I. Short answer

As a general rule, no, an employer in the Philippines cannot simply deduct Land Transportation Office (LTO) traffic fines from an employee’s salary.

Deductions from wages are strictly regulated under Philippine labor law. Traffic fines are not one of the deductions “authorized by law,” and even if the employee is at fault, the employer cannot unilaterally charge the fine to the employee’s wage without complying with very specific legal requirements.

However, there are limited situations where a deduction related to a traffic fine might be allowed (for example, with valid written consent and proper procedure), but even these are legally delicate and vulnerable to challenge.

This article explains the full legal landscape.

II. Legal framework on wage deductions

1. Wage protection policy

Philippine labor law follows a strong wage protection policy. Wages are considered special and are protected from arbitrary reductions, set-offs, or withholdings. Key principles include:

Wages must be paid in full and on time.
Employers cannot freely withhold or deduct amounts unless specifically allowed by law.
Any doubt is usually resolved in favor of labor.

2. Authorized deductions under the Labor Code

The Labor Code provision on wage deductions (commonly referred to as Article 113 in the original numbering, renumbered in later issuances) generally allows deductions only in the following cases (paraphrased):

Deductions authorized by law – e.g.,
- Withholding tax
- SSS, PhilHealth, Pag-IBIG contributions
- Other mandatory government contributions
Deductions authorized by the employee in writing for payment to a third person, and the employer agrees to do so, provided:
- The deduction is for a lawful purpose; and
- The deduction does not exceed a certain portion of the employee’s wage (commonly applied as not more than 20% of wages in many DOLE guidelines/practices).
Deductions for losses or damages caused by the employee, but only under strict conditions (explained below).

Important: LTO traffic fines do not fall under any mandatory statutory deduction category. That means they cannot be automatically treated like tax, SSS, PhilHealth, or Pag-IBIG.

III. Who is liable for an LTO traffic fine?

Under traffic and transportation laws (e.g., the Land Transportation and Traffic Code and LTO regulations), liability for a traffic violation may fall on:

The driver who committed the violation; and/or
The registered owner of the vehicle.

From a public law perspective, LTO will look to the driver and/or the registered owner to collect the fine.

From a private law (employer–employee) perspective, the question becomes:

If the employee driver is responsible for the violation and the employer ultimately pays the fine (because the vehicle is under the company’s name), can the company make the employee reimburse it via salary deduction?

That is where labor law restrictions come in.

IV. General rule: No unilateral deduction for traffic fines

1. Not “authorized by law”

LTO fines are government penalties, but they are not on the list of statutory wage deductions. Just because a fine is due to the government does not mean an employer can automatically use payroll to collect it from the employee.

If an employer simply deducts the amount of the traffic fine from the employee’s pay without more, that deduction is unauthorized and may be considered:

An illegal deduction
A form of wage withholding
A potential labor standard violation that can be the subject of a DOLE complaint

2. Consent alone is not always enough

Even if the employee “agrees” verbally, or is pressured to sign something after the fact, that does not automatically make the deduction valid. The law is concerned with:

The nature of the obligation being deducted
Whether the agreement is voluntary and informed
Whether the deduction conforms to wage protection rules

V. When can a deduction related to LTO fines possibly be allowed?

There are a few narrow windows where a deduction might be defensible. Employers should still treat these as risky and proceed carefully.

1. If the employer paid the fine, and the employee clearly caused a loss

Some DOLE regulations and jurisprudence recognize that an employer can deduct amounts to recover losses or damages caused by the employee, but typically only if:

The employee is clearly at fault or negligent;
There is due process (notice and opportunity to explain);
The amount of the loss/damage is clearly established; and
The deduction does not exceed prescribed limits (often applied as up to 20% of wages per pay period).

In this context, if:

The company vehicle had an LTO fine due to the employee’s clear violation while driving on duty, and
The company (as registered owner) paid the fine to the LTO,

the company might argue that the fine is a “loss” suffered by the employer due to the employee’s negligence, and seeks to recover it.

