We have held that management is free to regulate, according to its own discretion and judgment, all

aspects of employment, including hiring, work assignments, working methods, time, place and manner
of work, processes to be followed, supervision of workers, lay off of workers and discipline, dismissal
and recall of workers. The exercise of management prerogative, however , is not absolute as it must be
exercised in good faith and with due regard to the rights of labor (Julie’s Bakeshop and/or Edgar Reyes
vs. Henry Arnaiz, Edgar Napal and Jonathan Tolores, G.R. No. 173882, February 15, 2012)

The statutory definition of wage distortion is found in Article 124 of the Labor Code, as
amended by Republic Act No. 6727, which reads:

Art. 124. Standards/Criteria for Minimum Wage Fixing - …

As used herein, a wage distortion shall mean a situation where an increase in prescribed
wage results in the elimination of 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.

Elaborating on this statutory definition, this Court ruled: “Wage distortion presupposes a
classification of positions and ranking of these positions at various levels. One visualizes a
hierarchy of positions with corresponding ranks basically in terms of wages and other
emoluments. Where the significant change occurs at the lowest level of positions in terms of
basic wage without a corresponding change in the other level in the hierarchy of positions,
negating as a result thereof the distinction between one level of position from the next higher
level, and resulting in a parity between the lowest level and the next higher level or rank,
between new entrants and old hires, there exists a wage distortion… The concept of a wage
distortion assumes an existing grouping or classification of employees which establishes
distinctions among such employees or some relevant or legitimate basis. This classification is
reflected in a differing wage rate for each of the existing classes of employees” (Prubankers
Association vs. Prudential Bank & Trust Company, G.R. No. 131247, January 25, 1999).
 In the present case, the employees of Puyat were classified as regular employees and
casual employees. Accordingly, a wage distortion resulted when respondent implemented Wage
Order No. NCR-22, increasing the minimum wage rates to Php 537.00, as basis for the salary of
the casual employees. This significant change in the salary resulted in a parity between the
regular employees and the casual employees. Thus, in increasing the salary of the casual
employees without the corresponding increase in the salary of the regular employees necessarily
caused distortion in the wages of the two classifications.

Moreover, taking into consideration that complainant continuously receives an outstanding

performance in his work and was made to perform task outside the scope of his employment, it is
but proper that he is entitled to receive an amount in proportion to his tasks as General Utility,
Delivery Helper, Truck Helper, Warehouse Maintenance Staff and Carpenter. .