Dear Attorney,

I need assistance with an issue regarding my final pay. My employer has not yet released my final pay after I resigned from the company. I would like to know what my legal rights are in this situation and how I can make sure I receive the compensation owed to me. Could you provide guidance on what steps I should take to address this matter?

Sincerely,
A Concerned Employee

Insights

In the Philippines, final pay refers to the sum of all wages or benefits owed to an employee upon separation from employment, regardless of whether the separation was voluntary (resignation) or involuntary (termination or redundancy). According to the Department of Labor and Employment (DOLE), the final pay should include several key components:

Unpaid Salary: This includes any salary the employee earned before the date of separation but has not yet been paid.
Pro-rated 13th Month Pay: If the separation occurs before the end of the calendar year, the employer must provide a prorated portion of the employee’s 13th-month pay, which is a statutory benefit under Presidential Decree No. 851.
Unused Service Incentive Leave (SIL): Under Article 95 of the Labor Code, employees are entitled to five days of service incentive leave per year. If an employee does not use these leaves, the employer must convert unused leave days into cash upon separation.
Separation Pay (if applicable): For employees terminated under specific grounds such as redundancy, installation of labor-saving devices, or retrenchment, separation pay must be provided, as outlined in Articles 298 and 299 of the Labor Code.
Other Benefits (if any): Depending on the company policy or collective bargaining agreements, final pay may also include other entitlements such as bonuses or allowances.

Time Frame for Release of Final Pay

DOLE Department Advisory No. 06-20 stipulates that the final pay must be released within 30 days from the date of separation unless a different period is agreed upon through the employment contract, company policy, or a collective bargaining agreement.

Recourse for Delayed or Non-Payment of Final Pay

If the employer fails to release the final pay within the prescribed period, the employee may file a complaint with the DOLE or pursue legal action through labor arbitration. The employee may also seek assistance from DOLE’s Single Entry Approach (SEnA) program, which aims to mediate and resolve labor disputes, including final pay issues, in a less formal setting. If the case is not resolved, it may be elevated to the National Labor Relations Commission (NLRC) for further action.

Understanding the components of final pay and the legal recourse available is crucial to protecting employee rights. It is recommended to seek legal counsel to ensure all entitlements are received promptly and in full.