What goes into final pay
Final pay — sometimes called "back pay" or "last pay" — is the total amount owed to an employee who has resigned, been terminated, or reached the end of a contract. It's separate from your regular payroll run and covers everything you've already earned but haven't yet received, plus a few benefits triggered specifically by separation.
| Component | How it's typically computed |
|---|---|
| Unpaid salary | Daily rate × unpaid days worked, up to your last day |
| Pro-rated 13th month pay | (Monthly salary × months worked this year) ÷ 12 |
| Unused leave conversion | Daily rate × unused convertible leave days |
| Other earnings | Tax refund, unpaid overtime, unpaid allowances, etc. |
| Deductions | Outstanding loans, cash advances, unreturned company property |
This calculator uses a simplified daily rate of monthly salary ÷ 30 to keep the estimate straightforward. Some employers use a different divisor (such as 261 working days a year ÷ 12, or 26 days for semi-monthly payroll), so your actual computation may vary slightly.
The 30-day release rule
DOLE Labor Advisory No. 06-20 sets the general expectation that final pay should be released within 30 days from the date of separation, whether the employee resigned, was terminated, or reached the end of a fixed-term contract. Company policy, a collective bargaining agreement, or an individual contract can set a shorter timeline, but not a longer one without justification.
Employers are also expected to issue a Certificate of Employment within three days of the employee's request, separately from the final pay release.
Example computation
An employee earning ₱30,000 a month resigns after working 6 months in the current year, with 10 unpaid days worked in their final cutoff and 5 unused leave days. Their daily rate is ₱1,000 (₱30,000 ÷ 30). Unpaid salary comes to ₱10,000, pro-rated 13th month pay comes to ₱15,000 (₱30,000 × 6 ÷ 12), and leave conversion comes to ₱5,000 — for a gross final pay of ₱30,000, before any deductions.
Final pay vs. separation pay
These two are often confused but are legally distinct. Final pay is money you already earned — unpaid wages, pro-rated benefits, and leave conversions — owed regardless of why you left. Separation pay is an additional, legally mandated benefit that only applies to specific situations, such as retrenchment, redundancy, closure not due to serious losses, or disease that makes continued employment prohibited. Employees who resign voluntarily are generally not entitled to separation pay unless it's provided for in a company policy or employment contract.