Salary Release During the Resignation Notice Period in the Philippines: A Comprehensive Legal Guide (2025)
1. The Legal Setting
| Source of Law | Key Provisions Relevant to Salary Release |
|---|---|
| Labor Code of the Philippines | Art. 102 (timely payment of wages); Art. 113 (permissible deductions); Art. 116 (prohibition against withholding); Art. 300 [formerly 285] (30-day resignation notice); Art. 305–306 (money-claims enforcement) |
| Presidential Decree 851 | 13th-Month Pay (pro-rated for resigning employees) |
| DOLE Labor Advisory No. 06-20 (Final Pay Advisory, 13 Jan 2020) | Final pay and Certificate of Employment (COE) must be released within 30 calendar days from the employee’s date of separation, “unless a more favorable company policy, CBA, or individual agreement applies.” |
| BIR Regulations | BIR Form 2316 and tax reconciliation within the same 30-day period; refund of any excess withholding |
| Jurisprudence | Magos v. NLRC (G.R. 146405, 2005); Del Villar v. Coca-Cola Bottlers (G.R. 164046, 2012); Cruz v. CA (G.R. 187266, 2013) — all reiterate employer liability for delayed or withheld wages and benefits |
2. When Does an Employee Actually “Earn” Salary in the Notice Period?
Rendering the 30-Day Notice
- An employee who tenders a voluntary resignation under Art. 300 must generally work 30 calendar days unless the employer agrees in writing to a shorter period.
- Salary earned during these 30 days is ordinary wage payable on the company’s regular pay dates.
- If the employer waives the notice (e.g., “You may leave tomorrow”), salary is due only up to the last day actually worked; the waived balance is not “garden-leave” pay unless your CBA or contract says so.
Just-Causes for Immediate Resignation
- Under Art. 300(b) an employee may resign without notice for employer breach (e.g., serious insult, inhuman treatment, commission of a crime). Salary still accrues for days actually worked, and final pay must still be released within 30 days.
Employer-Initiated Shortening of Notice
- If the company unilaterally shortens the 30-day period, the employee is considered constructively dismissed for the balance; salary for the unserved part becomes a money claim, potentially with moral and nominal damages (see Soriano v. NLRC, 2002; Stolt-Nielsen v. NLRC, 1998).
3. What Must Be Included in “Final Pay”?
| Component | Statutory Basis | Notes on Computation |
|---|---|---|
| Unpaid Basic Salary | Labor Code Arts. 102 & 116 | Up to the last day actually worked (including premium pay night diff, overtime, holiday differentials earned but not yet paid). |
| Pro-rated 13th-Month Pay | PD 851 & DOLE Guidelines | Calendar-year basis: basic salary ÷ 12 × months worked. Include fractions of a month ≥15 days. |
| Unused Service Incentive Leave (SIL) | Art. 95 | Convert remaining SIL to cash at the daily equivalent wage. Managerial employees only if company policy grants SIL. |
| Other Company-Granted Monetizable Leaves/Benefits | CBA or Policy | Vacation leave conversions, unused credits under flexi-benefit plans, perfect-attendance bonuses, etc. |
| Separation Pay | Art. 298–299 (authorized causes) | Not required for voluntary resignation unless: (a) CBA/company policy promises it, or (b) resignation is due to authorized causes such as redundancy for which employer offers “resign or be terminated.” |
| Tax Refunds/Adjustments | NIRC & BIR RRs 8-2018 / 11-2018 | Excess withholding for the year must be returned with the final pay; deficits are deducted. Employer issues BIR Form 2316. |
| Mandatory Government Contributions | SSS Law, PhilHealth Act, Pag-IBIG Fund Law | Employer must remit contributions up to the last applicable month; no salary deduction allowed beyond statutory employee share. |
4. Timing & Mode of Release
Regular Payroll vs. Final Pay
- Regular wages earned during the notice period follow the normal company pay cycle (e.g., semi-monthly within 16 days per Art. 103).
- Final pay packet (everything else) must be released within 30 calendar days from date of separation unless a shorter contractual schedule applies.
- Payment can be via payroll ATM, cash, or other lawful mode agreed in writing. Any change without consent violates Art. 102.
Clearance Procedures & Deductions
Employers may require turnover/clearance but may not delay wage release beyond 30 days because of pending signatures.
Legitimate deductions under Art. 113 include:
- Taxes, SSS/PhilHealth/Pag-IBIG employee share;
- CBA-authorized fees;
- Written-authorized deductions (e.g., company loans).
Unauthorized deductions (lost tools, training bonds without DOLE approval, unsubstantiated shortages) expose the employer to money-claim liability and even criminal penalties under Art. 116.
Certificate of Employment (COE)
- Must be issued within 3 days of request (Art. 301) but DOLE Advisory 06-20 aligns issuance with the 30-day final-pay window when requested simultaneously.
5. Practical Scenarios
| Scenario | Is Salary Due for the “Unserved Remainder” of Notice? | Final Pay Clock (30 days) Starts On |
|---|---|---|
| Employee renders full 30-day notice and works through | Yes— regular pay continues until last day | Last actual workday |
| Employer waives notice effective immediately | No— unless contract/CBA gives garden-leave | Date employer accepted resignation |
| Employee resigns without notice for “serious insult” | Pay only up to last day worked; employee may claim damages | Date of immediate resignation |
| Employer tells employee to “stay home” (garden leave) but pays salary | Salary continues; counts toward notice | Last paid calendar day |
| Employee abandons job (AWOL) | Employer owes salary until last day actually worked | Date of employer-recorded separation |
6. Enforcement & Remedies
Filing a Money-Claim
- Jurisdiction: DOLE’s Single-Entry Approach (SEnA) for ≤₱5,000; otherwise NLRC.
- Prescriptive period: 3 years for money claims (Art. 306).
- Penalties: Legal interest, attorney’s fees (10 %), exemplary damages if withholding was in bad faith (Magos v. NLRC).
Administrative Sanctions
- DOLE inspection may impose compliance orders and monetary penalties under the Labor Code’s penal provisions.
Criminal Aspect
- Willful refusal to pay wages is punishable under Art. 303(e) with a fine or imprisonment up to 4 years.
7. Key Take-Aways for Employers & Employees
For Employees
- Render the full notice unless lawfully excused; document acceptance of any shorter period.
- Collect a quitclaim only after verifying that all items in Section 3 are paid correctly.
- Keep payslips and computations; these are prima facie proof in money-claims.
For Employers
- Maintain written notice-acceptance and waiver forms; unclear practice may equal constructive dismissal.
- Align salary cutoff schedules so that wages earned during the notice are not inadvertently “lumped” into final pay, causing delay.
- Build an automated clearance workflow; DOLE inspectors frown on manual signatures becoming bottlenecks.
- Release BIR Form 2316 on or before the final-pay turnover to avoid separate tax penalties.
8. Conclusion
Under Philippine labor law, salary earned during an employee’s resignation notice period is treated no differently from any other wage—it becomes due on the usual payday, subject only to valid deductions. The final pay, which aggregates all unpaid monetary entitlements, must be settled within 30 calendar days after separation, per DOLE’s Labor Advisory 06-20, unless a superior company benefit exists. Non-compliance exposes employers to administrative fines, money-claim awards, legal interest, and even criminal sanctions. Both parties therefore benefit from explicit, written agreements on notice period adjustments, swift clearance procedures, and full documentation of pay computations.