Dear Attorney,

I recently resigned from my job, and it has been four months, but I still haven’t received my backpay and Certificate of Employment (COE). My former employer keeps telling me to call back next week, but nothing gets processed. I am urgently in need of both my backpay and COE. Could you please provide advice on how to proceed?

Thank you.

Insights:

Under Philippine labor law, the concept of backpay and the right to a Certificate of Employment (COE) are crucial aspects that protect the rights of a worker who resigns or is separated from employment. This article will discuss these concepts, their legal implications, and remedies available to employees who experience delays or issues regarding their release.

Backpay in the Philippines

What is Backpay?
Backpay refers to the total compensation an employee is entitled to receive upon separation from a company. This includes unpaid salaries, pro-rated 13th-month pay, unused leave credits, and any other financial entitlements such as bonuses or commissions. The release of backpay is typically required within a reasonable period after an employee resigns, is terminated, or is laid off.

When Should Backpay Be Released?
The Labor Code of the Philippines and the Department of Labor and Employment (DOLE) do not specify an exact period within which the backpay must be released. However, the period of 30 days is generally considered standard for the processing of backpay after an employee’s final clearance has been completed. If there are delays beyond this, the employee may seek remedies through labor tribunals or the DOLE.

Factors Affecting the Release of Backpay

Clearance Process – Most companies require that the resigning employee undergoes a clearance process, ensuring that there are no outstanding accountabilities, company assets are returned, and other final procedures are conducted. If this process is delayed, the release of the backpay may also be delayed.
Company Policies – Some companies have specific policies about when and how backpay is released, often tying it to certain administrative timelines. While internal policies are allowed, they must not contravene the employee’s right to timely and full payment of wages.
Employment Contract – Any stipulations about backpay in the employment contract should be observed as long as they do not violate labor standards.

Certificate of Employment (COE)

What is a Certificate of Employment?
A Certificate of Employment (COE) is a document that states the period during which the employee worked for the company, the position held, and the type of employment (e.g., permanent, probationary, or contractual). It is crucial for securing new employment and serves as an official record of an employee’s work history.

Legal Obligation to Provide a COE
Article 283 of the Labor Code of the Philippines mandates employers to provide a Certificate of Employment upon request. There is no condition attached to this right, meaning that the employee is entitled to request a COE at any time during or after their employment. The law explicitly states that even if the employee was terminated due to a breach of contract or resignation, they are entitled to receive this document.

Remedies for Non-Issuance

Filing a Complaint with DOLE – If an employer refuses or delays the issuance of a COE, the employee can file a complaint with the DOLE. The DOLE can order the employer to issue the COE and impose penalties for non-compliance.
Filing a Case with the National Labor Relations Commission (NLRC) – For more serious cases of delayed backpay or non-issuance of COE, an employee can bring their case to the NLRC, which can compel employers to meet their legal obligations.

What Can an Employee Do?

Steps to Take:

Send a Formal Demand Letter – The first step would be to send a formal demand letter to the employer, requesting the immediate release of the backpay and COE. This letter serves as an official record of the employee’s demand, which may be necessary if the case proceeds to labor tribunals.
Approach DOLE – If the employer fails to respond or does not provide the backpay and COE after receiving the demand letter, the employee can file a complaint with the DOLE. The DOLE’s Single Entry Approach (SEnA) provides a fast-track mediation system to resolve such issues within a period of 30 days.
File a Case with the NLRC – If mediation fails or the employer refuses to comply, the employee can file a formal case with the NLRC. The NLRC can order the release of backpay and COE and impose penalties on the employer for non-compliance. It may also award damages to the employee for the inconvenience caused by the delay.

Legal Consequences for Employers

Employers who fail to release backpay or issue a COE within a reasonable time can face legal consequences:

Fines and Penalties – Non-compliance with labor standards, such as the refusal to issue a COE or failure to provide backpay, can result in administrative fines imposed by DOLE.
Damages – The employee may claim damages, especially if the delay has caused harm, such as missed job opportunities or financial distress.
Legal Fees – In cases where the employee has to take legal action, the employer may be required to shoulder legal fees and other litigation costs.

Importance of Documenting Communication

Employees facing difficulties with the release of their backpay and COE should ensure that all communication with the employer is documented. Emails, text messages, and demand letters can serve as crucial evidence should the matter escalate to a legal dispute.

Conclusion

In the Philippines, employees who resign or are separated from employment have clear rights to both their backpay and a Certificate of Employment. Employers are obligated to release these promptly and without undue delay. Employees who encounter issues may seek recourse through the DOLE, NLRC, or courts. It is vital to address such delays as they can significantly impact the employee’s ability to secure future employment and meet financial obligations.