Wages

No work no pay principle

If there is no work performed by the employee there can be no wage or

pay unless the laborer was able, willing and ready to work but was
prevented by management or was illegally locked out, suspended or
dismissed (PAL v. NLRC)
Where the failure of workers to work was not due to the employers
fault, the burden of economic loss suffered by the employees should
not be shifted to the employer.

Coverage/Exclusions of the Rule on Minimum Wage

Article 98. Application of Title.This Title shall not apply to farm
tenancy or leasehold, domestic service and persons working in their
respective homes in needlework or in any cottage industry duly
registered in accordance with law.
Exceptions under the Implementing Rules and Regulations:
o Household or domestic helpers, including family drivers and
persons in the personal service of another
o Homeworkers engaged in needlework
o Workers employed in any establishment duly registered with the
National Cottage industries and Development Authority in
accordance with RA 3470 provided that such workers perform the
work in their respective homes;
o Workers in any duly registered cooperative when so
recommended by the Bureau of Cooperative Development and
upon approval of the SOLE
Barangay Micro Business Enterprise
o Any business entity or enterprise engaged in the production,
processing or manufacturing of products or commodities,
including agro-processing, trading and services, whose total
assets including those arising from loans but exclusive of the
land on which the particular business entity's office, plant and
equipment are situated, shall not be more than Three Million
Pesos (P3,000,000.00).
Retail/service establishment regularly employing not more than 10
workers (RA 6727)

Facilities vs Supplements
Facilities shall include articles or services for the benefit of the
employee or his employee but shall not include tools of the trade or
articles or service primarily for the benefit of the employer or
necessary to the conduct of the employers business (IRR)
SUPPLEMENTS constitute extra remuneration or special privileges or
benefits given to or received by the laborers over and above their
ordinary earnings or wages. FACILITIES are items of expense necessary
for the laborers and his familys existence and subsistence so that by
express provision of law, they form part of the wage and when
furnished by the employer are deductible therefrom, since if they are
not so furnished the laborer would spend and pay for them just the
same. (Atok-Big Wedge Assn. vs Atok-Big Wedge Co.)
The distinction between a facility and a supplement is in the purpose,
not the kind of the item.
The benefit or privilege given to the employee which constitutes an
extra remuneration over and above his basic or ordinary earning or
wage , is supplement; and when said benefit or privilege is part of the
laborers basic wages, it is a facility.
Facilities are wage deductible, supplements are not.
IRR states that for meals and snacks, employer ay deduct from the
wages not more than 70% of the value of the meals and snacks
enjoyed by the employees, provided that such deduction is authorized
in writing by the employees. The remaining 30% has to be subsidized
by the employer
For lodging facility, its fair and reasonable value is determined to be
the cost of operation and maintenance, including adequate
depreciation plus reasonable allowance (but not more than 5 1/2%
interest on the depreciated amount of capital invested by the
employer.
For the facilities to be deductible, proof mmust be shown that it is
customarily furnished, must be voluntary accepted in writing by the
employee, must be charged at a fair and reasonable value.
Wages vs Salaries
Art. 97 Wage Wage" paid to any employee shall mean the remuneration or
earnings, however designated, capable of being expressed in terms of
money, whether fixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same, which is payable by an
employer to an employee under a written or unwritten contract of
employment for work done or to be done, or for services rendered or to be
rendered and includes the fair and reasonable value, as determined by the
Secretary of Labor and Employment, of board, lodging, or other facilities

customarily furnished by the employer to the employee. "Fair and reasonable

value" shall not include any profit to the employer, or to any person affiliated
with the employer.

