines, damages, and reputational risk. The duty is grounded in the Omnibus Rules and clarified by DOLE Labor Advisory 06-20, reinforced by more than three decades of Supreme Court jurisprudence. Compliance is simple, while non-compliance exacts a heavy price. Employers should therefore embed COE issuance into their standard off-boarding workflow, automate the three-day turnaround, and treat the document as a worker’s right, not a favour.