Dear Attorney,

I am writing to seek legal advice regarding the delay in receiving my backpay or last salary payment from my previous employer. It has been an extended period since my resignation, and I have yet to receive the full amount. Could you please advise on the proper legal steps I should take to claim my backpay and what the company's obligations are in terms of releasing the payment? Any guidance would be greatly appreciated.

Thank you,
Concerned Employee

Insights

Under Philippine law, backpay or last salary payment refers to the compensation that an employee is entitled to receive after ending their employment, whether through resignation, retirement, or termination. This backpay includes unpaid salaries, pro-rated 13th-month pay, unused leave credits, and other monetary benefits under the employment contract or company policy.

The Labor Code of the Philippines governs the time frame for releasing final pay. In cases of resignation, employers are generally obligated to release the final pay within a reasonable period, usually 30 days after clearance processing, unless otherwise stated in the employment contract or company policy. However, delays may occur due to several reasons, such as incomplete clearance or disputes over certain deductions.

If an employer fails to release backpay within a reasonable period, the employee can take the following legal actions:

Demand Letter – The employee may send a formal written demand for payment, asking the employer to release the pending amount. This serves as a first step in asserting the employee’s right to compensation.
Filing a Complaint with the DOLE – If the employer still does not act, the employee can file a complaint with the Department of Labor and Employment (DOLE). DOLE can assist in mediating and settling the issue through its Single Entry Approach (SEnA) program. This procedure encourages settlement within 30 days and helps avoid costly litigation.
Filing a Case in the NLRC – Should the DOLE’s mediation fail or if the employer continues to delay the payment, the employee may escalate the issue to the National Labor Relations Commission (NLRC). Through the NLRC, employees can file a case for money claims to recover backpay and any related damages.

Employees should be aware that the company is prohibited from unjustly withholding final pay and that failure to release it could subject employers to administrative sanctions and liabilities under the law. Moreover, the employee is entitled to receive interest on delayed payments if the court or the NLRC finds the delay to be unreasonable.

To avoid any legal complications, employees should ensure that they comply with all clearance procedures, while employers must honor their obligation to release backpay within the prescribed time.