PART 2 MODULE 4 whole hours from 9-4 excluding the 1 hour

meal period shall be considered as hours

The definition of wages is found in Art. 97 of
work. In that situation, the employer can
the Labor Code. In that definition, aside
pay you based on time. Even if there are no
from what it means, it also includes the
bank clients from 9-11, if you are paid based
methods of fixing compensation. When the
on time at the end of your work schedule,
employer pays the worker his wages, the
the compensation is already deemed
law also allows the employer depending on
earned, whether you’ve accomplished
the circumstances, on how to pay his
anything or not.
workers. This is what is known as methods
of fixing compensation. If you pay your workers based on time, the
existing DOLE regulations would classify you
Under the Labor Code, we have payment
into two:
based on time, job or task, based on pace
rate, based on commission. The  Monthly paid worker
enumeration of the methods is not  Daily paid worker
exclusive. There are also other methods
It will now depend on the divisor used by
such as payment based on boundary which
the employer in arriving to the estimated
is very prevalent in the employment of taxi
equivalent monthly rate to determine if you
drivers. We also have another method
are considered as a monthly paid worker or
applicable to drivers and conductors in
a daily paid worker. Do not confuse yourself
public utility transport industry. Under
with the frequency of payment. Frequency
existing Department regulations, they may
has nothing to do in determining whether
be paid partly fixed and partly performance
the worker paid on time is monthly or daily
based.
paid worker. You have to look at the devisor
The employer is not at liberty to choose any used.
of these methods. The method must be
For monthly paid workers, you are
appropriate and applicable depending on
supposed to be paid 365 days in a year. The
the type of business or industry that the
divisor used is 365. You multiply the daily
employer belongs to.
rate with 365 divided by 12 and you come
When you refer to payment based on time up with the estimated equivalent monthly
or a worker who is paid based on time, once rate of the employee.
the agreed filed of work is completed the
A daily paid worker is paid for the day’s
compensation is earned and becomes due
actual work except when it is a regular
regardless of the result.
holiday. Although he doesn’t work, he gets
Under the L.C., hours of work it refers to all paid with what we call holiday pay. There
the time that an employee is required to be are diff. divisors used.
on duty at the prescribed workplace. If you
Example (daily paid worker)
are a bank teller, you are required by the
bank to be on duty from 9AM to 4PM. The
 - The establishment operates from M-
Sat. and there is no work on Sunday,
the divisor used is 313. You multiply
313 with the daily rate and divide it
by 12. You come up with the
estimated equivalent monthly rate
of the worker.
- The establishment operates from M-
F only. No work on Sat. and Sunday.
The recommended divisor is 261.
The existing handbook on statutory
workers’ wages will guide you on the diff.
divisors. There is a breakdown of theses
divisors. The breakdown will tell you how
many days consist the ordinary working
days, how many days are paid regular days
and how many days are paid special days.
There is a breakdown provided under the
handbook of statutory workers’ wages
issued by DOLE.
If you are a daily paid worker, the principle
of “no work, no pay” will generally apply.
This is very relevant because if you are a
daily paid worker, for days you don’t render
work you don’t get paid unless you are able
and ready to work but you were illegally
suspended, locked out, or dismissed. The
principle of “No Work, No Pay” is very
relevant to daily paid workers especially
with this pandemic situation. When certain
establishments were not allowed to operate
during the ECQ, since it is neither the fault
of the employer or employee, the principle
of ‘no work, no pay’ will apply and each pf
the parties will have to bear his losses. The
employer cannot operate, he suffers loss
and the employee cannot report to work
and he doesn’t earn his wages. Pantay lng
yon.
If you look at the cases decided by the SC,
the 2007 case of Leyte Electric Cooperative,
the 1995 case of Wellington Investment,
the 2006 case of Arellano University
Workers’ Union, these case use different
divisors. In coming up with the equivalent
monthly rate of their worker, the
applicability of the right divisor is very
important. Because if you use the wrong
divisor, it will turn out that you may be
underpaying your workers which will result
to a possible liability on the part of the
employer.
There is also a case involving monthly paid
workers where the divisor used is 365 in
paying the workers and decided to revert
into a lesser divisor. There was an issue
whether that is allowed by law. In the labor
code, there is a principle against the
diminution of benefits, so when you change
the divisor it will also affect the monthly
rate of the worker. If it results to the
underpayment of the worker, it will give
rise to a cause of action on the part of the
employee against the employer.
Does the principle of “No Work, No Pay”
apply to monthly paid workers?
