In our previous articles, we discussed some topics about the right of an employee to voluntarily resign and its effects. But what if the employer negatively reacts against such resignation?
The employee might ask, what more can the employer possibly do? As an employee, you have every right to resign, and upon resignation, you are free to go ahead without your employer watching over your shoulders anymore.
Lest the employee forgets, the employer may point to your last pay as well as your certificate of employment (or “COE”) as his final arsenal against you. This article will answer your question on whether the employer can legally withhold them.
Desire for a clean slate
Employees have various reasons for resigning. Some might feel that they do not still fit in their work environment despite devoting years of their lives in their jobs. Others may find the employer and colleagues as too toxic and these already take a toll to the employee’s mental health. A few may just want to take a break and breathe from what has already been a demanding life as a member of the workforce.
Just as important as any reason for resigning is an employee’s plan to move forward. A clean slate is what the employee desires as he takes the leap to the next chapter of his life. A clean slate means a record showing no evidence of wrongdoing or broken rules. This record includes past employment showing the employee’s professional engagements and undertakings. A huge factor for his “employability” is this past record.
If you are an individual looking for a job, this certificate will come handy since this gives an employer the idea of the skills you have acquired. Moreover, the employer will be able to match these skills to what he needs in his business or trade.
What is a certificate of employment?
A certificate of employment or “COE” is known as a document issued by an employer showing the employment history of an individual. The Labor Code of the Philippines does not specifically define a certificate of employment.
Under the omnibus rules which implement the Labor Code (Book V, Rule 14, Section 10):
“A dismissed worker shall be entitled to receive, on request, a certificate from the employer specifying the dates of his engagement and termination of his employment and the type or types of work on which he is employed.”
Last January 31, 2020, the Department of Labor and Employment (DOLE) issued Labor Advisory No. 6, series of 2020. It defines a COE as a certificate from the employer specifying the dates of an employee’s engagement and the termination of his/her employment and the type of work in which he/she was employed.
COE versus Clearance
An employer may issue a clearance in favor of a resigned employee. One should not confuse a clearance from a COE.
Clearance is a process where an employee settles his accountabilities with his employer. This includes the payment of debts and obligations. It also covers the return of company properties and documents, which are held by the employee.
This process is a standard operating procedure in almost all employers, both public and private. After the employee has completed this process, the employer may issue a document showing that the employee’s liabilities with the employer have been settled and the employee is “cleared.”
The Supreme Court has recognized a clearance as a valid procedure and may be imposed by the employer:
“Clearance procedures are instituted to ensure that the properties, real or personal, belonging to the employer but are in the possession of the separated employee, are returned to the employer before the employee’s departure.” (Milan v. National Labor Relations Commission, G.R. No. 202961, Feb. 04, 2015)
The release of an employee’s last pay and benefits may be conditioned on the settlement of his clearance.
A COE should be distinguished from a clearance. While a clearance can be both the process and the document showing that such process has been complied with, a COE is not a process but a document or a certification, which shows the employee’s current or previous employment.
When should the employer issue a COE?
Labor Advisory No 6, series of 2020 mandates an employer to issue a certificate of employment within three (3) days from the time of the request by the employee.
How about the last pay?
Your last pay may not only be the “wages” you are entitled in your last days in office.
Labor Advisory No 6, series of 2020 defines a “Final Pay,” “Last Pay,” or “Back Pay” as the sum or totality of all the wages or monetary benefits due the employee regardless of the cause of the termination of employment, including but not limited to:
- Unpaid earned salary of the employee;
- Cash conversion of the unused Service Incentive Leaves (SIL) pursuant to Article 95 of the Labor Code;
- Cash conversion 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 deposit/s due for return to the employee, if any.
The advisory also gives the time within which such final pay shall be given to the resigned employee:
“To effectively harmonize the management prerogative of the employer and the right of the employee, the Final Pay shall be released within thirty (30) days from the date of separation or termination of employment, unless there is a more favorable company policy, individual or collective agreement thereto.”
After undergoing the clearance process and the turnover period, if needed, the resigned employee can safely rely on the legal safeguards given to him. He can courteously ask his employer for his COE which should be given within three days from the date of request. His final pay should also be given within 30 days from the date of separation or termination of employment. However, if there is a more favorable company policy so that a shorter period is provided, that period should be applied. This shorter period may also be stipulated in the employment contract or in the collective bargaining agreement, if there is one.
Go and check for these pieces of information. With proper guidance and information you should be well-armed in order to protect what is legally due to you as an employee.
Additional Resouce if you’re thinking of resigning
I hope this was able to help you understand resignation better, but chances are, you still have questions. Click here for additional resources which I think can help you, as well as a preview video. Go to info.legalguide.ph/resignation to learn more.