1) What “final pay” means in the Philippines

Final pay (often called “backpay”) is the total of all amounts still owed to an employee after separation—whether the employee resigned, was terminated, or the employment ended for another reason. It is not a special benefit; it is the settlement of accrued compensation and benefits that have already become due.

Final pay typically includes, as applicable:

Unpaid salary/wages up to the last day worked (including unpaid overtime, night differential, holiday pay, premium pay, etc.)
Pro-rated 13th month pay (under P.D. 851) for the portion of the year worked if not yet paid
Cash conversion of unused leave if company policy, contract, or practice provides conversion (and for Service Incentive Leave under Labor Code rules, if applicable and convertible)
Commissions already earned but unpaid (key topic below)
Separation pay if the separation is due to authorized causes or other situations where law/contract/CBA requires it
Tax refund/adjustments, where applicable (depending on payroll timing and withholding computations)
Other amounts promised by contract or company policy, such as prorated allowances that are treated as part of compensation, reimbursements due, etc.

A common workplace misconception is that final pay is “released only after clearance.” Clearance is a company process; it does not erase the obligation to pay what is already due.

2) The baseline timeline: the “30-day” DOLE guidance—and why “60 days” raises flags

In practice, Philippine employers often cite internal policy (e.g., “final pay is released within 30/45/60 days”). The most widely used benchmark comes from DOLE’s Labor Advisory No. 06, Series of 2020, which provides guidelines on the payment of final pay. The advisory’s general rule is that final pay should be released within 30 days from the date of separation, subject to exceptions (including situations allowed by company policy/contract/CBA or where there are justifiable reasons that make computation/release beyond 30 days reasonable).

What this means for a “60-day final pay release” policy

A blanket 60-day rule is risky because:

It is longer than the 30-day DOLE benchmark, and
It can look like an unreasonable delay if the amounts are already determinable, or if the employer uses “pending commissions” as a reason to hold everything, including amounts not connected to commissions.

A 60-day release is not automatically “illegal” in every scenario, but it can be challengeable—especially where the delay is not supported by a clear, fair, and job-related justification, or where the employer could have paid the undisputed amounts earlier.

3) Commissions in the Philippines: when they are “wages” and when they are “not yet due”

A. Commissions are generally treated as part of “wages” when earned

Under Philippine labor standards principles, commissions that are direct remuneration for services rendered (e.g., a salesperson’s agreed percentage of sales) are typically treated as part of wages/compensation once they are earned under the commission plan.

That matters because withholding wages without legal basis is heavily regulated. If a commission is already earned and determinable, it is not a mere gratuity—it is compensation due.

B. The key question: When is a commission “earned” (i.e., demandable)?

This is where many disputes arise. In the Philippines, the commission plan/contract and established practice usually determine when commissions become due, such as:

Upon booking of a sale
Upon issuance of invoice
Upon delivery
Upon customer payment/collection
Upon completion of a trial period / no-return window
Net of cancellations/returns/chargebacks
Subject to management approval (this is legally sensitive; approval cannot be used arbitrarily to defeat an otherwise earned commission)

If the commission plan clearly makes commissions payable only upon collection, then “pending commissions” may genuinely be not yet due on the separation date. In that case, it is more accurate to treat them as post-separation receivables to be paid when the condition occurs (e.g., when the client pays).

But if the plan says commissions are earned upon sale/delivery and only the computation is pending, then the commission is already due; what’s pending is the payroll processing.

4) The core issue: Can an employer delay final pay for 60 days because commissions are pending?

Short legal logic (expanded below)

If commissions are already earned but not yet computed, they should generally be included in final pay and released within the expected timeline (commonly guided by DOLE’s 30-day benchmark), or at least the employer should pay all undisputed components and settle the commission portion as soon as it becomes determinable.
If commissions are not yet earned (because they depend on collection/conditions after separation), the employer may exclude those from final pay for the moment—but should still release the rest of final pay without waiting for that commission condition to happen.
Using “pending commissions” as a reason to hold everything for 60 days is often the weakest position.

A. Scenario 1: Commissions are earned as of separation date (but payroll says “pending validation”)

Typical examples

Sales were completed, delivered, and credited; only reconciliation remains.
Internal audit/approval is pending but not tied to any real contingency.
The company already records the sale in its systems and attributes it to the employee.

