Employees cite various reasons for leaving a company. The opportunity to grow one’s career in another company, the search for better benefits, and getting out of a toxic workplace are among the top reasons why people leave their jobs in pursuit of a fresh start. An important part of leaving your current company is getting a form of payment that your company owes you, called final pay.
What makes up an employee’s final pay?
Final pay is made up of different things, many of which are part of the benefits mandated by the Philippines’ labor department. However, it’s up to the company if they want to give out final pay. There’s no such law that says companies are required to pay for outgoing employees.
These things make up an employee’s final pay upon resignation:
- 1. Prorated 13th month pay. This amount is equal to the fraction of your 13th month pay based on the number of months rendered if you left the company before the year ends.
- 2. Prorated last salary. This is the withheld amount equal to your last salary.
- 3. Tax refund. You will receive a refund on your tax payments if your taxes due is less than the sum of your withheld taxes.
- 4. Company liabilities and deductions. Your company will levy a part of your final pay to cover your unpaid liabilities such as loans or damages.
- 5. Converted service incentive leave credits. If you have remaining unused vacation and/or sick leave credits, they can be converted into cash and form a part of your final pay. However, it depends on your company policy on service incentive leave credits conversion.
When do I get my final pay?
It usually takes about a month or two after the employee’s last day of work for companies to release the final pay. There are factors, however, that affect the time it takes for this payment to be given out to the employee.
You may experience a delay in getting your final pay if you haven’t finished your exit clearance yet, or if the company is intentionally holding out your final pay due to lack of a labor code provision for its timely release. If the latter applies to your situation, it may be helpful to get in touch with the HR manager to expedite the release of your final pay.
Aside from final pay, what else do I get upon leaving my company?
It’s a must for your company to hand over to you your BIR Form 2316 (Certificate of Compensation Payment / Tax Withheld), Certificate of Employment, and a release waiver and quitclaim for you to sign upon receipt of your final pay. You’ll need to submit the first two documents to your next employer as part of your upcoming on-boarding process.
What’s the difference between final pay, back pay, severance pay, and separation package?
These are loosely defined technical terms that refer to an employee’s final benefits upon resignation. Since these are often misused and interchanged with each other, let’s define them for us to understand their differences:
- ● Back pay. It’s defined as the amount of salary and other benefits that an employee claims that he or she is owed by the company after wrongful termination.
- ● Severance pay. It’s the payment to the employee who was separated from employment.
- ● Separation package. It refers to the sum of pay and benefits received by an employee after the end of his employment.
In other words, your company should give your final pay for the work you’ve rendered up to your last work day if you voluntarily resigned. Otherwise, you should receive compensation for being terminated without an authorized cause, or laid off based on company bankruptcy, retrenchment, or redundancy in accordance with the Philippine labor code.
Why an employee’s final pay matters
As an outgoing employee, you have the privilege to receive your final pay as a form of payment for the work you’ve done up to your last day at work. Talk to your immediate supervisor or HR manager to discuss about getting your final pay along with other documents for your next job.
The post Understanding Final Pay in the Philippines appeared first on Sprout.
source https://sprout.ph/blog/understanding-final-pay-philippines/
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