Introduction

In many Philippine workplaces—especially sales-heavy industries—employees’ pay packages include commissions, performance incentives, profit shares, or other variable compensation. Problems often arise when a worker resigns and discovers that commissions for deals already closed (or incentives for targets already hit) remain unpaid. Employers sometimes respond: “You already resigned, so you’re not entitled anymore,” or “You’ll get it only if you complete clearance,” or “Policy says commissions are forfeited upon resignation.”

This article explains what Philippine law generally says about unpaid commissions and incentives after resignation, when an employer may or may not withhold them, and what employees can do if they are not paid.

Note: This is a general legal discussion in Philippine context and not a substitute for advice on a specific case.

1. Key Principle: Commissions and Incentives Can Be “Wages”

Under Philippine labor law, “wages” include not only fixed salary but also remuneration tied to work performed, such as commissions and certain incentives, if they are part of compensation for services rendered.

Why that matters: If a commission or incentive is considered wage, it enjoys strong protection:

It cannot be withheld arbitrarily.
It must be included in final pay once earned and due.
Non-payment may lead to a money claim and possible labor standards violation.

Not every incentive automatically becomes wage, but many do—especially when the incentive is:

tied directly to personal performance (sales closed, quota hit), and
regularly paid as part of the compensation system.

2. Earned vs. Unearned: The Core Distinction

The legal outcome usually depends on whether the commission/incentive is earned before resignation.

Earned Commission/Incentive

You generally have a right to payment if:

You already completed the acts required to earn it; and
Only payment remains.

Example scenarios:

You closed a sale before resigning, and policy says commission is earned upon closing.
You met the performance target for the incentive period before your last day.
You fulfilled all conditions except employer’s internal processing.

For earned pay, resignation does not erase entitlement.

Unearned or Contingent Commission/Incentive

Employers may lawfully deny payment if the incentive is not yet earned because a condition has not happened.

Common lawful conditions:

Commission is earned only upon actual collection/payment by the client.
Incentive is earned only if still employed on the payout date and this was clearly agreed beforehand.
Commission is earned only after completion of after-sales steps explicitly made part of earning.

If a condition is valid and clearly communicated, and it hasn’t happened before resignation, payment may not yet be due.

3. What Company Policy Can and Cannot Do

Policies Are Binding—If Lawful and Clear

Commission schemes are often governed by contracts, offer letters, or sales incentive policies. If policy clearly defines when a commission is earned (e.g., “upon collection”), then entitlement follows that rule.

But Policies Cannot Override Law

Even if policy says “forfeited upon resignation,” that clause may be invalid if it deprives you of pay already earned.

Why:

Employers cannot forfeit wages already earned.
A resignation does not undo work already rendered.
Labor standards are protective; ambiguous policies are typically interpreted in favor of labor.

So:

Valid: “Commission is earned only upon collection. If you resign before collection, no commission is due yet.”
Likely invalid: “All commissions from sales made before resignation are forfeited if employee resigns before payout.”

4. Typical Employer Justifications—and Their Legal Limits

A. “You resigned, so you’re no longer entitled.”

Not correct if the commission/incentive was already earned. Resignation changes employment status, not ownership of earned wages.

B. “You didn’t complete clearance.”

Clearance is mainly an administrative process. Employers may withhold final pay temporarily to verify accountabilities but not indefinitely, and not as a way to erase entitlement.

If there are real, provable accountabilities (unreturned equipment, cash advances), employers can offset them only to the extent allowed by law and with proper documentation.

C. “Policy says payout requires being employed on payout date.”

This can be valid only if:

the incentive is truly discretionary or profit-sharing, not wage; and
the condition was explicit from the start, not added later.

If the incentive is actually wage for performance already achieved, “must be employed on payout date” can be an unlawful forfeiture.

D. “Client hasn’t paid yet.”

Often valid. Many schemes define commissions as earned upon collection. If so, resignation before collection means payment is not yet due unless the policy/contract says otherwise.

However, if collection later happens and policy does not require continued employment to receive commissions already earned, you may still claim it.

