Labor Law..Related Topics

7/30/2019 Labor Law..Related Topics

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The determination of whetheremployer-employeerelation exists between the parties is very important.For one, entitlement to labor standards benefits such as minimum wages, hours of work, overtime pay,

etc., or to social benefits under laws such as social security law, workmens compensation law, etc., or totermination pay, or to unionism and other labor relations provisions under the Labor Code, are largelydependent on the existence of employer-employee relationship between the parties.

Another thing is that the existence of employer-employee relationship between the parties will determinewhether the controversy should fall within the exclusive jurisdiction of labor agencies or not. If forexample the parties are not employer-employee of each other, respectively, but perhaps partners or

associates, then any dispute between them will be not be covered by the jurisdiction of labor agencies butby regular courts.

Three test to determine employer-employee relationship

There are three test commonly used to determine the existence of employer-employee relationship, viz.:

1. Four-fold test2. Economic reality test3. Two-tiered test (or Multi-factor test)

Four-fold test elementsThe usual test used to determine the existence of employer-employer relationship is the so-called four-

fold test. In applying this test, the following elements are generally considered:1. Right to hire or to the selection and engagement of the employee.2. Payment of wages and salaries for services.3. Power of dismissal or the power to impose disciplinary actions.4. Power to control the employee with respect to the means and methods by which the work is to be

accomplished. This is known as the right-of-control test.Right of control test is considered as the most important element in determining the existence ofemployment relation.

Of the above-mentioned elements, the right of control test is considered as the most important element indetermining the existence of employment relation. The control test initially found application in the caseof Viaa vs. Al-Lagadan and Piga, where the court held that there is an employer-employee relationship

when the person for whom the services are performed reserves the right to control not only the endachieved but also the manner and means used to achieve that end.

Control test thus refers to the employers power to control the employees conduct not only as to theresult of the work to be done but also with respect to the means and methods by which the work is to be

accomplished.

In applying this test, it is the existence of the right, and not the actual exercise thereof, that is important.

Economic reality test

In view of todays highly specialized workforce, the court are often faced with situations where the right-

of-control-test alone can no longer adequately determine the existence of employer-employer relationship.Subsequently, another test has been devised to fill the gap, known as the economic reality test.

In Sevilla v. Court of Appeals, the Court observed the need to consider the existing economic conditions

prevailing between the parties, in addition to the standard of right-of-control, to give a clearer picture indetermining the existence of an employer-employee relationship based on an analysis of the totality ofeconomic circumstances of the worker.

Economic realities of the employment relations help provide a comprehensive analysis of the trueclassification of the individual, whether as employee, independent contractor, corporate officer or someother capacity.
http://www.laborlaw.usc-law.org/2010/03/09/employer/http://www.laborlaw.usc-law.org/2010/03/09/employer/http://www.laborlaw.usc-law.org/2010/03/09/employee/http://www.laborlaw.usc-law.org/2010/03/09/employee/http://www.laborlaw.usc-law.org/2010/03/09/employee/http://www.laborlaw.usc-law.org/2010/02/23/overtime-pay/http://www.laborlaw.usc-law.org/2010/02/23/overtime-pay/http://www.laborlaw.usc-law.org/2010/02/23/overtime-pay/http://www.laborlaw.usc-law.org/2009/08/06/tests-of-employment-relations/#four-fold-testhttp://www.laborlaw.usc-law.org/2009/08/06/tests-of-employment-relations/#four-fold-testhttp://www.laborlaw.usc-law.org/2009/08/06/tests-of-employment-relations/#economic-reality-testhttp://www.laborlaw.usc-law.org/2009/08/06/tests-of-employment-relations/#economic-reality-testhttp://www.laborlaw.usc-law.org/2009/08/06/tests-of-employment-relations/#two-tiered-testhttp://www.laborlaw.usc-law.org/2009/08/06/tests-of-employment-relations/#two-tiered-testhttp://www.laborlaw.usc-law.org/2009/08/06/tests-of-employment-relations/#two-tiered-testhttp://www.laborlaw.usc-law.org/2009/08/06/tests-of-employment-relations/#economic-reality-testhttp://www.laborlaw.usc-law.org/2009/08/06/tests-of-employment-relations/#four-fold-testhttp://www.laborlaw.usc-law.org/2010/02/23/overtime-pay/http://www.laborlaw.usc-law.org/2010/03/09/employee/http://www.laborlaw.usc-law.org/2010/03/09/employer/


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Under economic reality test, the benchmark in analyzing whether employment relation exists between theparties is the economic dependence of the worker on his employer. That is, whether the worker is

dependent on the alleged employer for his continued employment in the latters line of business.

Applying this test, if the putative employee is economically dependent on putative employer for his

continued employment in the latters line of business, there is employer-employee relationship betweenthem. Otherwise, there is none.

Two-tiered test (or Multi-factor test)

The economic reality test is not meant to replace the right of control test. Rather, these two test are oftenuse in conjunction with each other to determine the existence of employment relation between the parties.This is known as the two-tiered test, or multi-factor test. This two-tiered test involves the following tests:

The putative employers power to control the employee with respect to the means and methods by whichthe work is to be accomplished; and The underlying economic realities of the activity or relationship.

References

1. Francisco vs. NLRC, G.R. No. 170087 August 31, 20062. Religious of the Virgin Mary vs. NLRC, G.R. No. 103606, October 13, 19993. Viaa vs. Al-Lagadan and Piga, 99 Phil. 408 (1956).4. Sevilla v. Court of Appeals, G.R. Nos. L-41182-3, April 15, 1988.

Employer - Employee Relationship

By:LawInfo

What may determine whether or not a person is an employee?

Historically, especially in law, employer and employee were termed "master and servant. Whether an

employer-employee relationship exists under the law will usually depend upon the respective rights and

duties of the parties. In determining issues such as wrongful dismissal, vicarious liability and statutory

liability, among other things, a court will examine the evidence of the relationship in determining, in a

particular case, whether or not a person is an employee, regardless, often, of the intentions of the parties.

The rules of determining such status have evolved by judicial precedent in the common law through

history. The absence or presence of some of these factors may indicate a person is or is not an employee

in an area of law where changing times and circumstances may change such decisions.

One of the main tests has been that of the employer's right of control over the person being paid to

perform. Some questions a court might ask in determining whether or not a person is an employee are:

- Does the master (employer) have the right to select the servant (employee)?

- Is there payment of wages or other remuneration?

- Does the master have right to control the method of doing the work?

- Does the master have the right of suspension or dismissal?

- Is the person subject to company policy?

- Is the person subject to discipline?

- Who decides the hours of work?- Who decides where the work is to be performed?

- Who decides to whom the person can or cannot sell goods?

- Does the worker have power, without authority, to hire others to perform the work?

What type of person may not be considered an employee?

An independent contractor, consultant or "entrepreneur".This is a situation where control, or lack of

control, by the person contracting the services being performed is not necessarily conclusive.
http://sc.judiciary.gov.ph/jurisprudence/2006/august2006/G.R.%20No.%20170087.htmhttp://sc.judiciary.gov.ph/jurisprudence/2006/august2006/G.R.%20No.%20170087.htmhttp://sc.judiciary.gov.ph/jurisprudence/2006/august2006/G.R.%20No.%20170087.htmhttp://sc.judiciary.gov.ph/jurisprudence/2006/august2006/G.R.%20No.%20170087.htmhttp://sc.judiciary.gov.ph/jurisprudence/2006/august2006/G.R.%20No.%20170087.htmhttp://sc.judiciary.gov.ph/jurisprudence/2006/august2006/G.R.%20No.%20170087.htm


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Commission Sales Representatives.Courts have often (not always) found that commission sales people

are either employees or in an "intermediate class" and therefore entitled to notice of termination of their

services.

Family Members.Family members can be considered employees of one another. All factors would be

considered, such as the closeness of the relationship and the nature of the business and the duties and

obligations of those in it.

Clergy.Particularly when considering a question of dismissal, it has been held that many of the elements

of an employer - employee relationship exist between a church, congregation or synagogue and its priest,

minister or rabbi and a court may intervene, even if the clergy person is not considered an employee.

Military Personnel.Members of the Canadian Forces have no contractual relationship with the Crown,

but serve "at the pleasure of the Crown". Any claims or grievances a member of the forces may have

would be dealt with under the grievance procedures found in the National Defence Act.

Prisoners.It has been held that being a prisoner does not necessarily prevent a person from also being an

employee of a correctional institution. For example, medical practitioner or other professional person who

is serving a sentence may be employed to provide certain services in the prison. Other prisoners may be

given compensable work in the institution.

