CONDITIONS OF EMPLOYMENT

Normal Hours of Work

ART. 83. Normal hours of work. - The normal hours of work of any employee shall
NOT exceed eight (8) hours a day.

Health personnel in cities and municipalities with a population of at least one

million (1,000,000) or in hospitals and clinics with a bed capacity of at least one
hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5)
days a week, exclusive of time for meals, except where the exigencies of the
service require that such personnel work for six (6) days or forty-eight (48) hours,
in which case, they shall be entitled to an additional compensation of at least
thirty percent (30%) of their regular wage for work on the sixth day. For purposes
of this Article, "health personnel" shall include resident physicians, nurses,
nutritionists, dietitians, pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants and all other
hospital or clinic personnel.

Art. 84 Hours Worked

Compensable hours worked includes:
(a) all time during which an employee is required to be on duty or to be at a
prescribed workplace, and
(b) all time during which an employee is suffered or permitted to work.

Rest periods of short duration during working hours shall be counted as hours
worked.

General Principles governing Hours Worked

(Sec 4 Rule I Book 3 IRR)
a. All hours are hours worked which the employee is required to give his
employer, regardless of whether or not such hours are spent in productive
labor or involve physical or mental exertion.

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b. An employee need NOT leave the premises of the work place in order that his
rest period shall not be counted, it being enough that he stops working, may
rest completely and may leave his work place, to go elsewhere, whether
within or outside the premises of his work place.
c. If the work performed was necessary, or it benefited the employer, or the
employee could not abandon his work at the end of his normal working hours
because he had no replacement, all time spent for such work shall be
considered as hours worked, if the work was with the knowledge of his
employer or immediate supervisor.
d. The time during which an employee is inactive by reason of interruptions in
his work beyond his control shall be considered working time either if the
imminence of the resumption of work requires the employee's presence at
the place of work or if the interval is too brief to be utilized effectively and
gainfully in the employee's own interest.

Question:
Is the following hours considered compensable working hours?

1. Waiting time
2. Working while eating
3. Working while sleeping

WHAT IS OVERTIME PAY?

It is defined as an additional pay for service or work rendered or performed in

excess of eight hours a day by employees or laborer in employment covered by
eight-hour law and not exempt from its requirements. It is computed by
multiplying the overtime hourly rate by the number of hours worked in excess of
eight hours.

Art. 87 Overtime Work and Compensation

It is work rendered in excess of and in addition to eight (8) hours on ordinary
working days.

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 An additional compensation equivalent to an employees regular wage plus
25% thereof given for overtime work on an ordinary day. If overtime was
done on a rest day or a holiday, the additional compensation is equivalent to
the rate of the first 8 hours plus at least 30% thereof.

Overtime Pay Premium Pay

Additional compensation for
work done beyond the normal
work hours on ordinary working
days.
Additional compensation for
work rendered by the employee
on days normally he should not
be working such as special
holidays or rest days. Pay for
excess of 8hours on such days
considered overtime pay.

May an employee be compelled to render overtime?

General Rule: No.
Exceptions:

ARTICLE 89
Emergency Overtime Work
a. When the country is at war or when any other national or local emergency
has been declared by the National Assembly or the Chief Executive;
b. When it is necessary to prevent loss of life or property or in case of
imminent danger to public safety due to an actual or impending emergency
in the locality caused by serious accidents, fire, flood, typhoon, earthquake,
epidemic, or other disaster or calamity;
c. When there is urgent work to be performed on machines, installations, or
equipment, in order to avoid serious loss or damage to the employer or
some other cause of similar nature;
d. When the work is necessary to prevent loss or damage to perishable goods;
and

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 e. Where the completion or continuation of the work started before the
eighth hour is necessary to prevent serious obstruction or prejudice to the
business or operations of the employer.

Undertime does not offset overtime (Art. 88)

The rationale behind is that it is an evident unfairness on the part of the
employee because the hourly rate of overtime has a corresponding overtime
pay.

Employees NOT entitled to Overtime Pay

1. Government Employees

2. Managerial employees

3. Non-agricultural field personnel

4. Members of the family of the employer who are dependent upon him for
support
5. Domestic helpers and persons in the personal service of another
6. Workers who are paid by results, such as piece-rate or task-basis.

