Bankard Employees Union-Workers Alliance Trade Unions v.

NLRC

Facts:

 The Board of Directors of Bankard, Inc. approved a “New Salary Scale” which increased the
hiring rates of new employees. Accordingly, the salaries of employees who fell below the new
minimum rates were also adjusted to reach such rates under their levels.
 Bankard Employees Union-WATU pressed for an increase in the salary of its old, regular
employees, but Bankard took the position that it had no obligation to grant an across-the-board
salary increase.

Issue:

 Does wage distortion exist in this situation?

Ruling:

 Article 124 of the Labor Code defines “wage distortion” as 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 & 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.
 The four elements of wage distortion are:
1) An existing hierarchy of positions with corresponsing salary rates
2) A significant change in the salary rate of a lower pay class without concomitant increase
in the salary rate of a higher one
3) The elimination of the distinction between the two levels
4) The existence of the distortion in the same region of the country.
 Bankard’s wage structure is based on level, and not seniority; hence there is no hierarchy of
positions. Even assuming that there is a decrease in the wage gap of the old and new
employees, the Court finds that the gap is not so significant so as to satisfy the the 2nd and 3rd
elements of wage distortion.
 In addition, Article 124 (LC) refers to a wage distortion resulting from a prescribed wage increase
by virtue of a law or Wage Order issued by any Regional Board. Clearly, Bankard’s New Salary
Scale is neither of the two.
 The mere factual existence of wage distortion does not, ipso facto result to an obligation to
rectify it, absent a law or other source of obligation which requires its rectification. This Court
will not step in to interfere with Bankard’s management prerogative.
 The is no wage distortion in the instant case.