Resigned Employee: How to Compute Final PayAtty Elvin
Resigned employee: How to Compute Final Pay is a post about the figures surrounding the last pay of an employee who already resigned.
The Labor Code provides the minimum requirements. Exceeding such requirements will not violate the law. Giving below the amount required is a violation.
In this post we will tackle the benefits as mandated by law.
Let us say Employee X, a daily paid worker in NCR, resigned effective October 15, 2017, following the 30-day prior notice rule in Article 300 [formerly Art. 285] of the Labor Code. Hence, his benefits shall be as follows:
- Accrued wages
- 13th month pay
Accrued wages are those which he worked for prior to his resignation which he was not yet paid at the time of the effective date of resignation. Since we assumed that he submitted his resignation today, September 15, 2017, employer normally withholds the last pay prior to completion of clearance.
Thus, he still has 26 days of work until October 15, 2017. Using the NCR Daily Minimum Wage of 491.00, his accrued pay would be P491 x 26 = P12,766.00.
SIL is five days leave benefit for which the employee should be allowed to be absent with pay in a calendar year. Note that employee should have rendered at least one year of service to be entitled to SIL. Any unused of these five days should be converted to cash. The whole 5 days should be earned for the whole year which means that they do not accrue at once.
Hence, 5 days / 12 = .42 days accrual per month. Since X served for the calendar year from January to October 2017, his approximate SIL should be:
- January to September has 9 months
.42 x 9 = 3.78 days
P491.00 x 3.78 days = P1,855.98
- October 1-15 has .5 month
.5 x .42 = .21 days
P491 x .21 days = P103.11
Add both: P1,855.98 + P103.11 = P1,959.09 SIL
Now, the 13th month pay should be computed based on the total salary actually earned during the calendar year. Let us say X earned total salary for this period of P114,894.00.
13th month is 1/12
1 month / 12 months = .083 month
.083 x 114,894.00 = P9,574.50
The same result can be obtained if you divide P114,894 by 12. Thus:
P114,894.00 / 12 = P9,574.50
The reason I showed both methods is to emphasize the principle behind the periodic accrual of this benefit.
Adding them all up:
Wages – P12,766.00
SIL – P1,959.09
13th month pay – P9,574.50
Hence, P12,766.00 + P1,959.09 +P9,574.50 = P24,299.59
X’s final pay is P24,299.59
Please let me know your thoughts on this by sending me an email at firstname.lastname@example.org.
Learn how to compute employee benefits through Guide on Employee Compensation and Benefits Volume 1 and Guide on Employee Compensation and Benefits Volume 2.