In my previous post, I gave you important things to remember before you resign from employment. Once you have finally decided to resign from your job, let me tell you now about the things you need to know about your final pay and certificate of employment. This likewise applies to employees who retired or got terminated from employment for whatever cause.
What is Final Pay?
Final pay is also known as last pay or back pay. It refers to the sum or totality of all the wages or monetary benefits due the employee regardless of the cause of termination of employment.
What comprises Final Pay?
Final pay shall be comprised of the following:
(1) unpaid earned salary of the employee;
(2) cash conversion of unused Service Incentive Leave (SIL) pursuant to Article 95 of the Labor Code;
(3) cash conversions of remaining unused vacation, sick or other leaves pursuant to a company policy, or individual or collective agreement, if applicable;
(4) pro-rated 13th month pay pursuant to Presidential Decree No. 851 (P. D. 851);
(5) Separation pay pursuant to Articles 298-299 of the Labor Code, as renumbered, company policy, or individual or collective agreement, if applicable;
(6) Retirement pay pursuant to Article 302 of the Labor Code, as renumbered, if applicable;
(7) Income tax claim for the excess of taxes withheld, if applicable;
(8) Other types of compensation stipulated in an individual or collective agreement, if any;
(9) Cash bond/s or any kind of deposit/s due for return to the employee, if any.
When do I expect to receive my Final Pay after I resign from my job?
The 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.
Illustration:
Miss A’s resignation from XYZ Corporation is effective on September 5, 2020. Her final pay should be released on or before October 5, 2020.
If, however, XYZ Corporation has an existing company policy or CBA provision that provides that the final pay of employees shall be released within twenty (20) days from date of separation, then that period shall be applied since that is considered to be a more favorable policy. In this case, the final pay shall be released on or before September 25, 2020.
What is Certificate of Employment?
Certificate of employment refers to a certificate from the employer specifying the dates of an employee’s engagement and the termination of his/her employment and the type or types of work in which he/she is employed.
An employee whose employment is not yet terminated may also ask for a Certificate of Employment.
When should an employee receive his/her Certificate of Employment?
The employer shall issue a certificate of employment within three (3) days from the time of the request by the employee.
Can an employer refuse to issue a Certificate of Employment once requested by an employee?
No. Once an employee requests for a certificate of employment, the employer is required to provide the same.
The basis of the above answer is Section 10, Rule XIV, Book V of the Omnibus Implementing Rules and Regulations of the Labor Code of the Philippines, which provides that:
A dismissed worker shall be entitled to receive, on request, a certificate from his/her employer specifying the dates of his/her engagement and termination and the type or types of work on which he/she was employed.
Based on the above, if a dismissed employee is lawfully entitled to receive a certificate of employment, upon his/her request, then it follows that a resigned employee, upon his/her request, shall also be entitled for a certificate of employment.
Is the Certificate of Employment similar to a Clearance?
No, a certificate of employment is different from a clearance.
A certificate of employment specifically states the dates of an employee’s engagement and termination of his employment, including the type of work on which he/she is employed. It is simply a service record based on actual facts of the employment.
A clearance, on the other hand, is usually an employer’s certification that the employee is cleared of all accountabilities prior to separation from the company; that he is of good moral character; and that the employee is recommended to be a valuable addition to the new company that he/she is applying for. Unlike a certificate of employment, a clearance may or may not be issued by the employer. The issuance of a clearance is within the sole discretion of the employer.
What can I do if my Final Pay and Certificate of Employment are not yet released/issued within the mandatory periods?
For any issue or claim dispute arising out of or relating to the payment of final pay, or issuance of certificate of employment, one may go to the nearest Department of Labor and Employment (DOLE) Regional/Provincial/Field Office which has jurisdiction over the workplace. A DOLE representative will be available to assist you in addressing your concern with your former company.
Reference: DOLE Labor Advisory No. 06, Series of 2020.
I hope you find this post useful and informative. Stay tuned for my next post!
