Last Pay Computation of Terminated Employee Paid by Company that Utilizes Cut-off Period

Last Pay Computation of Terminated Employee Paid by Company that Utilizes Cut-off Period

Last pay means the final wage or salary of the employee as a result of termination from service.

Most often, last pay exists due to the wage to which the employee has worked for which was not included in the last payroll period when the separation took effect. This is the cutoff period referred to by most HR practitioners. The purpose is for administrative facility considering that payroll preparation takes time.

For instance, when a company practices a five-day cutoff period the salary received in theory is less of five days worked for. Since most establishments observe the 15-30 payday, the cutoff happens on the 10th and on the 20th.


Mavagalna Mackupadpa Delivery Service Company an establishment based in NCR practices a 5-day payroll cutoff period. It pays salary every 15th and 30th. An employee, Pina K. Mabagel was hired on February 1, 2017 and is paid minimum wage. She goes to work 6 days a week.

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On March 1, 2019, Ms. Mabagel was subjected to administrative investigation. She was eventually found guilty and was terminated from service effective March 31, 2019. At the time of her dismissal from service she was able to receive only the 15th payroll.

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Valid-Dismissal-of-Emloyees-by-Atty-Elvin-B-Villlanueva-2nd-Edition by Atty Elvin B. VillanuevaThe salary that she received on March 15, 2019 covers the period February 21-March 10, 2019. This means that her pay for March 11-March 15 is still on hold due to the cutoff system.

Although she was terminated from service she is still entitled to her prorated 13th month pay and service incentive leave (SIL) pay. SIL is due considering that she has served for more than one year. For this purpose, let us assume that she has not used any of her leave credits for 2018.

Hence, she is still entitled to the following:

Pay for the period March 11-15

Pay for the period March 16-31

Prorated 13th month pay

SIL for 2018 and 2019 (proportionate)


Daily Rate     PhP537.00

Monthly equivalent   PhP14,006.75 (PhP537.00 x 313 / 12)


March 11-15 (5 days x PhP537.00)    PhP2,685.00

March 16-31 (13 days x PhP537.00) PhP6,981.00

Total Accrued Wage:                             PhP9,666.00

Prorated 13th month pay

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Formula: Total Basic Salary Earned during the CY / 12 months


January                            PhP14,006.75

February                          PhP12,888.00

March                               PhP 9,666.00

Total                                 PhP35,560.75


PhP35,560.75 / 12 months = PhP3,046.73


Formula   SIL Earned + Proportionate SIL

SIL Earned for the period January-December 2018                      5.00 days

Proportionate SIL for Jan-Mar 2019 (2/12) x 5 days           .25 days

Total Accrued SIL as of March 31, 2019                               5.25 days


Total Accrued SIL x Daily Wage

5.25 days x PhP537.00 per day = PhP2,819.25

Hence, Ms. Mabagel is entitled to the following:

Accrued wage + Prorated 13th month + Total Accrued SIL

PhP9,666.00 + PhP3,046.73 + PhP2,819.25 = PhP15,531.98

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