Letter to Attorney:

Dear Attorney,

I hope this message finds you well. I would like to seek your legal assistance regarding an issue I am facing with my former employer. I am encountering difficulty obtaining my Certificate of Employment (COE) because my employer has refused to release it until my clearance process is completed. This delay is significantly affecting my ability to secure new employment, as many of the companies I am applying to require the COE as part of the pre-employment requirements.

Despite having submitted all necessary documents, I have been told by my former team leader that the clearance is still pending approval by higher management. This has been the case for almost a month now. Due to the lack of resolution, I am unable to proceed with any job applications, and this is causing a severe financial strain on my family. As I am the primary breadwinner, the prolonged delay is particularly distressing.

I would appreciate your guidance on whether the refusal to release my COE is legally justified. Is it permissible for an employer to withhold a COE until the completion of clearance? What legal steps can I take to expedite the release of my COE, considering the urgency of my situation?

Thank you for your time and assistance.

Sincerely,

[Concerned Former Employee]

Legal Article: Understanding the Legal Framework Surrounding Certificate of Employment and Clearance Procedures in the Philippines

Introduction

In the Philippine labor law context, the issuance of a Certificate of Employment (COE) is a critical document for both employees and prospective employers. The COE serves as proof of an individual’s employment history, indicating the employee’s tenure, position, and possibly other pertinent employment details. However, complications arise when an employer conditions the release of the COE upon the completion of other employment-related processes, such as the clearance procedure, as described in the letter above. This article explores the legal basis governing COEs, the validity of withholding them, the clearance process, and the possible legal recourse for affected employees.

I. The Certificate of Employment: Definition and Legal Requirements

A COE is governed primarily by Article 285 of the Labor Code and reinforced by relevant regulations issued by the Department of Labor and Employment (DOLE). Under DOLE’s Labor Advisory No. 06, Series of 2020, an employer is mandated to issue a COE within three (3) days from the employee’s request. This advisory emphasizes the right of an employee to request a COE at any point during or after employment.

According to DOLE Labor Advisory No. 06-2020, a COE should contain basic details about the employee's employment, including:

The full name of the employee,
Position/Job Title,
Inclusive dates of employment (start and end date),
Nature of work or position held.

Notably, employers are obligated to provide a COE regardless of whether the employee has completed all exit clearances or settled financial obligations. The rationale is that a COE is simply a factual record of one’s employment and should not be subject to discretionary conditions like the completion of clearance. The act of withholding a COE as leverage for clearance completion may amount to an unlawful employment practice.

II. Clearance Process: What Does the Law Say?

The clearance process in employment is an internal mechanism where the employer verifies that the departing employee has returned all company property, settled any financial liabilities, and fulfilled other administrative tasks. Companies typically implement a clearance procedure to ensure all loose ends are tied up before the final release of the employee’s benefits, such as the final pay, 13th-month pay, or other separation benefits.

While the Labor Code does not directly regulate clearance procedures, they are common in many businesses, particularly in larger corporations. These procedures vary depending on the company’s internal policies, which may include securing clearances from various departments (e.g., finance, legal, and human resources). However, it is crucial to note that the completion of clearance procedures is not a legal precondition for the issuance of a COE. Thus, withholding a COE until clearance is finalized is contrary to DOLE guidelines.

Employers may use the clearance process to condition the release of final pay or other financial entitlements, but not for the COE. This distinction is critical in evaluating the legality of the employer’s actions in the scenario provided.

III. The Relationship Between COE and Final Pay

Many employers wrongly conflate the release of the COE with the release of the employee’s final pay. Under the DOLE's Labor Advisory No. 06-2020, it is made clear that the COE is a standalone document and should not be linked to the settlement of final pay, back pay, or clearance. The final pay, however, is subject to clearance, as stated in DOLE’s Labor Advisory No. 06, Series of 2020. The employer is allowed to withhold the final pay until such time that clearance is completed, which could include:

Settling any outstanding debts or liabilities,
Returning company property (e.g., IDs, laptops, etc.),
Securing departmental clearance.

Given that the COE is purely a factual document, employers should not delay its release based on unresolved financial or administrative matters. Employees have the right to access their COE upon request, and any delay could be construed as an unreasonable hindrance to the employee’s right to seek other employment.

IV. Legal Remedies for Employees

In cases where the employer refuses or delays the issuance of the COE, employees have legal options under Philippine labor laws:

Filing a Complaint with DOLE: Employees can file a complaint with the National Labor Relations Commission (NLRC) or the DOLE regional office where the employer operates. DOLE has authority to mediate disputes between employers and employees, including the wrongful withholding of documents like the COE. This process is usually faster and more accessible than filing a formal lawsuit.
Monetary Damages: If the delay in the release of the COE results in monetary loss (e.g., the employee loses a job opportunity due to the lack of a COE), the employee may potentially seek damages in an illegal dismissal or illegal withholding of documents case. The burden of proof lies with the employer to show a valid reason for the delay.
Labor Arbitration: Employees can escalate the matter to labor arbitration through the NLRC if the DOLE mediation process fails. Arbitration can compel the employer to release the COE and award back pay or damages for undue delays.
Expedited Release of Documents: Given that the COE must be issued within three (3) days of request, an employee can seek immediate intervention from DOLE or file a petition for mandamus in court. A mandamus action compels a public or private entity to perform a legal duty, in this case, the issuance of the COE.

V. Conclusion and Recommendations

In summary, employers in the Philippines are bound by law to issue a Certificate of Employment (COE) upon the request of a current or former employee, within three days from the request. The COE cannot be withheld on the grounds of pending clearance processes or unpaid financial obligations. As such, the employee described in the letter may have a legitimate claim against the employer for refusing to issue the COE.

Employees facing similar situations are advised to:

Document all communications regarding the COE request and the reasons provided for any delays,
Seek legal advice or file a complaint with the DOLE regional office to expedite the process,
Be aware of their rights regarding COEs, final pay, and clearance procedures.

By understanding their rights under Philippine labor law, employees can ensure they are not subjected to unjust employment practices that may prevent them from securing future employment or receiving their rightful entitlements.