Entitlement to Employment Clearance after Termination in the Philippines
A comprehensive legal guide (updated as of 30 April 2025)

1. What employees usually mean by “employment clearance”

In the Philippines the term employment clearance is used informally to describe two distinct but related deliverables an employee expects at the end of employment:

Practical term	What the law actually calls it	Main legal basis	Typical content
Certificate of Employment (COE)	“Certificate of employment”	Labor Code, Art. 299 (renumbered by DOLE Dept. Advisory No. 01-2022); DOLE Labor Advisory No. 06-20	Basic data: dates of employment, position(s); if the employee specifically asks, the cause of termination
Final pay (a.k.a. separation or last pay)	“Final pay”	Labor Code Arts. 102–103 (wages), 294-298 (termination benefits); DOLE LA 06-20	All unpaid wages, prorated 13th-month pay, service incentive leave conversion, separation pay (where applicable), tax refund, and any other monetary benefit that has become due

In company practice another document, clearance form (property/laptop return, settling cash advances, etc.), is required only as an internal control. It is not the same as the statutory COE and it is not regulated by the Labor Code; the employer invents the form and the routing process, but it cannot legally defeat an employee’s express statutory right to a COE and timely final pay.

2. Governing sources of law and policy

Labor Code of the Philippines
- Art. 299 (old Art. 284) — employer’s duty to issue a COE “within five (5) days from request.”
- Arts. 102–103 — prompt payment of wages in legal tender.
- Arts. 297–299 — just/authorized causes; separation pay.
- Art. 303 (penal provision) — non-compliance may constitute an offense.
RA 10395 (2013) & DOLE Dept. Advisory No. 01-2022 (renumbering) — preserve Art. 299 but re-number articles; no substantive change.
DOLE Labor Advisory No. 06-20 (13 Feb 2020) — now the operative policy:
- COE must be issued within three (3) working days from receipt of an employee’s request, free of charge.
- Final pay must be released within 30 calendar days from date of separation, unless a shorter period is provided in a CBA, company policy, or contract.
Data Privacy Act of 2012 (RA 10173) — personal data in COEs/clearance records must be processed under a lawful basis; disclose only what the employee asks for or what is strictly necessary.
SSS Law (RA 11199), PhilHealth Law (RA 11223) & Pag-IBIG Charter (RA 9679) — indirectly relevant because the employer must sign SSS Form RT-1, EcCLAIM 5, PhilHealth Claim Forms, HDMF MAT 1, etc., which many employers address during clearance.

Jurisprudence (illustrative list; all Supreme Court):

Case	G.R. No.	Date	Key takeaway
Alcantara v. Phil. Commercial & Industrial Bank	151349	09 Aug 2005	COE is a matter of right; refusal may justify damages.
Insular Life v. NLRC	174499	11 Dec 2013	Employer may require return of company property but cannot use it to indefinitely delay release of final entitlements.
Phil. Long Distance Tel. Co. v. Baldres	149110	03 Apr 2003	Clearance procedure must be reasonable; undue delay violates Art. 102.
Auto Bus Transport v. NLRC	85475	27 May 1998	Separation pay and COE are distinct; non-payment does not negate duty to issue COE.

3. Who is entitled?

All employees — rank-and-file, supervisory, managerial, probationary, project-based, fixed-term, or casual — become entitled immediately upon termination of employment, whatever the mode of separation.
Typical modes:

Employee-initiated: resignation, retirement (Art. 302), death (beneficiaries).
Employer-initiated: just cause dismissal (Art. 297), redundancy/closure (Art. 298), disease (Art. 299).
Operation of law: end of project/contract, legitimate contracting out, merger/consolidation.

