Work and Wages

Minimum Wage

Minimum wage rates are set at a regional level by Regional Tripartite Wages and Productivity Boards. Each Regional Board is composed of the Regional Director of the Department of Labor and Employment as chairman, the Regional Directors of the National Economic and Development Authority and the Department of Trade and Industry as vice chairmen and 2 members each from workers’ and employers’ organizations. The employee and employer representatives are appointed by the President of the Philippines, upon the recommendation of the Secretary, Ministry of Labour and Employment, made on the basis of the list of nominees submitted by the workers’ and employers’ associations respectively.

Whenever conditions in the region so warrant, the Regional Board investigates and studies all pertinent facts and, based on prescribed standards and criteria, proceed to determine whether a Wage Order should be issued. Any such Wage Order takes effect after 15 days from its complete publication in at least one newspaper of general circulation in the region. In the performance of its wage determining functions, the Regional Board can conduct public hearings/consultations, giving notices to employees’ and employers’ groups, provincial, city and municipal officials and other interested parties. A National Wages and Productivity Commission is charged with prescribing rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial, or industry levels and reviewing regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with prescribed guidelines and national development plans. The National Wage and Productivity Commission is not empowered to overturn Wage Orders issued by the Regional Boards directly. However, the Commission may make a wage recommendation in relation to a specified industry or branch thereof where it considers that a substantial number of employees in that industry or branch of industry are receiving wages which, although in compliance with the minimum wage provided by law, are less than sufficient to maintain them in health, efficiency and general wellbeing (taking into account the peculiar circumstances of the industry and its geographical location). Such a wage recommendation may be either rejected or approved by the Secretary of Labor and Employment and, if approved, a Wage Order shall be issued by the Secretary subject to the approval of the President of the Philippines.

The regional minimum wages to be established by the Regional Board are to be as nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and general wellbeing of the employees within the framework of the national economic and social development program. In determining the minimum wage rates, the Regional Board considers, among other relevant factors, the needs of workers and their families, the cost of living and any changes or increases therein, the prevailing wage levels, the equitable distribution of income and wealth along the imperatives of economic and social development, the effect on employment generation, the capacity of employers to pay, the wage adjustment vis-à-vis the consumer price index and the need to induce industries to invest in the countryside and improvements in standards of living.

The Regional Boards may set different minimum wage levels for different industries within the relevant region if the Regional Board considers that conditions make such differentiation proper and necessary to effectuate the intention of the Labor Code. A review of current Wage Orders indicates that different rates are usually set for different sectors, largely divided into nonagricultural sectors, agricultural sectors and retail and service sectors.

Each of the 16 regions in the Philippines has its own Regional Tripartite Wages and Productivity Board which sets minimum wage rates for their respective region. The Regional Boards may set different minimum wage levels for different provinces or localities within the relevant region if the Regional Board considers that conditions make such differentiation proper and necessary to effectuate the intention of the Labor Code.

Apprentices, learners and disabled workers cannot be paid no less than 75% of the applicable minimum wage.

The Regional Tripartite Wages and Productivity Boards may determine and adjust, from time to time, the minimum wage rates (every 3 years) with a view to improving them.

Lastly, the minimum wage rates set under Chapter V of Title II of Book Three of the Labor Code, as amended by the Wage Rationalization Act (the generally applicable minimum wage rates), apply to all workers and employees in the private sector regardless of their position, designation or status, and irrespective of the method by which their wages are paid, except

  1. Household or domestic helpers, including family drivers and workers in the personal service of another;
  2. Workers and employees in retail/service establishments regularly employing not more than 10 workers, when exempted from compliance with the Act for a period fixed by the Commission/Boards;
  3. Workers and employees in exempted Barangay Micro Business Enterprises; and
  4. Government sector employees.

Source: §61, 75, 80, 98,99, 120, 121, 122, 123, 124, and 143 of the Labour Code, as amended; Amended Rules of Procedure on Minimum Wage Fixing 2007; Omnibus Rules to Implement the Labor Code Rule IX of Book Three; Rules Implementing Republic Act No. 6727; Rules and Amended Rules on Exemptions from Prescribed Wage Increases

Regular Pay

The term ’wage’ means 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 oral 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 Labour and Employment, of boarding, lodging, or other facilities customarily furnished by the employer to the employee. ’Fair and reasonable value’ does not include any profit to the employer, or to any person affiliated with the employer.

Wages must be paid at least once a month and can also be paid at least once every two weeks or twice a month at intervals not exceeding sixteen days. If on account of force majeure or circumstances beyond the employer’s control, payment of wages on or within the time prescribed cannot be made, the employer must pay the wages immediately after such force majeure or circumstances have ceased. The payment of wages of employees engaged to perform a task which cannot be completed in two weeks in the absence of a collective bargaining agreement or arbitration award, must be paid at intervals not exceeding sixteen days, in proportion to the amount of work completed and final settlement upon completion of the work. As a general rule, wages are required to be paid at or near the workplace. Payment in a place other than the workplace is permissible only under certain circumstances. Wages may be paid through banks within one kilometer radius to entities with 25 or more employees, upon written permission of the majority of the employees.

Lastly, the law prohibits interference in the disposal of wages, unauthorized wage deductions, withholding of wages without the worker's consent, deductions to ensure employment, and retaliation against workers through the reduction of or refusal to pay wages. However, the employer may deduct from the employee’s wages when: (a) the deductions are authorized by law, including deductions for insurance premiums advanced by the employer on behalf of the employee as well as union dues where the right to check-off has been recognized by the employer or authorized in writing by the employee himself; or (b) the deductions are authorized by the employee in writing for payment to a third person, provided that the employer does not directly or indirectly receive any pecuniary benefit from the transaction.

Employers in the private sector are required to pay a 13th month pay to their rank and file employees on or before December 24 of every year. All the rank and file employees of the private sector are entitled to 13th month pay regardless of their position, designation, employment status or wage payment method provided that they have worked for at least one month during the calendar year.

While the Decree requires that the payment can’t be made later than 24th of December, a labour advisory, issued by the Department of Labour, suggests that employers may give 50% of the 13th month pay before the opening of the regular school year and the remaining 50% on or before 24 December every year. The amount of 13th month pay cannot be less than the one-twelfth of the total basic salary earned by a worker during the year. The due amount is however calculated in view of the monthly absences from work. Employers are required to report compliance to this by 15th January each year.

Source: §97, 103, 104 and 113 of the Labour Code, as amended; Presidential Decree No 851 of 1976