1) Why “Date Hired” Matters in Final Pay

When an employee resigns after being regularized, disputes often arise because payroll/HR systems may display two different dates:

Original Date Hired / Start Date – the first day the employee actually began work and was placed on payroll (often as a probationary employee).
Regularization Date – the date the employee’s status changed from probationary to regular.

For final pay (also called last pay), the correct legal “date hired” basis is generally the original date hired, because employment—and the counting of service—starts when the employee begins working, not when the employee becomes regular.

Regularization is typically a change in employment status, not a new employment contract that resets service (unless there is a real break in employment or a genuine re-hiring situation).

2) The Legal Character of Probationary Employment: Employee “From Day One”

Under Philippine labor principles, a probationary employee is already an employee; probationary status only means the employer is assessing fitness for regularization within a lawful probationary period (commonly up to six months, subject to lawful exceptions).

Key consequence: Time spent as a probationary employee is part of continuous service. Therefore, when final pay items depend on length of service (e.g., leave eligibility, retirement eligibility, service-based company benefits), counting generally begins from the original date hired, not the regularization date.

3) Final Pay vs. Separation Pay: Don’t Mix Them Up

A. Final Pay (Last Pay)

Final pay is the sum of amounts already earned or due and any convertible benefits at the time of separation. It commonly includes:

Unpaid salary/wages up to the last day worked
Pro-rated 13th month pay
Cash conversion/monetization of unused leave (if convertible under law/policy)
Tax refund/adjustments (if applicable)
Other earned benefits under company policy/CBA (e.g., commissions already earned under rules, pro-rated allowances, incentives due)

B. Separation Pay

Resignation (voluntary) generally does not entitle an employee to statutory separation pay—unless:

The company policy/CBA provides it; or
The resignation is not truly voluntary (e.g., constructive dismissal or forced resignation), in which case legal remedies may include separation pay/backwages depending on findings; or
A special law/contractual commitment applies.

So in typical resignation cases, focus is on final pay, not separation pay.

4) Governing Rules on Timing and Documentation (Final Pay and COE)

Philippine labor practice recognizes guidance that final pay should be released within a reasonable period, and administrative guidance has commonly used 30 days as the benchmark for releasing final pay after separation, subject to completion of clearance requirements and company processes—so long as those processes are reasonable and not used to unlawfully delay wages.

Separately, employees are entitled to a Certificate of Employment (COE) upon request, and employers are expected to issue it promptly.

Practical takeaway: Even when clearance is required, employers should not use “clearance” as a tool to indefinitely delay payment of wages already earned.

5) The Core Rule: What Is the Correct “Date Hired” for Final Pay Computation?

General Rule (Continuous Employment)

If the employee’s service is continuous from probationary hiring through regularization to resignation, the relevant “date hired” for service-based computations is the original date hired, because:

The employment relationship began at first day of work;
Regularization is a status change, not the start of employment; and
Statutory benefits that use “service” typically count from the beginning of employment.

What Regularization Date Is For

The regularization date is usually relevant for:

Eligibility to certain company benefits that are explicitly conditioned on regular status (e.g., certain HMO enrollment, loan privileges, retirement plan enrollment if plan rules say “regular employees only,” etc.)
Internal HR classification and some policy triggers

But it generally should not replace the original hire date for computing length of service unless the benefit’s written rules clearly define otherwise (and even then, statutory minimums must still be met).

6) Final Pay Components and How “Date Hired” Affects Each

(1) Unpaid Salary/Wages, Overtime, Premiums, Differentials

Includes pay for:

Last payroll cutoff up to last day worked
Overtime pay
Night shift differential
Holiday pay and premium pay (if applicable)
Unpaid allowances that are wage-integrated under policy/contract
Commission/incentives already earned under the commission plan rules

Date hired relevance: Usually none, except for checking correct wage rate history and eligibility rules for incentives.

(2) Pro-Rated 13th Month Pay

13th month pay is generally computed as:

Total basic salary earned during the calendar year ÷ 12

If separation occurs before year-end, the employee receives pro-rated 13th month based on basic salary earned from January 1 to separation date (or from date hired if hired midyear).

Date hired relevance: Use the actual start date within the year. Probationary months count because the employee is already employed and earning basic salary.

(3) Service Incentive Leave (SIL) and Conversion of Unused Leave

Statutory SIL is at least 5 days per year of service after completing one year of service, subject to coverage rules and exemptions.

