5. Prohibitions Regarding Wages

Means of Payment

The employer cannot pay his workers by means of any of the following:

• Vouchers;
• Promissory notes;
• Any object other than legal tender;
• Coupons;
• Chits;
• Tokens; or
• Tickets (Labor Code, Art. 102)

General Rule: No employer shall pay the wages of an employee by any other means other than legal tender, even when expressly requested by the employee. (Congson v. NLRC, G.R. No. 114250, April 5, 1995)

Exception: Payment of wages by bank checks, postal checks or money orders is allowed where:

• Such manner of wage payment is customary on the date of the Labor Code’s effectivity;
• It is stipulated in a collective agreement;
• All of the following conditions are met:
  • There is a bank or other facility for encashment within a radius of 1 kilometer from the workplace
  • The employer or any of his agents or representatives does not receive any pecuniary benefit directly or indirectly from the arrangement
  • The employees are given reasonable time during banking hours to withdraw their wages from the bank which time shall be considered as compensable hours worked if done during working hours
  • The payment by check is with the written consent of the employees concerned if there is no collective agreement authorizing the payment of wages by bank checks
• Necessary because of special circumstances as specified in appropriate regulations issued by the Secretary of Labor (IRR Labor Code, Sec. 2, Rule VIII, Book III)

Deductions from Wages (Labor Code, Art. 113)

General Rule: Wage deduction is strictly prohibited.

Exceptions:

• With Employee’s Consent in Writing
• Insurance premiums, when the employee has authorized the deduction in writing and the employer has agreed to pay the premiums
• SSS payments
• PHILHEALTH payments
• Contributions to PAG-IBIG Fund
• Value of meals and other facilities
• Payments to third persons with employee’s consent and without pecuniary benefit
• Deduction for unpaid absences
• Without Employee’s Consent
• Union dues, where the right to check-off has been recognized by the employer or authorized in writing by the employee
• Cases where the employer is authorized by law or regulations issued by the Secretary of Labor
• Debts of the employee to the employer that have become due and demandable
• Withholding tax

NOTE: Persons earning minimum wage are exempted from income tax

• When Authorized by Law
• Deposit for loss/breakage (Labor Advisory, No. 11 [2014], Sec. 3)
• In cases where the employee is indebted to the employer, where such indebtedness has become due and demandable (Civil Code, Art. 1706)
• Court judgment, but only for debts incurred for food, shelter, clothing, and medical attendance (Civil Code, Art. 1708)
• Regulation Issued by the Secretary of Labor

Requisites for Valid Deduction for Loss/Damage

• The employee concerned is clearly shown to be responsible for the loss or damage
• The employee is given reasonable opportunity to show cause why deduction should not be made
• The amount of such deduction is fair and reasonable and shall not exceed the actual loss or damage
• The deduction from the wages of the employee does not exceed 20% of the employee's wages in a week (IRR Labor Code, Sec. 11, Rule VIII, Book III)

Art. 114 [old numbering] provides for the rule on deposits for the loss or damage to tools, materials, or equipment supplied by the employer. The same does not apply to or permit deposits to defray any deficiency, which the taxi driver may incur in the remittance of “boundary” (Five J Taxi v. NLRC, G.R. No. 111474, 1994)

Non-Interference in Disposal of Wages (Civil Code Provisions)

• The laborer’s wages shall be paid in legal currency (Civil Code, Art. 1705)
• Withholding of wages, except for a debt due, shall not be made by the employer (Civil Code, Art. 1706)
• The laborer’s wages shall be a lien on the goods manufactured or the work done (Civil Code, Art. 1707)
• The laborer’s wages shall not be subject to execution or attachment, except for debts incurred for food, shelter, clothing, and medical attendance (Civil Code, Art. 1708) Salaries may also be exempt from execution to the extent necessary for the support of the judgment obligor’s family, subject to Rule 39, Sec. 13(i) of the Rules of Court.
• The employer shall neither seize nor retain any tool or other articles belonging to the laborer (Civil Code, Art. 1709)