Back Pay and Other Benefits You May Receive Upon Resignation

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Back Pay Philippines | MoneyMax.ph

There are many reasons why employees leave employers; poor management, office location, lack of career growth, or a new business opportunity. Whatever it may be, leaving a job will always always be bittersweet—you bid goodbye to your colleagues as you also look forward to new possibilities.

Upon resignation, another thing to look forward to is your back pay. In the Philippines, back pay or final pay is the money you receive after resigning from a company. It is usually given a month after your last day or after submitting all HR requirements. Back pay, however, isn’t a law-mandated benefit meaning not all companies provide this incentive. Check your contract or ask your Human Resource Manager to know more about this.

Understanding Back Pay

Before receiving your back pay, you need to understand what constitutes it first. Why? Because other than knowing how much you will receive, back pay computations also vary by company. However, remember that the following items must be considered:

  1. Last salary – your employer may withhold your last salary and release it with your back pay. Make sure that you receive this.
  2. Pro-rated 13th month pay – you must receive a pro-rated 13th month pay if you resigned before the year ends. If your basic salary, for example, is PHP 15,000 per month and you have worked for 10 months, your 13th month computation is: PHP 15,000 x 10 months / 12 = PHP 12,500.
  3. Tax refund – you must receive a tax refund is the tax you owe is less than the sum of the total amount of your withholding taxes and estimated taxes.
  4. Vacation leave conversion (if convertible to cash)
  5. Sick leave conversion (if convertible to cash)
  6. Deductions and/or liabilities (payment to loans or lost/damaged office equipment)

Here is a sample payslip to give you an idea of your back pay computation:

Back Pay and Other Benefits Upon Resignation | MoneyMax.ph

For a more accurate computation of your back pay, use this calculator from Sweldong Pinoy.

A back pay is a great way to boost your savings or help you while you transition to a new job. Use it wisely and remember to save a portion of it.

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When Should I Expect my Back Pay?

Most companies issue back pays within 30-60 business days after an employee’s last day at work. If it exceeds this mark, here are some possible causes of delay:

  • Signatories are still incomplete
  • Your manager has not submitted your clearance to HR
  • Your company is holding it off since there is no provision in the labor code regarding the release of back pays

Despite the absence of a labor code, you still have a right to follow-up your back pay—it’s part of your contract, after all. Contact your Human Resource Manager to determine its release.

Back Pay and Other Benefits Upon Resignation

What Else Should I Receive Upon Resignation?

Apart from your back pay, your employer should also release your Certificate of Employment, BIR Form 2316, and a release waiver and quitclaim (which you need to sign) to acknowledge the receipt of your final pay. If you have health insurance, you can also keep using it until it expires. Just make sure to inform your Human Resource Manager so they can notify your insurance provider.

To avoid future problems, it is also important to check if your company remits your SSS and PhilHealth contributions. Check your contributions online and discuss any issues with your employer before you leave.

Am I Also Entitled to a Separation Pay?

Many resigned employees think that they are entitled to a separation pay. However, it is important to know that separation pay is only given to employees whose services are forcibly terminated. Some reasons behind this include closure of business, retrenchment, and reduction of personnel. Also, unlike back pay, local laws mandate separation pay as it is part of the Philippine Labor Code.

Final Thoughts

Resignation is a momentous part of every person’s career. Make it right and keep track of the benefits you should receive. Talk to your immediate head or Human Resource Manager to align your resignation with your contract. Good luck!

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