1. Definition, Components, and Exclusions

1. Definition, components, and exclusions

a. Wage vs. Salary b. Bonus, 13th month c. Holiday pay i. Labor Code, Executive Order 203, IRR, R.A. No. 9492, R.A. No. 9849, R.A. No. 10966

B. Wages

• Components and Exclusions
• Wages – Labor Code, art. 97(f)
• Facilities
• Supplements
• Bonus
• 13th Month Pay – P.D. No. 851; Revised Guidelines on the Implementation of the 13th Month Pay Law
• Holiday Pay – Labor Code, art. 94; Omnibus Rules Implementing the Labor Code, Book III, Rule IV, secs. 1-7
• Principles
• No Work, No Pay
• Equal Pay for Equal Work
• Fair Wage for Fair Work
• Non-Diminution of Benefits – Labor Code, art. 100
• Payment of Wages – Labor Code, arts. 102-105; Omnibus Rules Implementing the Labor Code, Book III, Rule VIII, secs. 1-7 and 10-14
• Prohibitions Regarding Wages – Labor Code, arts. 112-119; DOLE L.A. No. 11-14
• Wage Distortion – Labor Code, art. 124
• Minimum Wage – Labor Code, art. 99; Omnibus Rules Implementing the Labor Code, Book III, Rule VII, secs. 7, 9 and 15

Facilities

Articles or services for the benefit of the employee or his family, but not tools of the trade or articles or services primarily for the employer’s benefit or necessary to the conduct of its business, are facilities. Their fair and reasonable value may be deducted from the employees’ wages only when the applicable requirements are met. (Omnibus Rules Implementing the Labor Code, Book III, Rule VII, Secs. 4–5.)

Exclusion

• Employment purely casual and not for the purpose of occupation or business of the employer;
• Service performed on or in connection with an alien vessel by an employee if he is employed when such vessel is outside the Philippines;
• Service performed in the employ of the Philippine Government or instrumentality or agency thereof;
• Service performed in the employ of a foreign government or international organization, or their wholly-owned instrumentality;
• Such other services performed by temporary and other employees which may be excluded by SSS regulation [Sec. 8, RA 11199].

Note: Employees of bona fide independent contractors shall not be deemed employees of the employer engaging the service of said contractors.

Exceptions:

• When it was promised to be given without any conditions imposed for its payment in which case it is deemed part of the wage; and
• When it has ripened into practice (Marcos v. NLRC, G.R. No. 111744, 1995)

Employees NOT covered

Employees excepted under Article 82 of the Labor Code are, generally, not covered by the rule on additional compensation.

Basic Salary

INCLUDES:

All remunerations or earnings paid by an employer to an employee for services rendered

DOES NOT INCLUDE:

• Cost of living allowances (COLA),
• Profit-sharing payments and
• All allowances and monetary benefits (e.g. unused VL and sick leave credits, OT premium, night differential and holiday pay) which are not considered or integrated as part of the regular or basic salary of the employee. However, the above should be included in the computation if by individual or collective agreement, company practice or policy.

Non-inclusion in Regular Wage

Benefit need not be credited as part of regular wage of employees for purposes of determining OT pay and premium pays, fringe benefits as well as contributions to the state insurance fund, Social Security, Medicare, and private retirement plans.