RA 6727
Wage Rationalization Act of 1988
Objectives:
- To rationalize the fixing of minimum wages
- To promote productivity-improvement and gain-
sharing measures
- To guarantee the rights of labor to its just share
- To enhance employment generation
- To allow business and industry reasonable
returns on investment, expansion, and growth
Collective bargaining
 Primary mode of setting wages and other
terms and conditions of employment
 Minimum wage rates shall be adjusted in a
fair and equitable manner, considering
existing regional disparities
Regional Minimum Wages (Art. 99)
 Minimum wage rates for agricultural and
non-agricultural employees and workers in
each and every region shall be prescribed by
the Regional Tripartite Wages and
Productivity Boards (RTWPB)
National Wages and Productivity Commission (Art.
120-121)
 Attached to DOLE for policy and program
coordination
 Powers and functions:
o As national consultative and
advisory body to the President and
Congress on matters relating to
wages, incomes, and productivity
o To formulate policies and guidelines
on wages, incomes, and productivity
o To prescribe rules and guidelines for
the determination of appropriate
minimum wage and productivity
measures
o To review regional wage levels set
by RTWPB
o To undertake studies, researches,
and survey
o To review plans and programs of
the RTWPB
o To exercise technical and
administrative supervision over the
RTWPB
o To call a national tripartite
conference of representatives of
government, workers, and
employers
 Shall [serve for a term of 5 years and] be
composed of:
o DOLE Secretary – ex-officio
chairman
o NEDA Director-General – ex-officio
vice-chairman
o 2 members each from workers and
employers’ sectors – appointed by
the PH President upon
recommendation of DOLE Secretary
o NWPC Executive Director
 Shall be assisted by a Secretariat:
o Executive Director
o 2 Deputy Directors - appointed by
the PH President upon
recommendation of DOLE Secretary
 Executive Director – same rank, salary,
benefits, and other emoluments as that of
DOLE Assistant Secretary
 Deputy Directors – same rank, salary,
benefits, and other emoluments as that of a
Bureau Director
 Commission members – same rank,
emoluments, allowances, and other benefits
as the labor and management
representatives in the Employees’
Compensation Commission
Regional Tripartite Wages and Productivity Boards
(Art. 122)
 Powers and functions:
o To develop plans, programs, and
projects relative to wages, incomes,
and productivity improvement
o To determine and fix minimum
wage rates applicable in their
region, provinces, or industries
o To undertake studies, researches,
and surveys
o To coordinate with other Regional
Boards
o To receive, process, and act on
applications for exemption from
prescribed wage rates
 Implementation of plans, programs, and
projects shall be through the respective
regional offices of DOLE
 Regional Boards shall have technical
supervision over the regional office of DOLE
 for the implementation of plans, programs,
and projects
 Shall be composed of:
o DOLE Regional Director – chairman
o NEDA Regional Director – vice-
chairman
o DTI Regional Director – vice-
chairman
o 2 members each from workers and
employers’ sectors
 Each Regional Board shall be assisted by a
Secretariat
Wage Order (Art. 123)
 Whenever conditions in the region so
warrant, the Regional Board shall investigate
and study all pertinent facts; and, based on
the standards and criteria prescribed, shall
proceed to determine whether a Wage
Order should be issued
 Shall take effect 15 days from its complete
publication in at least 1 newspaper of
general circulation in the region
 Wage-determining functions:
o The Regional Board shall conduct
public hearings/consultations, giving
notices to employees’ and
employers’ groups, provincial, city,
and municipal officials, and other
interested parties
 Appealing:
o May appeal to the Commission
within 10 calendar days from the
publication of such order
o Mandatory for the Commission to
decide such appeal within 60
calendar days from the filing thereof
o The filing of appeal does not
operate to stay the order unless the
person appealing shall file with the
Commission an undertaking with a
surety or sureties satisfactory to the
Commission for the payment
Standards/Criteria for Minimum Wage Fixing (Art.
