EMPLOYER-EMPLOYEE

RELATIONS WITH LABOR

LAWS AND CBA
Lecture Notes V

WAGES

WAGES
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, 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.

HOW WAGE IS FIXED

wage fixing criteria :
the cost of living and changes or increases thereto
the needs of workers and their families,
improvements in standards of living
the need to induce industries to invest in the countryside
fair return on capital invested and capacity to pay of
employers
effects on employment generation and family incomes
the equitable distribution of income and wealth along the
imperatives of economic and social development

HOW WAGE IS FIXED

wage fixing criteria :
the cost of living and changes or increases thereto
the needs of workers and their families,
improvements in standards of living
the need to induce industries to invest in the countryside
fair return on capital invested and capacity to pay of
employers
effects on employment generation and family incomes
the equitable distribution of income and wealth along the
imperatives of economic and social development

Wage V Salary
WAGE compensation for manual
labor. Skilled or unskilled, paid at
stated times and measured by the
day, week, month or season
SALARY denotes a higher degree
of employement, or superior grade
of services and implies a position
of office

FACILITIES V SUPPLEMENTS
FACILITIES

SUPPLEMENTS

Board, lodging, snacks, articles of service

for the benefit of the employee

Tools of the trade or articles or service

primarily for the benefit of the ER in the
conduct of the ERs business

Wage deductible; items of expense

necessary for the laborers and his
familys existence and subsistence; must
be customarily given, voluntarily accepted
in writing by the EE and charged at fait
and reasonable value

Not part of the wage; extra-remuneration

or special privileges or benefits given to
or received by the laborer over and above
their ordinary or average wage

WAGES- inclusions/exclusions
1. Commissions are included
2. Allowances are excluded
3. Gratuity is excluded

GOVERNING PRINCIPLES ON
WAGES

FAIR DAYS WAGE FOR A

FAIR DAYS LABOR
EQUAL PAY FOR EQUAL
WORK

MINIMUM WAGE: EE is not estopped from

suing for the difference
Who are not covered:
1. BMBEs (Brgy Micro-Business Enterprise) under R.A. 9178 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 on the land
on which the particular business entitys office, plant and equipment are
situated, shall NOT be more than P3M. (Statistics show this category
comprises 90% of Philippine employers).
2. Sec 4, R.A. 6727 (Wage Rationalization Act) household or domestic
helpers and persons employed in the personal service of another
including family drivers; retail/service establishments regularly employing
not more than ten (10) workers as determined by the Regional Board

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 the promulgation of this Code
Note: 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 continuous 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 to the NONDIMINUTION

RULE
1.
2.
3.
4.
5.
6.
7.

Correction of error
Negotiated benefits
Wage Order compliance
Benefits on reimbursement basis
Reclassification of position
Contingent benefits or conditional bonus
Productivity incentives

PAYMENT BY RESULT (piece-rate,

pakyaw, takay)
2 Classes of Output-based workers
1. Those whose time and performance is
supervised by the ER - ex. piece-rate workers
2. Those who are unsupervised - ex. Pakyaw or
takay (task-workers) like those hired during
harvesting season

BENEFITS OF PIECE-RATE WORKERS

1.
2.
3.
4.
5.
6.
7.
8.
9.

Min wage
SIL (5 days for every yr of service)
Night shift differential
Holiday pay
Meal and rest periods
Overtime pay
Premium pay
13th month pay
Other benefits as may be granted by law, individual or CBA
or company policy or practice

FORM OF WAGES
As a general rule, wages shall be paid in legal tender. Payment by check or
money order is allowed where such manner of payment is customary, where
it is stipulated in a collective agreement, or even at the option of the
employer where all the following conditions are met:
1. 1) there is a bank or other facility for encashment within a radius of one
kilometer from the workplace;
2. 2) the employer, or any of his agents or representatives, does not receive
any pecuniary benefit directly or indirectly from the arrangement;
3. 3) the employees are given reasonable time during banking hours to
withdraw their wages from the bank, which rune shall be considered as
compensable hours worked if done during working hours; and
4. 4) the check payment is with the written consent of the employees
concerned if there is no collective agreement authorizing this manner of
payment.

FORM OF WAGES
The Labor Code prohibits payment of wages by means of:
promissory notes
vouchers
coupons
tokens
tickets
chits
or any object other than legal tender, even when expressly requested by the
employee.
This prohibition is more stringent than that provided by the Penal Code
covering this same act, among others, as Other Similar Coercions under its
Art 288 which carries the exempting clause unless expressly requested by
the employee. Hence, an employer who pays wages in any of these
prohibited forms under this circumstance still incurs absolute liability under
the Labor Code, although his liability under the Penal Code is qualified by the
said exempting clause.

