Resignation ends the employment relationship, but it does not end the employer’s duty to pay what the employee has already earned. In the Philippine labor setting, disputes commonly arise when employers delay (or condition) the release of an employee’s final pay and sales commissions on “clearance,” “turnover,” or internal processing timelines. This article explains the governing rules, what may be validly withheld, what cannot, and how commissions are treated when an employee resigns.

1) Core principle: earned compensation must be paid

Philippine labor standards treat wages and wage-related benefits as protected obligations. The key idea is simple:

Amounts already earned (salary, accrued benefits, earned commissions) are due and demandable.
Employers may take reasonable steps to verify accountabilities, but verification is not a license to indefinitely delay payment.

While employers can require employees to complete clearance/turnover processes, withholding pay must still comply with labor standards on timeliness and lawful deductions.

2) What “final pay” (last pay) usually includes

“Final pay” is the total of remaining amounts due to the employee after separation, typically including:

Unpaid salary/wages up to the last day worked
Pro-rated 13th month pay (if not yet fully paid for the year)
Unused service incentive leave (SIL) conversion to cash (if applicable and convertible under company policy/practice/law)
Other earned benefits under company policy or CBA (e.g., allowances that are earned, incentives already vested, prorated guaranteed bonuses if contractually promised)
Reimbursements due (if supported and approved under policy)
Tax-related adjustments commonly processed at year-end or separation (e.g., withholding tax reconciliation), depending on payroll practice

Final pay can also include other amounts depending on the employment contract, commission plan, or established company practice.

3) Timing: when must final pay be released?

In practice, the Department of Labor and Employment (DOLE) has set the expectation that final pay should be released within a reasonable period from separation, and the commonly applied administrative standard is within 30 days from the date of separation, unless there is a justified reason for a different timeline (for example, where post-employment computations genuinely require more time due to the nature of the employee’s compensation structure, or where there are documented, legitimate accountabilities that must be determined).

Important nuance: “Clearance” and “turnover” can be part of internal procedure, but internal procedure should not defeat labor standards on prompt payment.

4) Can an employer legally delay final pay because of “clearance”?

A. Clearance may be required, but it has limits

Many employers implement clearance to confirm that the employee has:

returned company property (laptops, IDs, tools, documents),
completed turnover,
settled cash advances, loans, or accountabilities.

This is generally allowed as an administrative process. However:

Clearance is not automatically a legal basis to withhold wages beyond what is necessary and lawful.
Employers should not use clearance as a blanket reason to postpone payment indefinitely.

B. What an employer may withhold (and when)

An employer may withhold or deduct only if there is a legal basis, such as:

Authorized deductions under labor standards rules (e.g., with employee’s written authorization, or deductions required by law like taxes/SSS/PhilHealth/Pag-IBIG contributions, or deductions for company loans under an agreed policy),
A clearly established and documented accountability (e.g., unreturned property with a known cost, liquidated cash advances supported by documentation), and
The deduction is reasonable, specific, and provable, not speculative.

C. What an employer generally may NOT do

Common problematic practices include:

Indefinite withholding until “everyone signs” the clearance, regardless of whether there are actual accountabilities.
Withholding the entire final pay because of a minor missing item when only a specific, provable amount is in question.
Offsetting alleged “damages,” “lost opportunities,” or unproven losses without due process and clear legal basis.
Penalizing resignation by delaying pay as a deterrent.

5) Lawful deductions vs. unlawful withholding

Because final pay often involves offsets (loans, unreturned items), it’s crucial to separate lawful deductions from unlawful withholding.

Lawful deduction characteristics

A deduction tends to be lawful if it is:

Permitted by law or regulations, or
Supported by a written authorization by the employee, or
Clearly within a documented policy/contract that the employee accepted and consistent with labor standards,
Quantified and supported by records (receipts, inventory logs, cash advance liquidation, loan ledger).

Red flags for illegality

Withholding tends to be problematic if it is:

Not itemized (no clear basis or computation),
Not supported by documentation,
Punitive (meant to punish resignation),
Disproportionate (entire final pay held hostage for a small, disputed amount),
Based on future/contingent claims without proper adjudication.

6) Commissions after resignation: are they part of “wages”?

In Philippine labor standards, commissions can be considered part of wages when they are compensation tied to work performed and are not purely discretionary. This matters because wage-related amounts receive stronger protection regarding timely payment.

However, commissions are also highly dependent on the commission plan terms, which typically specify:

when commissions are “earned,”
when they are “payable,”
what events must occur (booking, delivery, installation, collection),
what happens to pipeline deals upon separation.

The legal question is usually not “Are commissions allowed?” but “Were they already earned before resignation, under the governing plan?”

7) When is a commission “earned” versus merely “expected”?

A. Common commission-earning triggers

Commission plans vary, but earning is often defined at one of these stages:

Upon sale/booking (signed contract/PO)
Upon delivery or completion (project milestone)
Upon invoicing
Upon collection/payment by customer

If the plan says commissions are earned only upon collection, and collection happens after resignation, employers often argue nothing is due. Employees counter that they were the “procuring cause” and did the work.

