30-Day Final Pay (Ph)

Here is guidance on the 30-Day Final Pay labor advisory. Although released in 2020, over a year after, there are still Companies that do not comply. And this, of course results to disgruntled employees.

From what I hear, it is not just the money that is important but also the institution’s reputation and relationship with its exiting employees that’s at risk.

You would not want any of that, would you?

So, here it is…

TIME OF PAYMENT AND/OR RELEASE OF FINAL PAY


To effectively harmonize the management prerogative of the employer and the right of the employee, the Final Pay shall be released within thirty (30) days from the date of separation or termination of employment, unless there is a more favorable company policy, individual or collective agreement thereto.

Labor Advisory No. 06-20

Simply put, employers should pay employee back wages or final pay within a period of 30 days from effective date of resignation or termination. It can be paid out in less number of days but never more.

What does this mean for HR and/or Accounting?

  1. Clearance processing should be done faster. So, review your process and remove unnecessary approvers and whenever possible, have simultaneous approval lanes. In most cases clearance processing can be done on the employees last day at work.
  2. Strong coordination between HR and Payroll, in case Payroll is under Accounting, is a must to ensure nothing falls in the cracks.
  3. Finally, ensure all documents that show proof of release are signed once final pay is disbursed or paid out.

Labor Advisory No. 06-20 Guidelines on the Payment of Final Pay and Issuance of Certificate of Employment

I hope this helps.


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