What is final pay in the Philippines?

Final pay, also called back pay or last pay, is the sum of all wages and monetary benefits due to an employee on separation. Under DOLE Labor Advisory No. 06-20, it covers unpaid salary, pro-rated 13th month pay, the cash value of unused convertible leave, separation pay if applicable, and any tax refund, less outstanding liabilities.

How long does an employer have to release final pay?

DOLE Labor Advisory No. 06-20 sets the standard at within 30 days from the date of separation, unless a more favorable company policy, contract, or collective bargaining agreement provides a shorter period.

Is final pay the same as separation pay?

No. Separation pay is only one possible component of final pay, owed in specific cases such as retrenchment or redundancy under the Labor Code. Final pay is the total of every amount due, which may include separation pay but always includes unpaid salary and pro-rated 13th month pay.

Do resigned employees get final pay?

Yes. An employee who resigns is entitled to final pay covering unpaid salary, pro-rated 13th month pay, and the cash value of any unused convertible leave, less any liabilities. Resignation alone does not entitle the employee to separation pay.

Is pro-rated 13th month pay included in final pay?

Yes. The 13th month pay you earned for the portion of the calendar year you worked is part of your final pay, computed as the basic salary actually earned during the year divided by 12.

Can an employer deduct cash advances from final pay?

Yes. Outstanding cash advances, loans, unreturned company property, and other lawful liabilities may be deducted from final pay, provided the deductions are documented and authorized under the Labor Code.

What can I do if my final pay is delayed beyond 30 days?

You may file a request for assistance under the Single-Entry Approach (SEnA) at the nearest DOLE office, which provides a 30-day mandatory conciliation-mediation before any formal complaint.

Is separation pay taxable in the Philippines?

Separation pay paid for an authorized cause beyond the employee's control — redundancy, retrenchment, automation, closure, disease, or death — is exempt from income tax and withholding tax under Section 32(B)(6)(b) of the National Internal Revenue Code, regardless of amount. Separation pay or a release package given on voluntary resignation is not covered by that exemption and is generally taxable.

How is separation pay computed by authorized cause?

Redundancy and installation of labor-saving devices pay one month salary per year of service. Retrenchment, closure not due to serious losses, and disease pay one-half month salary per year of service. In every case the total is at least one month's pay, and a fraction of at least six months counts as one whole year of service. Closure due to serious, duly proven losses carries no separation pay.

Final Pay Calculator (Back Pay), Philippines

Final pay in the Philippines is the sum of all wages and benefits due on separation, released within 30 days under DOLE Labor Advisory No. 06-20.

By the Orkids payroll engineering team · Reviewed against DOLE Labor Advisory No. 06-20 (2020), Labor Code Arts. 298–299 & 302, and NIRC Sec. 32(B)(6)(b) · Updated June 2026

Unpaid earned salary (₱)

Pro-rated 13th month pay (₱)

Unused-leave cash value (₱)

Separation pay, if any (₱)

Tax refund, if any (₱)

Deductions / cash advances (₱)

Line items

Unpaid earned salary: + ₱0.00
Pro-rated 13th month pay: + ₱0.00
Unused-leave cash value: + ₱0.00
Separation pay: + ₱0.00
Tax refund: + ₱0.00
Deductions / cash advances: − ₱0.00

Your estimated final pay

₱0.00

= unpaid salary + pro-rated 13th month + unused-leave cash value + separation pay + tax refund − deductions. Under DOLE Labor Advisory No. 06-20, this must be released within 30 days of separation.

For the unused-leave line, multiply your daily rate by your convertible unused leave days and enter the peso value above. Separation pay applies only in specific cases (e.g. retrenchment or redundancy) — enter ₱0 if it does not apply to you. Estimate only — confirm with DOLE.

How is final pay computed?

Final pay is computed by adding up every amount your employer owes you on separation, then subtracting your outstanding liabilities — it is a sum, not a single multiplier.

The additive components are your unpaid earned salary, your pro-rated 13th month pay, the cash value of unused convertible leave (your daily rate multiplied by convertible unused leave days), separation pay where the Labor Code applies, and any year-end tax refund. From that total you deduct documented cash advances, loans, and unreturned company property.