Best legal view

The commissions are already part of compensation due. Delaying the entire final pay to 60 days can be viewed as unreasonable withholding, particularly if the employer could compute within 30 days with ordinary diligence.

Practical and legally safer approach for the employer

Release final pay within the expected timeframe at least for undisputed items (last salary, 13th month pro-rata, unused leave conversion, etc.).
If commission computation is complex, release a partial final pay and then pay the commission portion through a subsequent “true-up” once finalized—without dragging the entire settlement.

B. Scenario 2: Commission entitlement is genuinely contingent (e.g., payable only upon customer payment after separation)

Typical examples

Commission plan states: “Commission is earned/payable only upon collection.”
The company’s business model includes cancellations/returns, and commissions are only payable after a chargeback window.
Commission depends on project milestones that weren’t reached before resignation.

Best legal view

The commission may not yet be demandable on the separation date. The employer may treat it as an amount to be paid later, once conditions are met.
However, that does not justify holding the rest of the final pay.

What should happen

Release final pay for the amounts already due.
Commit to a post-separation commission payout schedule, tied to collections/milestones.
Provide the former employee with documentation showing which accounts remain pending and when they become payable.

C. Scenario 3: The commission plan is vague, unwritten, or inconsistently applied

This is where the most litigation risk sits.

If commission terms are unclear, labor standards interpretation tends to favor:

Existing practice, and
Fairness and non-arbitrariness, especially where the employee can show consistent historical payouts under similar circumstances.

If an employer suddenly invokes “60 days” or “must be employed at payout date” without a clear, consistently enforced plan, it can be attacked as an after-the-fact restriction on earned wages.

5) Can a company policy or contract validly impose “60 days” for final pay?

A. Internal policy vs. labor standards

A company may set procedures, but it cannot implement procedures that function as unreasonable delay or withholding of wages already due.

Even if an employee signed an employment contract acknowledging a 60-day release timeline, that does not automatically make it enforceable if:

It effectively reduces minimum labor standards or undermines wage protection principles, or
It is applied as a blanket delay without job-related necessity.

B. When a longer period can be defensible

A longer release period is more defensible if the employer can show legitimate reasons, such as:

Complex commission structures requiring third-party confirmations or collection reconciliations
Year-end tax adjustments that cannot be computed immediately (though many payroll systems can do this quickly)
Significant, documented accountabilities requiring verification (not mere allegations)

Even then, the strongest practice is to pay what is already determinable and only delay the portion that truly cannot be computed yet.

C. “Clearance” and unreturned property as reasons for delay

Employers often link final pay to clearance (return of laptop, uniforms, IDs, etc.). In labor disputes, the issue is not whether clearance exists—it’s whether the employer uses clearance to unreasonably withhold wages.

A legally safer balance is:

Promptly compute and release the amounts not affected by accountabilities, and
For legitimate monetary accountabilities, observe lawful rules on deductions/set-off (see below).

6) Important: Employers can’t freely deduct or “offset” alleged liabilities from final pay

Philippine wage protection rules restrict deductions and withholding. In general:

Deductions from wages must fall under lawful categories (e.g., those authorized by law, with written employee authorization where required, or those with proper due process where applicable).
Employers cannot simply deduct unproven charges (e.g., “training bond,” “damages,” “losses,” “penalties,” speculative chargebacks) without a sound legal and factual basis.

Common pitfalls

Deducting the full cost of “unreturned equipment” without proof of value, due process, or agreed valuation rules
Deducting “customer cancellations” as if they are employee fault, without a clear commission chargeback policy
Holding final pay as leverage (“no final pay until you sign”)

A disputed “accountability” is not a free pass to hold everything for 60 days.

7) Quitclaims and releases: “Sign this to get your final pay”

Many employers require departing employees to sign a Quitclaim, Waiver, and Release before releasing final pay.

How Philippine law generally treats quitclaims

Philippine courts and labor tribunals commonly hold that quitclaims are:

Not automatically invalid, but
Strictly scrutinized, especially in labor contexts where bargaining power is unequal.

