Published — December 26, 2020
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.
Relation of cash bonds or deposits to issuance of final pay: GUIDELINES ON THE PAYMENT OF FINAL PAY AND ISSUANCE OF CERTIFICATE OF EMPLOYMENT
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Generally, an employer requiring deposits for loss from his employees is not allowed
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An employer engaged in business where the practice of making deposits is a recognized one, is allowed to require deposits from his employees
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Unilateral imposition of cash deposit is not allowed
Mere invocation of management prerogative cannot exempt an employer from complying with the strict requirements of law when it comes to requiring an employee of cash deposits.
For a better understanding, let us take the case of Niña Jewelry Manufacturing of Metal Arts, Inc vs. Madeline C. Montecillo and Liza M. Trinidad.
In this case, Madeline and Liza were both employed as goldsmiths by Niña Jewelry Manufacturing of Metal Arts, Inc. (Niña Jewelry) in 1996 and 1994 respectively. On August 13, 2004, Niña Jewelry, invoking management prerogative, imposed a new policy for goldsmiths requiring them to post cash bonds or deposits in varying amounts but in no case exceeding 15% of the latter’s salaries per week.
The deposits were intended to answer for any loss or damage which Niña Jewelry may sustain by reason of the goldsmiths’ fault or negligence in handling the gold entrusted to them. The deposits shall be returned upon completion of the goldsmith’s work and after an accounting of the gold received.
Niña Jewelry alleged that the goldsmiths were given the option not to post deposits, but to sign authorizations allowing the former to deduct from the latter’s salaries amounts not exceeding 15% of their take home pay should it be found that they lost the gold entrusted to them. Madeline and Liza claimed otherwise insisting that Niña Jewelry left the goldsmiths with no option but to post the deposits.
In relation to the question above, “Is Nina Jewelry allowed to require deposits?”
The law says:
No employer shall require his worker make deposits from which deductions shall be made for reimbursement of loss or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules and regulations.
In this case, the Supreme Court said that while Niña Jewelry is not absolutely precluded form imposing the new policy, it can only do so upon compliance with the requirements of law. In other words, Niña Jewelry should first establish that the making of deductions from the salaries is authorized by law, or regulations issued by the Secretary of Labor. Further, the posting of a cash bonds should be proven as a recognized practice in the jewelry manufacturing services, or alternatively, Nina Jewelry should seek for the determination by the Secretary of Labor through the issuance of appropriation rules and regulations that the policy the former seeks to implement is necessary or desirable in the conduct of business.
Thus, with the failure to comply with the requirements of law, Nina Jewelry is not allowed to require deposits from Madeline and Liza.
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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