124)
 Regional minimum wages shall be as is
economically feasible to maintain the
minimum standards of living necessary for
the health, efficacy, and general welfare of
the employees
 Shall consider the following:
o Demand for living wages
o Wage adjustment vis-à-vis
consumer price index
o Cost of living and changes or
increases therein
o Needs of workers and their families
o Need to induce industries to invest
in the countryside
o Improvements in standards of living
o Prevailing wage levels
o Fair return of the capital invested
and capacity to pay of employers
o Effects on employment generation
and family income
o Equitable distribution of income and
wealth along the imperatives of
economic and social development
 Wages prescribed shall be the standard
prevailing minimum wages in every region;
wages shall include wages varying with:
o Industries
o Provinces or localities
 Business registration:
o Any person, company, corporation,
partnership shall file and register
annually with the appropriate
Regional Board, Commission, and
the NSO (now PSA) an itemized
listing of their labor component
 Distortions:
o When the application for wage
increase results in distortions of the
wage structure within an
establishment, the employer and the
union shall negotiate to correct the
distortions
o Shall be resolved through the
grievance procedure under the
collective bargaining agreement
 If still unsolved, through
voluntary arbitration
 Shall be decided within 10
calendar days from the time
of dispute was referred to
voluntary arbitration
o No collective agreements or
recognized labor unions:
 The employers and workers
shall endeavor to correct
such distortions
  Shall be settled through the o Authority to grant additional
National Conciliation and increases: appropriate Regional
Mediation Board Board
 If unresolved, refer to NLRC o Php 25 per day – entitled to the
branch (shall decide within same in private educational
20 calendar days) institutions as soon as they have
 All workers paid by result, including those increased or are granted authority
who are paid on piecework, takay, pakyaw, to increase their tuition fees
or task basis, shall receive not less than the
prescribed wage rates per 8 hours work a  Exceptions:
day, or a proportion for working less than 8 o Household or domestic helpers
hours o Persons employed in the personal
 Learnership and apprenticeship: service of another, including family
o Shall be considered automatically drivers
modified insofar as their wage o Retail/service establishments
clauses are concerned to reflect the regularly employing not more than
prescribed wage rates 10 workers may be exempted
 Upon application with and
Prohibition against Injunction (Art. 126) as determined by the
 No preliminary or permanent injunction or appropriate Regional Board
temporary restraining order (TRO) may be in accordance with the
issued by any court, tribunal or other entity applicable rules and
against any proceedings before the regulations issued by the
Commission or the Regional Boards Commission
 When application has been
Non-Diminution of Benefits (Art. 127) duly filed, action or
 No Wage Order issued by any Regional complaint shall be deferred
Board shall provide for wage rates lower pending resolution of the
than the statutory minimum wage rates application
prescribed by Congress  If applications are not
granted, employees shall
Statutory minimum wage rates receive the appropriate
 Minimum wage rates in the private sector, compensation due them as
whether agricultural or non-agricultural – provided for by this Act plus
shall be increased by Php 25 per day interest of 1% per month
o Exception: retroactive to the effectivity
 Workers and employees in of this Act
plantation agricultural  If agreed upon in the
enterprises outside NCR collective bargaining
with annual gross sales of agreements, all increases in
less than Php 5M in the the daily basic wage rates
preceding year – shall be shall be credited as
increased by Php 20 per day compliance with the
 Workers and employees of increases in the wage rates
cottage/handicraft prescribed
industries, non-plantation  If application results in
agricultural enterprises, distortions, such dispute
retail/service establishments shall first be settled
regularly employing more voluntarily between the
than 10 workers, operating parties; if deadlock, shall be
outside NCR – shall be resolved through
increased by Php 15 compulsory arbitration by
NLRC branch

New business enterprises outside NCR
 Shall be exempt from the application of this
Act for not more than 3 years from the start
of operations
 Provided, that it is established in Region III
and Region IV shall be exempt from
increases only for 2 years from the start of
operations
 Palawan, Oriental Mindoro, Occidental
Mindoro, Marinduque, Romblon, Quezon,
Aurora shall enjoy exemption for not more
than 3 years from the start of operation
Contracts for construction projects [and for security,
janitorial, and similar services]
 Prescribed increases in the wage rates of
the workers shall be borne by the principals
or clients of the construction/service
contractors and the contract shall be
deemed amended accordingly
o If principal or client fails to pay the
prescribed wage rates, the
construction/service contractor shall
be jointly and severally liable with
his principal or client
Private establishments, companies, businesses, and
other entities with 25 or more employees and
located within 1 kilometer radius to a commercial,
savings, or rural bank
 Upon written petition of the majority of the
employees or workers concerned, shall pay
the wages and other benefits of their
employees within the period of payment of
wages fixed by PD No. 442 (Labor Code of
the Philippines)
Certification of the record of payment of wages
 To be issued by the bank for a particular
payroll period
Inspections
 To be conducted by DOLE within its
manpower constraint of the payroll and
other financial records kept
 Unionized companies: DOLE inspectors shall
always be accompanied by the president or
any responsible officer of the recognized
bargaining unit of any interested union in
the conduct of inspection
 Non-unionized companies: inspection shall
be carried out in the presence of a worker
representing the workers in the said
company
o The workers’ representative shall
have the right to submit his own
findings to the DOLE and to testify
the same if he cannot concur with
the findings of the labor inspector
Funds
 Shall be taken from the Compensation and
Organizational Adjustment Fund, the
Contingent Fund, and other savings under
RA 6688 (GAA of 1989), or from any
unappropriated funds of the National
Treasury
National Wages Council (EO No. 614) and National
Productivity Commission (EO No. 615)
 Abolished
 All properties and documents shall be
transferred to the National Wages and
Productivity Commission
 All personnel shall be preferentially
considered for appointments to or
placement in the National Wages and
Productivity Commission
 Any employee separated from service shall
be entitled to appropriate separation pay
and retirement and other benefits accruing
to them under existing laws
Fines
 Any person, corporation, trust, firm,
partnership, association, or entity which
refuses or fails to pay any of the prescribed
increases or adjustments in the wage rates
shall be punished by a fine not exceeding
Php 25,000 and/or imprisonment of not less
than 1 year nor more than 2 years
o Provided, that any person convicted
under this Act shall not be entitled
to the benefits for under the
Probation Law
o If violation committed: Penalty shall
be imposed to president, vice
president, CEO, general manager,
managing director, or partner of the
corporation, trust or firm,
partnership, association, or any
other entity
Implementation
 DOLE Secretary shall promulgate the
necessary IRR
Approval
 June 9, 1989 by Pres. Corazon C. Aquino