MAY AN EMPLOYER BE EXEMPTED FROM COMPLIANCE WITH A WAGE ORDER?

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Published — June 1, 2022

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

After this article about wage order, you may also read: Payment of salary, and prohibitions regarding wages

• Payment of wages is a determinant of an employer-employee relationship

• A Wage Order is the basis for new minimum wage rates

• An employer may be exempted from complying with a Wage Order

wage rates are periodically assessed by the Regional Tripartite Wages and Productivity Board (Board). The Board conducts continuing studies in the determination of the minimum wage applicable in the region or industry.  This is the reason why, from time to time, there is an increase in the minimum wage rates.

What are the standards or criteria for Minimum Wage Fixing?

The law says:

In the determination of such regional minimum wages, the Board considers the following:

1. The demand for living wages;
2. Wage adjustment vis-à-vis the consumer price index;
3. The changes or increases of the cost of living
4. The needs of workers and their families
5. The need to induce industries to invest in the countryside
6. Improvements in standards of living
7. The prevailing wage levels
8. Fair return of the capital invested and capacity to pay of employers
9. Effects on the employment generation and family income; and
10. The equitable distribution of income and wealth along the imperatives of economic and social development

Increase in the minimum wage rates is always good news for the employees. However, due to reasonable and appropriate circumstances, employers and their business establishments may not be welcoming of an increased minimum wage rate brought about by another wage order. This is true where an establishment is trying to lower the cost of their expenses as a legitimate tool in an effort to save the operation of their business.

May an employer be exempted from complying with a Wage Order?

Yes. Let us take the case of employers from the National Capital Region.

Wage Order No. NCR-22 says:

The following may be exempted from the applicability of said Wage Order:

1. Distressed Establishments;
2. Retail/Service Establishments regularly employing not more than ten (10) workers; and
3. Establishments adversely affected by calamities such as natural and human-induced disasters

The Board may also exempt establishments other than those enumerated above only if they are in accord with the rationale for exemption stated in the Rules on Exemption and upon strong justifiable reasons.

Is the exemption automatic?

No. The concerned owner/manager or duly authorized representative of an establishment must file an application with the appropriate Board. The filing of the application may be made in person, or by registered mail.

An application for exemption together with supporting documents shall be filed not later than 75 days from publication of the approved implementing rules of the wage order. An extension of filing and submission of the required documents is not allowed.

After careful determination by the Board, the qualified applicant establishment may be granted an exemption for a maximum period of one (1) year.

On the other hand, if the application was disapproved by the Board, its decision may be appealed to the National Wages and Productivity Commission within ten (10) days from the date the applicant has received the decision.

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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