Final Pay Delays in the Philippines: How to Compute Your Last Pay and File a DOLE Complaint

This guide explains your rights and practical steps if your final pay (a.k.a. “last pay”) is delayed, short, or withheld in the Philippines. It covers what should be in your final pay, how to compute it, lawful deductions, timelines, where and how to complain (SEnA/DOLE and, if needed, NLRC), plus templates and examples. It’s general information—not a substitute for legal advice.

1) The baseline rule on release of final pay

When should it be released? As a general rule recognized by the Department of Labor and Employment (DOLE), final pay should be released within 30 calendar days from the date of separation, unless your company policy or contract sets an earlier (more favorable) timeline. This applies whether you resigned, were terminated, or were separated for authorized causes (e.g., redundancy).
Certificate of Employment (COE): Upon request, your employer must issue a COE within a few days (commonly 3 working days) stating your employment dates and position. This is separate from final pay.
“Final pay” vs. “back pay”: In HR practice, final/last pay is what you receive at separation. Back pay is a different concept usually awarded by the NLRC/courts after an illegal dismissal case (unpaid wages during the period you were kept out of work).

2) What should be included in final pay?

Final pay typically consists of all amounts already earned and due up to separation, plus benefits that become due upon separation. Common items:

Unpaid basic salary up to your last day (including any partial month).
Overtime pay, night shift differential, holiday premium, and other wage differentials already earned but unpaid.
Pro-rated 13th month pay (based on actual basic salary earned from January 1 of the calendar year up to your separation date).
Cash conversion of unused leave credits (e.g., vacation leave; SIL—the 5-day service incentive leave—must be commuted if unused and you’re eligible).
Separation pay (only if applicable):
- Redundancy or installation of labor-saving devices: at least one (1) month pay per year of service, or one (1) month pay, whichever is higher.
- Retrenchment to prevent losses, closure not due to serious losses, or disease: at least one-half (1/2) month pay per year of service, or one (1) month pay, whichever is higher.
- Just-cause dismissal and resignation: generally no separation pay, unless your CBA/policy grants it.
- Rounding: A fraction of at least six (6) months is commonly treated as one whole year for separation-pay computation.
Tax refund if the employer over-withheld during the year.
Other benefits that are non-discretionary or vested under your contract, company policy, or CBA. (Purely discretionary bonuses are generally not demandable unless there is a clear, consistent practice creating a right.)

⚠️ Always check your employment contract, company handbook, CBA, and past payroll practice. If policy is more favorable than the legal minimum, it usually prevails.

3) Lawful deductions and “clearance” holds

Employers can require clearance (return of company property, settlement of cash advances, etc.). They may make deductions from final pay only if lawful, such as:

Statutory deductions: SSS, PhilHealth, Pag-IBIG, withholding tax.
With your written authorization (e.g., company loan, uniform deposit), and for your benefit or as allowed by law/policy.
Losses or damages caused by the employee only if there is clear proof of responsibility, due process, and a written policy/authorization.
Unreturned company property (e.g., laptop) may justify deduction of the item’s cost or assessed value if that rule exists and you agreed to it, but employers cannot use clearance to indefinitely hold wages without basis.

Not allowed: Arbitrary or punitive deductions, or withholding the entire final pay just because “clearance is pending” when only a small accountability is in question.

4) Computing final pay (step-by-step)

Below is a practical framework you can apply with your own numbers.

A. Unpaid salary up to last day

Find your payroll divisor for partial months (check your payslip/handbook):
- Many companies use working days in the month (e.g., 22 for a 5-day schedule, 26 for a 6-day schedule), or a fixed divisor aligned to DOLE factors.
- Use the same divisor your employer consistently uses (consistency matters).
Formula (partial month):

$$ \text{Unpaid Salary} = \text{Daily Rate} \times \text{Days Actually Worked in Final Month} $$

where $\text{Daily Rate} = \frac{\text{Monthly Basic}}{\text{Company Divisor}}$

B. Pro-rated 13th month pay

Law: 13th month = (Total basic salary actually earned in the calendar year) ÷ 12.
Pro-rating: Count only the basic salary you actually earned from Jan 1 up to your separation date (include partial months on a per-day basis using your company’s divisor).
Exclusions: Overtime, night diff, holiday premium, allowances generally excluded (unless they are integrated into “basic” by policy/practice).
Tax: 13th month is part of “other benefits” with a tax-exempt cap (commonly ₱90,000 under recent tax rules); excess is taxable.

