Employee Rights on Salary Deductions for Unapproved Leaves in the Philippines
1. Governing Legal Sources
| Source | Key Provision(s) | Core Principle |
|---|---|---|
| 1987 Constitution | Art. XIII §3 | State policy to protect labor and “secure to workers… a living wage.” |
| Labor Code of the Philippines (Pres. Decree 442, as amended) | Art. 113–118 (Wage deductions & prohibitions); Art. 95 (Service Incentive Leave); Art. 297 [formerly 283] (Just causes for dismissal) | Deductions are strictly limited to those authorized by law, CBA, or the worker himself in writing. |
| Omnibus Rules Implementing the Labor Code | Book III, Rule VIII §10 | Reiterates the “no‑work‑no‑pay” rule and the narrow grounds for lawful deductions. |
| Special Leave Laws | e.g., R.A. 8972 (Solo Parents’ Leave), R.A. 9262 (VAWC Leave), R.A. 11210 (105‑Day Maternity Leave) | Provide paid leave credits that an employee may charge absences against. |
| DOLE Department Orders & Advisories | DO 19‑93, DO 174‑17, etc. | Clarify payroll deduction mechanics, wage payment intervals, and due‑process standards. |
| Supreme Court Jurisprudence | Auto Bus v. Bautista (G.R. 156367, 2005); Flexo Mfg. v. NLRC (G.R. 78910, 1992); Leyte IV Electric Coop. v. Angco (G.R. 203360, 2014) | Uphold the “no‑work‑no‑pay” rule yet void deductions or terminations done without statutory or contractual basis and observance of due process. |
2. The “No‑Work‑No‑Pay” Rule
- Nature. Philippine wage law follows the civil‑law principle of quantum meruit—wages are compensation for services actually rendered.
- Statutory Codification. While not expressly worded in Art. 113, the rule is subsumed in the notion that only days actually worked form the basis for wage entitlement unless a law (e.g., holiday pay, service‑incentive leave) or a contract/CBA says otherwise.
- Effect. For an unapproved or undocumented absence, the employer may legally withhold the wage corresponding to the day(s) missed—but nothing more.
3. When Is a Salary Deduction Lawful?
| Condition | Requirement | Practical Note for Employers |
|---|---|---|
| a. Authorized By Law | Art. 113(a) allows deductions for “insurance premiums, SSS/PhilHealth/Pag‑IBIG contributions, taxes,” etc. | Absence‑related deductions fall outside this clause; they must ride on the “no‑work‑no‑pay” doctrine or paid‑leave depletion. |
| b. Authorized By CBA or Company Policy | Policies must be published, reasonable, and uniformly enforced. | A handbook clause saying “absences shall be deducted from salary” suffices only if workers received the rule at hiring or via memo. |
| c. Authorized in Writing by the Employee | A specific consent (e.g., for salary‑loan amortization) is needed; blanket waivers are void. | Cannot be invoked retroactively to validate deductions already made. |
| d. Wage Equivalent to the Days Absent | Deduction must never exceed the wage corresponding to the exact hours/days of absence. | “Penalty deductions” or “fines” are illegal (Art. 116). |
4. Paid Leave Credits vs. Unapproved Leave
- Service Incentive Leave (SIL). Rank‑and‑file employees with at least 1 year of service earn five paid SIL days yearly (Art. 95). They may convert unused SIL to cash or apply them to otherwise unpaid absences.
- Statutory Special Leaves. Examples: maternity, paternity, solo‑parent, VAWC, Magna Carta for Women (gynecological‑related), COVID‑19 paid isolation (under Bayanihan laws).
- Company‑Granted Vacation/Sick Leave. Policies vary; once exhausted, subsequent absences revert to no‑work‑no‑pay unless the employer agrees to offset future accruals.
- Unapproved Leave Defined. An absence taken without prior approval and with no available leave credit (or supporting justification).
5. Procedural Due Process for “AWOL” and Deductions
- Notice to Explain (NTE). Even if the employer merely withholds pay, a formal NTE is best practice to preserve proof that the absence was in fact unapproved.
- Employee’s Written Explanation / Return‑to‑Work (RTW) Order. Grants the worker a chance to present justifying documents (medical certificate, calamity declaration, etc.).
- Notice of Decision. States (a) validation or rejection of the explanation, (b) corresponding deduction (day‑rate × days absent), and (c) any disciplinary sanction.
- Separation Sanctions. Repeated or prolonged AWOL may ripen into dismissal under Art. 297 “neglect of duties,” but two‑notice and hearing requirements apply (Jaka doctrine).
