How to Claim Unpaid Back Pay from an Employer in the Philippines
A comprehensive legal guide as of June 2024
Quick take-away: In the Philippines, an employee’s “back pay” (sometimes called final pay) normally refers to all monetary benefits still due at the end of employment—last salary, 13ᵗʰ-month pay, unused leave, pro-rated allowances, separation pay, etc. Philippine law gives you several administrative and judicial routes to collect what is owed; most claims prescribe in three (3) years, so move quickly and gather proof early.
1 | What Counts as “Back Pay”?
| Scenario | Typical Items Included |
|---|---|
| Resignation / termination (lawful) | • Unpaid basic salary & overtime • Pro-rated 13ᵗʰ-month pay (Art. 94, PD 851) • Monetized service-incentive leave (Art. 95) • Unused vacation / sick leave (if provided by CBA/Company policy) • Cash conversion of benefits (meal, rice, etc.) • Withheld reimbursements / commissions |
| Retrenchment / redundancy / installation of labor-saving devices / closure (Art. 298) | Above items plus separation pay (½ or 1 month salary per year of service, depending on ground) |
| Illegal dismissal | Back-wages (full salaries & allowances from dismissal up to reinstatement/finality of decision) + reinstatement or separation pay in lieu • 6 % legal interest per annum (Nacar v. Gallery Frames, G.R. 189871, 2013) |
| Wage arrears while still employed | Any earned but unpaid wages, COLA, holiday/rest-day premiums, overtime differentials, night shift differentials, service charges (if in the hospitality sector) |
⚠️ “Back pay” in everyday HR use is sometimes limited to the final pay after separation; in litigation it may also refer to back-wages awarded because of illegal dismissal. Identify which you are pursuing.
2 | Legal Foundations
1987 Constitution – Art. XIII §3 guarantees workers “just and humane conditions of work” and “a living wage.”
Labor Code of the Philippines (PD 442, as renumbered by RA 10151, RA 10380, etc.)
- Art. 102-109 – payment of wages and permissible deductions
- Art. 94-95 – 13ᵗʰ-month & service-incentive leave pay
- Art. 298-299 – separation pay for authorized causes
- Art. 306 – prescriptive period: 3 years for money claims
- Art. 128-129 – visitorial / small money-claims powers of DOLE
Republic Act No. 10396 (Single Entry Approach Act of 2013) – institutionalizes SEnA mandatory conciliation.
Department of Labor & Employment (DOLE) Labor Advisory No. 06-20 (June 2020) – Final Pay Advisory: employers must release final pay within 30 days from effectivity of separation.
BIR Regulations (e.g., RR 8-2018) – tax treatment: separation pay due to authorized causes is tax-exempt; normal wages and 13ᵗʰ-month are taxable and subject to withholding.
Civil Code – Arts. 1156-1169 on obligations and delay; Arts. 2200-2229 on damages.
3 | Prescription (Deadlines)
| Claim | Limitation Period | When It Starts |
|---|---|---|
| Money claims (unpaid wages, benefits, separation pay, etc.) – Art. 306 | 3 years | From the date each cause of action accrued (e.g., payday or separation date). |
| Illegal dismissal (to file action) | 4 years (Civil Code Art. 1146) | Date of actual dismissal. |
| Enforcement of a judgment | 5 years (execution as a matter of right) then another 5 years (court’s discretion). |
Filing a Request for Assistance (SEnA) already “tolls” (pauses) prescription.
4 | Step-by-Step Remedies
A. Start in-house
- Demand letter / e-mail to HR or Finance detailing amounts claimed.
- Secure clearance, certificate of employment (COE), and any exit documents—they may admit the debt.
- Print or keep screenshots of payslips, payroll records, company handbook, and CBA provisions.
