Minimum Wage Rates Art 99 Regional Minimum Wages

Agri and non-agri  prescribed by the Regional Tripartite Wages and Productivity Boards

MINIMUM WAGE

– lowest wage rate fixed by law that an employer can pay his worker

– adopted to reduce the evils of the “sweating system”

– raises standard of competition among employers

– employer’s ability to pay is immaterial; can’t exempt himself to pay minimum wages

– acceptance by an employee of the wages paid him without objection does not give rise to estoppel precluding him from suing for the difference between the amount received and the amount he should have received pursuant to a valid minimum wage law

Art. 100 – Prohibition against elimination or diminution of benefits

Requisites for application of nondiminution rule

1. grant of the benefit is founded on a policy or has ripened into a practice over a long period

2. the practice is consistent and deliberate

3. the practice is not due to error in the construction or application of a doubtful or difficult question of law

4. the diminution or discontinuance is done unilaterally by the employer

Extent of the Rule

1. food and meal allowances

2. noncontributory retirement plan 3. monthly emergency allowance Exceptions to the non-diminution rule 1. not established practice

2. benefit on reimbursement basis 3. negotiated benefits (i.e. CBA)

4. reclassification of position/promotion made in good faith

ex: rank-and-file to supervisory  lose overtime pay and other benefits under A 82-96 but A 100 is not violated (Nat’l Sugar Refineries Corp v NLRC) 5. contingent or conditional benefits/bonus

 bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer’s business and made possible the realization of profits; bonus is not a demandable and

enforceable obligation BUT it is when made part of the wage or salary or compensation

 equity or long practice as basis of bonus – even if bonus is not demandable; long and regular concession; fixed hope

 services rendered as basis of bonus – right is not defeated by a “release and quitclaim” upon termination (Marcos v NLRC – redundancy benefits))

 reduction of bonus not diminution of benefits; no profit, no bonus. Granting of bonus is basically a management prerogative (Traders Royal Bank v NLRC)

 bonus as productivity incentives; employee’s share is in the nature of salary bonus proportionate to increases in current productivity over the average for the preceding 3 consecutive years; “bonus” is not gratuity but the computed result of joint planning and effort; claimable only on the basis of predefined output level

 PD 851 – 13TH _{MONTH PAY}

– issued during the Martial Law, requires all employers to pay their rank-and-file employees receiving a basic salary of not more than P1000 a month, regardless of the nature of employment, a 13th _month

pay not later than December 24 of every year

– President Aquino removed the P1000 ceiling, entitled to 13th _{month pay all rank-}

rate, but still excluding managerial or supervisory employees

– “equivalent” (i.e. Christmas bonus, mid- year bonus, profit-sharing payments, and other cash bonuses amounting to not less than 1/12 of the basic salary but shall not include cash and stock dividends, cost-of- living allowances and all other allowances enjoyed by the employees, as well as non- monetary benefits) or bonuses may be credited as 13th _{month pay (Nat’l}

Federation of Sugar Workers v Ovejera – year-end productivity bonus of 1/12 of basic salary plus difference)

– If the CBA did provide for bonus in graduated amounts depending on the length of service of the employee, bonus provided in the CBA was meant to be in addition to the legal requirement (Universal Corn Products v NLRC – graduated Christmas bonus)

– Absence of an express provision in the CBA obligating the employer to pay the employees a 13th _{month pay is immaterial;}

PD 851 is mandatory, 13th _{month pay is}

deemed written in contract

– Supplements or other employee’s benefits or favorable practice not substitute for 13th _{month pay}

– Computation of 13th _{month pay – 1/12 of}

basic salary within a calendar year

Basic salary – include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances, profit-sharing payments and all allowances and monetary benefits which are not considered or integrated as part of the basic salary of the employee;

– overtime pay and other remunerations are excluded as part of basic salary and in the computation of the 13th _{month pay (San}

Miguel Corp v Inciong)

– commissions are included or excluded, depending on what kind of commissions are involved; if wage-or-sales-percentage type [intimately related to the extent or energy of an employee’s endeavors], includible in the 13th _{month pay}

computation (Phil. Duplicators v NLRC); if profit-sharing or productivity bonus type [something extra for which no specific additional services are rendered by any particular employee], excluded (Boie- Takeda Chemicals v Dela Serna)

– employees w/ guaranteed

wages/commissions entitled to 13th _month

pay based on their total earnings during the calendar year on both their fixed and

guaranteed wage and commissions (Phil. Agricultural and Industrial Workers’ Union v NLRC – drivers and conductors)

– commissions  recompense,

compensation, reward of an employee, agent, salesman, executor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit of the principal