Note that even in many cases where the parties have not considered themselves in an employer -

employee relationship, a court may, at the instance of an aggrieved party, consider all the circumstances

and find that sufficient lack of control of an aggrieved party in a situation may entitle such party to relief

as an employee. In contract situations, as society is complex and changing, so is the application of the law

in this area. A person may require the advice of a knowledgeable specialist in employment law.


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Republic of the Philippines

DEPARTMENT OF LABOR AND EMPLOYMENT

Intramuros, Manila

DEPARTMENT ADVISORY No. 2

Series of 2004

Implementation of Compressed Workweek Schemes

I. Purpose and Coverage

This Advisory is being issued to guide employers and workers who may opt to adopt a

mutually acceptable compressed workweek (CWW) scheme suitable to the requirements of

the firm.

This Advisory may be used in all establishments except those in the construction industry,

in health services, in occupations requiring heavy manual labor, or in occupations or

workplaces in which workers are exposed to airborne contaminants, human carcinogens,

substances, chemicals or noise that exceed threshold limit values or tolerance levels for an

eight-hour workday as prescribed under existing Occupational Safety and Health Standards

(OSHS).

II. Policy

As a matter of policy, and talking into account the emergence of new technology and the

continuing restructuring and modernization of the work process, the Department of Labor

and Employment (DOLE) encourages employers and workers to enter into voluntary

agreements adopting CWW schemes based on the following objectives:

1. To promote business competitiveness and productivity, improve efficiency by lower

operating costs, and reduce work-related expenses of employees;

2. To give employers and workers flexibility in fixing hours of work compatible with business

requirements and the employees' need for a balanced work life; and

3. To ensure the safety and health of employees at the workplace at all times.

For purposes of administering existing laws and rules on work hours, overtime

compensation and other relevant labor standards, DOLE shall recognize only those CWW

schemes that have been entered into consistent with this Advisory.


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II. Concept and Definition

The Labor Code provides that the normal work hours per day shall be eight hours. Work

may be performed beyond eight hours a day provided the employee is paid for the overtime

work. On the other hand, the normal number of workdays per week shall be six days, or a

total of forty-eight (48) hours based on the normal workday of eight hours. This is withoutprejudice to firms whose normal workweek is five days, or a total of forty (40) hours based

on the normal workday of eight hours.

For purposes of this Advisory, a CWW scheme is an alternative arrangement whereby the

normal workweek is reduced to less than six days but the total number of normal work

hours per week shall remain at 48 hours. The normal workday is increased to more than

eight hours without corresponding overtime premium. This concept can be adjusted

accordingly in cases where the normal workweek of the firm is five days.

IV. Specific Guidelines

Conditions. DOLE shall recognize CWW schemes adopted in accordance with the following:

1. The CWW scheme is undertaken as a result of an express and voluntary agreement of

majority of the covered employees or their duly authorized representatives. This agreement

may be expressed through collective bargaining or other legitimate workplace mechanisms

of participation such as labor-management councils, employee assemblies or referenda.

2. In firms using substances, chemicals and processes or operating under conditions where

there are airborne contaminants, human carcinogens or noise prolonged exposure to whichmay pose hazards to the employees' health and safety, there must be a certification from an

accredited health and safety organization or practitioner or from the firm's safety committee

that work beyond eight hours is within threshold limits or tolerable levels of exposure, as set

in the OSHS.

3. The employer shall notify DOLE, through the Regional Office having jurisdiction over the

workplace, of the adoption of th CWW scheme. The notice shall be in DOLE CWW Report

Form attached to this Advisory.

Effects. A CWW scheme which complies with the foregoing conditions shall have the

following effects:

1. Unless there is a more favorable practice existing in the firm, work beyond eight hours

will not be compensable by overtime premium provided the total number of hours worked

per day shall not exceed twelve (12) hours. In any case, any work performed beyond 12

hours a day or 48 hours a week shall be subject to overtime premium.


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2. Consistent with Articles 85 of the Labor Code, employees under a CWW scheme are

entitled to meal periods of not less than sixty (60) minutes. Nothing herein shall impair the

right of employees to rest days as well as to holiday pay, rest day pay or leaves in

accordance with law or applicable collective bargaining agreement or company policy.

3. Adoption of the CWW scheme shall in no case result in diminution of existing benefits.

Reversion to the normal eight-hour workday shall not constitute a diminution of benefits.

The reversion shall be considered a legitimate exercise of management prerogative,

provided that the employer shall give the employees prior notice of such reversion within a

reasonable period of time.

Administration of CWW Scheme. The parties to the CWW scheme shall be primarily

responsible for its administration. In case of differences of interpretation, the following shall

be observed:

1. The differences shall be treated as grievances under the applicable grievancemechanism of the firm.

2. If there is no grievance mechanism or if this mechanism is inadequate, the grievance

shall be refrred to the Regional Office which shall conduct a training and assistance visit

(TAV) pursuant to Section 3 of Department Order No. 57-04.

3. The purpose of the TAV is to ascertain, through the most practical and least litigious way

possible, whether or not the scheme is the result of a voluntary agreement or is supported

by the appropriate certification from an accredited safety and health organization or

practitioner. Where appropriate, the TAV may include the conduct, as may be appropriate,

of a referendum or work environment measurement (WEM) to determine actual work

conditions.

To facilitate the resolution of grievances, employers are required to keep and maintain, as

part of their records, teh documentary requirements proving that the CWW scheme was

voluntarily adopted and the certification that teh scheme is consistent with OSHS.

4. In the absence of proof of voluntary agreement or safety and health certification, the

employer shall pay the employees concerned any overtime pay that may be owing to them

as if the CWW scheme did not exist. If it turns out that work beyond eight hours is notconsistent with OSHS, the parties shall immediately revert to a normal eight-hour workday.

V. Publication and Posting

This advisory shall be published in two newspapers of general circulation and henceforth

shall be part of the labor education manuals to be developed by DOLE. Every firm adopting

a CWW scheme shall ensure that a copy of this advisory is posted in a conspicuous

location in the workplace.


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EXECUTIVE ORDER NO. 203 June 30, 1987

PROVIDING A LIST OF REGULAR HOLIDAYS AND SPECIAL DAYS TO BE OBSERVEDTHROUGHOUT THE PHILIPPINES AND FOR OTHER PURPOSES

WHEREAS, a Cabinet Assistance Secretariat Committee was constituted to review all existing

public holidays;WHEREAS, there are too many holidays being observed which has caused confusion amongthe public.NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, do hereby order:Sec. 1. Unless otherwise modified by law, order or proclamation, the following regular holidaysand special days shall be observed in this country:

A. Regular Holidays

New Year's Day January

Maundy Thursday Movable date

Good Friday Movable date

Araw ng Kagitingan (Bataan and Corregidor

Day)

April 9

Labor Day May 1

Independence Day June 12

National Heroes Day Last Sunday of August

Bonifacio Day November 30

Christmas Day December 25

Rizal Day December 30

B. Nationwide Special Days

All Saints Day November 1

Last Day of the Year December 31

Sec. 2. Henceforth, the terms "legal or regular holiday" and "special holiday", as used in laws,orders, rules and regulations or other issuances shall now be referred to as "regular holiday"and "special day", respectively.Sec. 3. All laws, orders, issuances, rules and regulations or parts thereof inconsistent with thisExecutive Order are hereby repealed or modified accordingly.Sec. 4. This Executive Order shall take effect immediately.Done in the City of Manila, this 30th day of June, in the year of Our Lord, nineteen hundred andeighty-seven.


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REPUBLIC ACT NO. 6971

AN ACT TO ENCOURAGE PRODUCTIVITY AND MAINTAIN INDUSTRIAL PEACE BY PROVIDING

INCENTIVES TO BOTH LABOR AND CAPITAL

Section 1. Short Title.This Act shall be known as the Productivity Incentives Act of 1990.

Section 2. Declaration of Policy.It is the declared policy of the State to encourage higher levels of

productivity, maintain industrial peace and harmony and promote the principle of shared responsibility

in the relations between workers and employers, recognizing the right of labor to its just share in the

fruits of production and the right of business enterprises to reasonable returns on investments and to

expansion and growth, and accordingly to provide corresponding incentives to both labor and capital

for undertaking voluntary programs to ensure greater sharing by the workers in the fruits of their

labor.

Section 3. Coverage.This Act shall apply to all business enterprises with or without existing and duly

recognized or certified labor organizations, including government-owned and controlled corporations

performing proprietary functions. It shall cover all employees and workers including casual, regular,

supervisory and managerial employees.

