When do You Get your Final Pay When You Resign?

Nicolas and De Vega Article on When do You Get your Final Pay When You Resign

You should get your final pay within thirty (30) days from the date of separation or termination of employment.

Getting your Final Pay after Resigning

Resigning from your job is never an easy task. Aside from losing employment, the uncertainties that loom ahead make it more difficult. One recurrent question is what will be included in the final pay of an employee. Philippine labor laws enunciate that the final pay should include the salary for work rendered, pro-rated thirteenth month pay, unused service incentive leaves (SIL), return of the bond (if any) and tax refund (if excess taxes have been withheld by the company).  That is all. Furthermore, deductions comprising of SSS loans and other amounts owed by the employee to the employer will be taken from the final pay.

No Separation Pay When you Resign

It bears stressing that an employee who resigned is not entitled to separation pay. Some are of the mistaken view that separation pay is due all the time.  That is wrong. Separation pay is only available when an employee is removed from employment due to authorized causes (retrenchment, redundancy, disease, installation of labor-saving devices, etc.) or when an illegally dismissed employee cannot be reinstated due to strained relations. We wish to reiterate that separation pay is never given when an employee resigns.

Labor Department Issues Clarification on Final Pay

Now, let’s move on to the burning question – when will a resigned employee receive his final pay?  Before the Department of Labor & Employment (DOLE) settled this issue, this has always been subject of various interpretations and sources of confusion.  Some employers take their time in releasing the final pay while some subject the employees to the rigorous process of the clearance system.

Thankfully, DOLE issued Labor Advisory No. 06 series of 2020 on 31 January 2020. This Labor Advisory finally ended the confusion on the release of the final pay. DOLE now mandates that in order to effectively harmonize the management prerogative of the employer and the right of the employee, 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.

Computation of Final Pay and Filing of Disputes

For example, an employee tendered his resignation on 31 August 2020 to be effective on 30 September 2020 (note that an employee needs to give 1-month advance notice of his resignation to the company).  His final pay should thus be given to him on or before 30 October 2020. Of course, the company can opt to give the final pay at an earlier time.

If there is any dispute arising out of the issuance of the final pay, the claim should be filed in the nearest DOLE field office which has jurisdiction over the workplace.  A word to the wise. It is always best to settle things with your employer properly. Going to the DOLE should be a measure of last resort when all avenues have been exhausted. As the old saying goes, it is never wise to burn bridges.

About Nicolas and De Vega Law Offices

If you need assistance in labor-related issues, compliance with DOLE issuances, and company employment policies,  or business-related concerns, we can help you find solutions. Nicolas and de Vega Law Offices is a full-service law firm in the Philippines.  You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines.  You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website www.ndvlaw.com.