Key takeaways
- Final pay (what most Filipinos call back pay) = unpaid salary + unused leave conversion + pro-rated 13th month + separation pay if due + tax refund − authorised deductions.
- Labor Advisory 06-20: final pay within 30 days from separation; Certificate of Employment within 3 days from your request.
- Daily rate here is monthly salary × 12 ÷ 261 (5-day week) or ÷ 313 (6-day week); your company’s own payroll factor governs if it is more favourable.
- Resigned employees still get a pro-rated 13th month and the cash value of unused service incentive leave; separation pay is generally not due on resignation unless policy or contract grants it.
- If the 30 days pass, send a written demand, then file a free SEnA request at DOLE (hotline 1349).
How the final pay computation is done
Final pay is not one number your employer picks. It is a sum of separate items, each with its own rule, minus deductions you agreed to. The calculator above follows the list in DOLE Labor Advisory No. 06, s. 2020, which says final pay includes unpaid salary, the cash conversion of unused service incentive leave, the pro-rated 13th month pay, separation or retirement pay if due, a tax refund, and other benefits under your contract, company policy or collective bargaining agreement (CBA).
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1. Find your daily rate
Daily rate = basic monthly salary × 12 ÷ the number of paid days in a year. We use 261 for a 5-day work week (Monday to Friday) and 313 for a 6-day work week (Monday to Saturday). At ₱25,000 a month on a 5-day week, that is ₱300,000 ÷ 261 = ₱1,149.43 a day.
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2. Unpaid salary
Count the days you actually worked after the last payroll you received, up to your last day. Unpaid salary = unpaid days × daily rate. On a semi-monthly payroll (15th and 30th), this is usually the last cut-off you did not get paid for.
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3. Unused convertible leave
Unused service incentive leave (SIL) is convertible to cash by law. Vacation leave is convertible only if your company policy or contract says so. Value = unused convertible days × daily rate.
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4. Pro-rated 13th month pay
13th month = total basic salary earned from January 1 to your last day ÷ 12. If you already received part of it as an advance (some companies pay half in May or June), subtract that advance. Use our 13th month pay calculator if your year had unpaid absences or a salary change.
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5. Separation pay, tax refund and other additions
Add separation pay only if your exit was for an authorised cause (redundancy, retrenchment, closure not due to serious losses, disease) or if company policy, a CBA or your contract grants it. Compute it with the separation pay calculator. Add any tax refund from the year-end tax adjustment and other benefits owed to you.
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6. Subtract authorised deductions
Subtract only deductions allowed by law or authorised by you in writing: outstanding company loans, the value of unreturned company property you agreed in writing to pay for, SSS/Pag-IBIG loan balances the employer must remit, and withholding tax still due. The result is your net final pay.
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7. Note the release deadline
Release deadline = date of separation + 30 calendar days. If your last day was September 30, 2026, your final pay is due by October 30, 2026.
About the 261 and 313 factors: these are the common annual divisors in Philippine payroll for converting a monthly rate to a daily rate. 261 counts Monday-to-Friday work days in a year; 313 counts Monday-to-Saturday days. They are the factors used in the equivalent monthly rate tables of DOLE’s Handbook on Workers’ Statutory Monetary Benefits. verify Your company may use a different factor (some use 262, 314 or 365 for employees paid every day of the year). Whatever factor your employer has consistently used in payroll is the one that applies, unless it gives you less than the law requires. Check your payslip or the company handbook; HR will compute with its own factor.
Legal basis: DOLE Labor Advisory No. 06, s. 2020 (final pay within 30 days; COE within 3 days); Labor Code Art. 95 (service incentive leave of 5 days, unused SIL commutable to cash); PD 851 and the Revised Guidelines on the 13th Month Pay Law (1/12 of basic salary earned, pro-rated for separated employees); Labor Code Arts. 298–299 (separation pay for authorised causes and disease).
