Final Pay Calculator (Back Pay & Separation Pay, 2026)

How final pay is computed

There is no single formula, because final pay is a sum of separate items. This calculator adds each one using the same rules DOLE publishes in its Handbook on Workers' Statutory Monetary Benefits:

• Unpaid salary = daily rate × days worked but not yet paid. Daily rate = monthly salary × 12 ÷ factor (313, 261 or 365 days).
• Prorated 13th month = total basic salary earned in the year of separation ÷ 12, less any 13th month already paid. See how prorated 13th month pay works.
• Leave conversion = unused days × daily rate. Service incentive leave is 5 days a year after one year of service, prorated in the year you leave. Company vacation leave is converted only if your policy says so.
• Separation or retirement pay depends on why you left. See the table below.

Separation pay computation by cause

Separation pay is based on your latest salary rate, including regular allowances, and "a fraction of at least six months is considered one whole year". So 3 years and 5 months counts as 3 years, but 3 years and 6 months counts as 4.

Worked examples

1. Redundancy after 8 years and 9 months

A ₱25,000 a month employee (313-day factor, daily rate ₱958.47) hired on 1 March 2018 loses the job to redundancy, with a last day of 30 November 2026. Service is 8 years and 9 months, which counts as 9 years.

• Separation pay: 9 × ₱25,000 = ₱225,000.00
• Prorated 13th month (11 months): ₱22,916.67
• 10 unpaid working days: ₱9,584.66
• 3 days of unused SIL: ₱2,875.40
• Total final pay: ₱260,376.73

2. Resignation after 1 year and 5 months

A ₱20,000 a month employee hired on 1 February 2025 resigns with a last day of 30 June 2026. There is no statutory separation pay, but the final pay still includes the prorated 13th month for six months (₱10,000.00), 5 unpaid days (₱3,833.87) and 2 days of SIL (₱1,533.55). Total: ₱15,367.42.

3. Retirement at 60 after 20 years and 5 months

A ₱30,000 a month employee on a 261-day factor has a daily rate of ₱1,379.31. Service of 20 years and 5 months counts as 20 years, so retirement pay is ₱1,379.31 × 22.5 days × 20 = ₱620,689.66, on top of the other final pay items.

When must final pay be released?

DOLE Labor Advisory No. 06, Series of 2020 says final pay should be paid within 30 days from the date of separation, unless your company policy or an individual or collective agreement provides a different (more favorable) period. The employer must also issue your Certificate of Employment within 3 days of your request. Read the full step-by-step in our guide to your final pay rights.

Is final pay taxable?

• Separation pay for redundancy, retrenchment, closure, illness or other causes beyond your control is exempt from income tax (NIRC Sec. 32(B)(6)(b)).
• Retirement pay under RA 7641 is exempt, and the 10-year and age-50 conditions apply to private retirement plans.
• 13th month pay and other benefits, including leave conversion, are exempt up to ₱90,000 a year. Only the excess is taxable. See is 13th month pay taxable?
• Unpaid salary is taxable compensation, and your employer adjusts the withholding tax in your last payroll. Use the income tax calculator to estimate it.