B. Single Entry Approach (SEnA) – fast & free
| Feature | Details |
|---|---|
| Where | Any DOLE Regional/Provincial/Field Office; online via ‘e-SEnA’. |
| Filing | Request for Assistance (RFA) form (no filing fee). |
| Procedure | • Notice & 1ˢᵗ conference within 7 days • Up to 30 days conciliation-mediation • Possible settlement agreement (compromise) enforceable by DOLE. |
| If unresolved | Worker receives Referral to the proper forum (NLRC, DOLE-RD, POEA, etc.). |
C. DOLE Regional Director (Art. 129) – “small money claims”
For simple money claims ≤ ₱5,000 per employee and no reinstatement.
- Summary hearing; decision within 30 calendar days.
- Writ of execution issued by DOLE if employer does not comply.
D. DOLE Visitorial Power (Art. 128)
- Labor inspectors may issue Compliance Orders for any unpaid monetary benefit uncovered during inspection—no ₱5k ceiling.
- Often used when there is an entire group of employees.
E. National Labor Relations Commission (NLRC) – formal adjudication
- Verified Complaint (NLRC RAB where employer operates) + ₱500 filing fee.
- Mandatory Conciliation-Mediation Conference (similar to SEnA but within NLRC).
- Position Papers, hearings, & Decision (ideally within 30 days after submission for resolution).
- Appeal to NLRC Commission within 10 days (post a cash/surety bond equal to the monetary award).
- Petition for Certiorari to Court of Appeals (Rule 65) then Supreme Court.
F. Bureau of Small Claims (Regular Courts)
- Not common because labor tribunals have primary jurisdiction, but still possible under exceptional circumstances (e.g., employer-employee relationship is not in dispute, but action is purely contractual).
G. Payroll Crediting / Wage Order Enforcement (for minimum-wage differentials)
- DOLE Regional Wage Boards issue Wage Orders; failure to comply is subject to penalties and can also be claimed via SEnA/DOLE inspection.
5 | Gathering & Presenting Evidence
| Evidence | Why Important |
|---|---|
| Employment Contract / Appointment Letter | Proves relationship & salary rate. |
| Payslips / Payroll registers | Shows payment shortfalls. Employees are entitled to payslips under DO No. 149-16. |
| Time cards / biometrics logs | Overtime calculations. |
| Company policies / CBA | Benefits beyond legal minima (e.g., leave conversion formula). |
| Demand letters & employer replies | Demonstrates good faith & potential malice. |
| Exit clearance, quitclaims | May be attacked if executed under duress or for inadequate consideration. |
Tip: Photocopies / scans are admissible if you can explain loss or unavailability of originals (secondary evidence, Rule 130).
6 | Computing Back Pay
(Illustrative example – change figures to your actual rates)
Assumptions
- Monthly basic salary: ₱20,000
- Last working day: 15 May 2025
- Unused SIL: 5 days
- Average daily rate (ADR) = ₱20,000 ÷ 26 = ₱769.23
| Item | Formula | Amount |
|---|---|---|
| Salary from 1-15 May | ₱20,000 × 15/30 | ₱10,000 |
| Pro-rated 13ᵗʰ-month | ₱20,000 × 5/12 | ₱8,333.33 |
| SIL monetization | ADR × unused days | ₱769.23 × 5 = ₱3,846.15 |
| Rice allowance (₱1,500/mo) | 1,500 × 15/30 | ₱750 |
| Gross Back Pay | ₱22,929.48 | |
| Less W/holding tax & SSS, PhilHealth, Pag-IBIG on taxable portions | — | (e.g., ₱1,000) |
| Net Receive | ₱21,929.48 |
For back-wages after illegal dismissal, compute monthly wage & allowances from dismissal date up to reinstatement (or finality of decision) and add 6 % annual legal interest.
7 | Tax and Statutory Deductions
Tax-exempt: Separation benefits due to retrenchment, redundancy, sickness, or closure (Sec. 32(B)(6)(b), NIRC; BIR RR 8-18).