Even then, the employer should not simply deduct. The safer sequence is:

Conduct an internal investigation.
Give the employee written notice of the violation and the company’s intent to charge the amount as “loss.”
Allow the employee to submit a written explanation and, if applicable, attend a hearing.
Issue a written decision stating the findings and basis for any financial liability.
If reimbursement will be done via payroll, secure a separate, clear, written authorization from the employee acknowledging the debt and allowing specific deductions (e.g., “₱___ per payroll for __ pay periods”).

Even with all of this, disputes may still be brought to DOLE or NLRC, and the arrangement may be struck down if:

The employee is minimum-wage or very low wage and the deduction effectively brings pay below minimum, or
DOLE finds the arrangement oppressive or contrary to wage protection policies.

2. Express written authorization for a specific debt

The law allows written authorizations for deductions for obligations to third parties. Some employers attempt to use this for traffic fines by:

Having drivers sign a specific authorization allowing the company to deduct amounts equivalent to traffic fines that the company had to pay on their behalf.

However, there are risks:

A very general or blanket authorization (“I authorize the company to deduct any amount for any violation I commit”) may be considered invalid or unconscionable.
DOLE may view it as a way of using payroll to shift the company’s risks and liabilities onto the employee.
The deduction still cannot reduce pay below minimum wage, especially for minimum wage earners.

Thus, any such authorization should be:

Specific (which obligation, how much, payable when);
Voluntary and not signed under coercion;
Limited in amount per pay period; and
Accompanied by proper disciplinary procedure.

3. CBAs and company policies

Some companies have:

Collective Bargaining Agreements (CBAs) with clauses about liability for company property or fines; and/or
Company handbooks or driver policies saying that traffic violations caused by the driver shall be for the driver’s account, and may be recovered from salary.

Even then:

A CBA cannot override statutory protections in the Labor Code.
A company policy alone is not enough legal basis to deduct wages.
The policy may support disciplinary action, but not automatic salary deductions if they contradict wage protection rules.

VI. Situational breakdowns

1. Employee uses company vehicle while on duty

Traffic violation due to employee’s fault; LTO fines the driver/company.
Employer pays the fine because the car is under the company’s name.

Can the company deduct from salary?

Not unilaterally.
It may attempt to recover the amount as “loss” with due process and written consent, but this remains contestable.
If the employee refuses to consent, the employer’s remedy is generally not to forcibly deduct from wages, but to:
- Treat it as a civil claim (e.g., demand for reimbursement), or
- Address it as a disciplinary matter (warnings, suspension, or dismissal, if repeated and serious).

2. Employee uses personal vehicle for personal purposes

Traffic fines here are purely personal. The employer has no legal basis at all to deduct such fines from wages. If an employer attempts to do so:

It is an unauthorized deduction and can be challenged at DOLE or NLRC.

3. Employee uses personal vehicle for company errands

This is a gray area. Even if the errand is work-related, the vehicle is the employee’s own property, and the registration and primary liability may rest with the employee.

The company may not be legally obliged to shoulder the fine.
But at the same time, it still cannot automatically deduct any amount from the employee’s wages.
The traffic fine remains, fundamentally, the employee’s personal debt to the government, not a company advance.

4. Probationary vs. regular employees; rank-and-file vs. managerial

The rules on wage deductions apply regardless of employment status or rank. Managers and probationary employees are also protected by the Labor Code’s wage provisions.

VII. Disciplinary actions vs. financial deductions

Employers sometimes mix up:

Disciplinary measures (warnings, suspension, dismissal)
Financial measures (salary deductions, reparations, fines)

Under labor law:

Employers have the right to impose disciplinary actions for just or authorized causes, following due process.
But monetary penalties taken from wages are heavily restricted.

So even if an employee clearly violated traffic rules:

The employer can sanction the employee under its code of conduct (e.g., “3rd preventable violation involving company vehicle may be ground for dismissal”).
The employer still cannot simply deduct the LTO fine from salary unless it clearly falls under one of the allowed deduction categories, with all requirements observed.

Using salary deductions as a form of punishment (without legal basis) is risky and can be viewed as:

Illegal deduction; and/or
Constructive dismissal if the pattern of deductions and pressure makes continued employment intolerable.