Regular Holidays

These holidays are compensable whether worked or unworked. (RA 9492)

New Years Day January 1, 2017 (Sunday)
ArawngKagitingan April 9, 2017 (Sunday)
Maundy Thursday April 13, 2017 (Thursday)
Good Friday April 14, 2017 (Friday)
Labor Day May 1, 2017 (Monday)
Independence Day June 12, 2017 (Monday)
EidlFitr to be announced
National Heroes Day August 28, 2017 (Monday)
EidulAdha to be announced
Bonifacio Day November 30, 2017 (Thursday)
Christmas Day December 25, 2017 (Monday)
Rizal Day December 30, 2017 (Saturday)

a. If it is an employees regular workday

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 If unworked 100%
If worked 1st 8 hours 200%
Excess of 8 hours plus 30% of hourly rate on said day
b. If it is an employee rest day

If unworked 100%
If worked 1st 8 hours plus 30% of 200%
Excess of 8 hours plus 30% of hourly rate on said day

Special Non-working Holiday

January 2, 2017 (Monday)

Chinese New Year January 28, 2017 (Saturday)
EDSA Revolution Anniversary February 25, 2017 (Saturday)
Black Saturday April 15, 2017 (Saturday)
Ninoy Aquino Day August 21, 2017 (Monday)
October 31, 2017 (Tuesday)
All Saints Day November 1, 2017 (Wednesday)
Last Day of the Year December 31, 2017 (Sunday)

For declared special days such as Special Non-working Day, Special Public
Holiday, Special National Holiday, in addition to the two nationwide special
days (November 1, All Saints Day and December 31, Last Day of the Year), the
following rules shall apply:

a. If unworked

No pay, unless there is a favorable company policy, practice, or collective

bargaining agreement (CBA) granting payment of wages on special days
even if unworked.
b. If worked

1st 8 hours plus 30% of the daily rate of 100%

excess of 8 hours plus 30% of hourly rate on said day
c. Falling on the employees rest day and if worked

1st 8 hours plus 50% of the daily rate of 100%

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 excess of 8 hours plus 30% of hourly rate on said day

Employees not entitled to Holiday Pay

1. Government and any of its political subdivisions including GOCCs

2. Those of retail and service establishments regularly employing less than 10

workers
3. Domestic helpers and those in the personal service of another

4. Managerial employees

5. Field personnel and other employees whose time and performance are
unsupervised by employer (contract basis, purely commission basis, paid
fixed amount for performing work irrespective of time consumed in the
performance thereof).

QUESTION:
What are the effects of absences on holiday pay?

a. If an employee is on leave of absence with pay, on the day immediately

preceding the regular holiday, he is entitled to holiday pay.
b. If an employee is on leave of absence without pay on the day immediately
preceding the regular holiday, he is not entitled to holiday pay.
c. If the day immediately preceding the holiday is a nonworking day or the
scheduled rest day of an employee, he is not considered to be on leave of
absence on that day, in which case he shall be entitled to holiday pay if the
employee should work on the day immediately preceding the non-working
day or rest day.

Night Shift Differential Art. 86

It is that additional compensation of not less than 10% of an employees

regular wage for every hour worked done between 10:00pm to 6:00am,
whether or not such period is part of the workers regular shift.

Employees NOT entitled to night shift differential

1. Government and any of its political subdivisions including GOCCs

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 2. Those of retail and service establishments regularly employing not more
than 5 workers
3. Domestic helpers and those in the personal service of another
4. Managerial employees
5. Field personnel and other employees whose time and performance are
unsupervised by employer (contract basis, purely commission basis, paid
fixed amount for performing work irrespective of time consumed in the
performance thereof).

Rest Day
It is a rest period of not less than 24 hours after every six consecutive normal
work days. It is an obligation of the employer to provide and schedule the rest
day of the employee.