Worked example of a final-pay computation
Component	Basis	Amount
Unpaid earned salary	10 days at ₱1,250/day	+ ₱12,500
Pro-rated 13th month pay	Basic earned ÷ 12	+ ₱9,000
Unused-leave cash value	4 days × ₱1,250/day	+ ₱5,000
Separation pay	Not applicable (resignation)	+ ₱0
Tax refund	Year-end adjustment	+ ₱0
Deductions / cash advances	Outstanding company loan	− ₱2,000
Final pay	Sum of the above	₱24,500

What is included in final pay?

Final pay includes unpaid salary, pro-rated 13th month pay, the cash value of unused convertible leave, separation pay if applicable, and any tax refund, less lawful deductions.

For the pro-rated 13th month component, use the basic salary you actually earned during the calendar year divided by 12 — the same Presidential Decree 851 formula our 13th month pay calculator uses. Separation pay is not automatic: it is owed only in specific cases such as retrenchment or redundancy under the Labor Code.

When must final pay be released?

Final pay must be released within 30 days from the date of separation, the standard set by DOLE Labor Advisory No. 06-20 (Series of 2020).

A more favorable company policy, individual contract, or collective bargaining agreement (CBA) can shorten that period. The Department of Labor and Employment (DOLE) also expects the Certificate of Employment to be issued within three days of a request.

What if final pay is delayed or disputed?

If your final pay is delayed beyond 30 days, you may file a request for assistance under the Single-Entry Approach (SEnA) at the nearest DOLE office.

SEnA provides a 30-day mandatory conciliation-mediation before any formal case proceeds. Unresolved monetary claims may then go to the National Labor Relations Commission (NLRC). Keep your payslips, contract, and clearance documents as evidence of the amounts due.

Separation pay rate by authorized cause (Labor Code Arts. 298–299)

When separation pay is part of your final pay, the rate per year of service depends on the authorized cause of termination. The Labor Code sets two tiers — one month per year for the higher-tier causes and one-half month per year for the rest — and in every case the total is at least one month's pay. A fraction of at least six months of service counts as one whole year.

Separation pay rate by authorized cause (Labor Code Arts. 298–299)
Authorized cause	Labor Code article	Rate per year of service	Minimum
Installation of labor-saving devices (automation)	Art. 298 (formerly 283)	1 month pay per year of service	1 month pay
Redundancy	Art. 298 (formerly 283)	1 month pay per year of service	1 month pay
Retrenchment to prevent losses	Art. 298 (formerly 283)	1/2 month pay per year of service	1 month pay
Closure or cessation not due to serious losses	Art. 298 (formerly 283)	1/2 month pay per year of service	1 month pay
Disease (Art. 299) — termination on a certified incurable condition	Art. 299 (formerly 284)	1/2 month pay per year of service	1 month pay
Just cause (e.g. serious misconduct) or voluntary resignation	Arts. 297, 300	No separation pay (unless granted by contract, CBA, or company practice)	—

Closure due to serious business losses duly proven carries no separation-pay obligation. The peso value of a "one-half month" separation-pay base is not fixed by Labor Advisory 06-20: it is commonly applied as one-half of the monthly salary (about 15 days), though some employers and rulings use a fuller day-factor — confirm the day-factor for a specific case with DOLE. (The 22.5-day reading — 15 days + 1/12 of 13th month + service-incentive-leave equivalent — is settled jurisprudence for RETIREMENT pay under Art. 302 / RA 7641, not for separation pay.) Separation pay for these authorized causes — being a cause beyond the employee's control — is exempt from income tax and withholding tax under NIRC Sec. 32(B)(6)(b).

