Unpaid Salary Rights After Resignation in the Philippines

Overview

When you resign in the Philippines—whether you rendered the full 30-day notice or left immediately for a just cause—you are entitled to receive all wages and monetary benefits you have already earned. Employers cannot lawfully withhold earned pay as “security” for clearance or return of company property. This article explains what is included in final pay, when it must be released, what deductions are allowed, common disputes, and the practical steps and legal remedies if your pay is delayed or denied.

What counts as “final pay”

Final pay (often called “last pay”) generally includes:

Unpaid basic wages up to your last day actually worked (including regular allowances treated as part of wages).
Overtime pay for approved overtime hours.
Night shift differential (10% of regular wage per hour for work between 10:00 p.m. and 6:00 a.m.).
Holiday premium/differentials and rest day pay, if worked but unpaid.
Pro-rated 13th-month pay (mandated; computed on basic wages earned within the calendar year up to separation).
Monetization of unused Service Incentive Leave (SIL), if applicable (the law grants at least 5 SIL days/year to covered employees; unused SIL is commutable to cash).
Other accrued benefits under your contract, company policy, or CBA (e.g., unused but monetizable vacation leave if your policy provides it, commissions already earned under the plan, de minimis benefits that are cash-convertible, etc.).
Tax documents (BIR Form 2316) and Certificate of Employment (COE)—not money, but you are entitled to them.

Not automatically included: “Separation pay.” Employees who resign are not entitled to statutory separation pay (that applies to specific authorized causes like retrenchment or closure). You may still get it if your CBA or company policy grants it upon resignation.

Timing: When must final pay be released?

Employers are expected to release final pay within 30 calendar days from the date of separation, or earlier if company policy states a shorter timeline.
Issuance of the COE must be done within 3 days from request.
A company clearance process may run in parallel, but it cannot be used to delay payment beyond the prescribed period. Property accountabilities should be handled through proper, lawful deductions (see below) or separate collection, not by indefinitely holding wages.

Deductions: What can the employer lawfully deduct?

The Labor Code prohibits deductions from wages unless they fall into specific, lawful categories. As a rule:

Allowed (with conditions):
- Taxes and government-mandated contributions (e.g., SSS loan amortizations if covered by a valid authorization).
- Employee-authorized deductions in writing (e.g., company loan with a signed authorization or payroll deduction agreement).
- Amounts due for loss/damage only if (a) there is due process (notice and opportunity to explain), (b) the employee is clearly liable, (c) the amount is reasonable and properly documented, and (d) the deduction is expressly authorized by the employee or allowed by law.
Not allowed:
- Open-ended “penalties” or forfeiture of earned wages for failure to return property without due process.
- Deductions for alleged shortages, defects, or breakages without proof and without written consent.
- “Bond” or “deposit” requirements taken from wages unless specifically allowed by law.

If property is unreturned, the legitimate approach is to document the actual value and apply a lawful, proportionate, and consented deduction—not to withhold the entire final pay.

Resignation notice and pay coverage

Standard rule: 30-day written notice to the employer before the intended resignation date.
Immediate resignation is allowed for just causes (e.g., serious insult by the employer, inhumane treatment, commission of a crime against the worker, etc.).
Pay coverage: You are entitled to wages up to the last day you actually worked. If the employer waives the notice period and releases you early, pay is due up to your last day actually rendered (not the end of the original notice period, unless the employer agrees to pay in lieu).

Taxation (quick notes)

13th-month pay is tax-exempt up to ₱90,000 (TRAIN law), with the excess subject to tax.
Regular wages and taxable benefits are subject to withholding.
You are entitled to your BIR Form 2316 for the year-to-date period covered by your employment to support your personal tax compliance and any future employer’s requirements.

Evidence and burden of proof

Employers must keep payroll, timekeeping, and wage records.
In pay disputes, non-production of these records can lead to adverse inferences against the employer.
Employees should keep copies of payslips, time logs, emails, and policies (leave and commission plans, clearance rules, etc.).

Common problem areas (and how they are resolved)

“We’re holding your pay until you clear.”
- Clearance cannot justify indefinite withholding. The proper route is itemized, lawful deductions (with due process) and release of the balance within the standard timeline.
Unpaid commissions/bonuses.
- Check the plan document. If the commission was earned (e.g., sale closed, invoice paid, and all conditions met before separation), it forms part of final pay. Purely discretionary bonuses may be excluded unless promised or consistently granted as a matter of policy or practice.
Unpaid overtime/night differential/holiday premium.
- Compute based on time records and applicable rates. If the employer failed to pay these earlier, they remain collectible as part of your money claims.
Unused leave encashment.
- SIL (5 days/year) is commutable to cash if unused; additional vacation leave encashment depends on written company policy/CBA.
Quitclaims/waivers.
- Employers often require a quitclaim when releasing final pay. These documents are valid only if voluntarily executed, for a reasonable consideration, and free from fraud or duress. Unconscionable or deceptive quitclaims can be set aside.

Remedies if your final pay is delayed or denied

1) Write a concise demand letter to HR/payroll

Cite your separation date, the items due (wages, 13th-month pro-rata, SIL, etc.), and the 30-day release rule.
Attach proof (payslips/time logs, policy excerpts).
Give a clear deadline (e.g., 5–7 days) to pay or explain in writing.

(Template provided at the end.)

2) Use SEnA (Single-Entry Approach) for conciliation-mediation

File a Request for Assistance with the DOLE Regional/Field Office that covers your workplace.
SEnA is a mandatory first step in most labor disputes and aims to settle within a short period through mediation.