Employee may be required to work on his rest day:

Art 92 LC, Sec 6 Rule III Book III, IRR
In case of actual or impending emergencies caused by serious accident, fire,
flood, typhoon, earthquake, epidemic or other disaster or calamity, to
prevent loss of life or property, or in cases of force majeure or imminent
danger to public safety;
In case of urgent work to be performed on machineries, equipment or
installations to avoid serious loss which the employer would otherwise
suffer;
In the event of abnormal pressure of work due to special circumstances,
where the employer cannot ordinarily be expected to resort to other
measures;
To prevent serious loss of perishable goods;
Where the nature of the work is such that the employees have to work
continuously for seven (7) days in a week or more, as in the case of the
crew members of a vessel to complete a voyage and in other similar cases;
and

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 When the work is necessary to avail of favorable weather or environmental
conditions where performance or quality of work is dependent thereon.

In cases not falling within any of the enumerated cases or instances, no

employee may be made to work on his rest day against his will

STATUTORY LEAVES

Service Incentive Leave (ART. 95)

- The Labor Code provides a five-day service incentive leave with pay for
employees who have rendered at least one year of service, continuous or
broken. The SIL may be used as vacation or sick leave. If unused at the end
of the year, this benefit is convertible to its cash equivalent.
- A grant of vacation and sick leave may be considered as the substitute for
SIL.
- Cause of action to recover SIL accrues from the moment the employer
refuses to remunerate its monetary equivalent.
- Available to employees who have rendered at least one year of service.

Employees not entitled to SIL

1. Government and any of its political subdivisions including GOCCs

2. Those employed in establishments regularly employing less than 10

workers
3. Domestic helpers and those in the personal service of another

4. Managerial employees

5. Field personnel and other employees whose time and performance are
unsupervised by employer (contract basis, purely commission basis, paid
fixed amount for performing work irrespective of time consumed in the
performance thereof).
6. Those who are already enjoying the benefit provided

7. Those enjoying vacation leave with pay of at least 5 days

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For purposes of SIL entitlement at least one year of service means:
- Service within 12 months, continuous or broken, reckoned from the date
the employee started working, including authorized absences and paid
regular holidays, unless the working days in the establishment as a matter
of practice or policy or that provided in the contract is less than 12 months,
in which case said period shall be considered one year.

Vacation and Sick Leave Benefits

- Unless otherwise stipulated, leaves must be claimed and enjoyed by the
employee within the year; otherwise considered waived and forfeited.
- Generally not convertible to cash.

Nature of Sick Leave,

Maternity Leave and Vacation Leave Benefits
It is a replacements for regular income which otherwise would be earned because
an employee is not working during the period of said leaves. May be given in
conjunction with other benefits.

Paternity Leave RA 8187

- Refers to benefits granting married male employees 7 days leave with full
pay on the condition that his spouse has delivered a child or suffered
miscarriage for purposes of enabling him to effectively lend support to his
wife in her period of recovery and/or in the nursing of the newly-born
child. If paternity leave is not availed of, it is not convertible to cash.
Paternity leave may be availed of for each delivery for the first 4 deliveries
of his legitimate wife and must be cohabiting with his spouse at the time of
delivery or miscarriage.
May be availed of within 60 days from the delivery of the wife.
Paid by the employer

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Maternity Leave RA 1161 as amended by RA 8282
Benefits granted to the female employee regardless of civil status, for the
first four deliveries.
Normal delivery 60 days
Caesarian delivery 78 days
Paid by SSS
NOTE:

The Senate on March 6, approved on 3rd and final reading the bill seeking to grant
120 days of maternity leave to expectant mothers.

With a vote of 22-0, Senate Bill 1305 or the Expanded Maternity Leave Law of
2017 was passed. Senator Risa Hontiveros, chair of the Senate committee on
women, children, family relations, and gender equality, authored the measure.

Under the bill, all female workers, regardless of civil status or legitimacy of her
child, shall be granted 120 days maternity leave with pay and an option to
extend it for another 30 days without pay. Under the current law, expectant
mothers are allowed only 60 days of paid leave.

Single mothers shall also be granted a total of 150 days maternity leave with pay.

Fathers would also benefit from the measure if passed into law, as it seeks to
grant them 30 days of leave more than the allowed 7 days of paid leave under
Republic Act 7322.

Under the bill, 30 of the 120 days can be transferred to alternate caregivers, such
as the spouse, common-law partner, and relative up to the 4th degree of
consanguinity, including adoptive parents.

