January 31, 2019 | Posted by: Mayee Gonzales | Personal Finance
January 31, 2019
There are many reasons why employees leave employers; poor management, office location, lack of career growth, or a plan to start a new business. Whatever it may be, leaving a job can be bittersweet—you bid goodbye to your colleagues as you 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 typically given a month after your last day or after submitting all HR requirements. This kind of pay, however, isn’t law-mandated meaning not all companies provide this incentive. Check your contract or ask your Human Resource Manager to know more about this.
Before receiving your final pay, you need to understand its meaning first. Why? Because other than knowing how much you will receive, a back pay computation also varies by company. However, remember that the following items must be considered:
For a more accurate computation, use this calculator from Sweldong Pinoy (1).
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.
Most companies issue this pay 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:
Despite the absence of a labor code, you still have a right to follow-up your final pay—it’s part of your contract, after all. Contact your Human Resource Manager to determine its release.
Apart from your final pay, your employer should also release your Certificate of Employment, BIR Form 2316, and a release waiver and quitclaim (that you need to sign) to acknowledge the receipt of your final pay.
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 exit.
Many resigned employees think that they are entitled to a separation pay (2). 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 (3).
Before handing that resignation letter, take note of the benefits you may receive. Talk to your immediate head or Human Resource Manager to align your resignation with your contract.