TIME OF PAYMENT OF WAGES

Wages are to be paid at least once every two weeks, or twice a month, at
intervals not exceeding 16 days. If this is not possible due to force majeure or
circumstances beyond the employees control, the employer should pay the
wages immediately after such contingency has ceased. In no case may an
employer pay wages with less frequency than once a month (Art. 103. LC).
Payment of wages of employees engaged to perform a task which
cannot be completed in two weeks shall be subject to the following
conditions, in the absence of a collective bargaining agreement or arbitration
award:
1) that payments are made at intervals not exceeding 16 days, in proportion
to the amount of work completed; and
2) that final settlement is made upon completion of the work

PLACE OF PAYMENT OF WAGES

As a general rule, the place of payment shall be at or near the place of
undertaking. Payment at some other place is permissible only under the
following circumstances:
1) when due to the deterioration of peace and order conditions, or by reason
of actual or impending emergencies caused by calamity, payment at or near
the workplace is impossible;
2) when the employer provides free transportation to the employees back
and forth; and
3) under any other analogous circumstances, provided that the time spent by
the employees in collecting their wages shall be considered as hours worked.
Prohibited places or payment are basis, night or day clubs,
drinking establishments, massage clinics, dance halls, or similar places, and in
places where games are played with stakes of money or things representing
money, except in the case of persons employed in said establishments.

DIRECT PAYMENT OF WAGES

Wages are to be paid directly to the employee entitled thereto, except in the
following cases:
1) where the employer is authorized in writing by the employee to pay his
wages to a member of his family;
2) where payments to another person of any part of the employees wage is:
a) specifically required by law, even without the employees
consent, e.g. withholding tax, SSS and Medicare contributions;
b) authorized by law, with the employees written consent, e.g.
insurance premiums of the employee, union check-offs, payments to a
cooperative, deductions for facilities; or
c) authorized by law, even without the employees consent, e.g. deposits for
loss or breakage (Art. 114, LC), court judgments for support.

DIRECT PAYMENT OF WAGES

3) In case of death of the employee, his wages may be
paid to his heirs without the necessity of intestate
proceedings. If the heirs are all of age, they should
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 should be executed in his behalf by
his natural guardian or next of kin. The affidavit is to be
presented to the employer who shall make payment
through the representative of the Secretary of Labor.
This official shall act as referee in dividing the amount
paid among the heirs.

RESPONSIBILITY FOR PAYMENT OF WAGES

RESPONSIBILITY FOR PAYMENT OF WAGES. The employer is the person
responsible for the payment of wages of his employees. Under the law, the
term employer includes any person acting directly or indirectly in the
interest of an employer in relation to an employee, while an employee
includes any individual employed by an employer The law further defines the
term employ as including to suffer or permit to work (Art. 97-b, c & e, LC).
These definitions broaden the scope of the employment situation, as well as
the responsibility for the payment of wages.
This obligation, as well as others established by the Labor Code,
may give rise to liability if not fulfilled by an employer Where the employer is
a corporation or artificial person, is it the corporation itself or its officers
concerned that incurs the liability, whether civil or criminal? This question
brings into play the doctrine of corporate fiction which holds that a duly
registered corporation acquires a legal personality separate and distinct from
that of its stockholders, officers and members. However this doctrine is not
inviolable due to a counterpoint dictum, by way of exception, which allows
piercing the veil of corporate fiction under certain circumstances.

RESPONSIBILITY FOR PAYMENT OF WAGES

The question of whether a corporation is a mere alter ego is one of fact.
Piercing the veil of corporate fiction may be allowed only if the following
elements concur:
(1) control -- not mere stock control, but complete domination -- not only of
finances, but of policy and business practice in respect to the transaction
attacked, must have been such that the corporate entity as to this transaction
had at the time no separate mind, will or existence of its own;
(2) such control must have been used by the defendant to commit a fraud or
a wrong to perpetrate the violation of a statutory or other positive right; and
(3) the said control and breach of duty must have proximately caused the
injustice or unjust loss complained of. (PNB vs. Andrada Electric and
Engineering Co., April 17, 2002)