Section 4. Definition of Terms.As used in this Act:a) Business Enterprise refers to industrial,

agricultural, or agro-industrial establishments engaged in the production manufacturing, processing,

repacking, or assembly of goods, including service-oriented enterprises, duly certified as such by

appropriate government agencies.b) Labor-Management Committee refers to a negotiating body in a

business enterprise composed of the representatives of labor and management created to establish a

productivity incentives program, and to settle disputes arising therefrom in accordance with Section 9

hereof.c) Productivity Incentives Program refers to a formal agreement established by the labor-

management committee containing a process that will promote gainful employment, improve working

conditions and result in increased productivity, including cost savings, whereby the employees are

granted salary bonuses proportionate to increases in current productivity over the average for the

preceding three (3) consecutive years. The agreement shall be ratified by at least a majority of the

employees who have rendered at least six (6) months of continuous service.

Section 5. Labor-Management Committee.a) A business enterprise or its employees, through their

authorized representatives, may initiate the formation of a labor-management committee that shall be

composed of an equal number of representatives from the management and from the rank-and-file

employees:provided, that both management and labor shall have equal voting rights:provided,

further, that at the request of any party to the negotiation, the National Wages and Productivity

Commission of the Department of Labor and Employment shall provide the necessary studies,

technical information and assistance, and expert advice to enable the parties to conclude productivity

agreements.b) In business enterprises with duly recognized or certified labor organizations, the

representatives of labor shall be those designated by the collective bargaining agent(s) of the

bargaining unit(s).c) In business enterprises without duly recognized or certified labor organizations,


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the representatives of labor shall be elected by at least a majority of all rank-and-file employees who

have rendered at least six (6) months of continuous service.

Section 6. Productivity Incentives Program.-a) The productivity incentives program shall contain

provisions for the manner of sharing and the factors in determining productivity

bonuses:provided,that the productivity bonuses granted to labor under this program shall not be less

than half of the percentage increase in the productivity of the business enterprise.b) Productivity

agreements reached by the parties as provided in this Act supplement existing collective bargaining

agreements.c) If, during the existence of the productivity incentives program or agreement, the

employees will join or form a union, such program or agreement may, in addition to the terms and

conditions agreed upon by labor and management, be integrated in the collective bargaining

agreement that may be entered into between them.

Section 7. Benefits and Tax Incentives.(a) Subject to the provisions of Section 6 hereof, a business

enterprise which adopts a productivity incentives program, duly and mutually agreed upon by parties

to the labor-management committee, shall be granted a special deduction from gross incomeequivalent to fifty percent (50%) of the total productivity bonuses given to employees under the

program over and above the total allowable ordinary and necessary business deductions for said

bonuses under the National Internal Revenue Code, as amended.b) Grants for manpower training and

special studies given to rank-and-file employees pursuant to a program prepared by the labor-

management committee for the development of skills identified as necessary by the appropriate

government agencies shall also entitle the business enterprise to a special deduction from gross

income equivalent to fifty per cent (50%) of the total grants over and above the allowable ordinary

and necessary business deductions for said grants under the National Internal Revenue Code, as

amended.c) Any strike or lockout arising from any violation of the productivity incentives program

shall suspend the effectivity thereof pending settlement of such strike or lockout:provided, that the

business enterprise shall not be deemed to have forfeited any tax incentives accrued prior to the date

of occurrence of such strike or lockout, and the workers shall not be required to reimburse the

productivity bonuses already granted to them under the productivity incentives program. Likewise,

bonuses which have already accrued before the strike or lockout shall be paid the workers within six

(6) months from their accrual.d) Bonuses provided for under the productivity incentives program shall

be given to the employees not later than every six (6) months from the start of such program over

and above existing bonuses granted by the business enterprise and by law:provided, that the said

bonuses shall not be deemed as salary increases due the employees and workers.e) The special

deductions from gross income provided for herein shall be allowed starting the next taxable year after

the effectivity of this Act.

Section 8. Notification.A business enterprise which adopts a productivity incentives program shall

submit copies of the same to the National Wages and Productivity Commission and to the Bureau of

Internal Revenue for their information and record.

Section 9. Disputes and Grievances.Whenever disputes, grievances, or other matters arise from the

interpretation or implementation of the productivity incentives program, the labor-management


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committee shall meet to resolve the dispute, and may seek the assistance of the National Conciliation

and Mediation Board of the Department of Labor and Employment for such purpose. Any dispute which

remains unresolved within twenty (20) days from the time of its submission to the labor-management

committee shall be submitted for voluntary arbitration in line with the pertinent of the Labor Code, as

amended.

The productivity incentives program shall include the name(s) of the voluntary arbitrator or panel of

voluntary arbitrators previously chosen and agreed upon by the labor-management committee.

Section 10. Rule Making Power.The Secretary of Labor and Employment and the Secretary of

Finance, after due notice and hearing, shall jointly promulgate and issue within six (6) months from

the effectivity of this Act such rules and regulations as are necessary to carry out the provisions

hereof.

Section 11. Penalty.Any person who shall make any fraudulent claim under this Act, regardless of

whether or not a tax benefit has been granted, shall upon conviction be punished with imprisonment

of not less than six (6) months but not more than one (1) year or a fine of not less than two thousand

pesos (P2,000.00) but not more than six thousand pesos (P6,000.00), or both, at the discretion of the

Court, without prejudice to prosecution for any other acts punishable under existing laws.

In case of partnerships or corporations, the penalty shall be imposed upon the officer(s) or

employee(s) who knowingly approved, authorized or ratified the filing of the fraudulent claim, and

other persons responsible therefor.

Section 12. Non-Diminution of Benefits.Nothing in this Act shall be construed to diminish or reduced

any benefits and other privileges enjoyed by the workers under existing laws, decrees, executive

orders, company policy or practice, or any agreement or contract between the employer and

employees.

Section 13. Separability Clause.If any provision of this Act is held invalid, any other provision not so

affected shall continue to be valid and effective.

Section 14. Repealing Clause.Any law, presidential decree, executive order, and letter of

instruction, or any part thereof, which is inconsistent with any of the provisions of this Act is hereby

repealed or amended accordingly.

Section 15. Effectivity Clause.This Act shall take effect fifteen (15) days after its publication in the

Official Gazette or in at least two (2) national newspapers of general circulation.

Approved, November 22, 1990.


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Republic of the PhilippinesCongress of the Philippines

Metro ManilaEighth Congress

Republic Act No. 6727 June 9, 1989

AN ACT TO RATIONALIZE WAGE POLICY DETERMINATION BY ESTABLISHING THEMECHANISM AND PROPER STANDARDS THEREFOR, AMENDING FOR THE PURPOSEARTICLE 99 OF, AND INCORPORATING ARTICLES 120, 121, 122, 123, 124, 126 AND 127INTO,PRESIDENTIAL DECREE NO. 442,AS AMENDED, OTHERWISE KNOWN AS THELABOR CODE OF THE PHILIPPINES, FIXING NEW WAGE RATES, PROVIDING WAGE

INCENTIVES FOR INDUSTRIAL DISPERSAL TO THE COUNTRYSIDE, AND FOR OTHERPURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congressassembled::Section 1.This Act shall be known as the "Wage Rationalization Act."Section 2.It is hereby declared the policy of the State to rationalize the fixing of minimumwages and to promote productivity-improvement and gain-sharing measures to ensure a decent

standard of living for the workers and their families; to guarantee the rights of labor to its justshare in the fruits of production; to enhance employment generation in the countryside throughindustry dispersal; and to allow business and industry reasonable returns on investment,expansion and growth.The State shall promote collective bargaining as the primary mode of settling wages and otherterms and conditions of employment; and whenever necessary, the minimum wage rates shallbe adjusted in a fair and equitable manner, considering existing regional disparities in the costof living and other socio-economic factors and the national economic and social developmentplans.Section 3.In line with the declared policy under this Act, Article 99 of Presidential Decree No.442, as amended, is hereby amended and Articles 120, 121, 122, 123, 124, 126 and 127 arehereby incorporated into Presidential Decree No. 442, as amended, to read as follows:

"Art. 99. Regional Minimum Wages.

