As a rule, employers are mandated by Republic Act (R.A.) No.

6727 or the Wage Rationalization Act to

pay the minimum wage to his employees. The minimum wage is determined by Congress itself through the
enactment of a law, or by the Regional Tripartite Wages and Productivity Boards through issuance of wage
orders (Article 99, Labor Code). However, there are exceptions to this rule. There are instances where an
employer is exempted from complying with the mandated minimum wage, either because of the class of his
employee, or the nature/circumstance of his business.

Foremost, R.A. No. 6727 expressly excludes household or domestic helpers and persons employed in
the personal service of another, including family drivers, from its coverage (Sec. 4(c), R.A. No. 6727).
Nevertheless, with respect to household or domestic helpers, their minimum wage is set by the recently
enacted R.A. No. 10361, more popularly known as Kasambahay Law.

For exemptions based on the nature or circumstance of the employers business, the rules issued by
the National Wages and Productivity Commission (NWPC) expressly states the following categories of
employers who may be exempted from payment of minimum wages: (1) Distressed establishments; (2) New
business enterprises (NBEs); (3) Retail/Service establishments employing not more than ten (10) workers; and
(4) Establishments adversely affected by natural calamities (Section 2, NWPC Guidelines No. 2, s. 2007).

The exemption is not automatic. The owner of the establishment must file an application for exemption,
together with supporting documents, with the appropriate Regional Board which will review the application and
determine whether the grant of exemption is warranted. In general, all applications for exemption must be
accompanied by proof of notice of filing of the application to the President of the union/contracting party if one
is organized in the establishment, or if there is no union, a copy of a circular giving general notice of the filing of
the application to all the workers in the establishment. The proof of notice, which may be translated in the
vernacular, shall state that the workers representative was furnished a copy of the application with all the
supporting documents. The notice shall be posted in a conspicuous place in the establishment (Section 4,
NWPC Guidelines No. 2, s. 2007). For exemption as an NBE, the application must also be supported by an
affidavit from the employer stating the principal economic activity, date of registration with appropriate
government agency and amount of total assets, and certificate of registration from the appropriate government
agency. On the other hand, for exemption as an establishment with not more than ten (10) workers, the
application must be supported by an affidavit from the employer stating that it is a retail/service establishment
regularly employing not more than ten (10) workers for at least six (6) months in any calendar year, and

business permit for the current year from the appropriate government agency (Section 4, NWPC Guidelines
No. 2, s. 2007).

Moreover, there are conditions before the grant of exemption may be given. For NBEs, first the
establishment must be located outside the National Capital Region (NCR) and Export Processing Zones.
Second, it must be established within two (2) years from effectivity of the Order. Lastly, the NBE must either be
an agricultural establishment, whether plantation or non-plantation, or its total assets after financing is five
million pesos (P5,000,000.00) or below (Section 3(B), NWPC Guidelines No. 2, s. 2007).

For retail/service establishments regularly employing not more than ten (10) workers, an exemption may be
granted under the following conditions: (1) it is engaged in the retail sale of goods and/or services to end users
for personal or household use; (2) it is regularly employing not more than ten (10) workers regardless of status,
except the owner/s, for at least six (6) months in any calendar year (Sec. 3 (C), (NWPC Guidelines No. 2, s.
2007).

If your planned business endeavor satisfies the conditions for exemption from payment of minimum wage, we
encourage you to apply with the appropriate regional board in order to enjoy the benefit.