Taxable: Ordinary wages, 13ᵗʰ-month (exempt only up to the statutory ceiling—₱90,000 in 2024), leave conversions, allowances converted to cash.
Permissible deductions (Art. 113):
- SSS, PhilHealth, Pag-IBIG contributions (employer shares still at employer’s cost)
- Tax properly withheld
- Employee-authorized deductions (e.g., salary loans)
- Debts / damages adjudged by a court or NLRC (with final judgment)
8 | Quitclaims & Waivers
The Supreme Court will nullify a quitclaim if:
- Employee executed it under duress, intimidation, or undue influence;
- Consideration is unconscionably low relative to what is legally due (Periquet v. NLRC, G.R. 91298, 1990);
- Employee was not fully aware of the rights being waived.
An employer relying on a quitclaim must prove it was voluntary and reasonable. It does not bar claims for money and benefits excluded or left undiscussed.
9 | Penalties & Additional Awards
| Basis | Possible Liability |
|---|---|
| Art. 288 (Wage violations) | Fine ₱1,000 – ₱10,000 and/or imprisonment 3 months – 3 years. |
| Art. 306 (Money claims) | 6 % legal interest per annum on monetary award (Nacar doctrine). |
| Exemplary/Moral damages | When employer acts in bad faith or with malice (Sesbreño v. NLRC, G.R. 121718, 1999). |
| Attorney’s fees | Up to 10 % of award when employee is compelled to litigate to recover. |
10 | If Employer Becomes Insolvent
- Art. 110, Labor Code – Wage claims enjoy first preference over all other creditors in bankruptcy or liquidation.
- File a claim with the liquidator/receiver appointed by court; NLRC decision may be filed as a judgment credit.
11 | Government Help & Hotlines
| Office | Contact |
|---|---|
| DOLE Hotline | 1349 (24/7) |
| DOLE NCR | +63 (2) 8400-6031 / ncr@dole.gov.ph |
| NLRC NCR Arbitration Branch | 8781-7862 |
| e-SEnA portal | https://sena.dole.gov.ph |
| Bureau of Local Employment (for job displacement) | 8527-2532 |
12 | Practical Checklist
- Compute what is owed using payslips and company policy.
- Send a demand letter (retain proof of delivery).
- File SEnA RFA within 3 years to stop prescription.
- Prepare evidence: contracts, payslips, screenshots, clearance.
- Attend conciliation meetings—settlements are often faster and usually paid via post-dated checks or bank transfer.
- If unresolved, elevate to NLRC (or DOLE RD for ≤ ₱5k claims).
- Monitor compliance; request a writ of execution if employer defaults.
- Keep copies of official receipts for tax credit and insurance/loan purposes.
13 | Frequently Asked Questions
| Question | Short Answer |
|---|---|
| Can I file a claim even if I signed a clearance and quitclaim? | Yes, if the quitclaim was made under duress or for inadequate consideration. |
| Does prescription run while my case is on appeal? | No; filing tolls the period. |
| Is SEnA required before NLRC? | Yes (except if the issue is already beyond DOLE’s mandate, e.g., certification election). |
| Do I need a lawyer? | Not at SEnA or NLRC arbitration level, but legal guidance helps with evidence and computation. |
| Can foreign workers claim back pay? | Yes—Labor Code protections cover all employees in PH, regardless of nationality, so long as the relationship is valid. |
14 | Conclusion & Disclaimer
Unpaid back pay is not merely a contractual grievance; it is a statutory right carrying criminal, civil, and administrative sanctions against employers. Philippine labor law deliberately offers graduated, worker-friendly mechanisms—from quick conciliation to full litigation—to make recovery accessible. Act swiftly, document everything, and seek legal advice when large sums or complex issues (e.g., illegal dismissal, corporate insolvency) are involved.
This article is for general educational purposes and is current as of June 2024. Laws, regulations, and jurisprudence evolve; consult the latest DOLE issuances or a licensed Philippine lawyer for specific cases.