WAGE
Applies to the compensation for manual labor, skilled or unskilled, paid at
stated times, and measured by the day, week, month, or season.
Indicates inconsiderable pay for a lower and less responsible character of
employment.
SALARY
Denotes a higher degree of employment or a superior grade of services, and
implies a position or office.
Suggestive of a larger and more permanent or fixed compensation for more
important service.
By some of the authorities, the word wages in its ordinary
acceptance, has a less extensive meaning than the word salary,
wages being ordinarily restricted to sums paid to artisans,
mechanics, laborers, and other employees of like class, as
distinguished from the compensation of clerks, officers of public
corporations, and public offices. In many situations, however, the
words wages and salary are SYNONYMOUS. *35 Am. Jur. Sec. 63, p.
496-497]
Art. 102. Forms of payment. No employer shall pay the wages of an
employee by means of promissory notes, vouchers, coupons, tokens, tickets,
chits, or any object other than legal tender, even when expressly requested
by the employee.
Payment of wages by check or money order shall be allowed when such
manner of payment is customary on the date of effectivity of this Code, or is
necessary because of special circumstances as specified in appropriate
regulations to be issued by the Secretary of Labor and Employment or as
stipulated in a collective bargaining agreement.
Art. 103. Time of payment. Wages shall be paid at least once every two
(2) weeks or twice a month at intervals not exceeding sixteen (16) days. If on
account of force majeure or circumstances beyond the employers control,
payment of wages on or within the time herein provided cannot be made, the

employer shall pay the wages immediately after such force majeure or
circumstances have ceased. No employer shall make payment with less
frequency than once a month.
The payment of wages of employees engaged to perform a task which
cannot be completed in two (2) weeks shall be subject to the following
conditions, in the absence of a collective bargaining agreement or arbitration
award:
That payments are made at intervals not exceeding sixteen (16) days,
in proportion to the amount of work completed;
That final settlement is made upon completion of the work.
Art. 104. Place of payment. Payment of wages shall be made at or near
the place of undertaking, except as otherwise provided by such regulations
as the Secretary of Labor and Employment may prescribe under conditions
to ensure greater protection of wages.
Art. 105. Direct payment of wages. Wages shall be paid directly to the
workers to whom they are due, except:
1.

In cases of force majeure rendering such payment impossible or under other

special circumstances to be determined by the Secretary of Labor and
Employment in appropriate regulations, in which case, the worker may be
paid through another person under written authority given by the worker for
the purpose; or

2.

Where the worker has died, in which case, the employer may pay the wages
of the deceased worker to the heirs of the latter without the necessity of
intestate proceedings.

3.

The claimants, if they are all of age, shall execute an affidavit attesting to
their relationship to the deceased and the fact that they are his heirs, to the
exclusion of all other persons. If any of the heirs is a minor, the affidavit shall
be executed on his behalf by his natural guardian or next-of-kin. The affidavit
shall be presented to the employer who shall make payment through the
Secretary of Labor and Employment or his representative. The representative
of the Secretary of Labor and Employment shall act as referee in dividing the
amount paid among the heirs. The payment of wages under this Article shall
absolve the employer of any further liability with respect to the amount paid.

Wage Distortion

ART. 124. Standards/Criteria for minimum wage fixing.xxx As used

herein, a Wage Distortion shall mean a situation where an increase in
prescribed wage rates results in the elimination or severe contraction of
intentional quantitative differences in wage or salary rates between and
among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of
service, or other logical bases of differentiation. xxx
ELEMENTS OF WAGE DISTORTION
4.

An existing hierarchy of positions with corresponding salary rates.

5.

A significant change in the salary rate of a lower pay class without a

concomitant increase in the salary rate of a higher one.

6.

Elimination of the distinction between the two levels.

7.

Existence of the distortion in the same region of the country.

POSSIBLE CAUSES OF WAGE DISTORTION:
1. Government decreed increase through wage orders.
2. Merger of establishments [confusion or elimination of the status of the
employee
3. Increase granted by the employers
4. Passage of RA 6727 or the Wage Rationalization Act
Non-diminution of Benefits
Art. 100. Prohibition against elimination or diminution of benefits.
Nothing in this Book shall be construed to eliminate or in any way diminish
supplements, or other employee benefits being enjoyed at the time of
promulgation of this Code.

