Final Pay is the totality of all payments due to an employee who retires or resigns or

is terminated due to just or authorized causes. It consists of the unpaid salaries,

benefits, bonuses, if any.

In other words, these are things that the employee has already earned but have yet to
receive. The employee worked for it, and it is only fair that it be distributed to the
employee at the end of employment.

Back Pay is notoriously confused with last pay. Why? Because literally, they mean
the same thing. However, we should be aware that there is a technical meaning given
to back wages by the law.

In other words, the back pay is a form of a penalty to punish erring employers for
violating the due process rights of their employees. If there's no labor decision, there's
no back pay to speak of. If you want the unpaid salaries, you're talking about last pay,
not back pay.

Separation pay is another form of benefit given to certain employees under the labor
code. This only becomes relevant in 2 cases:

First, employees become entitled to separation pay when they are terminated due to
authorized causes. What are authorized causes? They involve terminations done
under Article 297 and Article 298 of the labor code. These are situations
wherein without any fault on the part of the employee, circumstances led to his
termination.

Second, separation pay is given when the court orders the employer to reinstate or
allow back to work an illegally dismissed employee but the relationship between them
has gotten so bad, that seeing each other at work is no longer an option. Therefore,
instead of reinstatement, the court allows the employer to pay the employee
separation pay instead of going back to work, so they can both move on and live out
their lives in peace.

Final pay is the last compensation received upon separation, back pay addresses past
wage discrepancies, and separation pay is a broader term referring to financial
benefits provided upon termination to ease the transition for the departing employee.