Article 306 [291] of the Labor Code: Money claims: three years
The number in brackets, [291], is the article's number before the 2015 renumbering of the Labor Code.
Status: In force
What does Article 306 [291] say?
All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred.
All money claims accruing prior to the effectivity of this Code shall be filed with the appropriate entities established under this Code within one (1) year from the date of effectivity, and shall be processed or determined in accordance with the implementing rules and regulations of the Code; otherwise, they shall be forever barred.
Workmen’s compensation claims accruing prior to the effectivity of this Code and during the period from November 1, 1974 up to December 31, 1974, shall be filed with the appropriate regional offices of the Department of Labor not later than March 31, 1975; otherwise, they shall forever be barred. The claims shall be processed and adjudicated in accordance with the law and rules at the time their causes of action accrued.
Read the Labor Code on the DOLE website (it uses the article numbers before 2015)
What does it mean in plain language?
Article 306 (Article 291 before the 2015 renumbering) sets the deadline for money claims between employers and employees: three years from the time the cause of action accrued. A claim filed later is "forever barred". This covers unpaid wages and benefits of every kind, so when underpayment lasted more than three years, the older part is usually lost.
The rule is in the first paragraph:
All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred.
The other two paragraphs of the article were transitional rules. They set one-time deadlines for claims that accrued before the Labor Code took effect, and the last of those deadlines was in 1975.
How does it work in real life?
Ana: five years of underpayment
Ana was paid less than she was owed for five years before she filed a claim. Under Auto Bus, the amounts that fell due more than three years before her filing are usually barred. She can recover the amounts that fell due within the three years.
Ben: leave saved for years
Ben, a bus driver, never used or cashed his service incentive leave in eight years. He is dismissed and files a claim one month later. Under Auto Bus, the period for his accumulated leave started at the end of his employment, so his claim is on time.
Carmen: retirement pay refused
Carmen retires and asks for her retirement pay. Her employer refuses in a letter. Following De La Salle Araneta University, her claim accrues at that refusal, and she has three years from then to file.
What does this mean in practice?
- Each unpaid amount can have its own start date.
- The three years cover money claims. This page does not give the deadline for other kinds of labor cases, such as a case asking for reinstatement after a dismissal.
- An appeal from a Labor Arbiter's decision has its own short deadline: ten calendar days ([Article 229 [223]](/law/labor-code/article-229)).
- For the full question-and-answer guide, see the deadline for labor money claims. For final pay amounts, see the final pay calculator.
What is a money claim?
Any claim for money "arising from employer-employee relations". Common examples:
- unpaid or underpaid wages;
- overtime, holiday pay and premium pay;
- 13th month pay;
- service incentive leave pay;
- retirement pay under [Article 302 [287]](/law/labor-code/article-302);
- unpaid final pay.
When does the three-year period start?
When the cause of action accrued, that is, when the right to be paid was violated. The Supreme Court has applied this in different ways depending on the claim:
| Claim | When the three years start | Ruling |
|---|---|---|
| Wages and most benefits | When each amount was withheld; only amounts withheld within the three years before filing can be recovered | Auto Bus Transport Systems v. Bautista (2005) |
| Service incentive leave | When the employer refuses to pay its cash equivalent after demand, or when employment ends | Auto Bus Transport Systems v. Bautista (2005) |
| Retirement pay | When the employer refused to pay it | De La Salle Araneta University v. Bernardo (2017) |
In Auto Bus, the Court also said that when benefits were withheld for longer than three years, "the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription." Only the amounts within the three years before filing can be recovered.
In De La Salle Araneta University, a lecturer kept working past 65 on contracts the university renewed. He asked for his retirement pay after his last contract, and the university refused in writing. The Supreme Court held that his claim accrued only after that refusal, so his complaint, filed soon after, was on time.
Who has to prove that the money was paid?
The employer. In Agabon v. NLRC (2004), the Supreme Court said the burden rests on the employer to prove payment, because payrolls and other records are in its custody.
Which Supreme Court rulings are relevant?
- Agabon v. NLRC (G.R. No. 158693)Agabon v. NLRC explained: a dismissal for a just cause stays valid even without the two notices, but the employer must pay the worker nominal damages.
- Auto Bus v. Bautista (G.R. No. 156367)Auto Bus v. Bautista explained: why a bus driver paid on commission still gets service incentive leave, and when the three years to claim it begin.
Frequently asked questions
How long do I have to file a money claim against my employer?
Three years from the time the cause of action accrued. Article 306 [291] of the Labor Code says that after that, the claim shall be forever barred.
What counts as a money claim under Article 306?
All money claims arising from employer-employee relations, such as unpaid or underpaid wages, overtime and holiday pay, 13th month pay, service incentive leave pay and retirement pay.
When does the three-year period start?
When the cause of action accrued. For wages, that is usually when each amount fell due. For retirement pay, the Supreme Court in De La Salle Araneta University v. Bernardo (2017) held that the claim accrued when the employer refused to pay it.
When does the period start for unused service incentive leave?
In Auto Bus Transport Systems v. Bautista (2005), the Supreme Court said it starts when the employer refuses to pay the cash equivalent after the employee demands it, or when employment ends, as the case may be.
If I was underpaid for five years, can I recover all of it?
Usually not. In Auto Bus, the Court said that when benefits were withheld for longer than three years, the amount for the period beyond the three-year prescriptive period is barred.
General information, not legal advice. For your case, ask a lawyer, the Public Attorney's Office (PAO) or the agency.
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