Yes, in the 2004 case of ODANGO, the SC
was quite emphatic in enunciating that the
principle of ‘no work, no pay’ also covers
monthly paid workers especially when they
are absent without pay. Why would you pay
them for all those days they are not working
especially when they are absent without
pay? There must be corresponding
deduction or adjustment in their wages.
There is nothing that prevents the
application of that equitable principle
likewise to monthly paid workers in the
instances that they are absent without pay.
Payment based on Job or Task
If the employer decides to cement a 1km
road and hires workers to do that, that is a
job or task and the employer may agree
with the workers to pay the latter a fixed
amount based on that particular job or task
without regard to the number of actually
hours spent by these workers in the
performance or completion. Payment
based on a job or a task means that a plot
or fixed sum is paid for each and particular
job or task completed without regard to
the number of hours actually spent in the
performance or completion. A worker paid
based on the job or task may properly
qualify as a worker paid by results.
If you are a worker paid by result, there are
certain labor standards that do not apply to
you. In most cases, if you are paid based on
job or task, the assumption is you get paid
more compared to a time-based worker. If
the employer is engaged in the
manufacture of furniture, perhaps a single
piece of furniture a standard amount is
fixed for every unit produced without
regard for the time spent. If that is the case,
you are deemed paid on a piece work or
piece rate basis. If you are a piece rate
worker and your time and performance is
not supervised by the employer, then you
may also be qualified as a worker paid by
result. As a worker paid by result, you do
not enjoy certain standards because you
are excluded from entitlement thereof.
A piece rate worker may or may not be a
worker paid by result. A piece rate worker
may also be supervised on his time and
performance, and if that were the case he
is not excluded from entitlement of labor
standards under the labor code.
The importance of determining the method
of basing compensation is also found with
regard to the method of fixing your
compensation whether you’re entitled to
certain labor standards such as overtime
pay, premium pay, holiday pay, service
incentive leave, and if workers paid by
results are excluded to the entitlement of
these labor standards.
Cases decided by the SC will illustrate to you
examples of workers who are paid in a
piece rate such as the 1999 case of Lambo
Tailors, they were classified as workers paid
on a piece rate basis.
A ‘pakyaw’ or a task basis arrangement
defines the manner of payment and not
the relationship between the parties. This
principle is very important because workers
who are paid in pakyaw or job or task basis,
there are issues that are raised such as if
they are employees or not. The employer
cannot raise an issue that they are not
employees simply because of the method
of fixing their compensation. Payment
based on a job or task, payment based on a
piece rate, does not determine the
existence of employer and employee
relationship. We still go back to the four-
fold test or the two-tier test explained
earlier. It will not define the relationship of
the parties but will spell out the manner of
payment.
Payment based on Commission
 - Parties agreeing to a certain
percentage or fractions of the
proceeds resulting from sale
This is very common in salesmen and as
held in the 1990 case of Song Co, and in the
1996 San Miguel Jeepney Services case
involving drivers and dispatchers. We have
mentioned the 4 methods of fixing
compensation. The list is not exclusive.
Payment by Boundary
How do you know whether you are paid
based on boundary?
Under the boundary system, a fixed amount
is remitted by the driver to the owner
operator and gets to earn the amount in
excess thereof. For example, the driver
using the beaker of the owner operator the
driver pays P 1500. Any amount he earns in
excess of P1500 will be considered his
compensation. The 2011 case of Caung jr.,
the SC said that under the boundary
system, that if there are many passengers,
then the driver will benefit from it. More
passengers, more earnings in the part of the
driver.
This commission based of fixing
compensation also has its upside and
downside because in the past up to the
present, there are PUVs where the drivers
are paid based on commission, so they drive
very fast to get more passengers and that
resulted to accidents. The DOLE even came
up with a department order applicable to
drivers and conductors of the PUV industry
because accidents were very common since
those drivers were paid based on
commission.
Under the Department order, there goes
another method which was the partly-fixed
partly performance based payment. I am
referring to Department Order 118-12
Series of 2012 way back of Jan 13, 2012
applicable to drivers and conductors in the
PUV transport industry. Get a hold of a copy
and it will tell you how they are paid (partly-
fixed, partly- performance based). The fixed
component would have to be mutually
agreed by the employer and the driver and
the conductor but such should not be
lower than the applicable daily wage. The
partly fixed compensation must also
include the payment of wage related
benefits.
The performance based component would
depend on two factors under the
department order: 1) business performance
or the revenue or ridership- more
passengers and the employees earn more 2)
safety performance- less accidents, then
you earn more. When the DOLE issued this
order, it was challenge before the SC. It was
assailed to be unconstitutional. Read the
case involving the Provincial Bus Operators
where the SC En Banc ruled on the
constitutionality of this department order.