3) File a formal complaint

DOLE Regional Director (summary wage claims ≤ ₱5,000 per employee and no reinstatement sought) may take jurisdiction under the summary procedure.
NLRC Labor Arbiter (for larger or more complex claims, or where reinstatement/other reliefs are involved).
You may recover legal interest on monetary awards (commonly 6% per annum, applied per prevailing jurisprudence), plus attorney’s fees in certain cases.

4) Enforcement and penalties

DOLE may issue Compliance Orders and writs of execution for labor standards violations.
Noncompliance with wage laws (e.g., nonpayment of minimum wage, 13th-month pay) can trigger administrative sanctions and, in specific cases, criminal liability.

Deadlines (prescriptive periods)

Money claims arising from employer-employee relationships (e.g., unpaid wages, 13th-month, differentials): generally 3 years from when the cause of action accrued (often from separation or from each unpaid pay period).
Actions for illegal dismissal (if relevant): 4 years (as an injury to rights).
To avoid issues, act promptly—file your SEnA request or complaint well before these periods lapse.

Practical computation tips

Salary up to last day
- Daily-paid: Daily rate × days actually worked.
- Monthly-paid: Prorate the monthly rate using the company’s standard divisor (verify your payroll policy: 26, 22, or 313/365 methods vary by employer; use the method consistently applied to you).
13th-month pay (pro-rated)
- (Total basic wages actually earned in the calendar year up to separation ÷ 12).
- Exclude allowances not deemed part of basic wage unless your company treats them as such.
SIL encashment
- Unused balance × regular daily wage.
- If your company grants more than 5 leave days, check the handbook for encashment rules of the excess.
Differentials (OT/ND/holiday/rest day)
- Use the legally required multipliers based on your pay structure (e.g., OT = hourly rate × 1.25; rest day/holiday work has higher multipliers). Keep your timekeeping evidence.

Documentation you should receive

Payslip or final pay computation (itemized).
COE (on request, within 3 days).
BIR Form 2316 covering your employment period that year.
Quitclaim (if any) — review before signing; negotiate items and ensure the correct amount is stated.

Frequently asked questions

Q: Can my employer delay my pay because IT hasn’t “cleared” my laptop yet? A: They must still release your final pay within the standard timeline. They may deduct the proven, reasonable value of any unreturned/damaged property with your written authorization and after due process—not hold your entire pay hostage.

Q: I resigned without completing the 30-day notice. Can they forfeit my pay? A: No forfeiture of earned wages. They might pursue contractual remedies (e.g., set-off of demonstrable losses) if your premature exit caused measurable damage under a valid agreement, but that requires proof and lawful procedure.

Q: I’m on commission. Do I still get paid after I resign? A: If the commission was earned under the plan’s conditions before separation (or if the plan provides for post-separation payouts for closed deals), it is collectible. If the plan is discretionary or conditions were unmet, it may not be due.

Q: What if I signed a quitclaim but the amount was clearly too low? A: You can still challenge a quitclaim if there was fraud, coercion, mistake, or the consideration is unconscionably low compared to your lawful entitlements.

Step-by-step playbook (employee)

Collect: payslips, time sheets, handbook/CBA, emails approving OT/commissions, clearance forms.
Compute: list each head (wages, 13th-month pro-rata, SIL, differentials).
Demand: send a dated demand letter to HR/payroll with a 5–7 day deadline.
Mediate: file SEnA at the DOLE office if unpaid after your deadline.
Escalate: file with NLRC (or DOLE summary procedure if ≤ ₱5,000 and no reinstatement).
Preserve: keep all correspondence; track dates for prescription.
Consider counsel: for complex commission plans, large deductions, or contested quitclaims.

Step-by-step playbook (employer)

Compute and release final pay within 30 days (or earlier per policy).
Itemize lawful deductions; obtain written authorizations where required.
Document clearance separately; avoid using it to justify delay.
Provide COE (within 3 days of request) and BIR 2316 on time.
Keep records (payroll/timekeeping) to meet the burden of proof.
Handle quitclaims ethically: reasonable sums, no coercion.

Simple demand letter template (you can copy-paste)

Subject: Demand for Release of Final Pay Date: [________]

HR/Payroll Department [Company Name]

I resigned effective [Separation Date] after working until [Last Day Worked]. As of today, my final pay has not been released.

I respectfully demand payment of the following within [5/7] calendar days from receipt of this letter: (a) unpaid wages up to my last day, (b) pro-rated 13th-month pay, (c) monetization of unused Service Incentive Leave, and (d) any unpaid differentials (overtime, night shift, holiday/rest day) and lawful benefits under company policy.

Please also issue my Certificate of Employment and BIR Form 2316.

If there are proposed deductions, kindly provide a written, itemized basis and the legal grounds.

Absent payment within the above period, I will pursue relief through SEnA/DOLE and, if necessary, file a complaint with the NLRC, including claims for legal interest and other applicable remedies.

Sincerely, [Your Name] [Position/Department] [Contact Details]

Key takeaways

Your earned wages and statutory benefits remain due even after resignation.
Final pay should be released within 30 days (or earlier if policy says so).
Only lawful, documented, and consented deductions may be made.
If unpaid, follow the Demand → SEnA → DOLE/NLRC path well within the 3-year money-claim period.
Keep records; they often make or break wage claims.

This article provides general information on Philippine labor standards regarding unpaid salary after resignation. It is not a substitute for tailored legal advice. For complex cases (e.g., commission plans, large deductions, or contested quitclaims), consult a labor law practitioner.