A quitclaim is more likely to be rejected if:

The amount paid is unconscionably low compared to what is due,
The employee signed under pressure, coercion, or as a condition to receive wages already owed,
The employee did not understand what was waived, or
There is evidence of bad faith or deception.

Also, a quitclaim generally cannot be used to legalize nonpayment of legally due wages and benefits.

Practical impact

Even if a former employee signed a quitclaim, claims for unpaid earned commissions can still prosper if the circumstances show unfairness or the amount waived was clearly due.

8) How “pending commissions” should be handled in a compliant final pay process

A sound and defensible approach (common in well-run Philippine payroll/HR systems) is to split settlement into:

A. Final pay (within the benchmark timeline)

Pay within the expected window:

Unpaid wages up to last day
Pro-rated 13th month
Leave conversions due
Reimbursements due
Other determinable amounts

B. Commission true-up (later, when it becomes determinable)

Pay later when conditions are met:

Collections-based commissions
Commissions subject to return windows/chargebacks
Project milestone incentives not yet achieved

What should accompany a later commission payout

A written breakdown identifying:
- the accounts/sales covered,
- the condition for payout (collection date/milestone),
- the computation method,
- the expected payout schedule or trigger.

This reduces disputes and removes the need to delay the entire final pay.

9) Indicators that a 60-day final pay delay is likely problematic

A 60-day final pay release is more likely to be challenged successfully where:

The employee’s non-commission amounts are already clear and computable (last salary, 13th month pro-rata, etc.)
The employer uses “pending commissions” as a blanket reason to hold everything
The commission plan does not actually make payment contingent, and “pending” is just internal delay
The employer’s policy appears designed mainly for convenience rather than necessity
The employer requires a quitclaim as a precondition for releasing amounts already due

10) What an employee can do when final pay is delayed because commissions are pending

Common steps in Philippine practice:

Request a written breakdown
- Ask for itemization of final pay components and commission computations.
Clarify commission status
- Identify which commissions are:
  - already earned but not paid, versus
  - not yet due because conditions have not been met.
Make a written demand
- A clear demand helps establish the timeline and can be important if the matter escalates.
Use DOLE’s SEnA mechanism
- The Single Entry Approach (SEnA) is a standard first route for many money claims.
File the appropriate labor case if unresolved
- Money claims and employment-related disputes may proceed through labor processes (often involving the NLRC, depending on the nature of the claim and employment relationship).

Delays can also lead to interest on monetary awards depending on how the claim is adjudicated and when the obligation is deemed due and demandable.

11) What employers should do to avoid losing a “60-day” dispute

Employers that want to avoid exposure should:

Define commission terms in writing, including:
- When commissions are earned vs payable
- Treatment of cancellations/returns/chargebacks
- Whether continued employment is a condition (high risk if it defeats earned commissions)
Pay undisputed final pay components promptly
Separate contingent commissions into a scheduled true-up
Avoid using quitclaims as leverage
Document legitimate reasons for any delay beyond the benchmark and ensure the delay is proportionate

12) Practical examples

Example 1: Earned commission, delayed computation

Separation date: January 31
Sales delivered and credited by January 20
Commission plan: payable upon delivery
Employer says: “final pay in 60 days because commissions pending”

Better view: The commission is already earned; the employer should release final pay within the benchmark timeline, or pay the non-commission amounts first and finalize commission promptly.

Example 2: Collection-based commission

Separation date: January 31
Commission plan: payable upon customer payment
Customer pays March 10
Employer delays entire final pay to April 1 (60 days)

Better view: The employer should release the rest of final pay without waiting for March 10; then pay the collection-based commission after March 10 per plan.

13) Bottom line

A 60-day final pay release is often legally vulnerable when used as a blanket delay—especially if it holds non-commission amounts hostage to “pending commissions.”
Earned commissions are typically treated as compensation due and should be paid within the normal final pay timeline (or via a short, well-documented true-up if computation is genuinely complex).
If commissions are not yet due because the plan makes them contingent (e.g., payable only upon collection), they may be paid later—but that does not justify delaying the rest of final pay.
Policies, contracts, and quitclaims do not automatically validate long delays if they operate to defeat wage protection principles or result in unreasonable withholding.