Revised Guidelines on the Conduct of Time
and Motion Study DOLE D.O. 125-13 issued
on April 1, 2013
This is applicable to all workers of micro-
small and medium enterprises who are paid
results including pakyaw, piece work, and
other non-timed work pursuant to Art. 101
of the Labor Code. The employer should
not commit a mistake in fixing the
compensation of the workers if they were
to be paid on a pakyaw, piece rate, or non-
times work. If the workers are underpaid,
then that becomes a money claim and the
employer may be sued for the recovery of
that money claim.
There is also a procedure defined under this
department order wherein a union, an
individual worker, even an owner or
manager of an establishment may file an
application for the conduct of time and
motion study still with the Regional
Tripartite Wages and Productivity Board.
The end result there is the RTWPB through
the Regional Director of DOLE, being the
chairperson of the board, is expected to
issue a piece rate and production standard
order.
If the establishment hires workers and
these workers are paid on a pakyaw, piece
rate, or non-time work basis, he DOLA
prescribes a procedure on the conduct of
time and motion studies. The employer may
unilaterally fix the amount per piece or per
pakyaw, but if there is a mistake or an
underpayment of wages, then it is the
liability of the employer to pay for the wage
differences. The requirement of publication
and enforcement more or less is the same
in the conduct of facility evaluation.
Equal Pay for Equal Work Principle
Remember the Equitable Principle of ‘No
work, No pay’ also known as the ‘Per Day’s
Wage for a Per Day’s Labor’. Corollary to
that, we also have another equitable
principle initiated in the 2000 case
International School Alliance of Educators
involving ‘Equal Pay for Equal Work’. There
was a bar exam question on what are these
principles of equal pay for equal work. The
international school case involved Filipino
teachers and foreign teachers where in the
latter were paid more than the Filipino
teachers. There was an issue on whether
there was a violation on the equal pay for
equal work principle.
Minimum Wage
Minimum wage is fixed by the RTWPB
pursuant to the Wage Rationalization Act.
When the board fixes the minimum wage, it
may be subject to review by the National
Wages and Productivity Commission.
Review and study the composition of the
RTWPB and the NWPC. The regional
director heads the RTWPB while the
Secretary of the DOLE is the head of the
NWPC. There is a tripartism in the
composition because there is a
representative from the public sector, the
private/ employer sector, the employee
sector usually represented by a federation
or a national union.
What is the policy of the state in fixing the
minimum wage?
One policy that is spelled out under the law
is to rationalize the fixing of minimum
wage. It is very inequitable to have the
minimum wage applicable to all the regions.
Why is it inequitable? There is always a
difference in socio-economic factors in
every region. For example, the cost of living
in NCR is higher than the cost of living of
Region X or XII. The board is left to decide
how much should be the minimum wage
applicable to that region.
Another policy under the law is the
promotion of collective bargaining as a
primary mode of settling wages. The right to
collective bargaining and negotiation is
available to workers who have exercised the
right to self-organization. Referring to
workers who are members of the union, a
certified union, they can exercise the right
to collective bargaining and negotiation.
If there is anyone interested in the increase
of the prevailing minimum wage, there is
also a step by step procedure. The Revised
Rules of Fixing Minimum Wage where you
file your application and the petition for
wage increase will have to undergo
publication, public hearing, and expect the
board to issue a wage order. It is not at all
times that the board will grant a wage
increase. There are occasions in the past
particularly Region VII that the board had
denied the petition for wage increase.
A wage order is an order promulgated by
the board pursuant to its wage fixing
power. For the wage order to be effective, it
requires publication and within 1 year
from the effectivity of that wage order, the
rules will not allow another petition to be
filed except under extraordinary
circumstances such as an increase in the
prices of basic goods or fuel, then the board
may entertain another petition within that
1 year period.
Can an individual worker file a petition for
wage increase?
NO, under the existing the rules there re
persons who are authorized. An employer
may file but I have yet to see situation
where the employer would want to see a
minimum wage increase. A duly registered
federation or union since it has a juridical
personality can also file a petition. In Region
VII for example, I noticed that the
federation that usually files for a wage
increase is the Associated Labor Union-
Trade Union Congress of the Philippines
(ALU-TUCP). It’s one of the largest
federation or national union we have in this
country.
It is not uncommon that when there is a
petition for a wage increase filed to the
board employers would oppose. There was
one time our office lawyered for a large
employer’s organization and at that time I
was tasked to drop a position paper
opposing for the wage increase. For due
process purposes, during the hearing we
filed our position paper and the board
deliberated on it and eventually deliberated
to grant the petition or not. Sometimes
when you ask for a P50 wage increase the
board will only grant half of it or none at all.