RESPONSIBILITY FOR PAYMENT OF WAGES

The rationale for this is that the fiction of corporate
personality was envisaged for convenience and to serve
justice, therefore it should not be used as a subterfuge
to commit injustice and circumvent labor laws. (Indino
vs. NLRC, 178 SCRA 168) Jurisprudence has applied this
exception in cases involving unpaid wages and
backwages, (A. C. Ransom Labor Union vs. Ople, 150
SCRA 498), in overseas recruitment (del Rosario vs.
NLRC, 187 SCRA 777), in unfair labor practices (NAFW
vs. Ople, 143 SCRA
124)

PROHIBITED ACTS REGARDING

WAGES
PROHIBITED ACTS REGARDING WAGES. The law prohibits the
following acts regarding wages:
a) Interference in the 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 the employer or from
any other person, or otherwise make use of any store or
services of such employer or any other person (Art. 112, LC).
It is the element of compulsion that makes this act
reprehensible. Compelling patronage is also penalized as
Other Similar Coercions under Art 288 of the Penal Code.

PROHIBITED ACTS REGARDING

WAGES
b) Unlawful deductions on wages--It is unlawful to make any
deduction from the wages of any employee for the benefit of
the employer or his representative or immediacy as
consideration of a promise of employment or retention in
employment (Art. 117, LC). It is also unlawful for an employer
to reduce wages and benefits, discharge or in any manner
discriminate against any employee who has filed any
complaint or instituted any proceeding to recover wages, or
has testified or is about to testify in such proceedings (Art.
118 LC).

PROHIBITED ACTS REGARDING

WAGES
No employer, in his own behalf or in behalf of any person, may make any
deduction from the wages of his employees, except in the cases allowed by
law, such as:
i) When specifically required bylaw, even without the employees consent,
e.g. Withholding Tax, SSS f Medicare contributions.
ii) When authorized by law, with the employees consent, e.g. reimbursement
for insurance premiums paid by the employer on the workers insurance,
check-offs on union dues, deductions on the value of facilities, payments to
employees cooperatives.
iii) When authorized by law, even without the employees consent , e.g.
deposit for loss or damage, court judgments for support.
iv) When the deductions are authorized by regulations issued by the
Secretary of Labor.

PROHIBITED ACTS REGARDING

WAGES
C) Deposits for loss or damage--In general, the Code prohibits an
employer from requiring his worker o make deposits kom which
deductions shall be made for the reimbursement of loss or
damage to tools, materials or equipment supplied by the
employer The exception is when the employer is engaged in such
trade, occupation or business where making deductions or
requiring deposits is a recognized practice, or is necessary or
desirable as determined in appropriate rules and regulations
(Art. 114 LC)

PROHIBITED ACTS REGARDING

WAGES
The pertinent rule allows this practice based on the above
premise, but subject to the following conditions:
i) that the employee concerned is clearly shown to be
responsible for the loss or damage;
ii) that the employee is given reasonable opportunity to show
cause why deduction should not be made;
iii) that the amount of such deductions is fair and reasonable,
and shall not exceed the actual loss or damage; and
iv) that the deduction from the wages of the employee does not
exceed 20 percent of his weekly wages (Sec. 14, Rule VIII OR).

PROHIBITED ACTS REGARDING

WAGES
d) Withholding of Wages and Kickbacks -. It is 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 of dismissal or by any other
means whatsoever without the workers consent (Art. 116 LC).
Parenthetically, it may be noted that in cases of unlawful
withholding of wages the culpable party may be assessed
attorneys fees equivalent to 10 percent of the amount of wages
recovered (Art. 111-a L,C; Lantion vs. NLRC, 181 SCRA513). In any
judicial or administrative proceeding for recovery of wages, it is
unlawful to demand or accept attorneys fees which exceed 10
percent of the amount of wages recovered (Art. 111-b LC).

PROHIBITED ACTS REGARDING

WAGES
e) False Reporting--It is likewise unlawful for any
person to make any statement, report or record
filed or kept pursuant to the provisions of the
Labor Code, knowing such statement, report or
record to be false in any material respect (Art.
119 LC).

OTHER WAGE-TYPE BENEFITS

COST OF LIVING ALLOWANCE:This wage-type benefit was originally
designated Emergency Living Allowance when it was first mandated by PD
525 on July 31, 1974 w help meet the increase in the daily expense of workers
as a result of escalating prices occasioned by the global energy crisis in the
70s. It was given as some form of compromise. While it increased the labor
costs of employers, it was provided that the allowance was not in the nature
of wages. Hence, it was not to be included in the computation of additional
compensation and other employee benefits.
Since then, a succession of other decrees increased this allowance
which became better known as Cost-of -Living Allowance, or COLA for short.
Two of these decrees--PD 1614 and Ex. 0. 178--integrated the allowances
granted by five Wage Orders into basic wages.

