[1] Statutory Monetary Benefits - Minimum Wage

From St. Ven's notes

Minimum Wage

• R.A. 6727 “Wage Rationalization Act“

• Basis for wage classification:

  • Agriculture

  • Retail Establishment

  • Service Establishment

Agriculture

BASIS FOR WAGE CLASSIFICATION

Farming in all its branches

Retail Establishment

BASIS FOR WAGE CLASSIFICATION

• Principally engaged in the sale of goods to end-users

• Regularly engages in wholesale activities loses its retail character

Service Establishment

BASIS FOR WAGE CLASSIFICATION

Principally engaged in the sale of service to individuals

Regional Tripartite Wages and Productivity Boards (RTWPBs)

Authorized to determine the daily minimum wages in different regions based on established criteria

Regional Wage Orders

• Prescribe daily minimum wage rates per industry per locality within the region

• Depends on the number of workers and the capitalization of enterprises

• Provide bases and procedures for application for exemption from compliance

Minimum Wage’s Coverage

• Wage increases apply to:

  • Private sector workers receiving daily minimum wage rates or those receiving up to a certain daily wage ceiling

  • EXCEPT: workers of Barangay Micro Business Enterprises (BMBEs) with Certificate of Authority

• An establishment may be exempted from compliance with a Wage Order for at most 1 year

Rules in Determining Compensable Working Hours

Basis of minimum wage is normal working hours of 8 hours a day

• Hours worked

• Principles in determining hours worked

• Treatment on waiting time

• Attendance at lectures, meetings, training programs, etc.

• Meal and Rest Periods

Hours Worked

RULES IN DETERMINING COMPENSABLE WORKING HOURS

All time during which an employee is required to be on duty or is permitted to work

Principles in Determining Hours Worked

RULES IN DETERMINING COMPENSABLE WORKING HOURS

• All hours are hours worked regardless of whether or not the hours are spent in productive labor or involve physical or mental exertion

• Rest period is considered when the employee stops working. The employee does not need to leave the premises during rest period

• The work performed was necessary, benefited the employer, or employee could not abandon his work at the end of his normal working hours due to no replacement; the hours spent is considered work hours, provided that is is upon the knowledge of the employer

• time during which an employee is inactive due to interruptions in their work beyond their control shall be considered working time

Treatment on Waiting Time

RULES IN DETERMINING COMPENSABLE WORKING HOURS

• Waiting time = working time if employee is obligated to wait as part of their work or as tasked by the employer

• Being on call is considered working

Attendance at Lectures, Meetings, Training Programs, etc.

RULES IN DETERMINING COMPENSABLE WORKING HOURS

• Attendance in such activities is not counted as working time if all conditions are met:

  • Attendance is outside employee’s regular working hours

  • Attendance is voluntary

  • Employee does not perform productive work during attendance

Meal and Rest Periods (Rules in Determining Compensable Working Hours)

RULES IN DETERMINING COMPENSABLE WORKING HOURS

• Employees are entitled to not less than 1 hour time-off for regular meals except:

  • Work is non-manual work or does not involve strenuous physical exertion

  • The establishment regularly operates more than 16 hours a day

  • In case of emergencies or urgent work to be performed on machineries to avoid serious loss

  • The work is necessary to prevent serious loss of perishable goods

• Employees falling onto the aforementioned conditions can be given at least 20-minute meal period, provided that the shorter meal period is credited as compensable hours worked

• Rest periods of 5 to 20 minutes are considered as compensable working time

Monthly-Paid

• Paid every day of the month

• Including unworked rest days, special days, and regular holidays

• 365 days in a year is used in determining the equivalent monthly salary

Daily-Paid

Paid on the days they actually worked and on unworked regular holidays

• Monthly-paid

  • Factor 365 days in a year is used in determining annual and monthly salary

• Daily-paid

  • For those who are required to work everyday, including Sundays or rest days, special days, and regular holidays

• Daily-paid

  • For those who do not work and are not considered paid on Sundays or rest days

• Daily-paid

  • For those who do not work and are not considered paid on Saturdays and Sundays or rest days

Subsidized Meals and Snacks

• Employer may provide subsidized meals and snacks to employees

• Subsidy must be at least 30% of the fair and reasonable value of the facilities

• Employer may deduct at most 70% of the value of the meals and snacks enjoyed by employees

Wage of Kasambahay Working as Sales Clerk

Receive wage in accordance with the prescribed minimum wage applicable in retail and service establishments under existing Wage Orders

Effect of Reduction of Workdays on Wages

• In reducing regular working days to prevent losses, employers may deduct wages corresponding to days taken off from the workweek

• Consistent with “No Work, No Pay“

Penalty for Violation of Prescribed Adjustments in Wage Rates

• Fine of ₱25,000 to ₱100,000

• Imprisonment of 2 to 4 years

• Employer is ordered to pay double the unpaid benefits owed to employees

Barangay Micro Business Enterprises (BMBEs)

• Business enterprises engaged in the production, processing, or manufacturing of products or commodities

• Total assets, excluding land, are less than ₱3 million are not covered by the Minimum Wage Law

• All employees are still entitled to benefits such as SSS and PhilHealth

• BMBE workers and owners shall agree on the acceptable wage rates

Wage of Workers Paid by Results

• They receive at least prescribed minimum wage for the normal working hours not exceeding 8 hours a day

• It could be a proportion for work less than normal working hours

Wage of Apprentices, Learners and Persons with Disability

• Wage of apprentices and learners = at least 75% of minimum wage rates

• Apprentices and learners should be those covered by Technical Education and Skills Development Authority (TESDA)

• PWDs are entitled to be the same terms and compensation as a qualified able-bodied person

Annual Establishment Report on Wages

All private establishments are required to submit an annual report on a verified itemized listing of their labor component and corresponding salaries and wages

Coverage from Income Tax

• Income payments are exempted from the requirement of withholding tax on compensation:

  • For minimum wage earners (MWEs) who work in the private sector and being paid the statutory minimum wage

    • Holiday pay, overtime pay, night shift differential pay, and hazard pay earned by MWE is covered by tax exemption

    • Hazard pay

      • Amount paid to MWE’s who are exposed to great danger

• Annual salary does not exceed ₱250,000

Hazard Pay

Amount paid to MWE’s who are exposed to great danger