What is final pay?
Final pay is the total amount still due to an employee after employment ends. The exact components depend on what has already been paid, the employee's circumstances, company policy and applicable law.
After resignation, final pay can be more than just the last few days of salary. Depending on the situation, it can include earned but unpaid salary, prorated 13th-month pay, cash-convertible leave where applicable, tax adjustments, other benefits due and valid deductions or accountabilities.
Common components of final pay
- Unpaid salary: compensation earned up to the employee's final working day that has not yet been paid.
- Prorated 13th-month pay: the employee's applicable 13th-month entitlement for basic salary earned during the calendar year.
- Unused leave: only when the leave is legally or contractually cash-convertible.
- Other amounts due: benefits, reimbursements or adjustments owed under policy, agreement or applicable rules.
- Deductions: valid deductions or accountabilities that affect the final net amount.
Final pay is not the same as separation pay
These terms are often confused. Final pay is the overall settlement of amounts due when employment ends. Separation pay is a specific benefit that may be due only under qualifying grounds, agreements or company policies. A voluntary resignation does not automatically create statutory separation-pay entitlement.
If you are unsure whether separation pay applies, use the separate Separation Pay Calculator only after identifying the applicable basis.
When should final pay be released?
DOLE has reiterated the general 30-day final-pay guideline under Labor Advisory No. 06, Series of 2020, unless a more favorable company policy, agreement or practice applies. Individual disputes can depend on the facts, so keep copies of resignation, clearance and payroll records.
A simple final-pay checklist
- Confirm your final working date and last payroll cutoff already paid.
- Calculate earned but unpaid salary after that cutoff.
- Add the applicable prorated 13th-month amount.
- Check whether unused leave is cash-convertible.
- Add any other benefits or adjustments still due.
- Subtract valid deductions or accountabilities.
- Compare your estimate with the employer's final-pay breakdown.
Official reference
For current labor guidance, check the DOLE Bureau of Working Conditions and DOLE's guidance on final pay and Certificate of Employment release.
Frequently asked questions
What is usually included in final pay after resignation?
Final pay can include earned but unpaid salary, prorated 13th-month pay, applicable cash conversion of unused leave, tax adjustments, other amounts due and valid deductions.
Is separation pay included when I resign?
Not automatically. Statutory separation pay generally depends on the ground for separation or another applicable legal, contractual or company-policy basis.
When should final pay be released?
DOLE has reiterated a general guideline of release within 30 days from separation unless a more favorable policy, agreement or practice applies.
Can unused leave be added to final pay?
Only leave that is legally, contractually or by company policy cash-convertible should be included. Not every unused leave balance must be paid in cash.
Worked final-pay example
Assume a departing employee has ₱12,000 of unpaid salary, ₱15,000 of prorated 13th-month pay, ₱4,000 of convertible leave and ₱2,000 of other approved amounts, with ₱3,000 of authorized deductions. A simple component total is ₱12,000 + ₱15,000 + ₱4,000 + ₱2,000 − ₱3,000 = ₱30,000.
Final pay is not the same as separation pay
Final pay is the settlement of compensation and benefits due when employment ends. Separation pay is a distinct statutory or contractual benefit that may apply only in particular termination situations. A resigning employee can have final pay without automatically being entitled to statutory separation pay.
Build the computation component by component
- Unpaid salary through the last compensable day.
- Prorated 13th-month pay based on basic salary actually earned.
- Convertible leave if the employee is entitled to conversion.
- Other approved earnings or reimbursements.
- Authorized deductions that can lawfully be taken from the settlement.
Documents to keep
Keep the final payslip or settlement statement, attendance or payroll records relevant to unpaid salary, the 13th-month computation, leave balance records and an explanation of deductions. These make it much easier to identify which component is causing a disagreement.