In the Philippine employment landscape, the release of final pay is a frequent point of contention between employers and departing employees. For years, the timeline for the release of these benefits was murky, often dictated by internal company policies rather than clear legislation. This changed with the issuance of DOLE Labor Advisory No. 06, Series of 2020.

Defining "Final Pay"

Before determining when the clock starts, it is essential to understand what constitutes final pay. Under Philippine law, final pay (also known as "last pay" or "back pay") refers to the sum total of all wages and monetary benefits due to an employee regardless of the cause of the termination of employment. This typically includes:

Unpaid earned salary.
Cash conversion of unused Service Incentive Leave (SIL).
Pro-rated 13th-month pay.
Separation pay (if applicable).
Refund of withheld taxes or contributions.
Other benefits stipulated in the Individual Employment Contract or Collective Bargaining Agreement (CBA).

When Does the 30-Day Period Begin?

According to Labor Advisory No. 06, Series of 2020, the 30-day period for the release of final pay begins from the date of the actual cessation of the employment relationship.

Specifically, the "clock" starts on the employee's last day of work, whether the separation is due to:

Resignation (voluntary).
Termination for just or authorized causes (involuntary).
Expiration of a fixed-term contract.
Completion of a project or phase.

Note: The law sets the 30-day window as the default maximum period. However, if the company policy or the employment contract provides for a shorter period, the shorter period will prevail. Conversely, a company policy cannot extend the period beyond 30 days.

The Role of the Clearance Process

A common misconception is that the 30-day period only begins after the employee completes their clearance. Legally, the employer and employee have a mutual obligation to facilitate the clearance process within that 30-day window.

Employee’s Duty: To return company property (laptops, IDs, keys) and settle outstanding accountabilities.
Employer’s Duty: To process the clearance promptly.

The Supreme Court has historically held that an employer may withhold final pay until "clearance" is obtained, provided the clearance process is reasonable and not used as a tool for harassment. However, Labor Advisory No. 06-20 imposes a stricter administrative burden on the employer to ensure this process is completed within the 30-day timeframe to avoid legal complications.

Legal Basis and Enforcement

The primary regulation governing this is Section 1, Article 4 of Labor Advisory No. 06, Series of 2020, which states:

"Final pay shall be released within thirty (30) days from the date of separation or termination of employment, unless there is a more favorable company policy, individual or collective agreement thereto."

Remedies for Non-Compliance

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

Action	Description
SENA (Single Entry Approach)	A mandatory 30-day conciliation-mediation process through DOLE to reach an amicable settlement.
Labor Case (NLRC)	If SENA fails, the employee may file a formal complaint for non-payment of wages and benefits with the National Labor Relations Commission.
Legal Interest	In some cases, the court may award legal interest (usually 6% per annum) on the withheld amount from the time of judicial or extrajudicial demand.

Issuance of Certificate of Employment

In conjunction with the final pay, the employer is also required to issue a Certificate of Employment (COE). Under the same Labor Advisory, the COE must be issued within three (3) days from the time of the employee’s request, regardless of whether the 30-day period for final pay has elapsed.

Summary of Timeline

Day 1: Actual date of separation/Last day of work.
Day 1–29: Processing of clearance and computation of benefits.
Day 30: Deadline for the release of the final pay and the Certificate of Release and Quitclaim.