5. Discretionary Bonus vs. Performance Incentive

Philippine practice recognizes a difference:

Discretionary Bonus

Given out of generosity or company discretion.
Not demandable unless:
- promised in contract, or
- consistently given over a long period such that it becomes a company practice.

Employers can stop discretionary bonuses, including after resignation, so long as they do not violate non-diminution rules (see below).

Performance Incentive / Commission

Given as compensation for meeting defined targets.
Usually demandable once conditions are met.

Courts and labor authorities often treat these as part of wages when they are tied to output and not purely voluntary.

6. Non-Diminution of Benefits

Once a benefit or incentive becomes a regular company practice (given consistently, over time, without conditions reserving discretion), it may be protected by the rule against diminution.

Meaning:

Employer cannot remove or reduce it unilaterally.
Cannot introduce a forfeiture after years of giving it as a matter of course.

This strengthens an employee’s case that the incentive is not discretionary and should be paid even after resignation if already earned.

7. Final Pay in the Philippines and Where Commissions Fit

When you resign, you are generally entitled to final pay, which may include:

unpaid salaries
prorated 13th month pay
unused service incentive leave (if convertible)
earned commissions/incentives
other benefits due under contract or policy

Employers are expected to release final pay within a reasonable period after separation. Delays must be justified and not used to defeat valid claims.

8. Quitclaims and Waivers: Be Careful

Employers often ask resigning employees to sign a quitclaim stating all claims are settled.

Philippine law does not automatically void quitclaims, but they are scrutinized. A quitclaim may be invalid if:

you were pressured or misled,
the amount paid is unconscionably low, or
it waives wages you clearly earned.

Practical tip:

If commissions are missing, don’t sign a blanket quitclaim without noting your reservation or getting clarity.

9. Common Fact Patterns and Likely Outcomes

Pattern 1: Sale closed before resignation; commission earned upon closing.

Likely payable. Employer cannot say resignation forfeits it.

Pattern 2: Sale closed before resignation; commission earned upon collection; collection happens after resignation.

Depends on policy.

If policy only says “earned upon collection” with no forfeiture clause, you can claim when collection happens.
If policy clearly says you must still be employed at collection, validity depends on whether commission is treated as wage or discretionary; if wage-like, forfeiture clause may be challenged.

Pattern 3: Incentive period ended and quota met before resignation, payout date later.

Generally payable if performance requirements were already met and incentive is wage-like. Forfeiture clauses may be void.

Pattern 4: Incentive is a yearly profit-share given only if still employed by payout date.

Often not payable if genuinely discretionary/profit-based and clearly conditional.

10. What an Employee Can Do if Commissions Are Withheld

Review your documents
- employment contract
- commission/incentive policy
- offer letter
- emails/memos describing earning rules
Compute what is earned
- list sales/targets
- attach proof: signed contracts, purchase orders, target reports
Send a written demand
- polite but firm
- specify basis: policy, performance, dates, computations
File a money claim
- Typically through DOLE or the NLRC, depending on nature and amount of the claim.
- Claims for unpaid wages and benefits after resignation are standard labor cases.
Watch prescription periods
- Money claims have time limits. Don’t sit on your rights too long.

11. What Employers Should Do (to stay compliant)

Draft clear commission schemes defining:
- earning event (closing vs. collection)
- payout schedule
- treatment of separated employees
Avoid forfeiture of already-earned commissions.
Release final pay promptly with written breakdown.
Use clearance only to verify legitimate accountabilities.

Conclusion

Philippine law does not allow employers to withhold commissions or incentives that are already earned simply because an employee resigned. If the compensation is wage-like and the worker has completed the required conditions, it must be paid as part of final pay.

However, if payment is contingent on a valid, agreed condition (like collection), and that condition has not yet occurred, then the commission may not yet be due—and resignation alone doesn’t accelerate it. The real battleground is the definition of “earned” in policy and practice, and whether the incentive is a protected wage or a discretionary benefit.

If you’re in this situation, the best move is to ground your claim in documents, timelines, and clear computation, and assert your rights through a formal demand or labor claim if needed.