– teacher’s overload pay performed during or within the 8 hours in a day [the load in excess of the normal load of private school teachers as prescribed by DECS or the policies, rules, and standard of particular private schools; work in excess of the regular teaching load; may be performed within or outside 8 hours in a day] part of basic pay for computing 13th _{month pay}

– an employee who has resigned or whose services were terminated at any time before the time for payment of the 13th

month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year up to the time of his resignation or termination from service (Int’l School of Speech v NLRC)

– distressed employer may be exempt from paying the 13th _{month pay only upon prior}

authorization from Labor Sec (Dentech Manufacturing Corp v NLRC)

– difference of opinion on how to compute the 13th _{month pay does not justify a strike}

– nonpayment of 13th _{month pay is not an}

issue of unfair labor practice but one of money claim

– PD 851 only applies to private employers and their employees; no intention to cover persons working in the govt service (Alliance of Govt Workers v Minister of Labor and Employment)

Art. 101 – Payment by Results

 Workers paid by results [pay is calculated not on the basis of time spent on the job but of the quantity and quality or the kind of work they turn out] grouped into 2:

1. those whose time and performance is supervised by the employer – embodies an element of control and supervision over the manner as to how the work is to be performed

ex: piece-rate worker

2. those whose time and performance is unsupervised

ex: pakiaw and takay workers

 payment by result not determinative of er-ee rel., only a method of compensation

 basis of output rate – the performance of an ordinary worker of minimum skill or ability [aka the average worker of the lowest producing group representing 50% of the total number of employees engaged in similar employment in a particular establishment, excluding learners, apprentices, and handicapped workers employed therein

 unsupervised piece-rate workers are not entitled to night differential pay and service incentive leaves

 re: yearly commutation or cash conversion of the service incentive leave of piece-rate workers  based on their average daily earnings during the particular year of service which can be derived by dividing the amount earned during the year by the actual number of working days or the statutory minimum rate, whichever is higher  in the absence of any agreement which provides

otherwise, the amount earned during the year may exclude COLA, overtime pay, and premium pay, holiday pay, night differential pay and company fringe benefits

 computation of service incentive leave of piece- rate worker  get actual wage earned for 1 year, divide by 12 to get average monthly earnings then divide by the average number of actual worked days in a month, multiply result by 5; if average daily rate is less than P36, basis for the computation is P36, the minimum rate outside Metro Manila.

 Other entitlements: 1. holiday pay

2. 13th _{month pay (if he has rendered at least}

1 month work or service during the calendar year)

 Variant Jurisprudence on Piece-rate workers’ entitlement to statutory benefits

a. Makati Haberdashery v NLRC Held:

– workers are regular employees although paid on piece-rate basis

– entitled to minimum wage

– as regular employees, they can claim cost- living allowances, 13th _{month pay}

– not entitled to service incentive leave pay and holiday pay because they fall under one of the exceptions stated in Section 1(d), rule 5, Implementing Regulations, Book 3, Labor Code for being paid at a fixed amount for performing work irrespective of time consumed in the performance thereof

a. Labor Congress v NLRC Held:

– piece-rate employees are entitled to night shift differential, holiday pay, service incentive leave, premium pay, and 13th

month pay because they do not fall within the group of workers who “are field personnel and other employees whose time and performance is unsupervised by

the employer, including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.”

– entitled to overtime pay if their output pay rate is not shown to be in accordance with the standards prescribed under the Implementing Rules [Rule 7-A, Sec.5] or by the Secretary of Labor

– further, piece workers are specifically mentioned as being entitled to holiday pay (Sec 8-B, Rule 4, Book 3)

– Revised Guidelines on the Implementing of the 13th _{Month Pay Law, in view of the}

modifications to P.D. 851 by Memorandum Order No. 28, clearly exclude the employer of piece-rate workers from those exempted from paying the 13th _{month pay}

– Entitled to overtime pay because respondent company did not allege adherence to the standards set forth in Sec 8, Rule 7, Book 3

 Summation of benefits payable to Piece-rate workers

1. minimum wage

2. service incentive leave of 5 days with pay 3. night differential pay

4. holiday pay

5. meal and rest periods

6. overtime pay (conditional) 7. premium pay (conditional) 8. 13th _{month pay}

9. other benefits granted by law, by individual or collective agreement or company policy or practice

IF output rates conform with the standards prescribed by the Labor Code, employer is not required to grant the piece-rate workers the benefits under the Rule on Hours of Work nor to pay the wage differentials if their daily earnings do not amount to the applicable statutory minimum daily wage.

Chapter III Payment of Wages