Battered Woman Leave RA 9262

The victim employee is entitled to a paid leave up to ten days in addition to
other paid leaves under the Labor Code, other laws and company policies.
The leave is extendible when the necessity arises as specified in the
Protection Order. Not Convertible to cash.

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Magna Carta for Women RA 9710 Special Leave/Surgical Leave
Section 18 provides that a woman employee having rendered continuous
aggregate employment service of at least 6 months for the last 12 months
shall be entitled to a special leave benefit of two (2) months with full pay
based on her gross monthly compensation following surgery caused by
gynecological disorders.
Non cumulative.Non convertible to cash unless otherwise provided in the
CBA.

Solo Parent Leave

- Republic Act No. 8972 (An Act Providing for Benefits and
Privileges to Solo Parents and Their Children, Appropriating Funds Therefor
and for Other Purposes), otherwise known as The Solo Parents Welfare
Act of 2000, approved on November 7, 2000 grants parental leave of not
more than seven (7) days every year to any employee who has rendered
service of at least one (1) year. (Sec. 8, R.A. 8972) Not convertible to cash.

WHO ARE CONSIDERED SOLO PARENT?

"Solo parent" - any individual who falls under any of the following categories:

(1) A woman who gives birth as a result of rape and other crimes against
chastity even without a final conviction of the offender: Provided, That the
mother keeps and raises the child;

(2) Parent left solo or alone with the responsibility of parenthood due to
death of spouse;

(3) Parent left solo or alone with the responsibility of parenthood while the
spouse is detained or is serving sentence for a criminal conviction for at
least one (1) year;

(4) Parent left solo or alone with the responsibility of parenthood due to
physical and/or mental incapacity of spouse as certified by a public medical
practitioner;

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 (5) Parent left solo or alone with the responsibility of parenthood due to
legal separation or de facto separation from spouse for at least one (1)
year, as long as he/she is entrusted with the custody of the children;

(6) Parent left solo or alone with the responsibility of parenthood due to
declaration of nullity or annulment of marriage as decreed by a court or by
a church as long as he/she is entrusted with the custody of the children;

(7) Parent left solo or alone with the responsibility of parenthood due to
abandonment of spouse for at least one (1) year;

(8) Unmarried mother/father who has preferred to keep and rear her/his
child/children instead of having others care for them or give them up to a
welfare institution;

(9) Any other person who solely provides parental care and support to a
child or children;

(10) Any family member who assumes the responsibility of head of family
as a result of the death, abandonment, disappearance or prolonged
absence of the parents or solo parent.

A change in the status or circumstance of the parent claiming benefits

under this Act, such that he/she is no longer left alone with the
responsibility of parenthood, shall terminate his/her eligibility for these
benefits.

Compressed Workweek DOLE Advisory 02 series of 2004

Generally observed work week of 6 days may be shortened to 5 days but
prolonging the working hours from Monday to Friday without employer being
obliged to pay overtimepay for work performed in excess of 8 hours on
weekdays in exchange of personal benefits. 48 hours will still be worked on a 5
days workweek.
- Conditions:
1. Employees voluntarily agree to work more than 8 hours but not more
than 12 hours a day but not more than the normal weekly hours of work

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 prior to the adoption of the compressed workweek. In excess of 12
hours, it shall be compensable as Overtime pay
2. No diminution of weekly or monthly take home pay and fringe benefits.
3. All such work shall be compensated under the LC or applicable CBA.
4. Appropriate waivers with respect to overtime premium pay for work
performed in excess of 8 hours may be devised.
5. Effectivity of the arrangement shall be by agreement of the parties.
6. The DOLE regional office must be duly notified not later than 10 days of
adoption of scheme.

Meal Periods
Obligation of employer to give employee not less than 60 minutes time for
regular meals. Not compensable. Employees may leave company premises
during meal periods.

Coffee Breaks rest periods running from 5 to 20 minutes are included.

Considered compensable working time.

Service Charge Art 96

Distributed as follows:
85% for all employees
15% disposition of management to answer for losses or breakages and
distribution to managerial employees at the discretion of management.

- If abolished shall be deemed integrated to the wages of employees. Forms

part of backwages of employees.

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 SERVICE CHARGE vs. TIPS

Service Charge collected by management from customers

TIPS voluntary payments made by the customers to the employees for excellent
service.