C. Leave conversion

Company leave: Convert unused leave credits as per policy/CBA.
SIL (5 days): If you’re entitled and unused, it should be commuted to cash upon separation.
Formula:

$$ \text{Leave Conversion} = \text{Daily Rate} \times \text{Unused Leave Days} $$

D. Separation pay (if applicable)

Identify the ground for separation (redundancy, retrenchment, closure not due to serious losses, disease).
Apply the correct rate (1 month per year or 1/2 month per year, whichever applies).
Whichever is higher vs. one month minimum: The law sets a floor—you should receive at least that minimum even with short service.
Rounding: 6 months or more → count as one full year.

E. Taxes and contributions

Withholding tax: computed on taxable components (e.g., basic pay, separation pay in some cases).
Tax treatment of separation pay: If due to causes beyond your control (e.g., redundancy, retrenchment, closure not due to serious losses, disease), it is generally tax-exempt. If due to resignation or just-cause dismissal, it’s taxable.
Government contributions: Standard SSS/PhilHealth/Pag-IBIG apply where relevant for the period.

Worked examples (illustrative only)

Example 1: Resignation Monthly basic = ₱30,000; 5-day workweek (divisor 22). Separation date = March 20; worked 15 days in March; no unused leaves; no OT.

Unpaid salary (March): ₱30,000 ÷ 22 × 15 = ₱20,454.55 Pro-rated 13th month (Jan-Mar 20): – Jan & Feb earned: ₱60,000 – March earned (same as unpaid salary above): ₱20,454.55 – Total earned YTD to separation: ₱80,454.55 – 13th month = ₱80,454.55 ÷ 12 = ₱6,704.55 Final pay (gross): ₱20,454.55 + ₱6,704.55 = ₱27,159.10, less applicable tax.

Example 2: Redundancy (2 years, 7 months service) Monthly basic = ₱25,000; 6-day workweek (divisor 26). Last working day = June 30; no leaves/OT. Unpaid salary (June): none (already paid) 13th month (Jan-Jun): ₱25,000 × 6 ÷ 12 = ₱12,500 Separation pay (redundancy): 1 month per year of service (≥ 6 months → round up) – Service years = 3 (2 years, 7 months → 3) – Separation pay = ₱25,000 × 3 = ₱75,000 (typically tax-exempt) Final pay (gross): ₱12,500 + ₱75,000 = ₱87,500, less any lawful deductions.

5) If your final pay is late, short, or withheld

A. Try internal resolution first

Email HR/Payroll (keep it polite and documented).
Attach your computation and references (contract/policy).
Set a reasonable deadline (e.g., 5–7 days) and request a written explanation for any variance.

B. File a DOLE SEnA Request for Assistance (RFA)

The Single Entry Approach (SEnA) is DOLE’s free, mandatory conciliation-mediation for labor issues, designed to settle disputes quickly.

How it works (plain-English guide):

Prepare your documents:
- Government ID, company ID (if any)
- Employment contract/offer/acceptance email
- Payslips, payroll summaries, 2316/2306/2307 if any
- Resignation letter/notice or termination notice
- Company policy/handbook/CBA excerpts on pay, leaves, separation, etc.
- Emails/chats re: clearance, property return, computations, and your demand letter
- Your own itemized computation and timeline
File an RFA at the nearest DOLE Field/Provincial Office (you may also use DOLE’s online facility if available).
Conciliation-mediation is scheduled (often within days). Both parties meet (in person or virtual).
Timelines: SEnA is normally completed within 30 calendar days (extendable once by agreement).
Possible outcomes:
- Settlement (paid in full or on a schedule; sign a settlement with DOLE).
- Partial settlement and referral of unresolved issues.
- Non-settlement: DOLE issues a certificate of non-settlement so you can elevate.

C. Elevate to the NLRC (Labor Arbiter) if unresolved

If conciliation fails, you can file a money claim and/or illegal dismissal (as applicable) with the NLRC.
Prescriptive periods:
- Money claims (e.g., unpaid wages, 13th month, leave conversion): generally 3 years from when the claim accrued.
- Illegal dismissal (for reinstatement/damages): generally 4 years.
Reliefs: Payment of deficiencies, legal interest, sometimes moral/exemplary damages and attorney’s fees if bad faith is proven.

Tip: Keep every email, chat, and payroll proof. Bring clean computations to SEnA/NLRC—decision-makers appreciate clarity.