B. A practical way Philippine labor disputes analyze it

Philippine labor dispute resolution often looks at:

the written commission agreement/policy and whether it was clearly communicated and consistently applied,
the employee’s actual contribution and whether the commission was already vested/earned under the agreed trigger,
whether the employer’s withholding is a disguised penalty for resignation,
whether the employer changed the rules midstream.

C. Typical outcomes in practice (general guidance)

If the commission was earned before the last day under the plan’s trigger (e.g., booking happened while employed and plan says booking earns commission), it is generally payable even if payout date is later.
If the plan requires a post-resignation condition (e.g., collection) and that condition genuinely defines earning (not just payment timing), entitlement becomes more plan-dependent and fact-specific.
If an employer’s policy says “must be employed on payout date” to receive commissions, this clause can be challenged when it effectively forfeits already earned compensation—especially if it operates as a resignation penalty rather than a true definition of earning.

8) Can the employer delay commissions because “client hasn’t paid yet”?

It depends on whether “client payment” is an earning condition or just a payment schedule.

Earning condition: If the plan clearly states commission is earned only upon collection, the employer may argue it is not yet earned.
Payment schedule: If the commission is already earned (e.g., upon booking), but payroll releases it later (e.g., next cutoff or after validation), the employer generally must pay it within a reasonable time and should not refuse payment simply because the person resigned.

A key fairness point: if an employee has already performed all required acts to earn the commission under the plan, resignation should not be used to defeat payment.

9) “Must be employed at payout date” clauses: enforceable or not?

These provisions are common in sales organizations. Their enforceability can be contested depending on how they operate:

If they define commission as a retention incentive (more like a bonus not yet earned), employers may defend it.
If they function to forfeit commissions already earned by completed work, they can be attacked as contrary to the protection given to wages/earned compensation and as an indirect restraint or penalty on resignation.

In disputes, the decisive issues are:

how the plan defines earning (not just payment timing),
whether the rule is applied consistently,
whether the commission is truly contingent or already vested.

10) What if there are pending accountabilities—can commissions be offset?

Offsetting commissions against liabilities follows the same rules as wage offsets generally:

The employer must have a lawful basis and supporting documentation for the liability.
The amount must be specific and proven.
A blanket, unitemized hold on all commissions “until further notice” is risky and often a flashpoint in labor complaints.

11) Other resignation-related issues that affect final pay

A. Failure to render 30 days notice

Resignation typically requires 30 days notice unless a shorter period is accepted or a valid reason exists for immediate resignation.

If an employee fails to render notice without agreement, employers may claim damages. But in practice:

Employers cannot simply withhold wages arbitrarily as “damages.”
Claims for damages generally require proper basis and cannot be imposed unilaterally without due process and proof.

B. Company property and data

Unreturned items can justify holding a reasonable equivalent amount, but employers should:

itemize missing property,
show replacement value basis,
follow internal accountability procedures fairly.

C. Bonds and training agreements

If there is a valid training bond agreement, the employer may pursue repayment per contract terms, but again:

deductions must still follow lawful deduction rules,
disputes often turn on the bond’s validity, proportionality, and documentation of training costs.

12) Remedies if final pay or commissions are delayed or withheld

An employee may pursue:

Labor standards money claims for unpaid wages/benefits (including commissions treated as wages),
Assistance/conciliation mechanisms (often through DOLE channels) or adjudication mechanisms depending on the claim’s nature and amount and on the employer-employee relationship context at filing time,
Claims may include legal interest where applicable in monetary awards, depending on the forum and ruling.

Employers, on the other hand, may defend by producing:

the commission plan and proof of the earning condition not being met,
payroll computations,
itemized accountabilities and lawful deduction authorizations.

13) Best practices for employers (to avoid illegality findings)

Release final pay within the commonly expected timeframe and document any justified exception.
Provide an itemized final pay computation (salary, 13th month, leave conversion, commissions, deductions).
Treat clearance as a parallel process, not an open-ended gatekeeping mechanism.
For deductions, secure written authorizations where required and keep supporting documents.
Ensure commission plans clearly define:
- when commissions are earned,
- what happens to deals in the pipeline,
- treatment of returns/cancellations/non-collection,
- separation scenarios (resignation vs termination), and apply consistently.

14) Best practices for resigning employees (to protect entitlement)

Keep copies of:
- commission plan/compensation policies,
- sales reports, booking documents, delivery/acceptance records, collection records (if relevant),
- resignation letter acceptance and last day confirmation.
Request a written breakdown of final pay and any deductions.
If deductions are asserted, ask for itemization and documentation (what item, what cost basis, what policy/authorization).
Document turnover and return of property (signed inventories, emails, acknowledgments).

15) Key takeaways

Delaying final pay purely because of resignation is not lawful.
Clearance procedures are allowed, but indefinite withholding or unitemized holds are high-risk and often improper.
Commissions may be wages and are generally payable if earned before resignation under the governing plan.
Employers may deduct or offset only with a lawful basis, proper authorization where needed, and proof of specific liabilities.
Most disputes are resolved by answering two questions with documents: (1) What was earned? (2) What deductions are legally justified and properly supported?