Primary sources: Labor Code (PD 442), lawphil.net · PD 851, lawphil.net · Department of Labor and Employment
Worked examples of final pay computation
Each line below is rounded to the centavo, the way a payroll system prints it. Days are multiplied using the full daily rate (monthly × 12 × days ÷ factor) before rounding, which is why a line can differ by a few centavos from multiplying the rounded daily rate. Your employer’s figures may differ slightly if it uses another factor.
- Basic monthly salary
- ₱25,000.00
- Daily rate (₱25,000 × 12 ÷ 261)
- ₱1,149.43
- Unpaid salary: 6 days (₱25,000 × 12 × 6 ÷ 261 = ₱1,800,000 ÷ 261)
- ₱6,896.55
- Unused SIL: 4 days (₱25,000 × 12 × 4 ÷ 261 = ₱1,200,000 ÷ 261)
- ₱4,597.70
- Basic salary earned January 1 to September 30 (9 months × ₱25,000)
- ₱225,000.00
- Pro-rated 13th month (₱225,000 ÷ 12)
- ₱18,750.00
- 13th month advance already paid
- ₱0.00
- Total before deductions (₱6,896.55 + ₱4,597.70 + ₱18,750.00)
- ₱30,244.25
- Deductions
- ₱0.00
- Release deadline (September 30 + 30 days)
- October 30, 2026
Net final pay: ₱30,244.25, due on or before October 30, 2026.
- Basic monthly salary
- ₱30,000.00
- Daily rate (₱30,000 × 12 ÷ 313)
- ₱1,150.16
- Unpaid salary: 10 days (₱360,000 × 10 ÷ 313 = ₱3,600,000 ÷ 313)
- ₱11,501.60
- Unused SIL: 5 days (₱360,000 × 5 ÷ 313 = ₱1,800,000 ÷ 313)
- ₱5,750.80
- Basic salary earned January 1 to June 30 (6 × ₱30,000)
- ₱180,000.00
- Pro-rated 13th month (₱180,000 ÷ 12)
- ₱15,000.00
- Service: 4 years 8 months → 5 years (fraction of at least 6 months = 1 year)
- 5 years
- Redundancy separation pay: 1 month per year (5 × ₱30,000), higher than 1 month
- ₱150,000.00
- Total (₱11,501.60 + ₱5,750.80 + ₱15,000.00 + ₱150,000.00)
- ₱182,252.40
- Deductions
- ₱0.00
- Release deadline (June 30 + 30 days)
- July 30, 2026
Net final pay: ₱182,252.40, due on or before July 30, 2026.
- Basic monthly salary (Makati Business Solutions Inc., 5-day week)
- ₱25,000.00
- Unpaid salary: 11 days, August 17–31 (₱300,000 × 11 ÷ 261 = ₱3,300,000 ÷ 261)
- ₱12,643.68
- Unused SIL: 3 days (₱300,000 × 3 ÷ 261 = ₱900,000 ÷ 261)
- ₱3,448.28
- Pro-rated 13th month: 8 months × ₱25,000 = ₱200,000 ÷ 12
- ₱16,666.67
- Less 13th month advance paid in May
- − ₱5,000.00
- 13th month still due (₱16,666.67 − ₱5,000.00)
- ₱11,666.67
- Tax refund from year-end adjustment
- ₱1,850.00
- Gross final pay (₱12,643.68 + ₱3,448.28 + ₱11,666.67 + ₱1,850.00)
- ₱29,608.63
- Less company salary loan balance
- − ₱6,000.00
- Less unreturned company phone (signed written authorisation)
- − ₱4,500.00
- Net final pay (₱29,608.63 − ₱10,500.00)
- ₱19,108.63
- Release deadline (August 31 + 30 days)
- September 30, 2026
Net final pay: ₱19,108.63, due on or before September 30, 2026. No separation pay: she resigned voluntarily.
Example 3 is the most common real case. Maria Clara served her 30-day notice using a resignation letter, returned her ID and headset, but lost her company phone. Because she signed an authorisation for the ₱4,500 charge, HR may deduct it. Without that signature, the deduction would be open to challenge and she could ask for the phone value to be settled separately.