In fixing the minimum wage by the board,
the board has to consider several factors
and cost of living condition. That is why
among the members of the board you can
find there members form the DTI, NWPC,
agencies charged with assessing the
economic conditions of the country like
NEDA or National Economic Development
Authority.
In fixing minimum wage, the board has to
consider the right of the employer. The
employer has the right to a reasonable
return of investment and expansion and
growth. That right of the employer has to
be considered. It is not always one-sided to
grant the wage increase because a very
unreasonable wage increase will result to
the stoppage or closure of operations of the
establishment which will violate the
employer’s right to reasonable return on his
investment and to expansion and growth.
That was exemplified in the 2004 case
Duncan Association of Detailman.
WAGE DISTORTION
When the board issues a wage order, it is
not avoidable that a wage distortion may
happen. The definition is very long. For the
purposes of the BAR examination, what you
have to remember are the 4 requisites to
constitute wage distortion:
(Check the case of Prubankers Association.
1999)
 When the board issues a wage order
and results into a wage distortion.
The law provides a remedy. The
procedure in resolving that remedy
would depend on whether the
establishment is organized or
unorganized.
UNORGANIZED – establishment
does not have a recognized
bargaining union or collective
bargaining agreement
ORGANIZED – there is a certified
and recognized bargaining agent or
collective bargaining agreement
Ex. An establishment has a wage order
issued by the board and the workers believe
that while there is an adjustment on the
salary of the lower pay class there is no
concomitant increase in the salary of the
higher pay class which resulted in the
elimination or civil contraction. In that
case, the workers have a cause of action for
wage distortion.
If the wage distortion is not properly
resolved despite the procedure provided by
law, the wage distortion may be the subject
of a compulsory arbitration before the LA or
voluntary arbitration before a voluntary
arbitrator. In other words, it may end up
with arbitration.
Employees should not hesitate to seek
redress from their grievances if you believe
that as a result of a wage order there exists
a wage distortion.
It is difficult to prove because you don’t
know the salary of the employees in the
establishment because there is a hierarchy
of position. Ex. If there is a severe
elimination or contraction between the
rank and file employees and the
supervisors, then there could be a cause of
action for wage distortion.
 Wage distortion must exist in a
particular region.
Do not compare the Regions with each
other. The wage distortion should just be in
that particular region.
Our regional tripartite board, in fixing the
wages, the SC came up with methods of
determining wages found in the 2007 case
of Metropolitan Bank and the earlier case
of Employers’ Confederation in 1991.
TWO methods:
1) Floor wage method – the most common
method of creating wage distortion because
when there is a minimum wage the board
will only fix the amount and add it to the
prevailing
2) Salary ceiling method – what is
acceptable; the board will fix an amount
and that will apply to certain employees
receiving a denominated salary ceiling
In the 2004 case of Bankard Employees Double Indemnity Rule- Department Order
Union, if the increase in the hiring rate is 10 Series of 1998
brought about by the employer voluntarily
In the 2009 Philippine Hoteliers Inc., this
and unilaterally even without increasing the
department regulation was cited.
salary rate of all employees, there exists no
wage distortion. Why? The increase of the While the board has the power to fix the
salary was not brought about by the minimum wage through the issuance of a
issuance of a wage order. It was done wage order, the law also allows exemptions
voluntarily and unilaterally by the employer. from the wage order either by application
or by operation of law.
You must know various situations where
there are wage distortions and situations  BY APPLICATION- entitles certain
where there are no wage distortions. establishments to apply for
exemption
When the board issues a wage order fixing
Ex. A distressed retail or service
the minimum wage, the wage order will
establishment employing not more
ONLY benefit those workers who are
than 10 workers can apply with the
receiving below the prescribed daily wage.
RTWPB for an exemption from the
It is not across the board. It will not be
wage order.
granted to all employees. It is only
 BY OPERATION OF LAW – under the
applicable to employees who are receiving
labor code- domestic workers are
below the minimum wage.
exempted from the wage order
In the 2006 PAG-ASA Steel Works case, because they are paid a monthly
there is no right to wage increase if the wage and not a daily wage.
employees are receiving above the
minimum wage. In fact, we have wage orders fixing
the monthly wage of domestic
What is the liability of the employer if he
workers under the Batas
fails to comply with the wage order?
Kasambahay.
If the wage order is affirmed by the NWPC,
the wage order becomes final and
executory (can still be subject to appeal up
until the SC) the employer is expected to
comply. Failure or refusal to comply, under
our existing law, will mean liability on the
part of the employer including criminal
liability. Take note of the so-called double
indemnity which is a penalty imposed upon
an erring employer or an employer who
fails and refuses to comply with a valid
wage order.