Compensation Law, Policies and Regulations

CHAPTER 6
COMPENSATION LAW, POLICIES AND REGULATIONS
WAGES/COMPENSATION
• The term wages also covers all benefits of the employee under the CBA (Collective bargaining
Agreement) such as severance pay, educational allowance, accrued vacation leave earned but not
enjoyed, as well as workmen's compensation awards and un paid salaries for services rendered.
TWIN ATTRIBUTES OF WAGES
CASH WAGES
• Takes the form of ready money paid by the employer for services rendered by the employee.
FACILITIES
• Articles or services customarily given for the benefit of the employee and are voluntarily
accepted by him.
WAGES AND SALARY
• The distinction between salary and wages was only for the purpose of article 1708 of the civil
code which mandates that “The laborer’s wages shall not be subject to execution or attachment,
except for debts incurred for food, shelter, clothing and medical attendance.”
• Salary – denotes a higher degree of employment, or a superior grade of services, and implies a
position of office and is suggestive of a larger and more important service.
• In labor law, the distinction is only a matter of semantics. It is settled that wage and salary are
synonymous, the term pay is a synonymous with wage and salary.
• Compensation for manual labor (skilled and un skilled) also known as “blue collared workers”
paid at stated times and measured by the day, week, month or season.
LIST OF BLUE-COLLAR WORKERS:
• construction worker, machine operator, millwright, assembler and truck driver. manufacturing,
mining, custodial work, farming, commercial fishing, landscaping, pest control, food processing,
oil field work, waste disposal, recycling, construction, maintenance, shipping, driving, and many
other types of physical work.
• Considerable pay for lower and less responsible character of employment.
• Not subject to execution.
Debts incurred for food, shelter, clothing and medical attendance.
SALARY
• Paid to “white collared worker’s” and denotes a higher degree of employment or a superior
grade of services and implies a position of office.
LIST OF WHITE COLLARED WORKER’S:
• academic, accountancy, business and executive management, management consulting, customer
support, market research, finance, human resources, operations research, marketing, information
technology, networking, attorneys, medical professionals, architects, research and development
and contracting.
• Suggestive of a larger and more permanent or fixed compensation for more important services.
• Subject for execution.
REGIONAL MINIMUM WAGES

• Minimum wage is the lowest wage rate fixed by law that an employer can pay his workers.
• R.A. 6727, otherwise known as the "Wage Rationalization Act", was enacted into law in 1989.
• The purpose of minimum wage law is “to set barrier below wages not fall, in order to develop
competition on a high level of efficient rather than competition on a low level of wages”.
• The minimum wage fixed by the law is mandatory
• it is non-waivable and non-negotiable. The enactment in nature in order to ensure a decent living
condition.
PENALTY AND DOUBLE INDEMNITY FOR VIOLATION OF THE PRESCRIBED
INCREASES OR ADJUSTMENTS IN THE WAGE RATES (RA 8188)
 shall be punished by a fine of not less than Twenty-five Thousand Pesos (P25,000.00) nor more
than One Hundred Thousand Pesos (P100,000.00) or imprisonment of not less than two (2) years
nor more than four (4) years, or both such fine and imprisonment at the discretion of the court.
MINIMUM WAGE OF APPRENTICES, LEARNERS, AND PERSONS WITH DISABILITY

• Wage of apprentices and learners shall in no case be less than seventy-five (75%) percent of the
applicable minimum wage rates.
• A qualified employee with disability shall be subject to the same terms and conditions of
employment and the same compensation, privileges.
• Fringe benefits or allowances as a qualified able-bodied person (Sec. 1 of or the Magna Carta for
Persons with Disability). RA 10524 SECTION 1. Equal Opportunity for Employment.
COVERAGE FROM INCOME TAX OF MINIMUM WAGE EARNERS
• Effective January 1, 2018, salaried individuals earning annual gross compensation of ₱250,000 or
below per year are exempted from paying income taxes. The following income of MWEs
(minimum wage earners) shall also be exempt from income tax:
1. Statutory Minimum Wage (SMW) inclusive of the COLA
2. Holiday pay
3. Overtime pay
4. Night shift differential pay
5. Hazard pay
HOLIDAY
• Holiday pay refers to the payment of the regular daily wage for any unworked regular holiday.
Coverage
• This benefit applies to all employees except:
1. Government employees, whether employed by the National Government or any of its political
subdivisions, including those employed in government-owned and/or controlled corporations
with original charters or created under special laws.
2. Those of retail and service establishments regularly employing less than ten (10) workers.
3. Kasambahay and persons in the personal service of another.
4. Managerial employees.
5. Field personnel and other employees whose time and performance is unsupervised by the
employer.
• Regular Holidays Every employee covered by the Holiday Pay Rule is entitled to the minimum
wage rate (daily basic wage and COLA).
• Holiday falls on the scheduled rest day of the employee, work performed on said day merits at
least an additional 30% of the employee’s regular holiday rate of 200% or a total of at least
260%.
• Where there are two (2) successive regular holidays, like Maundy Thursday and Good Friday, an
employee may not be paid for both holidays if he/she absents himself/herself from work on the
day immediately preceding the first holiday, unless he/she works on the first holiday, in which
case he/she is entitled to his/her holiday pay on the second holiday.
• Premium pay - refers to the additional compensation for work performed within eight (8) hours
on non-work days, such as rest days and special days.
• Special Work Days (special holiday) - For work performed on a declared Special Work Day, an
employee is entitled only to his/her daily wage. No premium pay is required since work
performed on said day is considered work on an ordinary workday.
• work performed on special days merits additional compensation of at least thirty percent (30%) of
the basic wage or a total of one hundred thirty percent (130%). Where the employee works on a
special day falling on his rest day, he/she shall be entitled to an additional compensation of at
least fifty percent (50%) of his/her basic wage or a total of one hundred fifty percent (150%).
OVERTIME PAY
• Overtime Pay Rates -The COLA shall not be included in the computation of overtime pay. The
minimum overtime pays rates vary according to the day the overtime work is performed, as
follows:
1. For work in excess of eight (8) hours performed on ordinary working days: Plus 25% of the
hourly rate.
2. For work in excess of eight (8) hours performed on a scheduled rest day or a special day: Plus
30% of the hourly rate on said days.
3. For work in excess of eight (8) hours performed on a special day which falls on a scheduled rest
day: Plus 30% of the hourly rate on said days.
4. For work in excess of eight (8) hours performed on a regular holiday: Plus 30% of the hourly rate
on said days.
For work in excess of eight (8) hours performed on a regular holiday which falls on a scheduled rest day:
Plus 30% of the hourly rate on said days.
Night Shift Differential (NSD) - refers to the additional compensation of ten percent (10%) of an
employee’s regular wage for each hour of work performed between 10 p.m. and 6 a.m.
Work on: Pay equals:

• Ordinary day 100% or 1
• Sunday or rest day 130% or 1.3
• Special day 130% or 1.3
• Special day falling on rest day 150% or 1.5
• Regular Holiday 200% or 2
• Regular Holiday falling on rest day 260% or 2.6
• Double holiday 300% or 3
• Double holiday falling on rest day 390% or 3.9

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CHAPTER 6

COMPENSATION LAW, POLICIES AND REGULATIONS

REGIONAL MINIMUM WAGES

MINIMUM WAGE OF APPRENTICES, LEARNERS, AND PERSONS WITH DISABILITY

Work on: Pay equals:

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