Final pay late? Write your demand letter →What is included in final pay (and what is not)
| Item | Included? | Rule |
|---|---|---|
| Salary for days worked, not yet paid | Always | Unpaid days × daily rate |
| Unused service incentive leave | Always (if 1 year+ of service) | 5 days a year, commutable to cash (Art. 95) |
| Unused vacation leave beyond SIL | Only if policy or contract says convertible | Many companies forfeit; check the handbook |
| Unused sick leave | Only if policy says convertible | Not required by the Labor Code |
| Pro-rated 13th month pay | Always (rank-and-file) | Basic salary earned this year ÷ 12 |
| Separation pay | Only for authorised causes, disease, or if granted | Arts. 298–299; resignation: none by law |
| Retirement pay | If you qualify | Age 60 optional / 65 compulsory, 5 years’ service (Art. 302) |
| Tax refund | If over-withheld | Year-end adjustment on separation |
| Commissions, incentives already earned | Per contract or plan | Check the incentive plan’s release rules |
| Overtime, night differential, holiday pay owed | If unpaid | Part of unpaid wages |
Use this table to decide which inputs to fill in the calculator.
What does not count toward the 13th month: overtime, holiday pay, night differential, premium pay, the cash value of SIL, and allowances that are not part of your basic salary. They are still paid to you if owed, but on their own lines, not inside the 13th month base. If your employer pays you a monthly rice or transport allowance, leave it out of the basic salary input.
Service incentive leave vs vacation leave
The law gives every employee with at least one year of service 5 days of service incentive leave a year, and unused SIL is convertible to cash. Many companies instead give 10 to 15 days of vacation leave; if that leave is at least 5 days and convertible, it already satisfies SIL. Employees who already enjoy at least 5 days of paid vacation leave, and some others, are excluded from the SIL rule under the implementing rules. verify If your handbook says unused vacation leave is forfeited at year-end, the first 5 days of what you did not use this year may still be claimable as SIL. Enter only days you are sure are convertible.
Labor Advisory 06-20: final pay in 30 days, COE in 3 days
Before 2020 there was no fixed national deadline for releasing final pay, and many workers waited months for clearance to be signed. DOLE Labor Advisory No. 06, series of 2020 fixed two time limits that apply to every private employer, whatever the reason for separation (resignation, end of contract, termination or retirement):
- Final pay must be released within 30 days from the date of separation or termination, unless there is a more favourable company policy, individual or collective agreement.
- A Certificate of Employment must be issued within 3 days from the time the employee asks for it.
- Final pay covers unpaid salary, cash conversion of unused SIL, pro-rated 13th month, separation or retirement pay if due, tax refund, and other benefits under contract or CBA.
Count the 30 days in calendar days from your last day of employment, not from the day you finished clearance. A company clearance process is allowed (it is how HR confirms you returned laptops, IDs and cash advances), but it cannot be used to hold your money past 30 days indefinitely. If clearance is stuck because a department head will not sign, write to HR, list what you returned, and ask them to release what is undisputed. If you have not received your COE three days after asking, use our certificate of employment template to see what the document should contain and send a written follow-up.
Legal basis: DOLE Labor Advisory No. 06, s. 2020, Guidelines on the Payment of Final Pay and Issuance of Certificate of Employment.
Primary sources: Department of Labor and Employment
Back pay vs final pay: are they the same?
In everyday Philippine speech, yes. When people ask for back pay computation, they almost always mean final pay: the money released after you resign or are separated. HR forms, Labor Advisory 06-20 and DOLE use the term final pay. If you write to HR, use final pay so there is no confusion.
Backwages is something different. It is a legal award in an illegal dismissal case: the salary you would have earned from the day you were illegally dismissed up to your reinstatement or the finality of the decision. Only the NLRC or the courts award backwages, after a case. If you think you were dismissed without a just or authorised cause or without due process, you have a backwages question, not a final pay question; see how to file a DOLE complaint.
| Term | What it means | Who decides |
|---|---|---|
| Final pay | Everything owed on separation, net of deductions | Employer, within 30 days |
| Back pay (everyday use) | Same as final pay | Employer, within 30 days |
| Backwages | Lost salary from illegal dismissal to reinstatement or finality | NLRC or courts |
| Separation pay | Statutory or contractual payout on certain exits | Law, policy or CBA |
Final pay for resigned employees
Resigning does not forfeit your final pay. A resigned employee is entitled to unpaid salary, the cash value of unused convertible leave, and a pro-rated 13th month pay. What a resigned employee usually does not get is separation pay, because the Labor Code grants it only for authorised causes and disease. Some companies pay a resignation benefit after a certain number of years under their own policy; if yours does, enter it as an addition.