The minimum wage rates for agricultural andnon-agricultural employees and workers in each and every region of the country shall bethose prescribed by the Regional Tripartite Wages and Productivity Boards.""Art. 120. Creation of the National Wages and Productivity Commission.There ishereby created a National Wages and Productivity Commission, hereinafter referred toas the Commission, which shall be attached to the Department of Labor andEmployment (DOLE) for policy and program coordination.""Art. 121. Powers and Functions of the Commission.The Commission shall have thefollowing powers and functions:

"(a) To act as the national consultative and advisory body to the President of thePhilippines and Congress on matters relating to wages, incomes andproductivity;

"(b) To formulate policies and guidelines on wages, incomes and productivityimprovement at the enterprise, industry and national levels;"(c) To prescribe rules and guidelines for the determination of appropriateminimum wage and productivity measures at the regional, provincial or industrylevels;"(d) To review regional wage levels set by the Regional Tripartite Wages andProductivity Boards to determine if these are in accordance with prescribedguidelines and national development plans;
http://www.lawphil.net/statutes/presdecs/pd1974/pd_442_1974.htmlhttp://www.lawphil.net/statutes/presdecs/pd1974/pd_442_1974.htmlhttp://www.lawphil.net/statutes/presdecs/pd1974/pd_442_1974.htmlhttp://www.lawphil.net/statutes/presdecs/pd1974/pd_442_1974.html


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"(e) To undertake studies, researches and surveys necessary for the attainmentof its functions and objectives, and to collect and compile data and periodicallydisseminate information on wages and productivity and other related information,including, but not limited to, employment, cost-of-living, labor costs, investmentsand returns;"(f) To review plans and programs of the Regional Tripartite Wages and

Productivity Boards to determine whether these are consistent with nationaldevelopment plans;"(g) To exercise technical and administrative supervision over the RegionalTripartite Wages and Productivity Boards;"(h) To call, from time to time, a national tripartite conference of representativesof government, workers and employers for the consideration of measures topromote wage rationalization and productivity; and"(i) To exercise such powers and functions as may be necessary to implementthis Act.

"The Commission shall be composed of the Secretary of Labor and Employment as ex-officio chairman, the Director-General of the National Economic and Development

Authority (NEDA) as ex-officio vice-chairman, and two (2) members each from workers

and employers sectors who shall be appointed by the President of the Philippines uponrecommendation of the Secretary of Labor and Employment to be made on the basis ofthe list of nominees submitted by the workers and employers sectors, respectively, andwho shall serve for a term of five (5) years. The Executive Director of the Commissionshall also be a member of the Commission."The Commission shall be assisted by a Secretariat to be headed by an ExecutiveDirector and two (2) Deputy Directors, who shall be appointed by the President of thePhilippines, upon the recommendation of the Secretary of Labor and Employment."The Executive Director shall have the same rank, salary, benefits and otheremoluments as that of a Department Assistant Secretary, while the Deputy Directorsshall have the same rank, salary, benefits and other emoluments as that of a BureauDirector. The members of the Commission representing labor and management shall

have the same rank, emoluments, allowances and other benefits as those prescribed bylaw for labor and management representatives in the Employees' CompensationCommission."Art. 122. Creation of Regional Tripartite Wages and Productivity Boards.There ishereby created Regional Tripartite Wages and Productivity Boards, hereinafter referredto as Regional Boards, in all regions, including autonomous regions as may beestablished by law. The Commission shall determine the offices/headquarters of therespective Regional Boards."The Regional Boards shall have the following powers and functions in their respectiveterritorial jurisdiction:

"(a) To develop plans, programs and projects relative to wages, incomes andproductivity improvement for their respective regions;

"(b) To determine and fix minimum wage rates applicable in their region,provinces or industries therein and to issue the corresponding wage orders,subject to guidelines issued by the Commission;"(c) To undertake studies, researches and surveys necessary for the attainmentof their functions, objectives and programs, and to collect and compile data onwages, incomes, productivity and other related information and periodicallydisseminate the same;"(d) To coordinate with the other Regional Boards as may be necessary to attainthe policy and intention of this Code;


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"(e) To receive, process and act on applications for exemption from prescribedwage rates as may be provided by law or any Wage Order; and"(f) To exercise such other powers and functions as may be necessary to carryout their mandate under this Code.

Implementation of the plans, programs and projects of the Regional Boards referred to inthe second paragraph, letter (a) of this Article, shall be through the respective regional

offices of the Department of Labor and Employment within their territorial jurisdiction;Provided, however, That the Regional Boards shall have technical supervision over theregional office of the Department of Labor and Employment with respect to theimplementation of said plans, programs and projects."Each Regional Board shall be composed of the Regional Director of the Department ofLabor and Employment as chairman, the Regional Directors of the National Economicand Development Authority and the Department of Trade and Industry as vice-chairmenand two (2) members each from workers and employers sectors who shall be appointedby the President of the Philippines, upon the recommendation of the Secretary of Laborand Employment, to be made on the basis of the list of nominees submitted by theworkers and employers sectors, respectively, and who shall serve for a term of five (5)years.

"Each Regional Board to be headed by its chairman shall be assisted by a Secretariat."Art. 123. Wage Order.Whenever conditions in the region so warrant, the RegionalBoard shall investigate and study all pertinent facts; and based on the standards andcriteria herein prescribed, shall proceed to determine whether a Wage Order should beissued. Any such Wage Order shall take effect after fifteen (15) days from its completepublication in at least one (1) newspaper of general circulation in the region."In the performance of its wage determining functions, the Regional Board shall conductpublic hearings/consultations, giving notices to employees' and employers' groups,provincial, city and municipal officials and other interested parties."Any party aggrieved by the Wage Order issued by the Regional Board may appeal suchorder to the Commission within ten (10) calendar days from the publication of suchorder. It shall be mandatory for the Commission to decide such appeal within sixty (60)

calendar days from the filing thereof."The filing of the appeal does not stay the order unless the person appealing such ordershall file with the Commission an undertaking with a surety or sureties satisfactory to theCommission for the payment to the employees affected by the order of thecorresponding increase, in the event such order is affirmed.""Art. 124. Standards/Criteria for Minimum Wage Fixing.The regional minimum wagesto be established by the Regional Board shall be as nearly adequate as is economicallyfeasible to maintain the minimum standards of living necessary for the health, efficiencyand general well-being of the employees within the framework of the national economicand social development program. In the determination of such regional minimum wages,the Regional Board shall, among other relevant factors, consider the following:

"(a) The demand for living wages;

"(b) Wage adjustment vis-a-vis the consumer price index;"(c) The cost of living and changes or increases therein;"(d) The needs of workers and their families;"(e) The need to induce industries to invest in the countryside;"(f) Improvements in standards of living;"(g) The prevailing wage levels;"(h) Fair return of the capital invested and capacity to pay of employers;"(i) Effects on employment generation and family income; and


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"(j) The equitable distribution of income and wealth along the imperatives ofeconomic and social development.

"The wages prescribed in accordance with the provisions of this Title shall be thestandard prevailing minimum wages in every region. These wages shall include wagesvarying within industries, provinces or localities if in the judgment of the Regional Boardconditions make such local differentiation proper and necessary to effectuate the

purpose of this Title."Any person, company, corporation, partnership or any other entity engaged in businessshall file and register annually with the appropriate Regional Board, Commission and theNational Statistics Office an itemized listing of their labor component, specifying thenames of their workers and employees below the managerial level, including learners,apprentices and disabled/handicapped workers who were hired under the termsprescribed in the employment contracts, and their corresponding salaries and wages."Where the application of any prescribed wage increase by virtue of law or Wage orderissued by any Regional Board results in distortions of the wage structure within anestablishment, the employer and the union shall negotiate to correct the distortions. Anydispute arising from wage distortions shall be resolved through the grievance procedureunder their collective bargaining agreement and, if it remains unresolved, through

voluntary arbitration. Unless otherwise agreed by the parties in writing, such disputeshall be decided by the voluntary arbitrator or panel of voluntary arbitrators within ten(10) calendar days from the time said dispute was referred to voluntary arbitration."In cases where there are no collective agreements or recognized labor unions, theemployers and workers shall endeavor to correct such distortions. Any dispute arisingtherefrom shall be settled through the National Conciliation and Mediation Board and, if itremains unresolved after ten (10) calendar days of conciliation, shall be referred to theappropriate branch of the National Labor Relations Commission (NLRC). It shall bemandatory for the NLRC to conduct continuous hearings and decide the dispute withintwenty (20) calendar days from the time said dispute is submitted for compulsoryarbitration."The pendency of a dispute arising from a wage distortion shall not in any way delay the

applicability of any increase in prescribed wage rates pursuant to the provisions of law orWage Order."As used herein, a wage distortion shall mean a situation where an increase inprescribed wage rates results in the elimination or severe contraction of intentionalquantitative differences in wage or salary rates between and among employee groups inan establishment as to effectively obliterate the distinctions embodied in such wagestructure based on skills, length of service, or other logical bases of differentiation."All workers paid by result, including those who are paid on piecework, takay, pakyaw ortask basis, shall receive not less than the prescribed wage rates per eight (8) hours worka day, or a proportion thereof for working less than eight (8) hours."All recognized learnership and apprenticeship agreements shall be consideredautomatically modified insofar as their wage clauses are concerned to reflect the

prescribed wage rates.""Art. 126. Prohibition Against Injunction.No preliminary or permanent injunction ortemporary restraining order may be issued by any court, tribunal or other entity againstany proceedings before the Commission or the Regional Boards.""Art. 127. Non-diminution of Benefits.No Wage Order issued by any Regional Boardshall provide for wage rates lower than the statutory minimum wage rates prescribed byCongress."

