Grace period to release final pay after resignation (Philippines)

Short answer: Under DOLE’s Labor Advisory No. 06-20 (“Guidelines on the Payment of Final Pay and Issuance of Certificate of Employment”), employers are expected to release a separated employee’s final pay within 30 calendar days from the date of separation (resignation, termination, or completion of contract), unless a shorter period is set by company policy, a CBA, or employment contract. The 30-day timeline is the default benchmark used by DOLE officers in practice.

⚠️ This is general information, not legal advice. Laws, advisories, and jurisprudence can change, and unique facts matter. When in doubt, consult a Philippine labor lawyer or DOLE.

What counts as “final pay”

Final pay (“back pay”/“last pay”) generally includes all amounts that have become due up to the separation date:

Unpaid salary/wages up to last day worked (including overtime, holiday, and night differential already earned).
Pro-rated 13th-month pay (P.D. 851) based on actual basic pay earned in the calendar year up to the separation date.
Cash conversion of unused leaves:
- At minimum, Service Incentive Leave (SIL) of 5 days/year if unused and if the employee is covered by the SIL law (some employees are exempt). Many companies also convert unused VL/SL by policy.
Tax refund (if total withholding exceeds actual tax due up to separation date).
Other accrued benefits under company policy/contract/CBA (allowances already earned, commissions per plan rules, etc.).
Separation pay only if legally applicable (e.g., authorized causes, disease) — resignation alone does not entitle an employee to separation pay unless a contract/policy/CBA grants it.
Retirement benefits are not part of “final pay” for a resigning employee unless a retirement plan or law makes them due upon that resignation scenario.

Common deductions that may lawfully be netted against final pay:

Statutory contributions/taxes due; government loan deductions (if duly authorized).
Employee-authorized deductions (written consent) or those allowed by law.
Accountabilities (e.g., unreturned company property, cash shortages) only if (a) due and demandable, (b) amount is determinable, and (c) consistent with due process and the wage-deduction rules. Employers should avoid blanket or punitive withholdings.

The 30-day release rule, in practice

Clock starts: Date of separation (your last day on payroll), not the date HR completes clearance, unless a shorter internal rule applies.
Clearance: Employers may require clearance, but it shouldn’t be used to extend payout beyond the 30-day default. If property is unreturned or a case is pending, employers should compute and release the undisputed portion and document any lawful set-offs.
Pay run timing: Some employers make a partial release on the next regular payday and true-up within the 30-day window.
More favorable practice controls: If the contract, handbook, or CBA promises a shorter timeline (e.g., 7 or 15 days), that governs.

Certificate of Employment (COE)

Upon request, the employer must issue a COE within 3 calendar days. Delays in COE issuance do not justify holding the final pay.

Resignation notice vs. final pay timeline

Resignation notice: The Labor Code contemplates at least 30 days’ written notice (unless waived by the employer or for just causes attributable to the employer).
This notice period is separate from the final-pay release period. Even if an employer allows immediate resignation, the 30-day payout benchmark still applies (subject to more favorable rules).

If the final pay is delayed

Follow up in writing (email/letter) with HR/Payroll. Ask for a breakdown, the scheduled release date, and reasons for any hold.
Demand the undisputed portion if there are pending accountabilities.
File a request for assistance with DOLE through the Single-Entry Approach (SEnA) for conciliation-mediation. This is the usual first step before formal adjudication of money claims.
Legal interest: Courts commonly impose legal interest (currently 6% p.a.) on monetary awards from demand or filing until full payment, per Supreme Court guidance.
Quitclaims: If asked to sign a quitclaim to get your pay, remember it’s valid only if voluntary, informed, and for a reasonable consideration; it cannot waive clearly legally due benefits for a grossly inadequate amount.

Practical checklists

For employees (resigning)

Give written resignation (keep proof of receipt).
Return company property and settle accountabilities; keep turnover receipts.
Request: (a) breakdown of final pay, (b) target release date, (c) COE.
Keep copies of payslips, leave balances, commission plans, and any policy promising a shorter release period.
If delayed beyond 30 days without lawful reason, file SEnA with DOLE.

For employers/HR

Audit earnings and deductions promptly; release within 30 calendar days (or earlier if policy says so).
Issue COE within 3 days of request.
If there are accountabilities, document valuation and legal basis; release undisputed sums.
Avoid linking payout to unrelated conditions (e.g., “no COE unless you sign a quitclaim”).
Reflect the separation in BIR/SSS/PhilHealth/Pag-IBIG reports and issue BIR Form 2316 for the year of separation.

FAQs

Q: Can my employer withhold everything until I return a lost ID/laptop? They may offset the provable value of an unreturned/damaged item if lawful (and usually with written authorization), but should still release the undisputed balance within the 30-day window.

Q: Do commissions form part of final pay? If earned under the plan by the separation date (e.g., booked/paid sales per plan rules), they typically do. If contingent events haven’t occurred, they may be excluded until earned.

Q: Is separation pay due on resignation? Generally no, unless a policy/contract/CBA grants it. Separation pay is a statutory benefit for certain authorized causes (e.g., redundancy, retrenchment, closure) or disease separations—not for voluntary resignation.

Q: Can the final pay be released in installments? Permissible if completed within 30 days (or faster per policy) and documented, with a clear breakdown.

Key takeaways

Target release: Within 30 calendar days from separation (unless your contract/policy/CBA is shorter, which prevails).
COE: Within 3 calendar days upon request.
No indefinite holds: Clearance isn’t a license to exceed the 30-day benchmark; release the undisputed portion.
Recourse: Written follow-up → SEnA (DOLE) → formal claim; potential 6% legal interest may apply.

If you want, I can turn this into a one-page PDF checklist for employees and HR, or draft a polite demand letter you can send to HR.