The Department of Labor and Employment in the Philippines ("DOLE") recently issued the `Guidelines on the Payment of Final Pay and Issuance of Certificate of Employment' ("Guidelines") which requires employers to pay for termination benefits and to issue certificates of employment within a stipulated time period.
Payment of Termination Benefits
The Guidelines require an employer to make payment for wages or monetary benefits due to an employee within thirty (30) days from the date of separation or termination of employment unless a shorter timeline is provided under the company policy, employment agreement or collective agreement. Such payments include the following (where applicable):
- unpaid earned salary of the employee;
- cash conversion of unused Service Incentive Leave;
- cash conversion of unused holiday, sick or other leave days pursuant to a company policy, employment agreement or collective agreement;
- pro-rated 13th month pay;
- severance pay;
- retirement pay;
- income tax claim for the excess of taxes withheld;
- other types of compensation stipulated in and employment agreement or collective agreement; and
- cash bonds or any kind of deposit for return to the employee.
The payment timeline applies irrespective of the ground of termination.
Issuance of Certificate of Employment
An employer must also ensure that a certificate of employment is issued within three (3) days from the date of the request by the employee. The certificate should specify the date of employment and the type of work which the employee performed. Certificates may be requested for by all employees, even those in active service.
The Guidelines add clarity to the timeline for payment of termination benefits. However, given the short timeline, employers will need to plan ahead in the event of termination or mass redundancy exercises.