Minimum Wage
Under the Labor Code, the minimum wage rates are set at a regional level by Regional Tripartite Wages and Productivity Boards (RTWPBs). Each Regional Board is composed of the Regional Director of the Department of Labor and Employment (DOLE) as chairman, the Regional Directors of the National Economic and Development Authority and the Department of Trade and Industry as vice chairpersons, and two members each from workers’ and employers’ sectors. The employee and employer representatives are appointed by the President of the Philippines, upon the recommendation of the Secretary of Labor and Employment, made on the basis of the list of nominees submitted by the workers’ and employers’ sectors respectively.
Whenever conditions in the region so warrant, the Regional Board investigates and studies all pertinent facts and, based on prescribed standards and criteria, proceeds 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 must 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 (NWPC) 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 RTWPBs to determine if these are in accordance with prescribed guidelines and national development plans. Although the NWPC is not empowered to overturn Wage Orders issued by the Regional Boards directly, it can accept appeals of Wage Orders on the ground of grave abuse of discretion of the Regional Board for committing serious error in the application of law and non-compliance with prescribed guidelines and/or procedures.
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, the need to induce industries to invest in the countryside, and improvements in standards of living.
Each of the 16 regions in the Philippines has its own RTWPB which sets minimum wage rates for their respective region. 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 non-agricultural sectors, agricultural sectors, and retail and service sectors.
Apprentices, learners and disabled workers must be paid at a rate no lower than 75% of the applicable minimum wage.
The Secretary of Labor and Employment, or his or her duly authorized representatives, can access an employer’s records and premises, copy the records, question any employee, and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of the Labor Code and of any labor law, wage order or rules and regulations issued pursuant thereto.
Minimum wage complaints must be filed with the DOLE Regional Offices that have jurisdiction over the workplace.
Any entity which refuses or fails to pay any of the prescribed increases or adjustments in the wage rates will be punished by a fine not less than PhP25,000 nor more than PhP100,000, or imprisonment of not less than two years nor more than four years, or both such fine and imprisonment at the discretion of the court.
Lastly, the minimum wage rates set under Chapter V of Title II of Book Three of the Labour 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
a) Household or domestic helpers, including family drivers and workers in the personal service of another;
b) Workers and employees in retail/service establishments regularly employing not more than 10 workers, when exempted by the Board for a period of one year from the effectivity of the Wage Order;
c) Workers and employees of establishments adversely affected by natural calamities and/or human-induced disasters, when exempted by the Regional Board for a period of one year from the effectivity of the Wage Order;
d) Workers and employees in exempted Barangay Micro Business Enterprises; and
e) Government sector employees.
Source: §61, 75, 80, 98-99, 121-124, and 128 of the Labor Code, as amended; §1-2 of Rule V and §1 and 4 of Rule VII of the Omnibus Rules on Minimum Wage Determination; §17 of the Wage Rationalization Act, as amended; §8 of the Barangay Micro Business Enterprises (BMBE's) Act of 2002
For updated minimum wage rates, please refer to the section on minimum wage.
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 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 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 every two weeks or twice a month at intervals not exceeding 16 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 made at intervals not exceeding 16 days, in proportion to the amount of work completed, with 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-kilometre radius of the workplace 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 concerned employee; 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 law requires that the payment can’t be made later than 24th of December, employers are also allowed to 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, however, is calculated in view of the monthly absences from work. Employers are required to report compliance to this by 15th January the following year.
Source: §97, 103-104, 112-113, and 116-118 of the Labor Code, as amended; §7 of the Wage Rationalization Act, as amended; DOLE Labor Advisory 11 (2014); Presidential Decree No. 851 (1976), as amended; Rules and Regulations Implementing Presidential Decree No. 851