6. Limits & Prohibitions
| Unlawful Act | Statutory Basis | Consequence |
|---|---|---|
| Deducting amounts beyond the wage for the exact absence (e.g., “Php 500 attendance penalty”) | Art. 116 (a) – “Illegal Deductions/Kickbacks” | Criminal liability: fine + imprisonment + payment of improperly deducted sums. |
| Reducing mandatory benefits (13th‑month, SSS, Pag‑IBIG) on the ground of AWOL | P.D. 851 (13th‑Month), SSS Law (R.A. 11199) | Employers must base 13th‑month on total basic salary actually earned; absence simply lowers the divisor—not an extra deduction. |
| Applying “salary offset” without written authorization (e.g., paying medical expenses by charging future pay) | Art. 113(c) | Full refund + possible moral/exemplary damages in NLRC cases. |
7. Jurisprudential Highlights
| Case | G.R. No. & Date | Doctrine Restated |
|---|---|---|
| Auto Bus Transport v. Bautista | 156367, May 16 2005 | Absence may excuse non‑payment for missed days, but penalties must be based on a clear policy & due process. |
| Flexo Mfg. v. NLRC | 78910, Feb 24 1992 | Management prerogative to discipline does not include arbitrary wage deductions. |
| Leyte IV Electric Coop. v. Angco | 203360, Nov 16 2014 | No‑work‑no‑pay upheld for strike participants; benefits cannot be clawed back if already accrued. |
| PLDT v. Tiamson | 143011, Apr 30 2008 | Absenteeism must be habitual to justify dismissal; single AWOL merits only proportional sanctions. |
8. Impact on Other Wage‑Based Benefits
| Benefit | Effect of Unapproved Leave |
|---|---|
| 13th‑Month Pay | Computed on actual basic salary earned during the calendar year. Days without pay lower the total basic figure but do not justify extra deductions. |
| Overtime, Night‑Shift, Holiday Premiums | Forfeited only for the specific day not worked. Non‑performance on one day does not diminish premiums properly earned on other days. |
| SSS/Pag‑IBIG/PhilHealth Contributions | Employer shares remain due and demandable based on the applicable salary bracket. The employee share shrinks only if that period’s contributory wage is zero. |
9. Remedies for Employees
- Payroll Inspection / DOLE Money Claims. File a complaint under Art. 128 (visitorial power) or Art. 129 (small money claims ≤ ₱5k per employee).
- Single‑Entry Approach (SEnA). Mandatory 30‑day conciliation before NLRC litigation.
- NLRC Adjudication. Recovery of illegally deducted wages, plus legal interest (currently 6 % p.a.) and attorney’s fees (10 % of award).
- Criminal Prosecution (rare). Art. 288 allows the DOLE Secretary to endorse willful wage‑deduction violations to the DOJ for criminal action.
10. Practical Checklist for Employers
- ☑ Promulgate a clear leave & attendance policy, distribute and post it.
- ☑ Document every stage: absence log, NTE, employee reply, decision.
- ☑ Deduct only the computed wage for the exact days/hours of unapproved absence.
- ☑ Maintain parity—apply the same rules to all similarly‑situated workers to avoid discrimination claims.
- ☑ Record payroll computations; keep payslips for 3 years (Art. 115).
11. Frequently Asked Questions
| Question | Short Answer |
|---|---|
| Can my boss deduct twice my daily pay as a “disciplinary fine” for an unapproved absence? | No. Only the wage for the hours/days not worked may be withheld; punitive fines require a lawful basis and due process. |
| I still have unused SIL. Can the company refuse to apply it and treat my absence as unpaid? | The employer cannot override your right to use accrued SIL, provided you follow internal procedures for conversion/availment. |
| Does an AWOL day lower my 13th‑month pay? | Yes, indirectly. Since 13th‑month is 1/12 of total basic salary earned, a day of zero earnings lowers the base figure—but no separate “deduction” is imposed. |
| Are salary deductions allowed if I was absent due to a sudden flood but failed to get prior approval? | You may invoke the “acts of God” defense; employers should allow unpaid absence to be charged to available leave credits or flexi‑work, or face potential labor standards liability. |
12. Conclusion
Salary deductions for unapproved leaves in the Philippines hinge on a delicate balance: the employer’s right to pay only for work actually done and the employee’s right to due process and statutory protection against arbitrary wage deprivation. The overarching touchstones are (1) a lawful basis under Art. 113, (2) strict proportionality to the time not worked, and (3) observance of procedural fairness. Employers who go beyond these limits expose themselves to administrative fines, money judgments, and even criminal penalties, while employees armed with knowledge of these safeguards can vindicate their rights through DOLE or NLRC mechanisms.
This article is for general information only and is not a substitute for specific legal advice. For individual cases, consult a Philippine labor‑law practitioner or the nearest DOLE field office.