Last Pay & Final Wages in the Philippines: Everything You Need to Know (and How to File a Labor Complaint)

Philippine labor-law guide for employees and HR. This is general information, not legal advice.

What counts as “final pay” (a.k.a. last pay)?

When employment ends—whether by resignation, end of contract, or termination—“final pay” is the total of all amounts the employer still owes you, typically including:

Unpaid basic wages up to your last actual workday (and any salary differentials/corrections).
Overtime pay, night-shift differential (at least 10% of hourly rate for work between 10:00 PM–6:00 AM), premium pay for work on rest days/special days, and holiday pay (e.g., 200% if you worked on a regular holiday; 100% pay even if unworked on a regular holiday, subject to the usual conditions).
Pro-rated 13th month pay (1/12 of basic salary actually earned in the calendar year up to separation).
Cash conversion of unused Service Incentive Leave (SIL)—at least 5 days per year for eligible employees, convertible to cash at your daily rate if unused at separation.
Unused vacation/sick leave if your company policy/CBA allows monetization (beyond the statutory SIL).
Allowances/commissions/incentives that are due and demandable under your contract/policy.
Tax adjustments (refunds/withholding true-ups).
Separation pay (only if legally applicable—see below).
Retirement benefits (if covered by a plan or law and already due).

Timing. DOLE requires employers to release final pay within 30 calendar days from date of separation, unless a shorter period is provided by company policy or CBA. A Certificate of Employment (COE) must be issued within 3 days of your request.

Separation pay vs. final pay

Separation pay is not automatically part of final pay. It’s owed only in specific cases:

Authorized causes (Labor Code):
- Redundancy or installation of labor-saving devices → at least 1 month pay per year of service, or 1 month pay, whichever is higher.
- Retrenchment to prevent losses or closure/cessation not due to serious losses → at least 1/2 month pay per year of service, or 1 month pay, whichever is higher.
Disease: If you’re terminated because of a disease that cannot be cured within 6 months and your continued employment is prohibited by law or prejudicial to your or your co-workers’ health, separation pay is at least 1 month pay or 1/2 month pay per year of service, whichever is higher.

Rounding rule commonly applied: a fraction of at least 6 months is treated as one whole year of service.

No separation pay is due for just causes (e.g., serious misconduct, willful disobedience, gross and habitual neglect, fraud/breach of trust, crime against the employer or their family)—but you still get unpaid wages, 13th month (pro-rated), and other earned benefits.

Tax note (high level):

Separation pay due to authorized causes or due to death/illness/disability or causes beyond the employee’s control is generally income-tax exempt under the NIRC.
The 13th month pay and other benefits are non-taxable up to a statutory cap (commonly ₱90,000).
Other items (e.g., monetized leaves) may be taxable depending on BIR rules and how your employer classifies them. When in doubt, consult a tax professional.

Deductions the employer may (and may not) take

Allowed (subject to proof and written authorization or legal basis):

Statutory deductions (withholding tax, SSS, PhilHealth, Pag-IBIG).
Authorized deductions (e.g., company loan with signed authority to deduct).
Value of unreturned company property (e.g., laptop) if documented and valued reasonably.
Cash shortages or damages only with due process and clear evidence, and typically with written consent or legal basis.

Not allowed:

Penalties or deductions without legal basis or written authorization.
Deductions that would illegally reduce pay below due amounts (e.g., arbitrary “training bonds” not compliant with law/policy or lacking consent).

A clearance process can be required, but cannot be used to delay payment beyond the 30-day rule. Employers should compute net of any verified deductions within the same period.

Exit documents you should receive (or request)

Payslip/final pay breakdown (detailing each component and deduction).
Certificate of Employment (COE) — within 3 days from request.
BIR Form 2316 (for the year)—finalized after year-end; request an interim copy reflecting year-to-date withholding so your next employer can withhold properly.
Quitclaim/Release (optional). Read carefully. Courts can invalidate quitclaims that are unconscionable or signed under duress, but reasonable, voluntary quitclaims are often upheld. Don’t sign if you dispute the computation—note your objections in writing.

Prescriptive periods (deadlines to file)

Money claims (e.g., unpaid last pay, 13th month, SIL cash-out): 3 years from when the claim accrues (usually your separation date or the pay date when it should have been paid).
Illegal dismissal: generally 4 years from dismissal.