Final pay — frequently asked questions

What is final pay in the Philippines?: Final pay, also called back pay or last pay, is the sum of all wages and monetary benefits due to an employee on separation. Under DOLE Labor Advisory No. 06-20, it covers unpaid salary, pro-rated 13th month pay, the cash value of unused convertible leave, separation pay if applicable, and any tax refund, less outstanding liabilities.
How long does an employer have to release final pay?: DOLE Labor Advisory No. 06-20 sets the standard at within 30 days from the date of separation, unless a more favorable company policy, contract, or collective bargaining agreement provides a shorter period.
Is final pay the same as separation pay?: No. Separation pay is only one possible component of final pay, owed in specific cases such as retrenchment or redundancy under the Labor Code. Final pay is the total of every amount due, which may include separation pay but always includes unpaid salary and pro-rated 13th month pay.
Do resigned employees get final pay?: Yes. An employee who resigns is entitled to final pay covering unpaid salary, pro-rated 13th month pay, and the cash value of any unused convertible leave, less any liabilities. Resignation alone does not entitle the employee to separation pay.
Is pro-rated 13th month pay included in final pay?: Yes. The 13th month pay you earned for the portion of the calendar year you worked is part of your final pay, computed as the basic salary actually earned during the year divided by 12.
Can an employer deduct cash advances from final pay?: Yes. Outstanding cash advances, loans, unreturned company property, and other lawful liabilities may be deducted from final pay, provided the deductions are documented and authorized under the Labor Code.
What can I do if my final pay is delayed beyond 30 days?: You may file a request for assistance under the Single-Entry Approach (SEnA) at the nearest DOLE office, which provides a 30-day mandatory conciliation-mediation before any formal complaint.
Is separation pay taxable in the Philippines?: Separation pay paid for an authorized cause beyond the employee's control — redundancy, retrenchment, automation, closure, disease, or death — is exempt from income tax and withholding tax under Section 32(B)(6)(b) of the National Internal Revenue Code, regardless of amount. Separation pay or a release package given on voluntary resignation is not covered by that exemption and is generally taxable.
How is separation pay computed by authorized cause?: Redundancy and installation of labor-saving devices pay one month salary per year of service. Retrenchment, closure not due to serious losses, and disease pay one-half month salary per year of service. In every case the total is at least one month's pay, and a fraction of at least six months counts as one whole year of service. Closure due to serious, duly proven losses carries no separation pay.

Key terms

Final pay (back pay / last pay).: The sum of every wage and monetary benefit due to an employee on separation, releasable within 30 days under DOLE Labor Advisory No. 06-20.
Authorized cause.: An employer-side, no-fault ground for termination under Labor Code Arts. 298–299 — automation, redundancy, retrenchment, closure, or disease — each carrying separation pay.
Just cause.: An employee-fault ground for dismissal under Art. 297 (serious misconduct, fraud, etc.); it generally carries no separation pay.
Service incentive leave (SIL).: The five days of paid leave per year under Art. 95; any unused SIL is convertible to cash and forms part of final pay.
Retirement pay.: The benefit under Art. 302 (RA 7641) — at least 22.5 days pay per year of service for a qualified employee aged 60–65 with at least five years of service — payable as part of final pay where it applies.
Certificate of Employment (COE).: A document stating dates and nature of employment that DOLE Labor Advisory No. 06-20 requires the employer to issue within three days of the employee's request.
SEnA.: The Single-Entry Approach under RA 10396 — a mandatory 30-day conciliation-mediation step at DOLE before a money claim becomes a formal NLRC case.

Sources

DOLE Labor Advisory No. 06-20 (Series of 2020) — Guidelines on the Payment of Final Pay and Issuance of Certificate of Employment.
Presidential Decree No. 851 (1975) — the 13th Month Pay Law, source of the pro-rated 13th month component.
Labor Code of the Philippines (Presidential Decree No. 442, as amended) — separation pay and authorized deductions.
Department of Labor and Employment (DOLE) — Single-Entry Approach (SEnA) under Republic Act 10396 for delayed-claim assistance.
Estimates are for guidance only. Confirm your computation with DOLE.

Last reviewed: June 2026

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Final pay calculator for the Philippines.

Sum your back pay under DOLE Labor Advisory 06-20 — unpaid salary, pro-rated 13th month, unused leave, and separation pay, less deductions, due within 30 days.