What is included in final pay?
Final pay is everything your employer still owes you when employment ends, whatever the reason: resignation, end of contract, termination or retirement. Under DOLE Labor Advisory No. 06, Series of 2020, it should be released within 30 days from the date of separation, unless a more favourable company policy or agreement applies.
| Component | Who gets it | How it is computed |
|---|---|---|
| Unpaid salary | Everyone | Daily rate × unpaid days worked |
| Pro-rated 13th month pay | Rank-and-file employees | Basic salary earned this year ÷ 12, minus any part already paid |
| Unused leave conversion | Employees with at least one year of service (Service Incentive Leave), or as company policy allows | Daily rate × unused convertible leave days |
| Separation pay | Only for authorized causes | See the table below |
| Other benefits | As per contract, policy or CBA | Varies |
How the daily rate is worked out
The daily rate depends on how many days a year you are paid for. Common factors are:
- 5-day work week: monthly salary × 12 ÷ 261
- 6-day work week: monthly salary × 12 ÷ 313
- Paid every day, including rest days: monthly salary × 12 ÷ 365
For ₱25,000 a month on a 5-day week, the daily rate is 25,000 × 12 ÷ 261 = ₱1,149.43. Some employers use other divisors in their payroll policy, so check your payslip if the result looks different.
Separation pay under the Labor Code
Separation pay is not given for resignation, unless your contract or company policy provides it. It is required when your employment ends for certain authorized causes:
| Cause | Minimum separation pay |
|---|---|
| Installation of labor-saving devices, redundancy | One month pay, or one month pay per year of service, whichever is higher |
| Retrenchment to prevent losses, closure not due to serious losses | One month pay, or half a month pay per year of service, whichever is higher |
| Disease (Article 299) | One month pay, or half a month pay per year of service, whichever is higher |
| Closure due to serious business losses | None required |
A fraction of at least six months counts as one whole year. So 4 years and 7 months counts as 5 years. The calculator applies this rule.
Worked example
Liza earns ₱25,000 a month on a 5-day week and leaves because of redundancy after 4 years and 7 months. She has 10 unpaid working days, earned ₱200,000 basic salary this year, received no 13th month yet, and has 5 unused leave days.
| Daily rate | ₱1,149.43 |
| Unpaid salary (10 days) | ₱11,494.25 |
| Pro-rated 13th month (200,000 ÷ 12) | ₱16,666.67 |
| Leave conversion (5 days) | ₱5,747.13 |
| Separation pay (5 years × 1 month) | ₱125,000.00 |
| Total before tax | ₱158,908.05 |
Want only the 13th month part? Use our 13th month pay calculator, which also checks the ₱90,000 tax-free limit.
How to claim your final pay
- Complete clearance by returning company property and settling accountabilities. Clearance should not delay release beyond the 30-day period.
- Ask HR for a computation and compare it with this estimate.
- Request your Certificate of Employment, which should be issued within three days of request, and BIR Form 2316.
- If payment is late or disputed, you can seek help through the Department of Labor and Employment (DOLE) and its Single Entry Approach (SEnA) for conciliation.
Frequently asked questions
When should final pay be released in the Philippines?
Within 30 days from the date of separation under DOLE Labor Advisory No. 06, Series of 2020, unless a more favourable policy or agreement applies.
Do I get separation pay if I resign?
Not under the Labor Code, unless your contract, company policy or a CBA provides it.
How is separation pay computed for redundancy?
At least one month pay per year of service, or one month pay, whichever is higher. A fraction of six months or more counts as a full year.
Is the 13th month pay part of final pay?
Yes. Rank-and-file employees get a pro-rated 13th month pay based on basic salary earned from January to the last day of work.
Are unused leaves converted to cash?
Unused Service Incentive Leave of employees with at least one year of service is commonly converted to cash, and many company policies convert unused vacation leave as well.