When must employers release final pay?

Under DOLE Labor Advisory No. 06-20 (Series of 2020), employers must release the final pay within 30 days from the date of separation or termination of employment, unless a more favorable company policy or CBA provision applies.

What is included in final pay?

Final pay typically includes unpaid salary for days worked, pro-rated 13th month pay (PD 851), cash conversion of unused leave credits (if company policy allows), tax refund or collection from annualization, and other unpaid benefits. Outstanding loans and accountabilities are deducted.

Can employers deduct outstanding loans from final pay?

Yes. Employers may deduct outstanding company loans, cash advances, and other accountabilities from the employee's final pay, provided these were authorized by the employee in writing. Government-mandated loans (SSS, Pag-IBIG) are typically settled separately.

How is pro-rated 13th month pay computed in final pay?

Under PD 851, pro-rated 13th month pay is calculated as: total basic salary earned during the calendar year divided by 12. If the employee already received a partial 13th month payment (e.g., mid-year), only the remaining balance is included in the final pay.

Is final pay subject to income tax?

Yes. The remaining salary and other taxable components are subject to withholding tax. However, the 13th month pay portion is tax-exempt up to P90,000 (combined with other benefits under the TRAIN Law). Separation pay due to authorized causes (retrenchment, redundancy, closure) is tax-exempt per NIRC Section 32(B)(6)(b).

Final Pay Calculator

Compute an employee's final pay including remaining salary, pro-rated 13th month pay (PD 851), leave monetization, and loan deductions. Based on DOLE Labor Advisory No. 06-20.

Monthly Salary

₱

Divisor Factor

313 days

All days including holidays and rest days

303 days

All days including holidays, excluding rest days

261 days

Working days only (5-day work week)

Working days remaining in last pay period

Unused convertible leave days

Months worked this year

13th month already received this year

₱

Outstanding loan balance

₱

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Frequently Asked Questions

When must employers release final pay?: Under DOLE Labor Advisory No. 06-20 (Series of 2020), employers must release the final pay within 30 days from the date of separation or termination of employment, unless a more favorable company policy or CBA provision applies.
What is included in final pay?: Final pay typically includes unpaid salary for days worked, pro-rated 13th month pay (PD 851), cash conversion of unused leave credits (if company policy allows), tax refund or collection from annualization, and other unpaid benefits. Outstanding loans and accountabilities are deducted.
Can employers deduct outstanding loans from final pay?: Yes. Employers may deduct outstanding company loans, cash advances, and other accountabilities from the employee's final pay, provided these were authorized by the employee in writing. Government-mandated loans (SSS, Pag-IBIG) are typically settled separately.
How is pro-rated 13th month pay computed in final pay?: Under PD 851, pro-rated 13th month pay is calculated as: total basic salary earned during the calendar year divided by 12. If the employee already received a partial 13th month payment (e.g., mid-year), only the remaining balance is included in the final pay.
Is final pay subject to income tax?: Yes. The remaining salary and other taxable components are subject to withholding tax. However, the 13th month pay portion is tax-exempt up to P90,000 (combined with other benefits under the TRAIN Law). Separation pay due to authorized causes (retrenchment, redundancy, closure) is tax-exempt per NIRC Section 32(B)(6)(b).

Read our full guide: Final Pay Computation Guide →