Below is a comprehensive discussion on the topic of unpaid commissions after an employee’s resignation in the Philippine setting. It covers the legal foundations, relevant jurisprudence, and practical measures employees may take to assert their rights.

1. Introduction

In the Philippines, commission-based compensation is commonplace in certain industries, especially sales, marketing, and real estate. Issues may arise when an employee resigns but is still owed commissions. While the Labor Code of the Philippines does not contain a specific provision that exclusively governs commissions, the general rules on wages, contracts, and established jurisprudence guide how unpaid commissions should be treated.

2. Legal Basis for Commission Claims

2.1. Commissions as Wages or Not

Labor Code of the Philippines (Presidential Decree No. 442): Although the Labor Code does not explicitly address commissions, it generally covers “wages,” which are broadly defined as “remuneration or earnings, however designated, capable of being expressed in terms of money...for work or services performed.”
Supreme Court Rulings: Philippine jurisprudence has recognized that commissions, if considered part of an employee’s compensation package and directly linked to the work or services rendered, may be treated as wages. However, the specific facts and terms in the employment agreement determine whether commissions qualify as “wages” within the meaning of labor laws.

2.2. Employment Contracts

Contractual Stipulations: Most questions on the entitlement to unpaid commissions hinge on the clauses found in the employment contract or commission agreement. Contracts will often specify how commissions are computed, the point at which commissions are deemed earned, and whether continued employment is a condition for payment.
Importance of Clear Provisions: If the contract states that the commission is payable upon completion of a specific transaction (e.g., a sale finalized), then the employee’s entitlement generally vests once those conditions are met. However, if the contract explicitly requires the employee to remain employed at the time of disbursement, challenges can arise when the employee has already resigned.

2.3. Company Policies and Handbooks

Internal Policies: Many companies issue guidelines or handbooks detailing the procedures for computing and disbursing commissions. While not strictly law, these guidelines bind both employer and employee if they do not violate labor standards and if they have been validly incorporated into the employment terms.
DOLE Standards: The Department of Labor and Employment (DOLE) generally respects legitimate company policies unless they contravene mandatory provisions of the Labor Code or established labor standards.

3. When Does the Right to Commission Vest?

3.1. Procuring Cause Doctrine

Philippine jurisprudence has sometimes employed the “procuring cause” principle, especially in sales transactions. If the employee was the principal or proximate cause of a sale or deal, they may be entitled to a commission, even if the final closure of the transaction happened after their resignation—provided that contractual terms do not explicitly require continued employment.

3.2. Completion of Sale or Transaction

Many commission agreements stipulate that the commission is deemed earned only upon the successful completion of the sale (i.e., when payment is received from the client). Thus, if an employee completed the critical steps in a transaction before resigning, and the sale eventually closes, they might still have a valid claim.

3.3. Condition of “Active Employment”

Some employment contracts expressly state that commissions are payable only if the individual is employed at the time of payment or at the time the commission is due. In such cases, absent any other contrary legal considerations (e.g., unconscionable or illegal stipulations), courts may uphold the requirement if it was knowingly agreed upon by both parties.

4. Common Causes of Disputes

Ambiguous Contract Terms: Vague or incomplete language in contracts regarding the timing and conditions for payment of commissions often leads to disputes.
Delayed Finalization of Sales: Sales negotiations that extend beyond the employee’s last day can create uncertainties about who is credited.
Failure to Document Sales Efforts: Without documentation, an employer might argue that the outgoing employee did not fully secure the deal.
Company Policy vs. Reality: Some policies may conflict with an employee’s actual work contributions (e.g., the employee being the sole or primary reason for a sale, but the employer refusing to pay due to an “active employment” clause).

5. Legal Remedies and Procedures

5.1. Negotiation and Company HR Process

Internal Settlement: The first step is often to attempt an amicable settlement with the employer, especially if the contract is not crystal-clear, or if there is a possibility of verifying the sale closure or partial payments from clients.
Documentation: The employee should present copies of the employment contract, company policies, emails, or any document that shows their participation in finalizing the transaction.

5.2. Filing a Labor Complaint

National Labor Relations Commission (NLRC): If negotiations fail, a former employee may file a labor complaint with the NLRC for the recovery of unpaid monetary claims.
Small Claims Under DOLE: For smaller sums (the threshold changes over time), the employee may also opt for a simpler filing under DOLE’s single-entry approach (SEnA) or small claims mechanism.
Jurisdictional Considerations: The NLRC has original and exclusive jurisdiction over claims arising from an employer-employee relationship, including unpaid wages or commissions if treated as wages.

5.3. Time Limits (Prescriptive Periods)

Three (3) Year Rule for Money Claims: Under Article 305 (formerly Article 305 of the Labor Code) and relevant jurisprudence, monetary claims must generally be filed within three (3) years from the time the cause of action accrued (i.e., from the time the commission should have been paid).
Immediate Action Recommended: Although three years is the standard prescriptive period, it is in the employee’s best interest to file a claim as soon as possible to preserve evidence and facilitate resolution.

6. Practical Considerations and Tips

Review Your Contract Thoroughly: Determine if the contract categorizes commissions as part of your wage or as incentives subject to certain conditions.
Document Everything: Keep comprehensive records of your sales efforts, communications with clients, and any confirmations from your employer regarding the computation of commissions.
Check Internal Policies: If your employer has a published policy on commissions, confirm it aligns with the terms of your contract and does not violate labor standards.
Seek Legal Advice Early: If negotiations with your former employer stall, consulting with a lawyer or seeking free legal assistance (e.g., from the Public Attorney’s Office or labor unions) can clarify your next steps.
Mind the Prescriptive Period: File any claim within the three-year window. Delaying action risks losing your right to recover commissions altogether.

7. Relevant Supreme Court Decisions (for Reference)

While each case must be evaluated on its unique facts, Philippine Supreme Court rulings have clarified that:

Commissions can be considered wages if they are an integral part of the compensation structure for work performed.
Stipulations requiring the employee to remain employed at the time of payment can be enforced, provided there is no unfair or unconscionable circumstance.
“Procuring cause” or “proximately responsible” tests may be applied to determine if a resigned employee was the principal reason the sale transpired, thus entitling them to commissions.

8. Conclusion

Unpaid commissions after resignation remain a significant source of labor disputes in the Philippines. Understanding the basic principles—particularly how employment contracts, company policies, and jurisprudence address the vesting of commissions—helps both employees and employers navigate their respective rights and obligations. Employees who believe they are entitled to commissions should first seek an amicable resolution but remain prepared to file a labor complaint with the NLRC if no agreement can be reached. Meticulous documentation, timely action, and a clear understanding of relevant contract stipulations are key to successfully asserting one’s claims.

Disclaimer: This article provides a general overview and does not constitute legal advice. For specific concerns regarding unpaid commissions, seeking professional legal counsel or consulting the Department of Labor and Employment (DOLE) and the National Labor Relations Commission (NLRC) is strongly recommended.