Payment of salary, and prohibitions regarding wages

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Published — January 19, 2018

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.

Related Topic: Employer’s Guide on the Minimum Terms and Conditions of Employment

Under the law, wages mean the monetary remuneration or earnings 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 [See: Art. 97(f), Labor Code]. Many employees rely on their wages for their sustenance, if not survival. Given this, employers are prohibited by law from interfering with how the employee would dispose his wages by imposing certain prohibitions.

Form of payment

The law mandates that no employer shall pay the wages of an employee by means of promissory notes, vouchers, coupons, tokens, tickets, chits, or any object other than legal tender (money). This prohibition applies even if the employee himself expressly requests for it. Payment of wages through check or money order, however, may be allowed [See: Art. 102].

Payment of wages due to an employee by means of tokens or objects other than the legal tender currency is even considered by law as a form of coercion, which is a criminal offense punishable by imprisonment of 1 month and 1 day to 6 months, and/or a fine of P200 to P500 under the Revised Penal Code.

Direct payment of wages

It is likewise mandated that an employee’s wage be paid directly to the employee himself to whom it is due. This, however, allows certain exceptions, to wit:

1. In cases of force majeure, rendering direct payment impossible, the employee may be paid through another person under written authority given by such employee for that purpose.
2. Where the employee has died, in which case the employer may pay the wages of the deceased employee to the latter’s heirs. The claimants shall execute an affidavit attesting to their relationship to the deceased employee and the fact that they are his heirs, to the exclusion of all other persons [Art. 105].

Non-interference of wage disposal

Under the law, no employer shall, in any manner, force, compel, or oblige his employees to purchase merchandise, commodities, or other property from any other person, or otherwise make use of any store or services of such employer or any other person [Art. 112].

In other words, the law does not allow an employer to control, whether directly or indirectly, the employee’s use of his money. He earned it by working and, having earned it, he has the freedom to spend it the way he wants, or not to spend it at all [Azucena, Everyone’s Labor Code, 2015, p. 104]. In fact, any employer who shall force or compel, or shall knowingly permit any of his employees to be force or compelled to purchase merchandise or commodities of any kind shall be criminally liable for coercion [Art. 288, Revised Penal Code]. It also carries the penalty of imprisonment of 1 month and 1 day to 6 months, and/or a fine of P200 to P500.

Salary deductions

The law likewise prohibits any employer, in his own behalf or in behalf of any person, from making any deduction from the wages of his employees. This, however, admits of several exceptions, to wit:

1. Where the employee is insured by the employer (with the employee’s consent), and the salary deduction is to reimburse the employer for the amount of the insurance premium that was paid.
2. In cases where the employee is a union member, deductions for union dues may be made, provided that the right of the employee or his union to check-off has been recognized by the employer, or authorized in writing by the employee concerned.
3. In cases where the salary deduction is authorized by law or regulations, such as:

• Where the employee is indebted to the employer [Art. 1706, Civil Code]
• Withholding tax on compensation [National Internal Revenue Code]
• Deductions for payment to third persons, provided that it was authorized by the employee in writing [IRR, Book III, Rule VIII, Sec. 13]
• SSS, PhilHealth and Pag-IBIG contributions/premiums

The law likewise prohibits the employer from requiring his employees to make deposits from which deductions shall be made for the reimbursement of loss or damage to company-owned tools, materials or equipment, unless the employer is engaged in a business where salary deduction (or requiring of deposit) is a recognized practice [Art. 114, Labor Code]. In such case, however, salary deductions may be made for the actual amount of the loss or damage only when due process is observed, meaning that the employee was heard thereon, and his responsibility is clearly shown [Art. 115].

Withholding of wages

It shall be unlawful for the employer to withhold any amount from an employee’s wage, or to induce him to give up any part of his wages without the employee’s consent [Art. 116].

The earned wages must be paid on time and in full. The employer cannot refuse to pay the wages simply because the employee has not yet submitted a required report or has violated certain company rules. The inefficiency or the violation can be acted upon in some lawful way, but not by withholding of wages [Azucena, supra, p. 106].

Considering that the employer cannot simply do whatever he willed over the payment of his employees’ wages, it is therefore imperative for them to know the dos and don’ts to ensure that the enterprise is in line with the best practices in the field of human resources.

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

All rights reserved.

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