Final Pay: Nine Components, Released in 30 Days
Department of Labor and Employment · benefits
Quick answer
Final pay is every wage and monetary benefit due you when employment ends, regardless of the cause. Labor Advisory 06-20 lists 9 components and requires release within 30 days of separation. A Certificate of Employment is separate and due within 3 days of your request.
Every figure on this page is from official published documents: DOLE and Official Gazette.
Last verified 2 sources, listed below
DOLE | Labor Advisory No. 06, Series of 20201 · Official Gazette | Presidential Decree No. 442, Labor Code of the Philippines2. PHGuides is independent and not affiliated with DOLE.
Final pay is defined by a single document: DOLE Labor Advisory No. 06, Series of 2020, signed on 31 January 2020. It settles what is owed, when, and where to go when it does not arrive.
The definition does the most work
The advisory defines Final Pay, Last Pay or Back Pay as the sum or totality of all wages or monetary benefits due the employee regardless of the cause of the termination of employment.
That phrase decides most arguments before they start. Resignation, dismissal, redundancy, closure and the end of a fixed term all produce the same obligation. What changes between them is which of the nine components has a figure in it.
The nine components
| Component | Where the figure comes from | |
|---|---|---|
| (a) | Unpaid earned salary | payroll |
| (b) | Cash conversion of unused Service Incentive Leave | Article 95 |
| (c) | Cash conversion of other unused vacation, sick or other leave | company policy or agreement |
| (d) | Pro-rated 13th month pay | PD 851 |
| (e) | Separation pay, if applicable | Articles 298 and 299 |
| (f) | Retirement pay, if applicable | Article 302 |
| (g) | Income tax claim for excess taxes withheld | your withholding for the year |
| (h) | Other compensation under an individual or collective agreement | the agreement |
| (i) | Cash bond or any kind of deposit due for return | the deposit |
Only two of the nine carry a formula the advisory itself supplies. The other seven are amounts fixed elsewhere, which is why no calculator can produce them from your salary alone.
The 13th month component is computed on salary earned
The advisory defines the 13th month as one-twelfth (1/12) of the total basic salary earned by an employee within the calendar year.
The operative word is earned. A partial year is divided by 12, not by the months you worked.
At a ₱22,000.00 monthly basic salary:
| Months worked | Basic salary earned | Pro-rated 13th month |
|---|---|---|
| 3 | ₱66,000.00 | ₱5,500.00 |
| 6 | ₱132,000.00 | ₱11,000.00 |
| 8 | ₱176,000.00 | ₱14,666.67 |
| 9 | ₱198,000.00 | ₱16,500.00 |
| 12 | ₱264,000.00 | ₱22,000.00 |
Each row is the output of the final pay calculator. Someone leaving in month 8 receives ₱14,666.67, which is neither a full month nor one eighth of anything.
The full rules on what counts as basic salary are in the 13th month pay guide.
A worked total
An employee on ₱22,000.00 a month with a ₱1,000.00 daily rate, leaving after 8 months, owed ₱15,000.00 of unpaid salary with 5 unused leave days:
| Component | Amount |
|---|---|
| Unpaid earned salary | ₱15,000.00 |
| SIL conversion, 5 days at ₱1,000.00 | ₱5,000.00 |
| Pro-rated 13th month | ₱14,666.67 |
| Total | ₱34,666.67 |
Add a redundancy separation pay of ₱120,000.00, a ₱2,500.00 tax refund and a ₱4,000.00 cash bond return and the same employee is owed ₱161,166.67.
Separation pay is usually the largest single component when it applies, and it has its own statutory formula covered in the separation pay guide.
The leave component
Article 95 grants 5 days of paid service incentive leave a year after 1 year of service. Only the days actually unused convert to cash, so the figure is yours rather than a fixed 5.
At a ₱1,000.00 daily rate, 5 unused days is ₱5,000.00 and 15 accumulated days is ₱15,000.00, which is more than a month’s pay for many employees. The entitlement itself, and the several categories excluded from it, are covered in the service incentive leave guide.
The two deadlines
| Obligation | Deadline | Runs from |
|---|---|---|
| Release of final pay | 30 days | the date of separation or termination |
| Issuance of a Certificate of Employment | 3 days | the time of the request |
They are separate clocks. The 30 days starts at separation, not at the point you chase it, and the advisory permits only a more favorable company policy or agreement, never a longer period.
The Certificate of Employment is a standing right rather than an exit document. The advisory states expressly that an employee whose employment is not yet terminated may also request one.
If it does not arrive
Any issue or claim arising out of or relating to the payment of final pay, or the issuance of a Certificate of Employment, is filed before the nearest DOLE Regional, Provincial or Field Office with jurisdiction over the workplace, for conciliation under DOLE’s existing enforcement mechanism.
Jurisdiction follows the workplace, not your home address.
Where this goes wrong
Thinking resignation forfeits it. The advisory says regardless of the cause of termination. It is owed either way.
Dividing the 13th month by the months worked. The divisor is 12, so 8 months at ₱22,000.00 gives ₱14,666.67.
Confusing final pay with separation pay. Separation pay is one of the nine components and only applies on the authorized causes.
Counting the 30 days from the date you asked. It runs from separation.
Treating the Certificate of Employment as part of the same deadline. It is 3 days from request, on its own clock.
Assuming unused leave always converts at 5 days. Only days actually unused convert, and leave already taken is worth nothing here.
Related
The certificate of employment guide covers the other half of Labor Advisory 06-20, due within 3 days of your request, and the separation pay guide covers the component that applies only to authorised causes, and the SEnA guide covers the conciliation step an unpaid claim has to pass through before any case can be filed.
Frequently asked questions
- How long does my employer have to release my final pay?
- Within 30 days from the date of separation or termination of employment. Labor Advisory 06-20 allows a more favorable company policy or agreement to shorten that period, but nothing lengthens it. The clock runs from separation, not from the date you ask.
- Do I get final pay if I resigned?
- Yes. The advisory defines final pay as the totality of wages and monetary benefits due regardless of the cause of the termination of employment. Resignation, dismissal and redundancy all produce a final pay obligation, though what goes into it differs.
- What are the nine components?
- Unpaid earned salary, cash conversion of unused service incentive leave, cash conversion of other unused leave under company policy, pro-rated 13th month pay, separation pay where applicable, retirement pay where applicable, an income tax refund for excess withheld, other compensation under an agreement, and the return of any cash bond or deposit.
- How is the pro-rated 13th month computed?
- One-twelfth of the total basic salary earned within the calendar year. The divisor stays 12 for a partial year. On a ₱22,000.00 monthly salary, 8 months worked means ₱176,000.00 earned and ₱14,666.67 of 13th month pay, not a full month.
- What is a Certificate of Employment and when is it due?
- A document stating the dates of your employment and the type of work performed. The advisory requires issuance within 3 days from the time of the request. It runs on its own clock, separate from the 30 days for final pay, and an employee whose employment is not yet terminated may also request one.
- My employer will not pay. What do I do?
- The advisory routes it to conciliation. Any issue or claim relating to the payment of final pay or the issuance of a Certificate of Employment is filed before the nearest DOLE Regional, Provincial or Field Office with jurisdiction over the workplace.
- Is separation pay part of final pay?
- It is one of the nine components, but only where an authorized cause applies. Final pay is owed on every separation; separation pay is owed only on the grounds in Labor Code Articles 298 and 299. An employee who resigns is owed final pay and no separation pay.
- Can my employer hold my final pay until I finish clearance?
- The advisory sets a 30-day period running from separation and permits only a more favorable arrangement. It does not make the deadline conditional on completing a clearance process.