Section 4.(a) Upon the effectivity of this Act, the statutory minimum wage rates of all workersand employees in the private sector, whether agricultural or non-agricultural, shall be increased


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by twenty-five pesos (P25.00) per day, except that workers and employees in plantationagricultural enterprises outside of the National Capital Region (NCR) with an annual gross salesof less than five million pesos (P5,000,000.00) in the preceding year shall be paid an increase oftwenty pesos (P20.00), and except further that workers and employees of cottage/handicraftindustries, non-plantation agricultural enterprises, retail/service establishments regularlyemploying not more than ten (10) workers, and business enterprises with a capitalization of not

more than five hundred thousand pesos (P500,000.00) and employing not more than twenty(20) employees, which are located or operating outside the NCR, shall be paid only an increaseof fifteen pesos (P15.00): Provided, That those already receiving above the minimum wagerates up to one hundred pesos (P100.00) shall also receive an increase of twenty-five pesos(P25.00) per day, except that the workers and employees mentioned in the first exceptionclause of this Section shall also be paid only an increase of twenty pesos (P20.00), and exceptfurther that those employees enumerated in the second exception clause of this Section shallalso be paid an increase of fifteen pesos (P15.00): Provided, further, That the appropriateRegional Board is hereby authorized to grant additional increases to the workers andemployees mentioned in the exception clauses of this Section if, on the basis of itsdetermination pursuant to Article 124 of the Labor Code such increases are necessary.(b) The increase of twenty-five pesos (P25.00) prescribed under this Section shall apply to all

workers and employees entitled to the same in private educational institutions as soon as theyhave increased or are granted authority to increase their tuition fees during school year 1989-1990. Otherwise, such increase shall be so applicable not later than the opening of the nextschool year beginning 1990.(c) Exempted from the provisions of this Act are household or domestic helpers and personsemployed in the personal service of another, including family drivers.Retail/service establishments regularly employing not more than ten (10) workers may beexempted from the applicability of this Act upon application with and as determined by theappropriate Regional Board in accordance with the applicable rules and regulations issued bythe Commission. Whenever an application for exemption has been duly filed with theappropriate Regional Board, action on any complaint for alleged non-compliance with this Actshall be deferred pending resolution of the application for exemption by the appropriate

Regional Board.In the event that applications for exemptions are not granted, employees shall receive theappropriate compensation due them as provided for by this Act plus interest of one per cent(1%) per month retroactive to the effectivity of this Act.(d) If expressly provided for and agreed upon in the collective bargaining agreements, allincreases in the daily basic wage rates granted by the employers three (3) months before theeffectivity of this Act shall be credited as compliance with the increases in the wage ratesprescribed herein, provided that, where such increases are less than the prescribed increases inthe wage rates under this Act, the employer shall pay the difference. Such increases shall notinclude anniversary wage increases, merit wage increases and those resulting from theregularization or promotion of employees.Where the application of the increases in the wage rates under this Section results in distortions

as defined under existing laws in the wage structure within an establishment and gives rise to adispute therein, such dispute shall first be settled voluntarily between the parties and in theevent of a deadlock, the same shall be finally resolved through compulsory arbitration by theregional branches of the National Labor Relations Commission (NLRC) having jurisdiction overthe workplace.It shall be mandatory for the NLRC to conduct continuous hearings and decide any disputearising under this Section within twenty (20) calendar days from the time said dispute is formallysubmitted to it for arbitration. The pendency of a dispute arising from a wage distortion shall not


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in any way delay the applicability of the increase in the wage rates prescribed under thisSection.Section 5.Within a period of four (4) years from the effectivity of this Act and without prejudiceto collective bargaining negotiations or agreements or other employment contracts betweenemployers and workers, new business enterprises that may be established outside the NCRand export processing zones whose operation or investments need initial assistance as may be

determined by the Department of Labor and Employment in consultation with the Department ofTrade and Industry or the Department of Agriculture, as the case may be, shall be exempt fromthe applicability of this Act for not more than three (3) years from the start of their operations:Provided, That such new business enterprises established in Region III (Central Luzon) andRegion IV (Southern Tagalog) shall be exempt from such increases only for two (2) years fromthe start of their operations, except those established in the Provinces of Palawan, OrientalMindoro, Occidental Mindoro, Marinduque, Romblon, Quezon and Aurora, which shall enjoysuch exemption for not more than three (3) years from the start of their operations.Section 6.In the case of contracts for construction projects and for security, janitorial andsimilar services, the prescribed increases in the wage rates of the workers shall be borne by theprincipals or clients of the construction/service contractors and the contract shall be deemedamended accordingly. In the event, however, that the principal or client fails to pay the

prescribed wage rates, the construction/service contractor shall be jointly and severally liablewith his principal or client.Section 7.Upon written permission of the majority of the employees or workers concerned, allprivate establishments, companies, businesses, and other entities with twenty five (25) or moreemployees and located within one (1) kilometer radius to a commercial, savings or rural bankshall pay the wages and other benefits of their employees through any of said banks and withinthe period of payment of wages fixed by Presidential Decree No. 442, as amended, otherwiseknown as the Labor Code of the Philippines.Section 8.Whenever applicable and upon request of a concerned worker or union, the bankshall issue a certification of the record of payment of wages of a particular worker or workers fora particular payroll period.Section 9.The Department of Labor and Employment shall conduct inspections as often as

possible within its manpower constraint of the payroll and other financial records kept by thecompany or business to determine whether the workers are paid the prescribed minimum wagerates and other benefits granted by law or any Wage Order. In unionized companies, theDepartment of Labor and Employment inspectors shall always be accompanied by the presidentor any responsible officer of the recognized bargaining unit or of any interested union in theconduct of the inspection. In non-unionized companies, establishments or businesses, theinspection should be carried out in the presence of a worker representing the workers in thesaid company. The workers' representative shall have the right to submit his own findings to theDepartment of Labor and Employment and to testify on the same if he cannot concur with thefindings of the labor inspector.Section 10.The funds necessary to carry out the provisions of this Act shall be taken from theCompensation and Organizational Adjustment Fund, the Contingent Fund, and other savings

under the Republic Act No. 6688, otherwise known as the General Appropriations Act of 1989,or from any unappropriated funds of the National Treasury: Provided, That the fundingrequirements necessary to implement this Act shall be included in the annual General

Appropriations Act for the succeeding years.Section 11.The National Wages Council created under Executive Order No. 614 and theNational Productivity Commission created under Executive Order No. 615 are hereby abolished.

All properties, records, equipment, buildings, facilities, and other assets, liabilities andappropriations of and belonging to the abovementioned offices, as well as other matterspending therein, shall be transferred to the Commission. All personnel of the above abolished


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offices shall continue to function in a holdover capacity and shall be preferentially considered forappointments to or placement in the Commission.

Any official or employee separated from the service as a result of the abolition of office pursuantto this Act shall be entitled to appropriate separation pay and retirement and other benefitsaccruing to them under existing laws. In lieu, thereof, at the option of the employee, he shall bepreferentially considered for employment in the government or in any of its subdivisions,

instrumentalities, or agencies, including government-owned or controlled corporations and theirsubsidiaries.Section 12.Any person, corporation, trust, firm, partnership, association or entity which refusesor fails to pay any of the prescribed increases or adjustments in the wage rates made inaccordance with this Act shall be punished by a fine not exceeding twenty five thousand pesos(P25,000.00) and/or imprisonment of not less than one (1) year nor more than two (2) years:Provided, That any person convicted under this Act shall not be entitled to the benefits providedfor under the Probations Law.If the violation is committed by a corporation, trust or firm, partnership, association or any otherentity, the penalty of imprisonment shall be imposed on the entity's responsible officers,including, but not limited to, the president, vice-president, chief executive officer, generalmanager, managing director or partner.