For the rule against diminution of supplements or benefits may apply,

it must be shown that 1) the grant of the benefit is founded on a policy
or has ripened into a practice over a long period; 2) the practice is
consistent and deliberate; 3) the practice is not due to error in the
construction or application of a doubtful or difficult question of law ;
and 4) the diminution or discontinuance is done unilaterally by the
employer.
Exceptions:
o Correction of error
o Negotiated benefits product of bilateral contract
In Hotel Employees Union-NFL vs. Waterfront Insular Hotel

o
o
o
o
o

Davao, the court upheld the validity of the agreement

concluded by the employees and the employer to save the
latter from total closure because of losses. The employees
union proposed to the management not only to to suspend
for ten years their CBA but also to waive some benefits and
privileges granted under the CBA. It was a self-sacrificing
act suggested by the employees themselves to save the
business and save their jobs. Some co-employees
questioned the legality of the memorandum of agreement
between the management and the union as illegal
diminution of benefits. The Supreme Court, finding that the
majority of the employees ratified the MOA, upheld its
legality
Wage order compliance Benefits or reimbursement basis
Reclassification of position
Contingent benefits or conditional bonuses
Productivity incentives

Workers Preference in case of Bankruptcy

Article 110. Worker preference in case of bankruptcy. In the event of
bankruptcy or liquidation of an employers business, his workers shall enjoy
first preference as regards their wages and other monetary claims, any
provisions of law to the contrary notwithstanding. Such unpaid wages and
monetary claims shall be paid in full before claims of the government and
other creditors may be paid.
-

a declaration of bankruptcy or a judicial liquidation must be present

before the workers preference may be enforced.
Not a lien but a preference. A preference applies only to claims
which do not attach to specific properties. A lien creates a charge on
a particular property. The right of first preference as regards unpaid
wages recognized by Article 110 does not constitute a lien on the
property of the insolvent debtor in favor of workers. It is but a
preference of credit in their favor, a preference in application. It is a
method adopted to determine and specify the order in which credits
should be paid in the final distribution of the proceeds of the
insolvent's assets. It is a right to a first preference in the discharge
of the funds of the judgment debtor. (DBP vs. NLRC)
covers both unpaid wages and monetary claims

Labor Code Provisions for Wage Protection

ART. 112. Non-interference in disposal of wages. - No employer shall limit or

otherwise interfere with the freedom of any employee to dispose of his
wages. He shall not in any manner force, compel, or oblige his employees to
purchase merchandise, commodities or other property from any other
person, or otherwise make use of any store or services of such employer or
any other person.
Article 113. Wage deduction. No employer, in his own behalf or in behalf of
any person, shall make any deduction from the wages of his employees,
except:
(a) In cases where the worker is insured with his consent by the employer,
and the deduction is to recompense the employer for the amount paid by
him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to
check-off has been recognized by the employer or authorized in writing by
the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued
by the Secretary of Labor and Employment.
ART. 114. Deposits for loss or damage. - No employer shall require his
worker to make deposits from which deductions shall be made for the
reimbursement of loss of or damage to tools, materials, or equipment
supplied by the employer, except when the employer is engaged in such
trades, occupations or business where the practice of making deductions or
requiring deposits is a recognized one, or is necessary or desirable as
determined by the Secretary of Labor and Employment in appropriate rules
and regulations.
Article 115. Limitations. No deduction from the deposits of an employee for
the actual amount of the loss or damage shall be made unless the employee
has been heard thereon, and his responsibility has been clearly shown.
Article 116. Withholding of wages and kickbacks prohibited. It shall be
unlawful for any person, directly or indirectly, to withhold any amount from
the wages of a worker or induce him to give up any part of his wages by
force, stealth, intimidation, threat or by any other means whatsoever without
the workers consent.
Article 117. Deduction to ensure employment. It shall be unlawful to make
any deduction from the wages of any employee for the benefit of the
employer or his representative or intermediary as consideration of a promise
of employment or retention in employment.
Article 118. Retaliatory measures. It shall be unlawful for an employer to

refuse to pay or reduce the wages and benefits, discharge or in any manner
discriminate against any employee who has filed any complaint or instituted
any proceeding under this Title or has testified or is about to testify in such
proceedings.
Article 119. False reporting. It shall be unlawful for any person to make
any statement, report, or record filed or kept pursuant to the provisions of
this Code knowing such statement, report or record to be false in any
material respect.