There are two important matters that come with the cessation of employment (for whatever reason, whether resignation or termination) — the payment of final pay and the issuance of the Certificate of Employment. The Department of Labor and Employment (DOLE) has issued guidelines for the release of the final pay and COE.
A Certificate of Employment refers to the certificate from the employer specifying the dates of an employee’s engagement and the termination of his/her employment and the type or types of work in which he/she is employed. It is important to highlight that a Certificate of Employment may also be requested even if the worker is still connected with the company.
The employer shall issue a Certificate of Employment or COE within three (3) days from the time of the request by the employee.
The Final Pay, also called “last pay” or “back pay,” refers to the sum or totality of all the wages or monetary benefits due the employee regardless of the cause of the termination of employment, including but not limited to:
- Unpaid earned salary of the employee;
- Cash conversion of unused Service Incentive Leave (SIL) pursuant to Article 95 of the Labor Code;
- Cash conversions of remaining unused vacation, sick or other leaves pursuant to a company policy, or individual or collective agreement, if applicable;
- Pro-rated 13th month pay pursuant to Presidential Decree No. 851;
- Separation pay pursuant to Article 302 of the Labor Code, as renumbered, if applicable;
- Retirement pay pursuant to Article 302 of the Labor Code, as renumbered, if applicable;
- Income tax claim for the excess of taxes withheld, if applicable;
- Other types of compensation stipulated in an individual or collective agreement, if any; and
- Cash bond/s or any kind of deposit/s due for return to the employee, if any.
The Final Pay shall be released within thirty (30) days from the date of separation or termination of employment, unless there is a more favorable company policy, individual or collective agreement.
These guidelines are contained in Labor Advisor No. 06, series of 2020, dated 31 January 2020 (“Guidelines on the Payment of Final Pay and Issuance of Certificate of Employment”). The Labor Advisory 06 does not include the interplay of these employee’s rights with the employer’s right to require the preparation of clearance procedures.