Inquiry on How to Claim Last Pay in the Philippines for an Overseas Worker

Letter to Attorney:

Dear Attorney,

I hope this message finds you well. I am writing on behalf of my husband, who is currently residing and working abroad. Before leaving the country, he was employed by a company here in the Philippines. He is owed his last pay by his previous employer, but unfortunately, they have not released it to him yet. The company has informed us that they require certain documents to be notarized before the release of his final pay, but my husband’s current location makes it difficult to fulfill this requirement in person.

I would like to ask for your advice on how to proceed with this situation. Specifically, I would appreciate guidance on the following:

1. Is it lawful for the employer to withhold the last pay under these circumstances?
2. What is the process for claiming last pay in the Philippines if the employee is already abroad?
3. What alternatives are there if we are unable to have the documents notarized in person?
4. Are there any legal remedies available if the employer continues to delay or refuse to release the payment?

I look forward to your insights on how we can resolve this matter in accordance with Philippine labor laws.

Sincerely,
Concerned Wife of an Overseas Worker

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Legal Analysis and Comprehensive Overview:

Understanding Last Pay Under Philippine Labor Law

The concept of “last pay” (also known as final pay or separation pay) refers to the total compensation an employee is entitled to receive upon the termination of employment. This can occur due to resignation, retirement, dismissal, or completion of a fixed-term contract. The last pay typically includes unpaid salaries, proportional 13th-month pay, unused leave credits, and other lawful entitlements that an employee has accrued during their tenure.

In this case, the employee has left the country and is encountering issues with the release of his last pay due to a notarization requirement. To understand the rights and obligations of both the employer and the employee, it is essential to explore key aspects of Philippine labor law, focusing on the legal basis for the release of last pay, the implications of notarization, and the possible remedies available to the employee.

1. Legal Basis for the Release of Last Pay

Under the Labor Code of the Philippines, particularly Book VI, Title I, an employer is required to provide an employee with their due wages and benefits upon the cessation of employment. The Department of Labor and Employment (DOLE) has clarified this obligation through its Labor Advisory No. 06-2020, which specifies the items that constitute last pay. These typically include:

• Unpaid wages
• Pro-rated 13th-month pay
• Accrued leave credits
• Separation pay (if applicable)
• Retirement benefits (if applicable)
• Other benefits stipulated in the employment contract or Collective Bargaining Agreement (CBA)

Employers are required to release the final pay within a reasonable period, which DOLE has interpreted to mean within 30 days from the date of separation, unless there is a more favorable provision in the employment contract or company policy.

2. Employer’s Obligation vs. Notarization Requirement

In the given situation, the employer has imposed a notarization requirement before the release of the final pay. Notarization typically serves as a formal way to authenticate documents and ensure their legitimacy. Employers may request notarization of documents such as quitclaims, waivers, or affidavits to protect themselves from future claims by the employee regarding any outstanding payments.

However, it is important to note that while employers may lawfully require a notarized quitclaim or waiver as part of the clearance process, they cannot unreasonably withhold the release of last pay indefinitely. Labor Advisory No. 06-2020 and the Labor Code both imply that there should be no unnecessary delay in releasing an employee's lawful compensation.

Key Legal Precedents: In cases where disputes arise concerning the last pay, the Supreme Court has consistently held that the final pay is a vested right of the employee and must be released in good faith. In cases like Callanta vs. Carnation Philippines, Inc. (G.R. No. L-58289), the Court emphasized that any stipulation that aims to deprive an employee of this right is void for being contrary to law and public policy.

Thus, while notarization of documents like quitclaims may serve a legitimate purpose, it should not become a barrier to an employee receiving their lawful entitlements.

3. Alternative Solutions if Notarization Is Not Feasible

In situations where an employee is abroad, as in the case described in the letter, fulfilling the notarization requirement can be challenging. There are, however, several alternative options that can be pursued to facilitate the release of last pay:

a. Consular Notarization

One common solution is for the employee to visit the nearest Philippine Embassy or Consulate in their current country of residence. Philippine embassies typically offer notarial services, allowing Filipino nationals to execute and authenticate legal documents in accordance with Philippine law. Documents notarized at a Philippine Consulate or Embassy are recognized as valid in the Philippines.

This option would allow the employee to notarize any required documents without returning to the Philippines.

b. Use of Special Power of Attorney (SPA)

Another practical solution is for the employee to issue a Special Power of Attorney (SPA) to a trusted relative or representative in the Philippines. The SPA grants the representative the authority to act on behalf of the employee, including signing documents and handling matters related to the claim of last pay.

For the SPA to be valid, it must be notarized by a Philippine Consulate if the employee is abroad. The representative in the Philippines can then present the notarized SPA to the employer and complete the necessary documentation for the release of the final pay.

c. Virtual or Remote Notarization

In light of technological advancements, some jurisdictions have adopted remote notarization or electronic notarization procedures. Although this practice is still in its early stages in the Philippines, there may be some leeway depending on the circumstances, particularly if the notarization requirement pertains to procedural rather than substantive issues.

d. Negotiating with the Employer

If the notarization requirement remains a significant hurdle, the employee or their representative may consider negotiating directly with the employer. Given the exceptional circumstances (e.g., the employee being abroad), the employer may agree to waive the notarization requirement or accept alternative forms of authentication.

4. Legal Remedies for Delay or Non-Release of Last Pay

If the employer continues to delay or refuses to release the last pay even after the employee has complied with reasonable requests, several legal remedies may be pursued:

a. Filing a Complaint with the Department of Labor and Employment (DOLE)

The employee can file a formal complaint with the DOLE’s Regional Office under the Single Entry Approach (SEnA) program, which facilitates mediation between the employer and the employee. This process is intended to be quick and cost-efficient, aiming to resolve labor disputes within 30 days.

If the issue remains unresolved after mediation, the employee may file a formal case with the National Labor Relations Commission (NLRC). Under the NLRC’s jurisdiction, claims related to non-payment of last pay, benefits, or separation pay fall within its competence. The employee can be represented by a duly authorized attorney-in-fact if they cannot appear personally due to their overseas status.

b. Civil Action for Recovery of Unpaid Wages

As a final recourse, an employee may file a civil action for the recovery of unpaid wages and other entitlements under the Civil Code. If the employer’s refusal to pay constitutes bad faith, the employee may also seek moral and exemplary damages as provided under Articles 2229 and 2230 of the Civil Code.

5. Final Thoughts: Balancing Employee Rights and Employer Interests

The requirement for notarization of documents like quitclaims or affidavits is generally considered a legitimate practice to safeguard the interests of both the employer and the employee. However, it is crucial that such formalities do not result in an undue burden for the employee or unjustly delay the release of final pay.

Employers must act in good faith and in accordance with Philippine labor laws, ensuring that employees, whether local or abroad, receive their rightful compensation promptly. Failure to do so could expose employers to potential legal liability and damage to their reputation.

For employees abroad facing challenges in complying with notarization requirements, alternatives such as consular notarization, SPAs, or even negotiation with the employer should be explored. If these efforts fail, DOLE and the NLRC offer viable avenues for legal redress.

In sum, while procedural requirements like notarization may serve valid purposes, they should not become obstacles that prevent employees from exercising their right to receive their due compensation. Employers are encouraged to approach such situations with flexibility, especially when dealing with overseas workers who face unique logistical challenges.

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By offering various alternative solutions and emphasizing the employee’s rights under the law, this legal article aims to equip individuals and families dealing with such issues with the necessary information and options to resolve the matter effectively.