Philippines: Labor Advisory on the Period for Payment and/or Release of Final Pay and Issuance of Certificate of Employment

On January 31, 2020, the Department of Labor and Employment (“DOLE”) issued Labor Advisory No. 6, series of 2020, which prescribes the period for: [a] the payment and/or the release of the final pay; and [b] the issuance of Certificate of Employment to employees who are terminated from their employment.

Under the Labor Advisory, all employers are advised to release the final pay to its employees within 30 days from the date of separation or termination of employment, unless a more favorable company policy, or individual or collective agreement exists.

In order to assist the employers in complying with the Labor Advisory, the DOLE enumerated items which would constitute an employee’s final pay, namely: [a] unpaid earned salary of the employee; [b] cash conversion of the unused service incentive leaves pursuant to Article 95 of the Labor Code; [c] cash conversions of remaining unused vacation, sick, or other leaves pursuant to a company policy, or individual or collective agreement, if applicable;[d] pro-rated 13^th month pay pursuant to Presidential Decree No. 851; [e] separation pay pursuant to Articles 298 to 299 of the Labor Code, company policy, or individual or collective agreement, if applicable; [f] retirement pay pursuant to Article 302 of the Labor Code, if applicable; [g] income tax claim for the excess of taxes withheld, if applicable; [h] other types of compensation stipulated in an individual or collective agreement, if any; and [i] cash bond/s or any kind of deposit/s due for return to the employee, if any.

The Labor Advisory likewise requires employers to issue a Certificate of Employment within three days from the time of the request by the employee concerned.

Issues and disputes arising from or relating to the payment of the final pay or issuance of Certificate of Employment must be filed before the nearest Regional/Provincial/Field Office which has jurisdiction over the workplace for conciliation and other existing enforcement mechanisms.

Read the latest issue of SyCipLaw Employment and Immigration Update here or via this link.