Section 13.The Secretary of Labor and Employment shall promulgate the necessary rules andregulations to implement the provisions of this Act.Section 14.Al laws, orders, issuances, rules and regulations or parts thereof inconsistent withthe provisions of this Act are hereby repealed, amended or modified accordingly. If anyprovision or part of this Act, or the application thereof to any person or circumstance, is heldinvalid or unconstitutional, the remainder of this Act or the application of such provision or partthereof to other persons or circumstances shall not be affected thereby.Nothing in this Act shall be construed to reduce any existing wage rates, allowances andbenefits of any form under existing laws, decrees, issuances, executive orders, and/or underany contract or agreement between the workers and the employers.Section 15.This Act take effect fifteen (15) days after its complete publication in the OfficialGazette or in at least two (2) national newspapers of general circulation, whichever comes

earlier.Approved: June 9, 1989

RULES IMPLEMENTING REPUBLIC ACT NO. 6727Pursuant to the authority granted to the Secretary of Labor and Employment under Section 13of Republic Act No. 6727, otherwise known as the Wage Rationalization Act, the following rulesare hereby issued for guidance and compliance by all concerned:

Definition of Terms. As used in this Rules a) "Act" means Republic Act No. 6727;b) "Commission" means the National Wages and Productivity Commission;c) "Board" means the Regional Tripartite Wages and Productivity Board;d) "Agriculture" refers to farming in all its branches and among others, includes the

cultivation and tillage of the soil, production, cultivation, growing and harvesting of anyagricultural or horticultural commodities, dairying, raising of livestock or poultry, theculture of fish and other aquatic products in farms or ponds, and any activities performedby a farmer or on a farm as an incident to or in conjunction with such farming operations,but does not include the manufacturing and/or processing of sugar, coconut, abaca,tobacco, pineapple, aquatic or other farm products;e) "Plantation Agricultural Enterprise" is one engaged in agriculture with an area of morethan 24 hectares in a locality or which employs at least 20 workers. Any otheragricultural enterprise shall be considered as "Non-Plantation Agricultural Enterprise";


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f) "Retail Establishment" is one principally engaged in the sale of goods to end-users forpersonal or household use;g) "Service Establishment" is one principally engaged in the sale of service to individualsfor their own or household use and is generally recognized as such;h) "Cottage/Handicraft Establishment" is one engaged in an economic endeavor in whichthe products are primarily done in the home or such other places for profit which requires

manual dexterity and craftmanship and whose capitalization does not exceed P500,000,regardless of previous registration with the defunct NACIDA;i) "National Capital Region" covers the cities of Kalookan, Manila, Pasay and Quezonand the municipalities of Las Pias, Makati, Malabon, Mandaluyong, Marikina,Muntinlupa, Navotas, Paraaque, Pasig, Pateros, San Juan, Taguig and Valenzuela;

j) "Region III" covers the provinces of Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac,and Zambales and the cities of Angeles, Cabanatuan, Olongapo, Palayan and San Jose;k) "Region IV" covers the provinces of Aurora, Batangas, Cavite, Laguna, Marinduque,Occidental Mindoro, Oriental Mindoro, Palawan, Quezon, Rizal and Romblon and thecities of Batangas, Cavite, Lipa, Lucena, Puerto Princesa, San Pablo, Tagaytay andTrece Martires;l) "Department" refers to the Department of Labor and Employment;

m) "Secretary" means the Secretary of Labor and Employment;n) "Basic Wage" means all remuneration or earnings paid by an employer to a worker forservices rendered on normal working days and hours but does not include cost-of-livingallowances, profit sharing payments, premium payments, 13th month pay or othermonetary benefits which are not considered as part of or integrated into the regularsalary of the workers on the date the Act became effective;o) "Statutory Minimum Wage" is the lowest wage rate fixed by law that an employer canpay his workers;p) "Wage Distortion" means a situation where an increase in prescribed wage ratesresults in the elimination or severe contraction of intentional quantitative differences inwage or salary rates between and among employee groups in an establishment as toeffectively obliterate the distinctions embodied in such wage structure based on skills,

length of service, or other logical bases of differentiation;q) "Capitalization" means paid-up capital, in the case of a corporation, and total investedcapital, in the case of a partnership or single proprietorship.

CHAPTER IWage Increase

SECTION 1. Coverage.The wage increase prescribed under the Act shall apply to allworkers and employees in the private sector regardless of their position, designation or status,and irrespective of the method by which their wages are paid, except;

a) Household or domestic helpers, including family drivers and workers in the personalservice of another;b) Workers and employees in retail/service establishments regularly employing not morethan 10 workers, when exempted from compliance with the Act, for a period fixed by the

Commission/Boards in accordance with Section 4 (c) of the Act and Section 15, Chapter1 of this Rules;c) Workers and employees in new business enterprises outside the National CapitalRegion and export processing zones for a period of not more than two or three years, asthe case may be, from the start of operations when exempted in accordance withSection 5 of the Act and Section 15, Chapter 1 of this Rules;d) Workers and employees receiving a basic wage of more than P100.00 per day.


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Section 2. Effectivity.The Act takes effect on July 1, 1989, 15 days following its completepublication in two newspapers of general circulation on June 15, 1989 pursuant to Section 15thereof.Section 3.Amount of Minimum Wage Increase.Effective July 1, 1989, the daily statutoryminimum wage rates of covered workers and employees shall be increased as follows:

a) P25.00 for those in the National Capital Region;

b) P25.00 for those outside the National Capital Region, except for the following:P20.00 for those in plantation agricultural enterprises with an annual grosssales of less than P5 million in the fiscal year immediately preceding theeffectivity of the Act;P15.00 for those in the following enterprises:

1. Non-plantation agriculture2. Cottage/handicraft3. Retail/Service regularly employing not more than 10 workers.4. Business enterprises with a capitalization of not more than P500,000and employing not more than 20 workers.

Section 4. When Wage Increase Due Other Workers.a) All workers and employees who, prior to July 1, 1989, were already receiving a basic

wage above the statutory minimum wage rates provided under Republic Act 6640 butnot over P100.00 per day shall receive a wage increase equivalent to that provided inthe preceding Section.b) Those receiving not more than the following monthly wage rates prior to July 1, 1989shall be deemed covered by the preceding subsection:

(i) P3,257.50where the workers and employees work everyday, includingpremium payments for Sundays or rest days, special days and regular holidays.(ii) P3,041.67where the workers and employees do not work but consideredpaid on rest days, special days and regular holidays.(iii) P2,616.67where the workers and employees do not work and are notconsidered paid on Sundays or rest days.(iv) P2,183.33where the workers and employees do not work and are not

considered paid on Saturdays and Sundays or rest days.c) Workers and employees who, prior to July 1, 1989, were receiving a basic wage ofmore than P100.00 per day or its monthly equivalent, are not by law entitled to the wageincrease provided under the Act. They may, however, receive wage increases throughthe correction of wage distortions in accordance with Section 16, Chapter 1 of this Rules.

Section 5. Daily Statutory Minimum Wage Rates.The daily statutory minimum wage ratesof workers and employees shall be as follows:Under RA 6640 Under RA 6727Sector/Industry (Effective (EffectiveDec. 14, 1987) July 1, 1989 )

A. NATIONAL CAPITAL REGIONNon-Agriculture P64.00 P89.00

AgriculturePlantation 54.00 79.00Non-Plantation 43.50 68.50Cottage/HandicraftEmploying more than 30 workers 52.00 77.00Employing not more than 30 workers 50.00 75.00Private hospitalsWith bed capacity of more than 100 64.00 89.00With bed capacity or 100 or less 60.00 85.00


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Retail/ServiceEmploying more than 15 workers 64.00 89.00Employing 11 to 15 workers 60.00 85.00Employing not more than 10 workers 43.00 68.00B. OUTSIDE NATIONAL CAPITAL REGIONNon-agriculture 64.00 89.00

AgriculturePlantation with annualgross sales of P5M or more 54.00 79.00Plantation with annual grosssales less than P5M 54.00 74.00Non-Plantation 43.50 58.50Cottage/HandicraftEmploying more than 30 workers 52.00 67.00Employing not more than 30 workers 50.00 65.00Private Hospitals 60.00 85.00Retail/ServiceCities w/ population of more than 150,000

Employing more than 15 workers 64.00 89.00Employing 11 to 15 workers 60.00 85.00Employing not more than 10 workers 43.00 58.00Municipalities and Cities withpopulation not more than 150,000Employing more than 10 workers 60.00 85.00Employing not more than 10 workers 43.00 58.00Sugar Mills 66.00 91.00

AgriculturePlantation with annual grosssales of P5M or more 48.50 73.50Plantation with annual gross

sales of less than P5M 48.50 68.50Non-plantation 43.50 58.50Business Enterprises with Capitalizationof not more than P500,000 and employingnot more than 20 workersNon-Agriculture 64.00 79.00

Agriculture PlantationProducts Other than Sugar 54.00 69.00Sugar 48.50 63.50Private Hospitals 60.00 75.00Retail/ServiceCities w/ population of more than P150,000

Employing more than 15 workers 64.00 79.00Employing 11 to 15 workers 60.00 75.00Municipalities and Cities w/ populationof not more than 150,000Employing more than 10 workers 60.00 75.00Section 6.Sug gested Formula in Determining the Equivalent Monthly Statutory MinimumWage Rates .Without prejudice to existing company practices, agreements or policies, thefollowing formula may be used as guides in determining the equivalent monthly statutoryminimum wage rates:


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a) For those who are required to work everyday including Sundays or rest days, specialdays and regular holidays:Equivalent Applicable daily wage rateMonthly = (ADR) x 390.90 daysRate (EMR) 12

Where 390.90 days =302 daysOrdinary working days20 days10 regular holidays x 200%66.30 days51 rest days x 130%2.60 days2 special days x 130%390.90 daysTotal equivalent number of days.

