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What are the forms of payment of wages? What is the law’s current stand on Digital Wage Payments?

Photo from Pexels | Alexandros Chatzidimos


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 a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is 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.

 


AT A GLANCE:

In the Philippines, employers are obligated to pay their employees only by means of legal tender, or in certain conditions, by way of check or money order.
When it comes to digital payments, the Department of Labor and Employment has released a Labor Advisory which encouraged and enabled all private establishments to “timely pay wages and other monetary benefits through transaction accounts” such as e-wallets because of the advantages in terms of “safety, security, and financial inclusivity.” (Art. 102, Labor Code; Labor Advisory No. 16)


 

In the Philippines, employers are obligated to pay their employees on time and in the manner and form of payment prescribed by law. The country’s Labor Code outlines the rules regarding the payment of wages, and Article 102, in particular, governs the forms that payment may be made.

 

How should employers pay their employees’ wages?

According to the Labor Code, in general, wages shall be paid only by way of legal tender – meaning, in notes and coins issued by the Bangko Sentral as the Philippine’s currency. 

 

Thus, the following forms of payment are prohibited, even when expressly requested by the employee or in the contract between the employee and employer:

  • promissory notes;
  • vouchers; 
  • coupons; 
  • tokens; 
  • tickets; 
  • chits; or 
  • any object other than legal tender.

 

When it comes to payment by way of check or money order, the law allows this only when:

  • This manner of payment was the custom of the employer and employee on the date the Labor Code was effective; or
  • It is necessary because of special circumstances specified by the appropriate regulations or as stipulated in a collective bargaining agreement.

 

Payments may also be made through an Automatic Teller Machine (ATM). However, according to the Labor Advisory on Payment of Salaries through ATM (1996), the following conditions must first be met:

  1. The ATM system of payment is with the written consent of the employees concerned; 
  2. The employees are given reasonable time to withdraw their wages from the bank facility which time, if done during working hours, shall be considered compensable hours worked; 
  3. The system shall allow workers to receive their wages within the period or frequency and in the amount prescribed under the Labor Code, as amended; 
  4. There is a bank or ATM facility within a radius of one (1) kilometer to the place of work; 
  5. Upon request of the concerned employee/s, the employer shall issue a record of payment of wages, benefits and deductions for a particular period; 
  6. There shall be no additional expenses and no diminution of benefits and privileges as a result of the ATM system of payment; 
  7. The employer shall assume responsibility in case the wage protection provisions of law and regulations are not complied with under the arrangement. 

 

Can employers pay wages through digital or electronic payments?

While there is still now particular law that expressly allows the payment of wages through digital or electronic payments (e.g. wage payments through GCash or Pay Maya e-wallets) – the Department of Labor and Employment (DOLE) has released Labor Advisory No. 16, series of 2020 in recognition of the advancements and advantages of digital payment systems. 

 

Through the Advisory, the DOLE encouraged and enabled all private establishments to “timely pay wages and other monetary benefits through transaction accounts” because of the advantages in terms of “safety, security, and financial inclusivity” (Secs. 1 and 3, Labor Advisory No. 16).

 

In line with the above, the DOLE highly encouraged employers in the private sector to undertake the following initiatives, to wit:

a. Communicate to their employees the benefits of using transaction accounts for receiving wages and other remunerations; 

b. Assist employees who have no existing transaction accounts in applying for transaction accounts which can be used for the payment of their wages and other monetary benefits. Employers may recommend a bank account (such as a BDA) or e-money account taking into consideration the transactional needs of their employees and the payment arrangement of the employers with their bank or EMI, if any;

c. Endeavor to provide their employees who have existing transaction accounts the option to receive their wages and other monetary benefits in their existing transaction accounts held in a PESONet-participating bank. 

 

If providing such option is not yet feasible, assist them in opening transaction accounts in the bank or EMI where the employer maintains an account; 

d. Require their partner banks or EMIs to provide their employees with information on the features of their transaction accounts and updated list of nearest financial service access points;
e. Ensure that opening, maintaining, and usage of transaction accounts shall in no case result in any additional expenses/fees or diminution of wages and other monetary benefits being received by the employees;
f. Ensure compliance with wage protection provisions of laws and regulations; and,

g. Issue to their employees payslip or a record of payment of wages and other monetary benefits as well as deductions for a particular period.

(Sec. 3, Labor Advisory No. 16).

 

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 0917-5772207/ 09778050020.

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