Under Labor Code Art. 300, you resign by giving written notice at least one month in advance. If you leave without notice and without one of the just causes in that article (serious insult, inhuman treatment, a crime against you or your family), your employer may hold you liable for damages. In practice this rarely becomes a deduction from final pay, and an employer may not simply invent a penalty. A deduction for “failure to render” is valid only if it is in your contract or you authorised it in writing, and even then it should reflect actual loss. If HR deducts a lump sum for short notice, ask for the basis in writing. See the resignation law at a glance on the hub.
What HR checks before releasing final pay
- Signed clearance from IT (laptop, phone, accounts), Admin (ID, keys, parking card), Finance (cash advances, liquidations) and your manager (turnover).
- Last attendance and payroll cut-off, so they know how many unpaid days to include.
- Leave ledger: unused SIL and any convertible vacation leave.
- Loan ledger: company loans, SSS and Pag-IBIG salary loan balances they still deduct.
- Year-to-date tax: they annualise your income and refund or deduct the difference, then issue BIR Form 2316.
Bring a list of what you returned with dates and who received it. A photo of signed acknowledgement slips saves weeks. Keep copies of your last payslips: they show your basic salary, your factor and your year-to-date figures, all of which you will need to check HR’s computation against this calculator.
Deductions your employer can and cannot make from final pay
| Deduction | Allowed? | Condition |
|---|---|---|
| Withholding tax still due | Yes | Required by tax law; shown in BIR 2316 |
| SSS, PhilHealth, Pag-IBIG employee share for the last cut-off | Yes | Statutory |
| SSS or Pag-IBIG salary loan balance | Yes, per loan terms | Employer remits it; ask for proof |
| Company loan or cash advance | Yes | With a signed loan agreement or authorisation |
| Unreturned laptop, phone, uniform | Only with written authorisation or clear policy you signed | Fair value, not replacement cost of a new unit |
| Training bond | Only if valid and in a signed agreement | Must be reasonable; pro-rated is safer |
| Penalty for not rendering 30 days | Doubtful | Needs a contract basis and actual damage |
| Cash shortages | Only after due process | Employee given a chance to explain verify |
The general rule under the Labor Code is that wages may not be deducted except for statutory items, items authorised by law, and deductions the employee has authorised in writing. verify If you see a deduction you did not agree to, ask HR in writing for the document that authorises it. Most disputes end at this step, because a deduction without paperwork is hard to defend at a SEnA conference.
Is final pay taxable?
Partly. Your unpaid salary is taxable compensation like any other payroll, which is why HR runs a final tax computation when you leave. The pro-rated 13th month and other benefits are tax-exempt up to ₱90,000 for the whole year combined (NIRC Sec. 32(B)(7)(e), as amended by the TRAIN Law). If your 13th month plus bonuses for the year are below ₱90,000, they are not taxed. Separation pay received because of causes beyond your control, such as redundancy, retrenchment, closure or disease, is exempt from income tax (NIRC Sec. 32(B)(6)(b)). Separation pay from a voluntary resignation benefit is generally taxable.
Because the employer withheld tax every payroll assuming you would work the whole year, leaving mid-year often means too much was withheld. The year-end adjustment done at separation produces the tax refund line in your final pay. Ask for BIR Form 2316 with your final pay: your next employer needs it to compute your withholding correctly, and it proves the tax you already paid.
| Final pay item | Tax treatment |
|---|---|
| Unpaid salary | Taxable compensation |
| Pro-rated 13th month + other benefits | Exempt up to ₱90,000 a year combined |
| Cash conversion of unused leave | Monetised vacation leave of private employees up to 10 days a year is exempt; beyond that, taxable verify |
| Separation pay (cause beyond your control) | Exempt verify |
| Tax refund | Not income; a return of your own withholding |
What to do if your final pay is late
- 1
Day 31: check the numbers
Run this calculator with your payslip figures. Know your number before you ask, and list each item so HR cannot answer with a single unexplained total.
