Baldoz affirms principle of non-interference on wages

Labor and Employment Secretary Rosalinda Dimapilis-Baldoz yesterday reiterated to employers the principle of non-interference in the disposal of wages as she urged refund of any deductions not based on or not indicated in the country’s labor laws.

“As a guiding principle,” said Baldoz, the country’s labor laws prescribe that “no employer shall limit or interfere with the freedom of the employee to dispose of his/her wages.”

For this purpose, the labor and employment chief issued Labor Advisory No. 11, Series of 2014, or “Non-Interference in the Disposal of Wages and Allowable Deductions”, pursuant to Articles 113 to 115 of the Labor Code of the Philippines, and Sections 9 to 11, Rule VIII of the Implementing Rules of Book III of the Labor Code.

She reminded employers not to make any deductions from the wages of the employee, except in the following cases:
1. When the deductions are authorized by law, including deductions for insurance premiums advanced by the employer in behalf of the employee, as well as union dues where the right to check-off has been recognized by the employer or authorized in writing by the individual employee himself/herself; or,
2. When the deductions are with written authorization of the employees for payment to a third person and the employer agrees to do so, provided that the latter does not receive any pecuniary benefit, directly or indirectly, from the transaction.

On top of the general rule, the advisory provides that as to “cash deposit to answer for loss or damage of tools, materials, or equipment supplied by the employers… it is only in private security agency where the practice is only recognized and allowed.”

In requiring such a cash bond, however, a private security agency must first strictly observe rules and standards to ensure its validity and with due regard to social protection and welfare of an employee.

To this end, the employer should first ensure that any or all of the following attendant conditions have been observed:
(a) The employee concerned is clearly shown to be responsible for the loss or damage;
(b) The employee is given reasonable opportunity to show cause why deductions should not be made;
(c) The amount of such deduction is fair and reasonable and shall not exceed the actual loss of damage; and
(d) The deduction from the wages of the employee does not exceed 20 percent of the employee’s wages in a week.

The advisory emphasized that “in the event that a private security agency requires a cash deposit from its employees, the maximum amount shall not exceed the employee’s one month basic salary.”

It states that “the full amount of cash deposit deducted shall be returned to the employee within 10 days from his/her separation from the service.”

Furthermore, no other deductions from the wages of the employees or cash deposit/bond shall be required by the employer without express authorization from the Secretary of Labor and Employment through an advisory or guidelines.

Finally, Labor Advisory No. 11 provides that deductions made from the employees’ wages, for company uniforms, cash deposits for loss or damage, personal protective equipment (PPE), capital share or capital build up in service cooperatives, training fees, and other deductions not included in the enumeration above, are unauthorized.

Unauthorized deductions made by the employer prior to Labor Advisory No. 11, which shall be applied prospectively from its date of issuance on 3 September 2014, shall not be deemed a violation or illegal deduction.

Nonetheless, it must be refunded to the employees within 30 days from its issuance, or as may be agreed upon by the employer or employees through the Single Entry Approach (SEnA), otherwise failure to refund shall render the deduction illegal.

(For inquiries about this release, please call the Bureau of Working Conditions at Tel. No. 527-3000   locals 303 or 307 or dial DOLE Hotline 527-8000).

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