Back Pay and Other Benefits You May Receive Upon Resignation

January 31, 2019 | Posted by: Mayee Gonzales | Personal Finance

January 31, 2019

Back Pay Computation Philippines | Moneymax

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.

What is Back Pay?

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:

  1. Last salary – your employer may withhold your last salary and release it with your final pay.
  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. Here’s a complete guide to 13th month pay computation in the Philippines.
  3. Tax refund – you must receive a tax refund if 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 Computation in the Philippines

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.

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When Should I Expect my Back Pay?

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:

  • 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 final pays

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.

Back Pay Computation Philippines

What Else Should I Receive Upon Resignation?

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.

Am I Also Entitled to a Separation Pay?

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).

Final Thoughts

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.

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