WAGES
a. it is the remuneration or earnings, however designated, for work done or
to be done or for services rendered or to be rendered;
b. it is 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;
c. it 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
d. it 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.

Salary
Denotes a higher degree of employment or a superior grade of services and
implies a position or office. Wage indicates a considerable for a lower and less
responsible character of employment

Generally, wage and salary refer to the same meaning, that is a reward or
recompense for services rendered.

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Significance of the Distinction:

Wages are exempt from execution or attachment except for debts incurred for
food shelter, clothing and medical attendance (Article 1708 Civil Code)

Whereas, Salaries are not exempt from execution or attachment (Gaa vs. CA 140
SCRA 304)

A fair days wage for a fair days labor

Unless specifically required by law, contract or established policy, the
employer is not bound to pay wages to a worker who has not actually
rendered any service. Absent or only for a portion of the day.
However, if employee is able, willing and ready to work but was illegally locked
out, suspended or dismissed or illegally prevented from working, employer is
liable to pay.
If the failure of the worker to work was not due to the employers fault, the
burden of economic loss should not be shifted to the employer. Each party
must bear its own loss.

THE PRINCIPLE OF NON-DIMUNITION 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 the promulgation of this Code.

In TSPIC Corp v. TSPIC Employees Union, the Supreme Court laid down the
elements of diminution of benefits: (1) the grant or 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.

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Benefits granted voluntarily, regularly and unconditionally cannot be reduced or
withdrawn because benefits given voluntarily, regularly and unconditionally
becomes part of the terms and conditions of the employment.

However, if the benefits was given by mistake (mistake of fact or mistake of law),
an employer can therefore stop payment that has been erroneously granted
without violating the principle of non-diminution of benefits.

REASON: Mistake is presumed of something which had never been due was given,
Under the circumstances, the employer cannot only discontinue the benefit but
may even recover what it has erroneously paid, under the principle of solution
indebiti.

Facilities vs. Supplements

Facilities shall include articles or services for the benefit of the employee or
his family but shall not include tools of the trade or articles or services
primarily for the benefit of the employer or necessary to the conduct of the
employers business.

The Secretary of Labor from time to time fixes fair and reasonable value of
board, lodging, and other facilities customarily furnished by an employer to his
employees both in agricultural and non-agricultural enterprise.

The value of Facilities may form part of the wages on the following
requirements:
a. Must be customarily furnished by the employer

b. Employee voluntarily accepts in writing

c. Value is fair and reasonable

d. Employee must voluntarily accept the facilities

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Examples: Meals, housing, fuel including electricity, water gas for the non-
commercial use of employee; transportation; school; medical and dental service

Supplements means extra remuneration or special privileges or benefits given

to or received by the laborers over and above their ordinary earnings or wages.

Supplements are NOT part of the wages. They are given precisely to augment the
earnings of the employee. Hence supplements cannot be deducted from the
wages of an employee.

Supplements Facilities
Remuneration or special benefits Items of necessary expense
given to employee necessary for the laborers and his
familys existence and subsistence.
Not part of wage, thus cannot be Part of wages and are thus
deducted. deductible therefrom if they are not
furnished.
Granted for the convenience of the Granted for the convenience of the
employer. employee
Once given cannot be eliminated or
diminished

Bonus
Bonus is an amount granted and paid ex gratia to the employee for his
industry or loyalty which contributed to the success of the employers
business and made possible the realization of profits. (Phil Educ. Co. vs CIR 92
Phil 381)

Hence, generally not demandable or enforceable. If there is no profit, there

may be no bonus. If profit is reduced, bonus should likewise be reduced,
absent any agreement making such bonus part of the compensation of the
employees.

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However, may become part of regular compensation by reason of its long and
regular concession.

If grant is entirely dependent on profits. May not be given if not employer

cannot afford.

Bonus NOT a demandable obligation. It becomes demandable obligation only

when:
1. The grant thereof arises from contract
2. It is made part of the wages
2.1 unconditionally given regardless of the realization of profits
2.2 it has ripened into a regular practice

To become a regular practice, the bonus should have been granted:

a. Consistently
b. Voluntarily
c. Deliberately over a long period of time

13th Month Pay PD 851

PD 851 requires an employer to pay its employees receiving basic salary of not
more than P1000, regardless of the nature of the employment, a 13th month
pay should be paid not later than December 24, every year, provided they
have worked for at least one month during the calendar year.

