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Issuance of Certificate of Employment and Release of Final Pay (2020)

The new Labor Advisory No. 6 Series of 2020, was released last January 31, 2020 by The Department of Labor and Employment. It tackles the guidelines on the payment of Final Pay and Issuance of Certificate of Employment of an employee.

Who can request for a Certificate of Employment?

A previous or current employee may request for a “Certificate of Employment” from the employer specifying his or her job title, type of work, and start and last date of their employment.

When should a CoE be issued by the employer?

According to the new advisory, the employer should issue a Certificate of Employment within three (3) days from the time of the request by the employee.

Who can receive a Final Pay?

All employees, regardless of the cause of the termination of employment, has the right to receive a Final Pay.

What covers the Final Pay?

  • Unpaid earned salary of the employee;
  • Cash conversion of unused Service Incentive Leave (SIL) pursuant to Article 95 of the Labor Code;
  • Cash conversions of remaining unused vacation, sick or other leaves pursuant to a company policy, or individual or collective agreement, if applicable;
  • Pro-rated 13th month pay pursuant to Presidential Decree No. 851 (PD 851);
  • Separation pay pursuant to Articles 298-299 of the Labor Code, as renumbered, company policy, or individual or collective agreement, if applicable;
  • Retirement pay pursuant to Article 302 of the Labor Code, as renumbered, if applicable;
  • Income tax claim for the excess of taxes withheld, if applicable;
  • Other types of compensation stipulated in an individual or collective agreement, if any; and
  • Cash Bond/s or any kind of deposits due for return to the employee, if any.

When should the Final Pay be released by the employer?

The Final Pay shall be released within thirty (30) days from the date of termination of employment, unless there is another favorable company policy, individual, or collective agreement.

What should I do if the guidelines are not met by the employer?

Any Issue or claim dispute arising out or relating to the payment of final pay, or Issuance of certificate of employment, shall be filed before the nearest DOLE Office which has jurisdiction over the workplace, for conciliation and subject to DOLE’S existing enforcement mechanism.

ABOUT THE AUTHOR

Raymund Zalamea

Raymund has over 20 years of experience in retirement consulting, entrepreneurship and marketing. He manages both the actuarial and the benefits administration services for Zalamea.

Raymund has also been successful in launching an online employee portal that provides seamless processing of payroll, timekeeping, retirement savings and loans.

7 thoughts on “Issuance of Certificate of Employment and Release of Final Pay (2020)

  1. Hi Sir, I’m 60 years old and still working, I am planning to retire this year. It is possible that i can get a retirement pay during this pandemic. We are 6 only in the company. Thank you very much and God bless…

    1. Hi Josie! Does your company have an established retirement plan? If so, it would be best to check first if you are eligible for the retirement benefit stated on the company’s retirement plan. However, it should be noted that as per R.A. 7641, an employee who wishes to retire is entitled to a retirement benefit provided that he has reached at least 60 years old with at least 5 years of service. In this regard, if you are in the service of the company for at least 5 years already, then you are eligible for a retirement benefit under R.A. 7641 and your company shall shoulder the payment in case there is no retirement fund.

      1. I am already 21 years in service Ma’am and I am worried because I read the article under the labor code that if your company falls in service and retail and if the employees is below 10, since we are only 6 in the company, you are not entitled for the retirement pay? Our company don’t have a retirement plan. Do I still qualify for the retirement pay considering my length of service? I plan to retire this January 2021. Can you help me please? Thank a lot Ma’am.

        1. We regret to inform you that your understanding is correct Maam. As per R.A. 7641, retail and service establishments employing not more than 10 employees are not required to provide retirement benefits to employees. However, further checking is needed in order to determine whether your company indeed falls under the exemption. In this case, it will be best to consult with your HR whether benefits will be provided to you considering your tenure since it will be the company who will decide on this matter.

  2. Sir, our company has no BIR registered retirement plan. I’m 35 years old , with more than 10 years of service, and retired / separated August 31, 2020. The company pay us as retirement pay according to labor law and according to the tax code. Am I eligible to tax exemption under the Bayanihan Act 2? Can i recover the tax deducted from me?

    1. Hi! To answer your question, only retirement benefit received from a duly registered retirement plan with the BIR is tax – exempt under the Bayanihan Act 2. Hence, we don’t think that you can recover the tax deducted from you.

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