6) Common pitfalls (and how to avoid them)

Quitclaim and Release: Employers often ask you to sign this to receive final pay. Read carefully. A quitclaim is valid only if voluntary, with full understanding, and for a reasonable consideration. You may strike out unfair clauses or note “received under protest” when accepting a partial payment. A quitclaim does not bar later claims for clear deficiencies or undue pressure.
Training bonds/return-of-service (ROS): Deductible only if reasonable, clearly agreed, and limited to actual training costs (often prorated). Over-broad penalties can be void.
Clearance abuse: HR can’t hold all your wages indefinitely over minor accountabilities. Ask for written breakdown and challenge unsupported deductions.
Discretionary bonuses: Unless your contract/policy or an established, consistent practice makes them demandable, you can’t compel them.
Tax mistakes: Verify the tax treatment of separation pay and 13th month. If over-withheld, you may be entitled to a tax refund/adjustment.

7) Quick checklists

A. Your computation worksheet (fill with your numbers)

Last month daily rate = Monthly basic ÷ company divisor (22/26/other)
Unpaid salary for last month = Daily rate × days worked
13th month = (Basic salary earned Jan 1 to separation) ÷ 12
Leave conversion = Daily rate × unused leave days (incl. SIL if entitled)
Separation pay (if any) =
- Redundancy/LSD: 1 month × years of service (≥6 mos → +1 year), or 1 month minimum, whichever is higher
- Retrenchment/closure (no serious losses)/disease: 1/2 month × years of service, or 1 month minimum, whichever is higher
Less: lawful deductions (withholding tax, SSS/PhilHealth/Pag-IBIG for the period, authorized company deductions)
Net final pay = Sum of positives – deductions

B. Documents to bring to DOLE

Valid ID; any company ID
Contract/offer, handbook/CBA pages
Payslips, payroll records, proof of benefits
Separation/resignation letters, notices
Emails/chats re: clearance, computations, property return
Your demand letter & your computation sheet

8) Simple demand letter template (you can copy/paste)

Subject: Demand for Release of Final Pay and Certificate of Employment

Dear [HR/Payroll/Authorized Officer]:

I was employed as [Position] from [Start Date] to [Last Working Day]. As of today, my final pay has not been released.

Based on my computation (attached), my final pay totals ₱[amount], consisting of:
• Unpaid salary up to [date]: ₱[ ]
• Pro-rated 13th month pay: ₱[ ]
• Leave conversion: ₱[ ]
• Separation pay (if applicable, grounds: [ ]): ₱[ ]
Less: lawful deductions ₱[ ], for a net of ₱[ ].

Kindly release the full amount within [5–7] days and issue my Certificate of Employment. If there are variances, please provide a written breakdown and legal basis.

Absent a satisfactory response, I will seek assistance through DOLE’s Single Entry Approach (SEnA).

Thank you.

Sincerely,
[Your Name]
[Mobile/Email]

9) FAQs

Q: The company says I must wait for “clearance” first. Can they hold everything? They can verify accountabilities and deduct lawful amounts, but they should not withhold your entire final pay indefinitely without basis. Ask for a written breakdown and a definite release date.
Q: I resigned. Do I get separation pay? Generally no, unless your policy/CBA grants it.
Q: My separation pay was taxed. Is that right? If you were separated for authorized causes (e.g., redundancy, retrenchment) or for reasons beyond your control, separation pay is generally tax-exempt. For resignation or just-cause dismissal, it’s typically taxable.
Q: How long will SEnA take? SEnA is designed to be short (around 30 days of conciliation). If unresolved, you can escalate.
Q: Can I still file if months have passed? Yes, but be mindful: money claims generally prescribe after 3 years from when they became due. Don’t delay.

10) Practical strategy (what usually works)

Compute cleanly and show your math.
Send a written demand with a reasonable deadline.
If no action, file a SEnA RFA with DOLE (free, quick, and often effective).
Escalate to NLRC if needed (especially for significant amounts or where illegal dismissal is involved).
Keep records; avoid signing broad quitclaims for small partial payments unless you’re satisfied—or annotate reservations.

Final notes

Rules change and every case is fact-specific. If your situation involves large sums, complex deductions (e.g., stock options, commissions, training bonds), or possible illegal dismissal, consider consulting a lawyer or a DOLE officer.
When in doubt, document everything and act within the prescriptive periods.

If you want, I can plug your numbers into a ready-to-use computation sheet and sanity-check the totals.