Rights to Unpaid Wages After Resignation in the Philippines

Last updated for general legal principles as of 2024. This is practical information, not a substitute for tailored legal advice.

1) What counts as “unpaid wages” after you resign?

Under Philippine labor law, wage broadly includes all remuneration for work performed, whether fixed or variable. After you resign, the following items commonly make up your final pay (also called “last pay”):

Unpaid basic salary up to your last day worked (including any overtime, night shift differential, premium pay, and holiday pay that accrued but have not yet been paid).
Pro-rated 13th-month pay for the calendar year up to your separation date (required under P.D. 851 and its rules).
Monetized Service Incentive Leave (SIL): If you’re covered by the Labor Code’s minimum 5-day SIL and you have unused days, they are commutable to cash upon separation.
Unused leaves convertible to cash under company policy/CBA/contract (e.g., vacation or sick leave beyond the statutory SIL, if the policy says they’re commutable).
Commissions and productivity incentives that are earned and determinable under your plan/policy (even if paid on a delayed schedule). Discretionary bonuses are generally not demandable unless a consistent company practice, CBA, or contract makes them enforceable.
Allowances that form part of wages (e.g., regular fixed allowances), if unpaid.
Tax refund/adjustment for the period worked, if applicable after the employer’s year-to-date withholding computation.
Other amounts expressly promised by contract or policy upon separation (e.g., sign-on clawbacks may reduce, while stay bonuses may increase, depending on terms).

Note: Separation pay is generally not owed when you resign voluntarily, unless (a) a company policy/CBA/contract grants it, or (b) your exit is actually an authorized cause termination (e.g., redundancy), in which case different rules apply.

2) When should the final pay be released?

The Department of Labor and Employment (DOLE) has issued guidance requiring employers to release an employee’s final pay within 30 days from the date of separation, unless a shorter period is set in a contract, CBA, or company policy. Employers may run clearance procedures, but these should not unduly delay release beyond the period.

Certificate of Employment (COE). Upon written request, the COE should be issued within a few days (DOLE has guided a 3-day period). The COE states employment facts (tenure, position); it is not a good-moral/behavior certificate.

3) Can an employer withhold or deduct from final pay?

A) Withholding (timing)

Employers may verify accountabilities via clearance (e.g., return of tools, company phone, laptop). However, blanket or indefinite withholding is unlawful. The default rule is release within 30 days (or earlier if the company’s own rules say so).

B) Deductions (amount)

The Labor Code prohibits deductions from wages except when:

Required by law (e.g., SSS, PhilHealth, Pag-IBIG, tax);
Employee-authorized in writing for a lawful/beneficial purpose (e.g., salary loans, cooperative dues); or
To recover loss or damage caused by the employee’s fault or negligence, after due process, and only to the extent of the proven loss. Employers must show clear proof (e.g., audit, incident reports) and cannot reduce pay below the minimum wage by such deductions for time worked.

Security deposits/“holds” not allowed by law are generally unlawful. If the employer seeks to offset a company loan, it typically needs your written authorization or a clear contract term allowing set-off upon separation.

4) Resignation notice and its effect on pay

Notice: An employee may resign by giving at least 30 days’ written notice to the employer. The employer may accept immediate resignation and waive the remaining notice; in that case, you are generally entitled to salary only up to your actual last day (the waived notice is not automatically “paid leave” unless the employer agrees).
Garden leave / pay in lieu: Not required by law. If allowed by company policy or agreed upon, it should be honored per terms.

5) How to compute typical components

A) Pro-rated 13th-Month Pay

13th-month = (Total basic salary earned in the year up to separation) / 12

Exclude allowances not integrated into basic pay and purely discretionary bonuses.
Include salary during paid leaves if counted as basic pay under policy.

B) Monetized SIL (statutory 5 days)

SIL cash = (Daily rate) × (Unused SIL days)

Covered rank-and-file employees who have rendered at least one (1) year of service and are not exempted by law.
Some employers provide more generous leave; follow the policy/CBA for conversion.

C) Overtime / Premiums / Night Differential

Compute per Labor Code rates for the hours actually worked but unpaid (e.g., OT beyond 8 hours, rest day work, night premium for 10:00 p.m.–6:00 a.m.).

6) Taxes and statutory contributions

Final pay items are subject to withholding tax per BIR rules. Employers should issue BIR Form 2316 reflecting compensation and tax withheld upon separation or by the standard annual deadline.
Separation benefits due to involuntary causes (e.g., retrenchment, redundancy) may be tax-exempt; resignation benefits are generally taxable unless a law says otherwise.
SSS, PhilHealth, and Pag-IBIG contributions are remitted for the covered periods you actually worked; there’s no “refund” of contributions via final pay.

7) Prescription (deadlines to claim)

Money claims arising from employer–employee relations (e.g., unpaid wages, 13th-month pay, SIL conversion, commissions) generally prescribe in three (3) years from the time the cause of action accrued (usually your separation date or the due date of each unpaid item).
Claims for illegal dismissal (not applicable to voluntary resignation) generally prescribe in four (4) years as an action for injury to rights.

To avoid prescription pitfalls, act promptly.

8) Enforcing your rights if final pay isn’t released

Step 1: Internal route

Write a clear, dated demand to HR/Payroll detailing each unpaid item and your computation, attaching proof (payslips, time records, commission plans, approved leaves).
Request a COE (if not yet issued) and BIR 2316.
Give a reasonable short deadline (e.g., 5–10 working days) for action.