OTHER WAGE-TYPE BENEFITS

This allowance applies to employees, regardless of
employment status, working in commercial, industrial
and agricultural establishments, as well as non-profit
institutions, provided they are receiving less than the
cut-off wage ceiling per month. This refers to the basic
wage, not the gross wage. Additional benefits not an
integral part of the basic wage are not to be included.
The previous exception of distressed
industries was eliminated by PD 1364, May 1, 1978.

OTHER WAGE-TYPE BENEFITS

FACTORS AFFECTING PAYMENT. Employees are paid their full
COLA even if on leave of absence, if such leave is authorized by
the employer or when the same is with pay. But deductions from
the COLA may be made corresponding to the number of days in
which an employee was on leave of absence without pay, in the
absence of any agreement or practice to the contrary.
Payment of this allowance is in the form of cash, and
made on regular paydays. Originally, the allowance could be
given in kind, at the option of the employer, provided these are
in the form of basic prime commodities, but this option has been
abolished

OTHER WAGE-TYPE BENEFITS

EMPLOYEES COVERED. All rank-and-file employees are entitled to the 13th
month pay regardless of the amount of their monthly basic salary, if their
employers are not otherwise exempted from the application of P.D. No. 851.
Such employees are entitled to this benefit regardless of their designation or
employment status, and irrespective of the method by which their wages are
paid, provided they have worked for at least one month during a calendar
year Any employee who has rendered this minimum service requirement is
entitled to a proportionate benefit under the law.
Employees who are paid on piece work basis are by law
entitled to the 13th-month pay. Those who are paid a fixed or guaranteed
wage plus commissions are also entitled to this pay based on their total
earnings during the calendar year on both their fixed wage and commissions.

OTHER WAGE-TYPE BENEFITS

For employees with multiple employers, these rules apply.
Government employees working part-time in a private
enterprise, including private schools, as well as employees
working in two or more private firms, whether on full or parttime basis, are entitled to the 13th-month pay from all their
private employers, regardless of their total earnings from each or
all their employers.
Private school teachers, including faculty members of
universities and colleges, are entitled to this benefit regardless of
the number of months they teach, or are paid within a year, If
they have rendered service for at least one month within a year

OTHER WAGE-TYPE BENEFITS

An employee who has resigned or whose services were terminated at any
time before the 13th-month pay falls due is entitled to this monetary benefit
in proportion to the length of time he worked during the year reckoned from
the time he started working during the calendar year up to the time of his
resignation or termination from service. This may be demanded by the
employee upon the cessation of his employment.
Thus, it has been held that the 13th month pay as a statutory
benefit is automatically vested in the employee who has worked for at least
one month during the calendar year. Such benefit may not be lost or forfeited
even in the event of the employees subsequent dismissal for cause, without
violating his property rights. (Archilles Manufacturing Corp. vs. NLRC, 244
SCRA 750)

OTHER WAGE-TYPE BENEFITS

EMPLOYERS EXEMPTED. The following employers are not bound by the 13thmonth pay requirement:
a) The Government and any of its political subdivisions, including
government-owned and controlled corporations, except those corporations
operating essentially as private subsidiaries of the government;
b) Employers of household helpers and persons in the personal service of
another in relation to such workers:
c) Employers of those who are paid on purely commission, boundary or task
basis, and those who are paid a fixed amount for specific work, irrespective of
the time consumed in the performance thereof, except where the workers
are paid on piece-rate basis in which case the employer shall grant the
required 13th-month pay to such workers; and
d) Employers already paying their employees a 13th- month pay or more in a
calendar year, or its equivalent.

REFERENCES
Abad, Jr., Antonio H. (2011). (4th ed). Compendium
on labor law. 4th ed. Manila: Rex.
Azucena, Jr. A. C. (2010). (7th ed.). The labor code
with comments and cases. Manila: Rex.
Azucena, C.A., Jr. (2007). (5th ed.). Everyone's Labor
Code. Manila:Rex.
Rex case digest. (2006). Labor law and social
legislation, legal ethics, mercantile law. Quezon City:
Rex.
Salao, Ernesto C. (2009). Law dictionary. Manila: Rex.