Note: For workers whose rest days fall on Sundays, the number of rest days in a year isreduced from 52 to 51 days, the last Sunday of August being a regular holiday under ExecutiveOrder No. 203. For purposes of computation, said holiday, although still a rest day for them, isincluded in the ten regular holidays. For workers whose rest days do not fall on Sundays, thenumber of rest days is 52 days, as there are 52 weeks in a year.Nothing herein shall be construed as authorizing the reduction of benefits granted under existing

agreements or employer practices/policies.Section 7. Bas is of Minimum Wage Rates.The statutory minimum wage rates prescribedunder the Act shall be for the normal working hours, which shall not exceed eight hours of worka day.Section 8. Credible Wage Increase.

a) No wage increase shall be credited as compliance with the increases prescribedunder the Act unless expressly provided under collective bargaining agreements, and,such wage increase was granted not earlier than April 1, 1989 but not later than July 1,1989. Where the wage increase granted is less than the prescribed increase under the

Act, the employer shall pay the difference.b) Anniversary wage increase provided in collective agreements, merit wage increase,and those resulting from the regularization or promotion of employees shall not be

credited as compliance thereto.Section 9. Workers Paid by Results .

a) All workers paid by results, including those who are paid on piecework, takay,pakyaw, or task basis, shall receive not less than the applicable statutory minimum wagerates prescribed under the Act for the normal working hours which shall not exceed eighthours work a day, or a proportion thereof for work of less than the normal working hours.The adjusted minimum wage rates for workers paid by results shall be computed inaccordance with the following steps:

1) Amount of increase in AMW*Previous AMW x 100 = % increase;2) Existing rate/piece x % increase = increase in rate/piece;3) Existing rate/piece + increase in rate/piece = Adjusted rate/piece.

*Where AMW is the applicable minimum wage rate.

b) The wage rates of workers who are paid by results shall continue to be established inaccordance with Article 101 of the Labor Code, as amended and its implementingregulations.

Section 10. Wages of Special G roups of Workers.Wages of apprentices, learners andhandicapped workers shall in no case be less than 75 percent of the applicable statutoryminimum wage rates.

All recognized learnership and apprenticeship agreements entered into before July 1, 1989 shallbe considered as automatically modified insofar as their wage clauses are concerned to reflectthe increases prescribed under the Act.


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Section 11.Application to Contractors .In the case of contracts for construction projectsand for security, janitorial and similar services, the prescribed wage increases shall be borne bythe principals or clients of the construction/service contractors and the contract shall be deemedamended accordingly. In the event, however, that the principal or client fails to pay theprescribed wage rates, the construction/service contractor shall be jointly and severally liablewith his principal or client.

Section 12.Application to Pri vate Educational Ins titutions.

Private educationalinstitutions which increased tuition fees beginning school year 1989-1990 shall comply with theP250.00 per day wage increase prescribed under the Act effective as follows:

a) In cases where the tuition fee increase was effected before the effectivity of the Act,the wage increase shall take effect on July 1, 1989.b) In cases where the tuition fee increase was effected on or after the effectivity of the

Act, the wage increase shall take effect not later than the date the school actuallyincreased tuition fees but in the latter case, such wage increase may not be maderetroactive to July 1, 1989.

Beginning school year 1990-1991, all schools shall implement the wage increase regardless ofwhether or not they have actually increased tuition fees.Section 13.Mobile and B ranch Workers .The statutory minimum wage rates of workers,

who by the nature of their work have to travel, shall be those applicable in the domicile or headoffice of the employer.The minimum wage rates of workers working in branches or agencies of establishments in oroutside the National Capital Region shall be those applicable in the place where they arestationed.Section 14. Trans fer of Personnel.The transfer of personnel to areas outside the NationalCapital Region shall not be a valid ground for the reduction workers transferred to the NationalCapital Region shall be entitled to the minimum wage rate applicable therein.Section 15. Exemptions .

a) The following establishments may be exempted from compliance with the wageincrease prescribed under the Act:

1) Retail/Service establishments regularly employing not more than 10 workers

upon application with and as determined by the appropriate Board in accordancewith applicable guidelines to be issued by the Commission.2) New business enterprises that may be established outside the National CapitalRegion and export processing zones from July 1, 1989 to June 30, 1993, whoseoperation or investments need initial assistance may be exempted for not morethan three years from the start of operations, subject to guidelines to be issuedby the Secretary in consultation with the Department of Trade and Industry andthe Department of Agriculture.

New business enterprises in Region III (Central Luzon) and Region IV (SouthernTagalog) may be exempted for two years only from start of operations, except those thatmay be established in the provinces of Palawan, Oriental Mindoro, Occidental Mindoro,Marinduque, Romblon, Quezon and Aurora, which may also be exempted for not more

than three years from the start of operations.b) Whenever an application for exemption has been duly filed with the appropriate officein the Department/Board, action by the Regional Office of the Department on anycomplaint for alleged non-compliance with the Act shall be deferred pending resolutionof the application for exemption.c) In the event that the application for exemption is not granted, the workers andemployees shall receive the appropriate compensation due them as provided for underthe Act plus interest of one percent per month retroactive to July 1, 1989 or the start ofoperations whichever is applicable.


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Section 16. E ffects on Exis ting Wage Structure.Where the application of the wageincrease prescribed herein results in distortions in the wage structure within an establishmentwhich gives rise to a dispute therein, such dispute shall first be settled voluntarily between theparties. In the event of a deadlock, such dispute shall be finally resolved through compulsoryarbitration by the regional arbitration branch of the National Labor Relations Commission(NLRC) having jurisdiction over the workplace.

The NLRC shall conduct continuous hearings and decide any dispute arising from wagedistortions within twenty calendar days from the time said dispute is formally submitted to it forarbitration.The pendency of a dispute arising from a wage distortion shall not in any way delay theapplicability of the increases in the wage rates prescribed under the Act.

Any issue involving wage distortion shall not be a ground for a strike/lockout.Section 17. Complaints for Non-Compliance.Complaints for non-compliance with thewage increases prescribed under the Act shall be filed with the Regional Offices of theDepartment having jurisdiction over the workplace and shall be the subject of enforcementproceedings under Articles 128 and 129 of the Labor Code, as amended.Section 18. Conduct of Inspection by the Department.The Department shall conductinspections of establishments, as often as necessary, to determine whether the workers are

paid the prescribed wage rates and other benefits granted by law or any Wage Order. In theconduct of inspection in unionized companies, Department inspectors shall always beaccompanied by the president or other responsible officer of the recognized bargaining unit or ofany interested union. In the case of non-unionized establishments, a worker representing theworkers in the said company shall accompany the inspector.The workers' representative shall have the right to submit his own findings to the Departmentand to testify on the same if he does not concur with the findings of the labor inspector.Section 19. Payment of Wages.Upon written petition of the majority of the workers andemployees concerned, all private establishments, companies, businesses and other entities withat least twenty-five workers and located within one kilometer radius to a commercial, savings orrural bank, shall pay the wages and other benefits of their workers through any of said bankswithin the period and in the manner and form prescribed under the Labor Code as amended.

Section 20. Duty of Bank.

Whenever applicable and upon request of a concerned worker orunion, the bank through which wages and other benefits are paid shall issue a certification ofthe record of payment of said wages and benefits of a particular worker or workers for aparticular payroll period.

CHAPTER IIThe National Wages and Productivity Commission and Regional Tripartite Wages and

Productivity BoardsSECTION 1. Commission.The National Wages and Productivity Commission created underthe Act shall hold office in the National Capital Region. The Commission shall be attached to theDepartment for policy and program coordination.Section 2. Powers and Functions of the Commiss ion.The Commission shall have thefollowing powers and functions:

a) To act as the national consultative and advisory body to the President of thePhilippines and Congress on matters relating to wages, incomes and productivity;b) To formulate policies and guidelines on wages, incomes and productivityimprovement at the enterprise, industry and national levels;c) To prescribe rules and guidelines for the determination of appropriate minimum wageand productivity measures at the regional, provincial or industry levels;d) To review regional wage levels set by the Regional Tripartite Wages and ProductivityBoards to determine if these are in accordance with prescribed guidelines and nationaldevelopment plans;


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e) To undertake studies, researches and surveys necessary for the attainment of itsfunctions and objectives, and to collect and complete data and periodically disseminateinformation on wages and productivity and other related information, including, but notlimited to, employment, cost-of-living, labor costs, investments and returns;f) To review plans and programs of the Regional Tripartite Wages and ProductivityBoards to determine whether these are consistent with national development plans;

g) To exercise technical and administrative supervision over the Regional TripartiteWages and Productivity Boards;h) To call, from time to time, a national tripartite conference of representatives ofgovernment, workers and employers for the consideration of measures to promote wagerationalization and productivity; andi) To exercise such powers and functions as may be necessary to implement this Act.

