In the Philippine labor context, Final Pay (often colloquially called "Back Pay") refers to the total sum of all wages and monetary benefits due to an employee, regardless of the cause of termination—be it resignation, retrenchment, or termination for cause.

The Department of Labor and Employment (DOLE) governs these payments primarily through Labor Advisory No. 06, Series of 2020, which provides the guidelines for the computation and the mandatory period for release.

I. Components of Final Pay

Contrary to popular belief, "Back Pay" is not a single benefit but an accumulation of several distinct items. A standard final pay settlement typically includes:

Unpaid Salary: Any wages earned from the last payroll cutoff up to the final day of work.
Pro-rated 13th Month Pay: Under P.D. No. 851, an employee who resigns or is terminated is entitled to 13th-month pay in proportion to the time they worked during the calendar year.

Formula:

Service Incentive Leave (SIL) Pay: The cash conversion of unused SIL. Under the Labor Code, employees who have rendered at least one year of service are entitled to 5 days of SIL annually.
Tax Refunds: Any excess withholding tax collected by the employer that needs to be returned to the employee at the end of the tax year or upon cessation of employment.
Other Earned Benefits: This includes unused vacation/sick leaves (if convertible to cash per company policy or CBA), unpaid commissions, or bonuses already earned.
Separation Pay (if applicable): Only required if the termination is due to authorized causes (e.g., redundancy, retrenchment). Resignation generally does not entitle an employee to separation pay unless stipulated in the employment contract.

II. The Computation Process

To ensure accuracy, the computation follows a specific sequence. Employers generally deduct any outstanding liabilities from the gross final pay.

Gross Total: Sum of all items in Section I.
Less: Deductions: * Pro-rated SSS, PhilHealth, and Pag-IBIG contributions for the final month.
Unpaid company loans or cash advances.
Accountability for unreturned company property (laptops, IDs, uniforms).
Net Final Pay: The actual amount issued via check or bank transfer.

III. The Release Period: The "30-Day Rule"

Under DOLE Labor Advisory No. 06-20, the employer is mandated to release the final pay within thirty (30) days from the date of separation or termination of employment.

While companies often require a "clearance process" to ensure all accountabilities are settled, this process cannot be used as a tool to indefinitely delay the release of the payment beyond the 30-day window.

IV. Procedure for Claiming

To claim the final pay, the employee must generally complete the following steps:

Clearance Procedure: Return all company assets and obtain signatures from relevant departments (HR, IT, Finance).
Quitclaim and Waiver: Upon receiving the check, the employee is usually required to sign a Deed of Release, Waiver, and Quitclaim.

Note: A quitclaim is valid if it is entered into voluntarily, represents a reasonable settlement, and is not contrary to law or public policy. It effectively declares that the employee has no further claims against the employer.

Certificate of Employment (COE): Per DOLE regulations, the employer must also issue a COE within three (3) days from the date of the employee's request.

V. Legal Remedies for Non-Payment

If an employer refuses to release the final pay or exceeds the 30-day period without valid cause, the employee has several points of recourse:

SENA (Single Entry Approach): The first step is to file a request for assistance with the nearest DOLE provincial or regional office. This is a 30-day mandatory conciliation-mediation process designed to reach an amicable settlement.
Labor Arbiter: If SENA fails, the employee may file a formal position paper with the National Labor Relations Commission (NLRC) to sue for the unpaid money claims, plus potential legal interest and attorney's fees.

VI. Key Jurisprudence

The Supreme Court has consistently held that the right of an employee to their earned wages and benefits is a vested property right. Employers cannot withhold final pay as a "penalty" for resignation or as a way to force an employee to sign a waiver that is clearly disadvantageous or fraudulent. However, the employer does have the right to withhold an amount necessary to cover liquidated debts or unreturned company property, provided it is documented and reasonable.