Date hired relevance (high):

The one-year service threshold is measured from the original date hired, not the regularization date, if employment is continuous.
For final pay, unused convertible leave may be cashed out if:
- Company policy or practice provides conversion, or
- Leave is legally convertible/required to be paid out under certain conditions and established practice, or
- Employment contract/CBA provides for monetization.

Important nuance: Many employers provide leave credits (vacation leave/sick leave) more generous than SIL. Conversion rules depend heavily on company policy, contract, CBA, and consistent practice.

(4) Company Leave Credits (Vacation/Sick Leave) and Monetization

Many companies provide:

VL/SL credits that accrue monthly, or front-load annually
Different rules for probationary vs regular employees
Different conversion rules upon resignation (e.g., VL convertible, SL not convertible)

Date hired relevance: Depends on the employer’s written leave policy:

If credits accrue from first day of employment (even probationary), then original date hired governs.
If policy says VL starts upon regularization, then accrual may legally start at regularization—but the employee must still receive at least statutory minimums where applicable.

(5) Retirement Pay (Only If Retirement is Triggered)

Statutory retirement pay generally applies when the employee meets retirement age and service conditions, or under a retirement plan providing better benefits.

Date hired relevance (very high): Eligibility often requires minimum years of service (commonly 5 years). For continuous employment, those years are counted from original date hired.

For a resigning employee who is not retiring, retirement pay is usually not due unless the retirement plan explicitly provides portability or vesting upon resignation.

(6) Final Tax Adjustment, 2316, and Refunds

Employers typically compute final withholding tax and issue tax documentation.

Date hired relevance: Usually minimal. The key is total compensation, taxable benefits, and withheld taxes for the year.

(7) Deductions, Offsets, and “Clearance”

Employers commonly deduct from final pay:

Authorized loans (company loans, cooperatives, salary advances)
Unreturned equipment or unliquidated cash advances
Other amounts the employee clearly owes

Legal guardrails:

Wage deductions are regulated; deductions should be authorized by law, contract, or with employee consent, and must be supported by documentation.
Employers should be careful with automatic deductions for alleged “damages” or unproven amounts.

Date hired relevance: None—this is more about lawful deduction authority and proof of indebtedness.

7) The Most Common “Date Hired” Mistake and Why It’s Wrong

The Mistake

Employer computes service-based items using the regularization date as the employee’s “date hired,” effectively erasing probationary service.

Why It’s Wrong (General Rule)

Because probationary employment is still employment. Unless there is a genuine end of employment and a later re-hiring, the employee’s service is continuous from the first day worked.

Typical Consequences of Using Regularization Date Improperly

Delayed or denied SIL eligibility (miscounting the one-year service requirement)
Underpayment of leave conversions if the leave policy counts probationary accrual
Incorrect computation of service-based company benefits (e.g., service awards, prorated benefits tied to tenure)
Disputes over retirement eligibility in older cases (counting fewer years than actually served)

8) When Regularization Date May Control (Legit Exceptions)

There are scenarios where it is defensible to use a later date—but these are not “regularization” situations in the ordinary sense.

A. Genuine Re-Hiring After Resignation/Termination (Break in Service)

If an employee resigned (or was terminated), cleared final pay, and was later re-employed, the company may treat the later employment as a new hire for tenure—unless company policy recognizes bridging of service.

Key factors:

Was there a clear separation (final pay release, exit processing)?
Was there a meaningful break?
Do policies provide for “bridging” prior service?

B. Project/Fixed-Term Engagement Followed by a New Regular Appointment

If the earlier engagement was genuinely project-based or fixed-term and it truly ended, and the employee was later hired into a regular position, the employer may argue a new hire date applies. That said, repeated renewals and the nature of work can legally transform status; misclassification is a frequent litigation issue.

C. Different Employer Entity (Absorption/Transfer)

If employment moves to a different corporate entity, the “date hired” for the new entity may legally start upon transfer—unless the arrangement is structured as a transfer with recognized prior service, or the circumstances show the “new” entity is effectively the same employer for labor law purposes.

D. Benefit Plan Rules That Define a Separate “Plan Entry Date”

Retirement plans, HMO plans, or internal benefit schemes sometimes define:

Date hired (employment start), and separately
Plan entry date (eligibility date)

This can be valid as to that plan benefit, provided it does not violate statutory minimums.

