When you resign or are separated from your job, the amount your employer hands you on your last day is more than just your last paycheck. Philippine labor law requires employers to release your final pay — a combined total of everything you are owed up to your last day of work. Unfortunately, many employees accept whatever number is written on the clearance form without understanding what it includes. This guide breaks down the computation step by step so you know exactly what to expect.
👉 Use the Final Pay Calculator to compute your own amount instantly.
What Is Final Pay?
Final pay is the total amount an employer must release to an employee whose employment has ended, whether by resignation, retirement, retrenchment, or termination. Under DOLE Labor Advisory No. 06-20, employers are expected to release final pay within 30 days from the date of separation, unless a different timeline is agreed upon in writing.
The Components of Final Pay
Your final pay is not a single number — it is a sum of several components:
- Unpaid salary — wages for days worked up to your last day, including any unpaid overtime, night differential, or holiday pay.
- 13th month pay (prorated) — the portion you have earned from January 1 up to your last day, even if you resign before December.
- Unused vacation / service incentive leave (SIL) conversion — commuted to cash based on your daily rate.
- Separation pay — only if the separation was initiated by the employer for authorized causes (retrenchment, redundancy, closure). Resignation typically does not include separation pay.
- Other benefits — retirement pay, unpaid commissions, or bonuses contractually due to you.
How Each Component Is Computed
1. Unpaid Salary
Multiply your daily rate by the number of days worked in your final pay period. Add any unpaid overtime, night differential, or holiday pay for that period.
2. Prorated 13th Month Pay
Formula: (Total basic salary earned from Jan 1 to last day) ÷ 12. Even if you resign in June, you are entitled to the 13th month portion you earned in those 6 months.
3. Leave Conversion
Multiply unused vacation leave days by your daily rate. Service Incentive Leave (5 days/year after 12 months of service) is also convertible if unused.
4. Separation Pay (if applicable)
One month pay per year of service, or at least one month pay whichever is higher, for authorized-cause separations. 👉 Use the Separation Pay Calculator to check your entitlement.
Worked Example
Suppose you earn ₱25,000/month, resign on June 30 after 2 years of service, with 5 unused vacation days and no separation pay entitlement:
- Unpaid salary (June): ₱25,000
- 13th month (Jan–Jun): (₱25,000 × 6) ÷ 12 = ₱12,500
- Leave conversion: 5 days × ₱1,153.85 daily rate = ₱5,769
- Estimated final pay: ₱43,269
Numbers vary by company policy and exact dates — that is why running it through a calculator matters.
👉 Compute your own final pay now.
What If Your Final Pay Is Delayed?
Employers must release final pay within 30 days. If they delay beyond that without valid reason, you may file a complaint with DOLE. Read our guide on filing a DOLE complaint for the full process.
Plan Your Job Transition
Knowing your final pay is only the first step. If you are moving to a new role, use the Job Change Calculator to compare salaries and plan your financial runway between jobs. Looking for remote work that pays in USD? Explore workpinoy.com for resources and job leads.