Filing within these periods is crucial. Interest (typically 6% per annum) may be awarded on money judgments as provided by jurisprudence.

How to file a labor complaint for unpaid last pay

You have two practical tracks. Most employees do Track A, then Track B if needed.

Track A — DOLE SEnA (conciliation/mediation)

Prepare a Request for Assistance (RFA). Describe issues (e.g., “Unpaid final wages, pro-rated 13th month, SIL cash conversion, and separation pay.”).
Attach evidence (see checklist below).
Attend the SEnA conference (usually within 30 days from filing). A DOLE officer mediates.
- If you settle, the agreement is recorded and enforceable.
- If no settlement, request a Referral to the proper forum.

Track B — NLRC labor complaint (adjudication)

File a verified complaint (can be e-filed or in person at the NLRC Regional Arbitration Branch with jurisdiction). Check the “money claims” box and list each claim (e.g., unpaid wages, 13th month, SIL, holiday pay, separation pay).
Mandatory conferences: You and the employer attend mediation/conciliation before a Labor Arbiter (LA).
Position papers: Submit written arguments with computations and evidence.
Decision: The LA issues a decision.
- Appeal: Either party may appeal to the NLRC Commission within the set period. Employers appealing monetary awards must usually post a cash/surety bond equal to the award.
- Further review is via Rule 65 (Court of Appeals), then potentially the Supreme Court.

There are no filing fees for ordinary complaints at DOLE SEnA, and employees ordinarily don’t pay filing fees at the NLRC level. Attorney’s fees (often 10%) may be awarded if you are compelled to litigate to recover your monetary claims.

Evidence checklist (bring copies)

Employment documents: Job offer, contract, company handbook/policies, CBA (if any), ID.
Payroll proof: Payslips, time records, attendance, bank payroll statements, commission sheets.
Separation proof: Resignation letter & employer acceptance, termination memo, end-of-contract notice.
Benefits proof: Leave ledger, SIL balance, holiday/OT logs, schedules/shift assignments.
Computation: Your own itemized computation of claims with formulas and rates.
Correspondence: Emails/messages demanding payment; employer replies.
Clearance/Property: Proof of return of company assets, or your written request for inspection/valuation.

A polite demand letter helps. It shows good faith and may trigger voluntary payment. Keep a copy and proof of delivery; interest can be computed from demand.

How to compute the common items

These are standard approaches used in practice. Actual payroll factors can vary by policy; always check your contract/CBA and ensure the method does not disadvantage you.

1) Pro-rated 13th month pay

$$ \text{13th month} = \frac{\text{Total basic salary actually earned in the calendar year up to separation}}{12} $$

(“Basic salary” usually excludes OT, allowances, and differentials, unless your policy includes them.)

2) Daily and hourly rate (illustrative factors)

5-day workweek example: daily rate $=$ monthly × 12 / 261; hourly $=$ daily / 8
6-day workweek example: daily rate $=$ monthly × 12 / 313; hourly $=$ daily / 8

3) SIL cash conversion

$$ \text{SIL cash} = \text{unused SIL days} \times \text{daily rate} $$

4) Overtime (OT)

Ordinary day OT: hourly × 1.25 × OT hours
Rest day/special day OT: higher multipliers apply (check your policy/law).

5) Holiday pay (quick reminders)

Regular holiday, unworked: 100% of daily rate (subject to attendance conditions).
Regular holiday, worked: 200% of daily rate for first 8 hours (OT has higher multipliers).
Special non-working day: “No work, no pay,” unless company policy grants pay; if worked, at least 130% for first 8 hours.

6) Separation pay (if applicable)

Redundancy/installation of labor-saving devices:

$$ \max(1\ \text{month pay},\ 1\ \text{month pay} \times \text{years of service}) $$
Retrenchment/closure (no serious losses):

$$ \max(1\ \text{month pay},\ 0.5\ \text{month pay} \times \text{years of service}) $$
Disease:

$$ \max(1\ \text{month pay},\ 0.5\ \text{month pay} \times \text{years of service}) $$

(Count ≥6 months as 1 year.)