9) Resignation Rules That Affect Final Pay in Practice

A. 30-Day Notice (General Rule)

The Labor Code generally requires an employee resigning without just cause to give one-month written notice. Some employees resign immediately; others serve notice.

B. Immediate Resignation for Just Causes

Immediate resignation may be permissible if the resignation is due to legally recognized just causes (e.g., serious insult, inhuman treatment, commission of a crime against the employee, analogous causes).

C. Can the Employer Withhold Final Pay for Failure to Serve Notice?

A frequent flashpoint: employers sometimes “penalize” employees by withholding final pay or deducting a full month’s salary for not completing notice.

Legally safer principles:

Earned wages should not be withheld indefinitely.
If the employer claims damages due to breach of notice, the employer must have a lawful basis and proof (and ideally a clear contractual stipulation), and deductions must comply with wage deduction rules.
“Liquidated damages” clauses may be scrutinized for fairness and reasonableness.

Bottom line: failing to serve notice can create employer claims, but it does not automatically erase the employee’s right to receive earned compensation.

10) Illustrative Example: Correct “Date Hired” vs. Wrong Basis

Facts

Original Date Hired (Probationary start): January 10, 2023
Regularization Date: July 10, 2023
Resignation / Last day: February 15, 2024
Daily rate: ₱1,000
Unused convertible leave at resignation: 5 days (per company policy)

A. SIL/Leave Service Counting

One year of service from January 10, 2023 is January 10, 2024. By resignation (Feb 15, 2024), employee has crossed one year.

✅ Correct: employee is already eligible for SIL (and any service-based leave triggers) because the one-year count uses original hire date.

❌ Wrong: using July 10, 2023 would push the one-year mark to July 10, 2024—incorrectly denying eligibility/conversion.

B. Leave Conversion (if policy allows)

Leave conversion: 5 days × ₱1,000 = ₱5,000

(Actual computation may use daily rate rules in policy—e.g., 26 working days divisor, or “monthly rate ÷ 22”—depending on employer practice, but the point is that eligibility and accrual shouldn’t erase probationary months if continuous.)

11) Evidence of the Correct Hire Date

When disagreements arise, the “date hired” is usually established by:

Employment contract/appointment letter and first day instruction
Payroll records (first payslip)
Timekeeping logs
SSS employment reporting and contribution history (not always dispositive alone, but supportive)
Company HRIS entries showing “original hire date” vs “regularization date”
Emails/onboarding documents (job offer acceptance, start date confirmation)

12) Remedies and Deadlines for Underpaid/Unpaid Final Pay

Employees who believe their final pay was underpaid due to an incorrect hire date basis typically pursue:

Workplace conciliation/mediation mechanisms (often starting at the labor department’s dispute resolution procedures)
Money claims actions within the prescriptive period for money claims under the Labor Code (commonly three years from accrual of the cause of action)

Employers, meanwhile, should preserve computation worksheets and policy bases to justify how each line item was computed.

13) Best-Practice Framework for Employers (and What Employees Should Look For)

A. Maintain Two Dates—But Use Them Correctly

Original Hire Date: for tenure and service-based statutory computations
Regularization Date: for internal status and benefits explicitly tied to regular status

B. Itemize Final Pay

Final pay disputes shrink when the employer provides:

Pay period coverage
Rate used
13th month computation basis
Leave conversion basis and policy reference
Deductions with signed authorizations and supporting documents

C. Align HRIS and Policy Definitions

Policies should define:

When leave accrues (probationary vs regular)
Which leaves are convertible at separation
How daily rates are computed for conversion
Whether prior service is recognized upon re-hire (“bridging” rules)

14) Key Takeaways

In continuous employment, the legally sound “date hired” basis for service counting is the original date the employee started work, not the regularization date.
Regularization is generally a status change, not a reset of tenure.
Final pay includes earned compensation and convertible benefits; resignation usually does not include separation pay unless policy/contract or special circumstances apply.
Service-based items (like SIL eligibility, tenure-based benefits, retirement eligibility when triggered) should count from the original hire date, subject to genuine breaks in service or clearly defined plan entry rules that do not undercut statutory minimums.
Disputes are best avoided through clear policies, itemized computations, and consistent definitions of “original hire date” versus “regularization date.”