- 2
Write a polite demand
Send a short letter citing Labor Advisory 06-20, your last day and the amount you computed, with a deadline of 5 to 10 days. Use the demand letter for final pay template; keep a receiving copy or the email.
- 3
File a SEnA Request for Assistance
If there is no payment or reply, file a Request for Assistance at the DOLE office nearest you or online. SEnA is free, no lawyer is needed, and the conciliation runs for 30 calendar days from the first conference. Prepare your details with our SEnA request for assistance form, or call DOLE hotline 1349.
- 4
If SEnA does not settle it
The desk officer refers you to the proper office (DOLE Regional Office or NLRC) where a formal complaint is filed. Have a lawyer, PAO or the DOLE desk officer review your complaint before you file it.
Money claims arising from employment must be filed within three years from the time the cause of action accrued, which for final pay is roughly 30 days after your last day (Labor Code Art. 306, formerly Art. 291). Do not sit on a claim for years hoping HR remembers you. The hub has the full rights and fake job offers section and our SEnA statistics tracker shows how many money claims DOLE settles each year.
Legal basis: RA 10396 (Single Entry Approach, mandatory 30-day conciliation-mediation); DOLE Department Order No. 249, s. 2025 (Revised SEnA rules, which replaced the old rules under DO 151-16).
Primary sources: RA 10396, lawphil.net · Department of Labor and Employment
Final pay for kasambahay, OFWs and contract workers
- Kasambahay (RA 10361): covered by the 13th month pay rule; if the employer ends the work without just cause, the kasambahay is owed earned wages plus 15 days’ pay. Disputes go to the DOLE Regional Office.
- OFWs: money claims arising from overseas employment go to the NLRC (Sec. 10, RA 8042 as amended); DMW handles recruitment and welfare concerns.
- Agency and contractual workers (DO 174, s. 2017): your employer is the contractor or agency, which releases your final pay; the principal can be held jointly liable for unpaid wages. verify
- Project and fixed-term employees: final pay is due within 30 days after the project or term ends, the same as any separation.
Common final pay computation mistakes
| The mistake | Why it matters | Do this instead |
|---|---|---|
| Using gross pay with allowances as basic salary | Inflates daily rate and 13th month | Use basic monthly salary from your payslip |
| Counting calendar days as unpaid days | Overstates unpaid salary | Count only days you worked after the last paid cut-off |
| Forgetting the 13th month advance | Double counts money already received | Enter the advance so it is subtracted |
| Adding separation pay on resignation | Not due by law | Add it only if policy or contract grants it |
| Ignoring loan balances | Your number will not match HR’s | Ask for your loan ledger before computing |
| Assuming all vacation leave converts | Many policies forfeit VL | Check the handbook; SIL always converts |
| Counting 30 days from clearance | Delays your claim | Count from your last day of employment |
| Waiting years to complain | Money claims prescribe in 3 years | Demand in writing after day 30, then SEnA |
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For the full list of documents you should keep from your job, from contract to COE, see the employment file checklist on the employment hub.
Frequently asked questions
+How is final pay computed in the Philippines?
Add your unpaid salary (unpaid days × daily rate), the cash value of unused service incentive leave and any convertible vacation leave, your pro-rated 13th month (basic salary earned this year ÷ 12, minus any advance), separation pay if due, and any tax refund. Then subtract authorised deductions such as company loans, unreturned property you agreed in writing to pay for, and tax due. The calculator above does this line by line.
+When should final pay be released after resignation?
