Any career transition is a big life decision, a leap, and a daunting task. One of the first steps to switching or exiting the corporate workspace is resignation, which is never an easy decision. While rewards may be fulfilling when you explore new things, resigning can leave you with feelings of uncertainty as you let go of a stable job and steady salary.
All that said, before you do decide to resign, you may be wondering just what will be in store for you in the final payment. Professional accounting services in the Philippines share that the labor laws state that it shall be inclusive of the salary for the work rendered, a prorated 13th-month pay, SIL, unused incentive leaves, if any, and other bonuses.
If need be, tax refunds held in excess by the company shall also be returned, as well as the bond. If the resigning employee owes their employer SSS loans and other amounts, such will be deducted from the final payment. Noteworthy, that is not all there is to final pay. It can be a bit tricky under certain circumstances, and the release itself may take time. If you are interested in learning more, read below.
Not All Workers are Entitled to Separation Pay
If you plan to resign, tax and auditing services in the Philippines emphasize that you will not be entitled to separation pay. Separation pay is not given all the time. It will only be given to you if you are removed from a job due to authorized causes, including redundancy, retrenchment, and diseases.
You are also authorized to receive such in cases where you have been illegally dismissed by your employer, and your job may not be reinstated due to relationship tensions. In summary, separation pay is not awarded to employees who resign or voluntarily withdraw from their position.
What DOLE Has to Say About Final Pay
Many fall victim to false interpretations of final pay terms. This has previously resulted in some employers protracting the release of final pay while others would let their employees undergo a rigorous clearance system.
The Department of Labor and Employment (DOLE) clarified the specifics on when employees are entitled to receive their final pay when, on the 31st of January 2020, they issued the Labor Advisory No. 06 series of 2020. Here, DOLE mandated that the release of final pay shall be within 30 days from the date of contract termination or employment separation.
Such a mandate was administered to maintain harmony between employee rights and employer’s management prerogatives. These guidelines should be followed unless cases arise where a more favorable agreement or policy is reached.
Filing of Disputes and Computing Your Final Pay
It is understandable for employees to eagerly await their final pay, especially when they are still waiting for their next employment opportunity. That said, if you tender your resignation on the 31st of October 2023, it will be effective on the 30th of November, 2023. If you decide to go through with your resignation plans, you must inform your company one month before the date you plan to resign. In the example previously mentioned, your company would then have to give you your final pay on or before December. The decision to disburse your final pay at an earlier time is in the hands of your company management.
Any issues or disputes arising from the issuance of your final pay would need you to file your claim to the DOLE office nearest you. Expert tax services in Manila say that it is best to have everything properly settled with your employer. However, if that does not go according to plan, going to DOLE is a great last resort. For your protection, note that employees must be aware of the labor laws that defend them and the wage they have earned the right to own.
Lastly, business owners must be on top of these issues to prevent unpalatable meetings with former employees in a court of law. Apart from being a massive headache, being charged with neglecting to pay former staff is a negative reflection of your company’s values and ethics. In cases where you may struggle to be on top of it all, as difficult as things may be, do not hesitate to contact professionals for servicing.
Final Thoughts
Looking to protect your business and ensure smooth employee transitions? When it comes to understanding final pay after employee resignations in the Philippines, trust the expertise of our reputable accounting services in Pasig. We’ll help you navigate the complexities and uphold your company’s values. Contact us today for professional guidance and safeguard your business’s reputation. We make your peace of mind our priority.