VIII. Minimum wage and “no work, no pay” considerations

Even if a deduction is arguably allowed:

It must not bring the employee’s take-home pay below the applicable minimum wage, except for deductions explicitly allowed by law (tax, SSS, etc.).
The employee must still receive the wages for work actually performed.

So, for example:

If a driver is on minimum wage and the LTO fine is large, deducting the full amount in one payroll is almost certainly illegal.
Even installment deductions can be questioned if they effectively deny the employee a decent net wage relative to minimum standards.

IX. Tax and accounting side (briefly)

From the employer’s perspective:

Fines and penalties paid to the government are typically not deductible as a business expense for income tax purposes under the tax code.
If the company chooses to shoulder the employee’s traffic fines without seeking reimbursement, it might arguably be treated as a fringe benefit or additional compensation in some scenarios (subject to tax rules).

These tax nuances also make many employers reluctant to treat traffic fines as mere overhead and more inclined to try to pass costs to employees—but labor law does not automatically allow them to do so via payroll.

X. Practical guidance for employers

If an employer wants to manage the risk of traffic violations while staying legally compliant, better approaches include:

Clear policies and training
- Detailed driver and vehicle use policies
- Regular defensive driving and safety training
- Clear rule: “Strict compliance with all traffic laws while operating company vehicles”
Progressive discipline
- Verbal/written warnings for first offenses
- Suspension or reassignment for repeated or serious violations
- Dismissal for habitual or gross negligence (subject to just cause and due process)
Written reimbursement arrangements (not automatic payroll deduction)
- If the company must pay the fine and believes the employee is at fault, it may:
  - Ask the employee to reimburse directly in cash; or
  - Enter into a written repayment agreement, with clearly stated amount and schedule, and a separate, clear authorization for any wage deduction, if absolutely necessary.
- Even then, comply with:
  - Maximum allowable percentage of wage deduction per pay period
  - No reduction below minimum wage
  - Proper documentation and transparency
Avoid blanket waivers
- Avoid generic clauses in contracts like “I authorize the company to deduct any and all amounts it deems due from my salary.”
- Such clauses are at high risk of being declared invalid or unconscionable.

XI. Practical guidance for employees

If you are an employee and your employer is deducting LTO traffic fines from your salary:

Check your payslips for any unclear “penalties,” “fines,” or “adjustments.”
Ask in writing for an explanation and a copy of:
- The company policy or handbook;
- Any document you allegedly signed authorizing such deductions;
- The official LTO violation receipt or ticket.
Evaluate:
- Did you actually commit the violation?
- Did the employer follow due process?
- Did you sign a specific written authorization allowing that particular deduction?
- Did the deduction reduce your pay below the applicable minimum wage?
If you believe the deduction is illegal, possible next steps:
- Raise the issue internally (HR / management).
- If unresolved, file a complaint with the DOLE for money claims and labor standards violations.
- For larger disputes (e.g., termination related to the issue), bring the case to the NLRC through the usual process.

Keep in mind that claims for illegal deductions and unpaid wages are generally subject to prescriptive periods, so do not wait too long before asserting your rights.

XII. Key takeaways

Default rule: An employer in the Philippines cannot simply deduct LTO traffic fines from an employee’s salary.
Traffic fines are not statutory deductions. They are not like tax or SSS that can automatically be withheld.
Any deduction must fall under strict legal categories, with due process and, where needed, clear written consent.
Even with consent, there are limits:
- No going below minimum wage (except for legally mandated deductions).
- No unreasonable or unconscionable blanket authorizations.
Employers should rely more on proper discipline and training, not on salary deductions, to manage traffic violations.
Employees who experience unauthorized deductions have remedies through DOLE and NLRC.

This is a general discussion based on Philippine legal principles. The specific facts of a case (e.g., nature of the violation, company policies, signed agreements, wage level) can significantly affect the legal outcome, so it is always prudent for both employers and employees to consult a Philippine lawyer or seek guidance from the DOLE for particular situations.