Within 30 days from your date of separation, under DOLE Labor Advisory No. 06, s. 2020, unless your company policy, contract or CBA gives a shorter period. The 30 days are calendar days counted from your last day of employment, not from the day you completed clearance. The same rule applies whether you resigned, finished a contract, were laid off or were terminated.
+Is back pay the same as final pay?
In everyday Filipino usage, yes: back pay means the final pay released after you leave a job. Legally, final pay is the correct term. Backwages is different: it is the lost salary the NLRC or a court awards when a dismissal is found illegal, counted from dismissal until reinstatement or finality of the decision. If you are only waiting for your last salary and benefits, you are claiming final pay.
+Do resigned employees get 13th month pay?
Yes. Every rank-and-file employee who worked at least one month in the calendar year is entitled to 13th month pay, pro-rated if they resigned. Compute it as total basic salary earned from January 1 to your last day divided by 12. If your employer advanced part of it earlier in the year, that advance is subtracted. It is paid together with your final pay.
+Can my employer withhold final pay until I finish clearance?
Employers may require clearance to confirm you returned company property and settled advances, but clearance cannot be used to delay final pay beyond the 30-day period in Labor Advisory 06-20. If clearance is stalled by someone else, put in writing what you returned and when, and ask HR to release the undisputed amount. After day 30, send a demand letter and consider a SEnA request.
+Are unused leaves converted to cash in final pay?
Unused service incentive leave, which is 5 days a year after one year of service under Labor Code Art. 95, is convertible to cash. Vacation leave and sick leave beyond that are convertible only if your company policy, contract or CBA says so. Value each convertible day at your daily rate: monthly salary × 12 ÷ 261 for a 5-day week or ÷ 313 for a 6-day week.
+Do I get separation pay if I resign?
Not by law. The Labor Code grants separation pay only when employment ends for authorised causes such as redundancy, retrenchment, installation of labor-saving devices or closure not due to serious losses, and for disease. A resigned employee gets separation pay only if company policy, a CBA or the employment contract grants it. If yours does, enter the amount in the calculator as an addition.
+What deductions can be taken from my final pay?
Withholding tax still due, your share of SSS, PhilHealth and Pag-IBIG for the last cut-off, SSS or Pag-IBIG loan balances, company loans and cash advances you signed for, and the value of unreturned company property if you authorised the charge in writing. Ask HR for a written breakdown. A deduction with no law or signed authorisation behind it can be questioned at DOLE.
+What if my employer does not release my final pay after 30 days?
Send a short written demand citing Labor Advisory 06-20, your last day, the amount and a deadline of 5 to 10 days. Keep proof of receipt. If there is still no payment, file a Request for Assistance under the Single Entry Approach at the nearest DOLE office or online, or call hotline 1349. SEnA is free, needs no lawyer, and runs 30 calendar days of conciliation.
+What daily rate is used to compute final pay?
This calculator uses monthly salary × 12 ÷ 261 for employees on a 5-day week and ÷ 313 for a 6-day week. At ₱25,000 a month on a 5-day week, that is ₱1,149.43 a day. Your employer may use a different annual factor in its payroll; whatever factor it has consistently used applies, as long as the result is not below what the law requires.
Related formats and guides
Official sources
- Labor Code of the Philippines (PD 442) — Arts. 95 (SIL), 298–300 (separation pay, resignation), 302 (retirement).
- Presidential Decree No. 851 — The 13th month pay law: 1/12 of basic salary earned in the year.
- Republic Act No. 10396 — Single Entry Approach: mandatory 30-day conciliation-mediation.
- Republic Act No. 10963 (TRAIN Law) — Raised the 13th month and other benefits tax exemption to ₱90,000.
- Republic Act No. 10361 (Batas Kasambahay) — Kasambahay pay, 13th month and termination rules.
- Department of Labor and Employment — Labor Advisory No. 06, s. 2020 on final pay and COE; hotline 1349.
Deepak Middha, Chartered Accountant
18 years in hedge funds; writes and maintains sulat.ph. Figures, deadlines and articles on this page were checked against the Labor Code, DOLE issuances and the agencies' own pages, last on 2026-10-22. Items marked verify are awaiting confirmation from an official source.