Worked examples (numbers are illustrative)

Scenario A — resignation (no separation pay)

Monthly basic pay: ₱30,000
5-day workweek factor (261 days/year).
Last day: June 30 (six full months worked this year).
Unused SIL at separation: 3 days
Overtime: 5 hours on ordinary days

Computation (rounded):

Daily rate ≈ ₱30,000 × 12 / 261 = ₱1,379.31
Hourly rate ≈ ₱1,379.31 / 8 = ₱172.41
Pro-rated 13th month = (₱30,000 × 6) / 12 = ₱15,000.00
SIL cash = 3 × ₱1,379.31 = ₱4,137.93
OT pay = 5 × ₱172.41 × 1.25 = ₱1,077.59

Final pay components (illustrative):

Unpaid basic wages (if any for last cutoff)
₱15,000.00 (13th month, pro-rated)
₱4,137.93 (SIL cash)
₱1,077.59 (OT)
Less taxes/authorized deductions (e.g., SSS/PhilHealth/Pag-IBIG, tax, authorized loan balance)

Scenario B — redundancy (with separation pay)

Same employee; service length: 3 years and 7 months → 4 years (6-month rounding).
Separation pay = 1 month per year of service = 4 × ₱30,000 = ₱120,000.00
Add Scenario A items (wages, 13th month pro-rated, SIL, differentials).
Tax: Redundancy separation pay is typically tax-exempt; employer should withhold correctly.

Always demand a written breakdown showing formulas and factors used.

Common issues (and quick fixes)

“We’re still waiting for clearance/approvals.” The 30-day release rule still applies; clearance can proceed in parallel. The employer may offset documented liabilities in the same computation.
“Sign this quitclaim first.” You don’t have to sign a quitclaim to get already-due wages/benefits. If you sign, write reservations if computations are disputed (e.g., “Received under protest—13th month and SIL undercomputed.”).
Undercomputed 13th month Check if the employer wrongly excluded salary periods you actually worked or included/excluded allowances contrary to policy.
No separation pay (but cause is redundancy/closure) Ask for the written notice to DOLE and to you (30 days before effectivity) and the redundancy/retrenchment basis. Lack of the correct cause may also implicate illegal dismissal.

Special notes

Probationary, casual, and fixed-term employees still get earned wages, 13th month (pro-rated), SIL cash (if eligible), and any due premiums. Separation pay depends on the cause of termination, not status.
Domestic workers (kasambahay), apprentices, and field personnel have special rules—check their specific statutes or DOLE advisories.
OFWs: Money claims against foreign employers/principals typically go to the NLRC; recruitment violations are usually with the DMW (formerly POEA).

Practical step-by-step (print-friendly)

List your claims (wages, 13th month, SIL, premiums, separation pay if applicable).
Compute each item (show your math).
Send a demand to HR/Payroll (email + courier if possible) asking for release within 30 days with a breakdown.
File a SEnA RFA with DOLE if unpaid. Bring your evidence.
Escalate to NLRC (labor complaint) if there’s no settlement.
Track deadlines (3 years for money claims; 4 years for illegal dismissal).
Keep everything (receipts, emails, tracking numbers, screenshots).

FAQs

Can my company legally delay my last pay until I return my laptop/ID? They can deduct the verified value of unreturned property, but cannot delay beyond 30 days; compute and offset instead.

Is my monetized SIL taxable? Often yes as compensation income, though overall “13th month and other benefits” enjoy a non-taxable cap. Ask payroll or a tax professional about your situation.

Do I still get 13th month if I resign in March? Yes, pro-rated to what you actually earned from January through your last workday.

If I was terminated for cause, do I still get anything? Yes: earned wages, pro-rated 13th month, and any accrued benefits. You don’t get separation pay for just causes.

Template: short demand email to HR

Subject: Request for Release of Final Pay and COE – [Your Name], separated [date]

Hi [HR/Payroll], I respectfully request the release of my final pay within 30 calendar days from my separation on [date], together with a breakdown and my Certificate of Employment. My computation shows the following items are due: [list]. Please advise if you compute differently and provide your basis. I am available to complete clearance and return any company property; kindly schedule. Thank you, [Name] | [Contact]

If you want, I can turn your facts into a ready-to-file computation sheet and a filled-out complaint outline for DOLE/ NLRC—just tell me your monthly rate, last day, unused SIL, and the cause of separation (resignation/redundancy/etc.).