Step 2: DOLE Single-Entry Approach (SEnA)

File a Request for Assistance (RFA) at the DOLE Regional/Field Office with jurisdiction over the workplace.
SEnA is a mandatory conciliation–mediation process designed to resolve pay disputes quickly and informally. Bring your evidence; many cases settle here.

Step 3: Formal case

If unresolved, you may file a money claim before the appropriate forum:
- Labor Arbiter (NLRC) for monetary claims arising from employment (especially when amounts are substantial, intertwined with other labor issues, or you seek damages/attorney’s fees).
- DOLE Regional Director (Summary proceedings) has limited jurisdiction over simple money claims without reinstatement and historically a small-amount threshold; in practice, most separated employees opt for the Labor Arbiter when amounts are significant or issues are contested.
Keep an eye on prescriptive periods and venue (where the employer is located, where work was performed, or where the employee resides, subject to rules).

Evidence that helps most:

Employment contract/handbook/CBA
Accepted resignation letter and employer’s acknowledgment (or proof of last day)
Payslips, payroll registers, bank credits
Timekeeping/OT approvals, schedule, emails
Commission plan and attainment reports
Leave ledger/SIL balance screen or HR certification
Clearance form and asset return receipts

9) Quitclaims and releases: are you barred from claiming?

A quitclaim signed on exit does not automatically bar you from later asserting underpayment/illegal deductions. Courts look at:

Voluntariness (no coercion, intimidation, or misrepresentation),
Reasonable consideration (the amount should be fair and not unconscionably low), and
Full understanding of the waiver’s terms.

If a quitclaim fails these standards, it can be set aside, and you may still recover lawful entitlements. However, a valid quitclaim can bar further claims to the extent of the issues clearly covered by the waiver.

10) Special situations

Commission-based roles: You’re entitled to commissions already earned under the plan as of your last day (e.g., booked and billable deals under “pay-on-invoice” plans). Post-separation clawbacks must be grounded in clear plan language and fairness; ambiguity is construed in favor of labor.
Allowance prorations: Fixed monthly allowances that form part of wages are generally pro-rated to days actually worked (unless policy states otherwise).
Negative leave balances / overpayments: Employers may recover documented overpayments or negative leave balances subject to lawful deductions rules (proof + due process + limits).
Company property not returned: Employers may withhold only the reasonable value of unreturned property after due process, not the entire final pay, and still must release undisputed amounts promptly.

11) Practical checklist for employees

Keep a copy of your resignation letter and HR acknowledgment.
Request COE in writing and keep proof of request.
Ask HR for a final pay breakdown (line-item list) and target release date.
Return all company property and complete clearance (take photos/receipts).
Collect payslips, time records, commission statements, and leave balances.
Upon payout, review withholding tax and request BIR Form 2316.
If delayed beyond 30 days, send a formal demand; consider SEnA.

12) Sample short demand letter (fill-in template)

Subject: Demand for Release of Final Pay and Employment Documents To: HR/Payroll, [Company Name] Date: [____]

I resigned effective [last day: Month Day, Year]. As of today, [Month Day, Year], my final pay remains unpaid. I respectfully demand release of the following within [5] working days:

Unpaid salary from [date] to [date] (₱[amount])

Overtime/premiums/night differential (₱[amount])

Pro-rated 13th-month pay (₱[amount])

Monetized SIL/convertible leave (₱[amount])

Commissions earned under [plan] (₱[amount])

Tax refund/adjustments if any Please also provide my Certificate of Employment and BIR Form 2316. I reserve all rights under the Labor Code and DOLE rules. Sincerely, [Your Name], [Position], [Contact Information]

13) Employer best practices (to avoid disputes)

Publish a clear separation policy (timeline, documents, cutoff for pay runs).
Itemize every component of final pay and provide a written computation.
Release undisputed amounts within 30 days; if there’s a genuine dispute, pay what’s due and explain in writing what’s being verified.
Obtain return receipts for all assets; avoid blanket “no clearance, no pay” rules.
Train payroll/HR on lawful deductions and SEnA processes.

14) Quick answers (FAQ)

Q: My employer says I won’t get final pay until the client “signs off” weeks later. A: Not lawful. Your final pay is due based on work already performed; client collection risk is an employer risk, not a basis to delay wages.

Q: Can they deduct the full price of a lost laptop? A: Only after due process and proof of fault, and only up to the proven loss—not as a penalty. They must still release other undisputed amounts on time.

Q: I resigned on March 15. Do I still get 13th-month pay? A: Yes, pro-rated for January 1–March 15 based on basic salary actually earned.

Q: My COE says “resigned with pending case,” hurting my job prospects. A: A COE should be neutral and factual. You may demand a corrected COE and escalate to DOLE if refused.

Q: I signed a quitclaim at payroll release. Can I still sue? A: If the quitclaim was coerced, unconscionable, or not fully explained, courts may invalidate it (wholly or partly). Seek legal advice promptly.

Bottom line

After you resign in the Philippines, you retain full rights to all earned and determinable wages and benefits, including pro-rated 13th-month pay and commutable leave, and you are generally entitled to receive your final pay within 30 days of separation. Employers may verify accountabilities but cannot indefinitely delay or unlawfully deduct from what you’ve earned. If issues arise, document, demand in writing, and use DOLE’s SEnA, then escalate to the NLRC if needed—always mindful of the 3-year prescriptive period for money claims.