Section 3. Composition of the Commission.The Commission shall be composed of theSecretary as ex-officio Chairman, the Director General of the National Economic andDevelopment Authority (NEDA) as ex-officio Vice-Chairman and two members each fromworkers and employers sectors who shall be appointed by the President for a term of five yearsupon recommendation of the Secretary. The recommendees shall be selected from the list ofnominees submitted by the workers and employers sectors. The Executive Director of the

Commission Secretariat shall also be a member of the Commission.The members of the Commission representing labor and management shall have the samerank, emoluments, allowances and other benefits as those prescribed by law for labor andmanagement representatives in the Employees Compensation Commission.Section 4. Commis s ion S ecretariat.The Commission shall be assisted by a Secretariat tobe headed by an Executive Director and two Deputy Directors, who shall be appointed by thePresident upon recommendation of the Secretary.The Executive Director shall have the rank of a Department Assistant Secretary, while theDeputy Directors that of a Bureau Director shall receive the corresponding salary, benefits andother emoluments of the positions.Section 5. Regional Tripartite Wages and Productivi ty Boards .The Regional Wages andProductivity Boards created under the Act in all regions, including autonomous regions as may

be established by law, shall hold offices in areas where the Regional Offices of the Departmentare located.Section 6. Powers and Functions of the Boards.The Boards shall have the followingpowers and functions:

a) To develop plans, programs and projects relative to wages, incomes and productivityimprovements for their respective regions;b) To determine and fix minimum wage rates applicable in their region, provinces orindustries therein and to issue the corresponding wage orders, subject to guidelinesissued by the Commission;c) To undertake studies, researches, and surveys necessary for the attainment of theirfunctions, objectives and programs, and to collect and compile data on wages, incomes,productivity and other related information and periodically disseminate the same;

d) To coordinate with the other Boards as may be necessary to attain the policy andintention of the Labor Code;e) To receive, process and act on applications for exemption from prescribed wage ratesas may be provided by law or any Wage Order; andf) To exercise such other powers and functions as may be necessary to carry out theirmandate under the Labor Code.

Implementation of the plans, programs and projects of the Boards shall be through therespective Regional Offices of the Department, provided, however, that the Boards shall have


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technical supervision over the Regional Office of the Department with respect to theimplementation of these plans, programs and projects.Section 7. Composition of the Boards .Each Board shall be composed of the RegionalDirector of the Department as Chairman, the Regional Directors of the National Economic andDevelopment Authority (NEDA) and Department of Trade and Industry (DTI) as Vice-Chairmenand two members each of workers and employers sectors who shall be appointed by the

President for a term of five years upon the recommendation of the Secretary. Therecommendees shall be selected from the lists of nominees submitted by the workers andemployers sectors.Each Board shall be assisted by a Secretariat.Section 8.Authori ty to Organize and Appoint Personnel.The Chairman of theCommission shall organize such units and appoint the necessary personnel of the Commissionand Board Secretariats, subject to pertinent laws, rules and regulations.

CHAPTER IIIMinimum Wage Determination

SECTION 1. Regional Minimum Wages.The minimum wage rates for agricultural and non-agricultural workers and employees in every region shall be those prescribed by the Boardswhich shall in no case be lower than the statutory minimum wage rates. These wage rates may

include wages by industry, province or locality as may be deemed necessary by the Boards.Section 2.S tandards /Cri teria for Minimum Wage Fixing .The regional minimum wages tobe established by the Boards shall be as nearly adequate as is economically feasible tomaintain the minimum standards of living necessary for the health, efficiency and general well-being of the workers within the framework of the national, economic, and social developmentprograms. In the determination of regional minimum wages, the Boards, shall, among otherrelevant factors, consider the following:

a) The demand for living wages;b) Wage adjustment vis-a-vis the consumer price index;c) The cost of living and changes or increases therein;d) The needs of workers and their families;e) The need to induce industries to invest in the countryside;

f) Improvements in standards of living;g) The prevailing wage levels;h) Fair return of the capital invested and capacity to pay of employers;i) Effects on employment generation and family income; and

j) The equitable distribution of income and wealth along the imperatives of economic andsocial development.

Section 3. Wage Order.Whenever conditions in the region so warrant, the Board shallinvestigate and study all pertinent facts; and, based on standards and criteria prescribed herein,shall determine whether a Wage Order should be issued.In the performance of its wage determining functions, the Board shall conduct public hearingsand consultations giving notices to employees' and employers' groups, provincial, city andmunicipal officials and other interested parties.

Section 4. Effectivity of Wage Order.

Any Wage Order issued by the Boards shall takeeffect 15 days after its complete publication in at least one newspaper of general circulation inthe region.Section 5.Appeal to the Commis s ion.Any party aggrieved by the Wage Order issued bythe Board may file an appeal with the Commission within ten calendar days from the publicationof the Order. The Commission shall decide the appeal within sixty calendar days from the dateof filing.


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Section 6. E ffect of Appeal.The filing of the appeal shall not suspend the effectivity of theWage Order unless the person appealing such order files with the Commission an undertakingwith a surety or sureties in such amount as may be fixed by the Commission.Section 7. Wage Di s tortions .Where the application of any wage increase resulting from aWage Order issued by any Board results in distortions in the wage structure within anestablishment, the employer and the union shall negotiate to correct the distortions using the

grievance procedure under the collective bargaining agreement. If it remains unresolved, it shallbe decided through voluntary arbitration within ten calendar days from the time the dispute wasreferred for voluntary arbitration, unless otherwise agreed by the parties in writing.Where there are no collective agreements or recognized labor unions, the employer andworkers shall endeavor to correct the wage distortion. Any dispute arising therefrom shall besettled through the National Conciliation and Mediation Board and if it remains unresolved afterten calendar days of conciliation, it shall be referred to the appropriate branch of the NationalLabor Relations Commission (NLRC). The NLRC shall conduct continuous hearings and decidethe dispute within twenty calendar days from the time said dispute is submitted for compulsoryarbitration.The pendency of a dispute arising from a wage distortion shall not in any way delay theapplicability of any wage increase prescribed pursuant to the provisions of law or Wage Order.

Section 8. Non-Diminution of Benefits.

Nothing in the Act and in this Rules shall beconstrued to reduce any existing wage rates, allowances and benefits of any form underexisting laws, decrees, issuances, executive orders and/or under any contract or agreementbetween the workers and employers.Section 9. Prohibition Agains t Injunction.No preliminary or permanent injunction ortemporary restraining order may be issued by any court, tribunal or other entity against anyproceedings before the Commission or Boards.Section 10. Penal Provis ions .Any person, corporation, trust, firm, partnership, associationor entity which refuses or fails to pay any of the prescribed increases or adjustments in thewage rates, made in accordance with the Act shall be punished by a fine not exceeding P25,000and/or imprisonment of not less than one year nor more than two years: Provided, that anyperson convicted under the Act shall not be entitled to the benefits provided for under the

Probation Law.If the violation is committed by a corporation, trust or firm, partnership, association or any otherentity, the penalty of imprisonment shall be imposed upon the entity's responsible officers,including, but not limited to, the president, vice-president, chief executive officer, generalmanager, managing director or partner.Section 11. Regis tration/Reporting Requirement.Any person, company, corporation,partnership or any other entity engaged in business shall submit annually a verified itemizedlisting of their labor component to the appropriate Board and the National Statistics Office notlater than January 31 of each year, starting on January 31, 1990 in accordance with the form tobe prescribed by the Commission. The listing shall specify the names, salaries and wages oftheir workers and employees below the managerial level including learners, apprentices anddisabled/handicapped workers.

CHAPTER IVTransitory Provisions

SECTION 1.Abolition of the National Wages Council and the National ProductivityCommission.The National Wages Council created under Executive Order No. 614 and theNational Productivity Commission created under Executive Order No. 615 are abolished. Allproperties, records, equipment, buildings, facilities, and other assets, liabilities andappropriations of and belonging to the abovementioned offices, as well as other matterspending therein, shall be transferred to the Commission. All personnel of the above-abolished


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offices shall continue to function in a hold-over capacity and shall be preferentially consideredfor appointments to or placements in the Commission/ Boards.

Any official or employee separated from the service as a result of the abolition of officespursuant to the Act shall be entitled to appropriate separation pay of one month salary for everyyear of service and/or retirement and other benefits accruing to them under existing laws. In lieuthereof, at the option of the employee, he shall be preferentially considered for employment in

the government or in any of its subdivisions, instrumentalities, or agencies, includinggovernment-owned

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