In the Philippine labor landscape, the "final pay" (often colloquially called "backpay") is a frequent point of contention between employers and departing employees. For non-contractual employees—those under regular, probationary, casual, or project-based status—the law provides specific protections to ensure that the fruits of their labor are rendered promptly upon the severance of the employer-employee relationship.

Under Labor Advisory No. 06, Series of 2020, issued by the Department of Labor and Employment (DOLE), the rules governing the timeline and components of final pay were clarified to prevent indefinite withholding by management.

1. The Mandatory Release Timeline

The general rule established by DOLE is clear:

The final pay of an employee must be released within thirty (30) days from the date of separation or termination of employment, unless a more favorable company policy or individual/collective bargaining agreement exists.

This 30-day window is intended to provide the employer sufficient time to process "clearnance" procedures while ensuring the employee is not left without financial means during their transition.

2. Components of Final Pay

Final pay is not merely the last salary earned. For non-contractual employees, it typically includes a consolidation of several legal entitlements:

Unpaid Earned Salary: Any wages earned from the last payroll period up to the final day of work.
Cash Conversion of Leave Credits: Specifically, the Service Incentive Leave (SIL) of five (5) days for every year of service, if unused. Note that conversion of vacation or sick leave depends on company policy or the employment contract.
Pro-rated 13th Month Pay: This is mandatory. It is calculated by taking the total basic salary earned during the calendar year and dividing it by 12.
Separation Pay: Only applicable if the termination was due to authorized causes (e.g., retrenchment, redundancy, or closure of business) or as a result of a labor dispute settlement.
Tax Refunds: Any excess withholding tax collected by the employer that needs to be returned to the employee.
Other Benefits: This includes any bonuses, commissions, or profit-sharing stipulated in the employment contract.

3. The "Clearance" Requirement and Withholding

A common practice in the Philippines is the withholding of final pay until the employee completes a "clearance" process. While the Supreme Court has recognized the employer's right to require clearance—to ensure return of company property or settlement of liquidated debts—this right is not absolute.

Reasonableness: The clearance process must be reasonable and not used as a tool for harassment.
Offsetting: Employers can only deduct amounts from the final pay if the employee has given written authorization (e.g., for loans) or if the deduction is authorized by law (e.g., SSS, PhilHealth, Pag-IBIG, and withholding tax).

4. Legal Remedies for Non-Compliance

If an employer fails to release the final pay within the 30-day period, the employee has several avenues for redress:

SENA (Single Entry Approach): The employee can file a request for assistance with the nearest DOLE office. This is a mandatory conciliation-mediation process designed to settle the issue without going to a full-blown court case.
Labor Arbiter: If SENA fails, the employee may file a formal complaint for "Non-payment of Final Pay" with the National Labor Relations Commission (NLRC).
Interests and Penalties: In cases of bad faith or unreasonable delay, the employer may be held liable for legal interest on the unpaid amount and potentially moral or exemplary damages.

5. Certificate of Employment

Alongside the final pay, Labor Advisory No. 06-20 mandates that the employer must issue a Certificate of Employment within three (3) days from the time of the employee's request. This is a separate requirement from the 30-day final pay timeline and cannot be withheld as a penalty.

Summary Table: Release Deadlines

Document/Payment	Deadline
Final Pay	Within 30 days of separation
Certificate of Employment	Within 3 days of request
13th Month Pay (Pro-rated)	Included in Final Pay (30-day limit)