Thirteenth month pay shall mean one-twelfth (1/12) of the basic salary of
an employee within a calendar year.

The basic salary of an employee for the purpose of computing the 13th-
month pay shall include all remunerations or earnings paid by the employer
for services rendered but does not include allowances and monetary benefits
which are not considered or integrated as part of the regular or basic salary,
such as the cash equivalent of unused vacation and sick leave credits,
overtime, premium, night differential and holiday pay and cost-of-living
allowances. However, these salary-related benefits should be included as part

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 of the basic salary in the computation of the 13th-month pay if by individual or
collective agreement, company practice or policy, the same are treated as part
of the basic salary of the employees.

Who are entitled?

By law, only rank and file employees are entitled provided they have worked
for at least one month during the calendar year.

Who are rank and file employee?

Managerial Employee is one who is vested with powers or prerogatives to
lay down and execute management policies and/or to hire, suspend, layoff,
recall, discharge, assign or discipline employees.

All employees NOT falling within the Definition of Managerial Employees are
considered rank and file employees.

Who are not entitled?

1. Employees who have not yet rendered service for one month during
the calendar year;
2. Employees who are paid purely on commission basis, boundary and
task basis;
3. Employees who are paid a fixed amount for performing specific work
irrespective of time consumed in the performance thereof, except
piece rate workers;
4. Employees who are not rank and file;

MINIMUM WAGE

MINIMUM WAGE is the lowest wage rate fixed by the law that an employer
can pay his workers. Compensation which is less than such minimum rate is
considered an underpayment that violates the law.

RA 6727 Wage Rationalization Act mandates the fixing of minimum wage

applicable to different industrial sectors, namely agricultural, non-agricultural

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and non-plantation, cottage/handicraft, and retail service, depending on the
number or capitalization or annual gross sales in some sectors.

Purpose of Fixing Minimum Wage:

It benefits wage earners by providing a rock bottom wage to be paid to them
by employers.
Protection to the employers who without legal compulsion pays a decent
wage to his workers against the competition of the employer who pays his
workers inadequate wages and thus operates at a lower cost or sell his
products at lower price.

WHO FIX THE MINIMUM WAGE?

Regional Tripartite Wages and Productivity Board

- Has power to fix minimum wage rates in their region, provinces or
industries therein and to issue wage orders subject to the guidelines issued
by the National Wages and Productivity Commission.
- May issue wage orders ordering the payment of wages above the
minimum. RA 6727 allowed the Board to be creative in resolving wage
distortions.
- If wage order without prior public hearing and consultations and not
published, such order is null and void.

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EMPLOYERS EXEMPTED FROM PAYMENT OF MINIMUM WAGE

Employers of Househelpers, including family drivers and

workers in the personal service of another whose conditions of
work are prescribed in RA 10361 (Law on Kasambahay);
Employers registered under Barangay Micro Business
Enterprise (BMBE) with Certificate of Authority issued by the
Office of Municipal or City Treasurer;
Those employers that are exempted from compliance for a
period not to exceed one (1) year upon application and as
determined by the RTWPB.
Farm Tenancy or Leasehold
Workers in any registered cottage industry who perform the
work in their respective homes
Workers in any registered cooperative when so recommended
by Bureau of Cooperative Development and approved by the
Secretary of Labor

MANDATORY PAYMENT OF MINIMUM WAGE

Compliance with the minimum wage law is mandatory. It cannot be the
subject of negotiations. Not even the consent of the employees can defeat its
operations. The minimum wage cannot be waived.

"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;

Correction of Wage Distortion.

Where the application of any prescribed wage increase by virtue of a Wage
Order issued by the Board results in distortions of the wage structure within an
establishment, the employer and the union shall negotiate to correct the
distortions. Any dispute arising from wage distortions shall be resolved through

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the grievance procedure under their collective bargaining agreement and, if it
remains unresolved, through voluntary arbitration. Unless otherwise agreed by
the parties in writing, such dispute shall be decided by the voluntary arbitrator
or panel of voluntary arbitrators within ten (10) days from the time said dispute
was referred to voluntary arbitration.

