In the Philippines, the transition between submitting a resignation letter and the effective date of departure is governed by a combination of the Labor Code, Department of Labor and Employment (DOLE) regulations, and the specific terms of an employment contract.
A common point of friction is whether an employee is entitled to their full salary during this "notice period." Under Philippine law, the answer is a definitive yes, provided the employee continues to render service.
1. The Mandatory 30-Day Notice Rule
Article 300 [285] of the Labor Code of the Philippines mandates that an employee must provide at least one (1) month’s prior notice to the employer before the resignation becomes effective.
- Purpose: This period allows the employer to find a replacement and facilitate a proper turnover of duties.
- Consequence of Non-Compliance: If an employee leaves without notice (and without a "just cause" like maltreatment or imminent danger), they may be held liable for damages.
2. Right to Wages for Services Rendered
The fundamental principle of "A Fair Day's Wage for a Fair Day's Labor" applies throughout the notice period. As long as the employee reports to work and performs their duties during those 30 days, the employer is legally obligated to pay their salary.
Key Points on Salary Entitlement:
- Pro-rated Salary: You are entitled to be paid for every day you worked up until your last day of employment.
- Standard Deductions: Taxes, SSS, PhilHealth, and Pag-IBIG contributions will still be deducted from your final pay.
- Benefits Accrual: Benefits like the 13th-month pay and Service Incentive Leave (SIL) continue to accrue during the notice period.
3. The Use of Leave Credits (Terminal Leave)
Many employees ask if they can "offset" their notice period using their remaining leave credits (e.g., spending the last 15 days of the notice period on paid vacation leave).
- Management Prerogative: The use of leave credits during the notice period is generally subject to employer approval. An employer can deny a leave request if the employee's presence is critical for turnover.
- Commutation: If the leaves are not used, they are typically "commuted to cash" (converted) and included in the final settlement, provided the company policy or contract allows for such conversion.
4. Employer-Initiated Early Release
Sometimes, after a resignation is submitted, an employer may ask the employee to leave immediately rather than serving the 30 days.
- Mutual Agreement: If both parties agree to waive the notice period, the employment ends immediately. The employer is only required to pay for days actually worked.
- Forced Leave: If the employer forces the employee to stop working immediately but refuses to pay for the notice period, this could be contested. Generally, if the employer waives the notice period for their own convenience, they may still be liable to pay the salary for that period to avoid "constructive dismissal" or breach of contract issues.
5. Final Pay and the "Clearance" Process
In the Philippines, the salary for the notice period is often withheld and bundled into the Final Pay (colloquially known as "Backpay").
According to DOLE Labor Advisory No. 06, Series of 2020, final pay must be released within thirty (30) days from the date of separation. The final pay package typically includes:
- Unpaid salary for the last period worked (including the notice period).
- Pro-rated 13th-month pay.
- Cash conversion of unused Service Incentive Leaves (SIL).
- Tax refunds (if applicable).
- Release of any other benefits stipulated in the contract.
6. Withholding of Salary
An employer cannot permanently withhold your salary as a penalty for resigning. However, they are permitted to temporarily withhold the final salary pending the completion of the Clearance Process.
This process ensures that the employee has returned all company property (laptops, IDs, uniforms) and settled any outstanding financial obligations (cash advances or liquidated damages). Once clearance is signed, the employer must release all withheld wages.
Summary Table: Rights vs. Responsibilities
| Action | Employee Right | Employer Right |
|---|---|---|
| Notice Period | To be paid for every day worked. | To require 30 days for turnover. |
| Leave Credits | To have unused SIL converted to cash. | To approve or deny leave during notice. |
| Final Pay | To receive payment within 30 days. | To require completion of clearance. |
| Resignation | To resign for any reason. | To sue for damages if no notice is given. |