4. Obligations of employers

Deliverable	Legal deadline	Cost to employee	Mandatory content	Optional content (only if asked)
COE	3 working days from request (LA 06-20)	Free	dates of employment; position(s)	cause of separation; wage rate; brief description of duties
Final pay	30 calendar days from date of separation (LA 06-20)	None (but usual statutory deductions apply)	all earned monetary benefits	n/a
Tax-related docs (BIR Form 2316)	On or before 31 Jan of the following year, or upon employee’s request after separation	Free	gross compensation, withholding tax	n/a
SSS/PhilHealth/Pag-IBIG certification of separation	“Immediately upon request” (agency circulars)	Free	last day of employment; reason for separation	n/a

No clearance, no withholding:
An employer may condition release of final pay on the completion of a reasonable clearance process (return of laptop, reconcile cash advances, etc.), but it can never condition the issuance of a COE on clearance completion or on the employee’s signing of quitclaims. Art. 299 and LA 06-20 impose an absolute duty.

5. Consequences of non-compliance

Monetary liabilities
- Moral and exemplary damages (e.g., Alcantara).
- Attorney’s fees under Art. 2208, Civil Code, if employee is forced to litigate.
Administrative sanctions
A complaint for money claims or illegal withholding of benefits may be filed with the DOLE Regional Office (Single-Entry Approach mediation) or the NLRC.
Criminal liability
Art. 303 makes willful refusal to comply with Labor Code obligations a penal offense (fine ₱ 100 – ₱ 10,000 and/or imprisonment up to 3 years).
Corporate disclosure risk
Delays in giving COE or final pay have reputational repercussions and may be used as evidence of unfair labor practice in other proceedings.

6. Practical employer checklist

Policy — Adopt a written separation/clearance SOP that expressly reiterates LA 06-20 deadlines.
Routing slip — Limit signatories to those who genuinely need to clear accountabilities; automate if possible.
Template COE — Keep it short; add “cause of separation” only if the departing employee asks in writing.
Data privacy — Issue COEs directly to the employee (or authorized representative); redact personal data of references.
Recordkeeping — Keep copies of COE, quitclaim, and clearance for at least 5 years (Labor Code Art. 305).

7. Employee remedies and strategy

Ask in writing. A dated e-mail or HR ticket starts the 3-day period running.
Follow up politely, then escalate. If HR is silent, escalate to the plantilla officer, then to DOLE Hotline 1349.
SEnA request (free) — file a Request for Assistance; most COE/final pay cases end here.
NLRC money claims — within 3 years from accrual.
Damages for bad-faith refusal — add prayer for moral/exemplary damages and attorney’s fees (Art. 111, Labor Code).

8. Frequently asked questions

Q 1. Can HR refuse to indicate the reason for termination?
Yes, unless the employee specifically demands it. Art. 299 says the COE must state the “dates of employment and the work or position held and, if requested, the cause of termination.” Absent a request, HR should omit the cause to protect both parties’ privacy.

Q 2. May the employer charge a “certificate fee”?
Absolutely not. LA 06-20: “The issuance of the statutory COE shall be free of charge.”

Q 3. What if the employee still has unreturned tools or an unpaid cash bond?
The employer may offset the cost against final pay (Art. 113, valid deductions) and hold the clearance form, but must still issue the COE within 3 working days.

Q 4. Does the 30-day final-pay rule apply to migrant workers or seafarers?
For OFWs governed by POEA contracts, the POEA Standard Employment Contract timelines prevail (e.g., 60 days for crew claims); for domestic employment, LA 06-20’s 30-day rule applies.

Q 5. Is a “good conduct” statement mandatory?
No law requires it. Some employers add it voluntarily; others refuse for defamation risk. The employee cannot compel its inclusion.

9. Key take-aways

The COE is a statutory right — independent of clearance, final pay, or the manner of separation.
Time frames are tight — 3 working days for the COE; 30 calendar days for final pay.
No fees, no excuses — any attempt to charge or delay exposes the employer to damages and even criminal sanction.
Both sides benefit from clarity — a streamlined, written exit process prevents disputes and speeds up benefit claims.

With these guideposts, employees know exactly what they are entitled to demand, and employers appreciate the concrete steps — and deadlines — needed to stay compliant.