In cases where there are no collective agreements or recognized labor unions,

the employers and workers shall endeavor to correct such distortions. Any
dispute arising therefrom shall be settled through the National Conciliation and
Mediation Board and, if it remains unresolved after ten (10) days of conciliation,
shall be referred to the appropriate branch of the National Labor Relations
Commissions (NLRC). It shall be mandatory for the NLRC to conduct continuous
hearings and decide the dispute within twenty (20) days from the time said
dispute is submitted for compulsory arbitration.
The pendency of a dispute arising from a wage distortion shall not in any way
delay the applicability of any increase in prescribed wage rates pursuant to the
provisions of the Wage Order.

PAYMENT OF WAGES

Form of wages
Under the Labor Code and its implementing rules, as a general rule, wages shall
be paid in legal tender and the use of tokens, promissory notes, vouchers,
coupons or any other form alleged to represent legal tender is prohibited even
when expressly requested by the employee.

What is legal tender?

Is that currency which has been made suitable by law for the purpose of tender of
payment of debts. All noted and coins issued by Bangko Sentral are legal tender.

Payments by checks, postal checks, money order (Sec. 2, Rule 8, Book III IRR)
1. Bank facility within a radius of 1 kilometer from business

2. Employer receives no pecuniary benefit from the arrangement

3. Employees given reasonable time to withdraw during banking hours

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 4. With written consent of employees concerned if no CBA - employer should
have at least 25 employees.

TIME OF PAYMENT OF WAGES

General Rule:
at least once every two (2) weeks or twice a month at intervals not exceeding
sixteen (16) days. No employer shall make payment with less frequency than
once a month.
EXCEPTION
when payment cannot be made with such regularity due to force majeure or
circumstances beyond the employers control, in which case, the employer
shall pay the wages immediately after such force majeure or circumstances
have ceased (Art. 103).

PLACE OF PAYMENT OF WAGES

General Rule
the place of payment shall be at or near the place of undertaking.

Exceptions
a. When payment cannot be effected at or near the place of work by reason
of the deterioration of peace and order conditions, or by reason of actual or
impending emergencies caused by fire, flood, epidemic or other calamity
rendering payment thereat impossible;
b. When the employer provides free transportation to the

employees back and forth; and

c. Under any other analogous circumstances, provided that the time spent by
the employees in collecting their wages shall be considered as compensable
hours worked. (Sec. 4 (a) Rule VIII Book III, Rules to Implement the Labor Code)

- Payment of wages in bars, massage clinics or nightclubs is prohibited

except in the case of employees thereof.

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 - Payment through banks are allowed in businesses and other entities with
twenty five (25) or more employees and located within one (1) kilometer
radius to a commercial, savings or rural bank. Written permission of the
majority of the employees is also a requirement.

Payment to be made to:

General Rule: directly to the employee entitled thereto and to nobody else.
(Art. 105)
The exceptions to this rule are:
a. Where the employer is authorized in writing by the employee to pay
his wages to a member of his family;
b. Where payment to another person of any part of the employees
wages is authorized by existing law, including payments for the insurance
premiums of the employee and union dues where the right to check-off has
been recognized by the employer in accordance with a collective agreement or
authorized in writing by the individual employees concerned; or
c. In case of death of the employee, in which case, the same shall be
paid to his heirs without necessity of intestate proceedings.

Labor-Only Contracting and Job Contracting

Job Contracting
- provides services
- Has substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and
placed perform activities directly related to the principal business of the
employer.
- Job Contracting Article 106 to 109 (Repealed by DO 18-A and DO 174)
Contractor/subcontractor and principal shall be jointly and severally liable
for unpaid wages.
- Deemed indirect employer

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- No E-E relationship between employee and principal.
- Trilateral relationship contractor, principal, employee

Labor Only Contracting

- provides manpower only

- Prohibited because gives rise to confusion as to who are the real employers
of the employees. Deprives workers from being regularized and to acquire
security of tenure.

Labor Only Contracting Job Contracting

Prohibited Legally recognized
Contractor does not have Contractor has substantial
substantial capital or capital and investment in the
investment form of equipment, machinery
and work premises
Employees employed by Employee are its own.
principal

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