Dear PAO,

I resigned from my employment last year, but my former employer has not yet released my final pay. The company informed me that it is still in the process of computing the charges allegedly attributable to me during my tenure. In this regard, may I inquire as to when my final pay should legally be released? Thank you.

Inez

Dear Inez,

The answer to your question may be found in Department of Labor and Employment (DOLE) Labor Advisory 06, Series of 2020, issued on Jan. 31, 2020.

Pursuant to Section 2, Article I of DOLE Labor Advisory 06, Series of 2020, final pay, last pay or back pay refers to the aggregate amount of wages and other monetary benefits due to an employee upon the termination of employment, regardless of the cause thereof. The Advisory further provides that the employee’s final pay may include, among others: (1) unpaid earned salaries and wages; (2) cash conversion of accrued but unused service incentive leave credits; (3) cash conversion of unused vacation, sick or other leave credits, where such benefit is granted under company policy, employment contract or collective bargaining agreement; (4) prorated 13th month pay; (5) separation pay, where applicable; (6) retirement benefits; (7) tax refunds corresponding to excess taxes withheld, if any; (8) other forms of compensation and benefits provided under an individual employment contract or collective bargaining agreement; and (9) refundable cash bonds, deposits or similar amounts due to the employee.

With respect to the period for the release of final pay, Article II of the same Labor Advisory expressly provides that an employee’s final pay shall be released within 30 days from the date of separation or termination of employment, unless a more favorable period is prescribed by company policy, employment contract or collective bargaining agreement.

Nevertheless, jurisprudence recognizes the employer’s prerogative to require the completion of clearance procedures prior to the release of final pay. In Emer Milan, et al. vs. National Labor Relations Commission (GR 202961, Feb. 4, 2015), the Supreme Court, through Senior Associate Justice Marvic M.V.F. Leonen, held that, “requiring clearance before the release of last payments to the employee is a standard procedure among employers, whether public or private. Clearance procedures are instituted to ensure that the properties, real or personal, belonging to the employer but are in the possession of the separated employee, are returned to the employer before the employee’s departure.”

Applying the foregoing provisions and jurisprudence to your case, your former employer is mandated to release your final pay within 30 days from the effective date of your resignation, subject to the completion of reasonable clearance requirements. Assuming that you have fully complied with the employer’s clearance process and have no outstanding accountabilities, there appears to be no legal basis for the undue delay in the release of your unpaid salaries and accrued benefits as your final pay.

We hope that we were able to answer your queries. This advice is solely based on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Thank you for your continued trust and support.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected].