Overview

In the Philippines, wages are protected by law because they are presumed necessary for a worker’s and their family’s day-to-day living. As a general rule, an employer may not withhold an employee’s salary—whether as punishment, as leverage for compliance, or as a condition for releasing documents or benefits—except in specific situations allowed by law.

The main framework is found in the Labor Code of the Philippines provisions on wages (commonly cited around Articles 102 to 116, including rules on payment, deductions, and the prohibition on withholding and kickbacks), plus Department of Labor and Employment (DOLE) issuances and related laws (tax, social security contributions, garnishment rules, etc.).

This is a general legal article for information. For advice on a specific case (amounts, timelines, documents, defenses), consult a Philippine labor lawyer or DOLE.

What counts as “withholding” salary?

“Withholding” can mean any of the following:

Not paying wages that are already due (full non-payment)
Delaying payment beyond the scheduled payday without legal justification
Holding back a portion of wages (partial withholding)
Refusing to release final pay after resignation/termination unless the employee signs a quitclaim, returns items, or completes clearance (a common issue)
Offsetting wages against alleged debts/losses without proper basis or process

Even when an employer believes the employee did something wrong, wages generally cannot be used as collateral or a bargaining chip.

The general rule: wages must be paid on time and in full

1) Wages must be paid at regular intervals

Philippine labor standards require timely wage payment (e.g., at least once every two weeks or twice a month at intervals not exceeding 16 days, subject to lawful exceptions and practical payroll arrangements). Employers can adopt common pay cycles (semi-monthly, weekly), but cannot unreasonably delay payment.

2) No withholding of wages as a rule

The Labor Code contains an express prohibition commonly cited as “withholding of wages and kickbacks prohibited” (often referenced around Article 116). In plain terms: an employer should not withhold any part of wages due or compel employees to return wages, except under legally recognized circumstances.

When withholding (or non-payment) may be legal

Withholding becomes lawful only when it falls under recognized principles such as (a) no work, no pay, (b) authorized non-payment during valid suspension, or (c) lawful deductions/withholdings recognized by law.

A. “No work, no pay” (lawful non-payment for time not worked)

Salary is generally compensation for work performed. If there is no work performed, pay may be reduced or not due for that period, unless a law, contract, CBA, or company policy provides otherwise.

Common lawful examples:

Absences without approved leave credits (unpaid absence)
Tardiness/undertime consistent with timekeeping rules and due process (deduction for unworked time, not “penalty withholding” beyond the time not worked)

Important distinction:

Deducting pay equivalent to unworked time is different from withholding wages as punishment (e.g., withholding an entire cut-off’s pay because of a single infraction). The latter is generally unlawful.

B. Preventive suspension (limited; cannot be indefinite)

Employers may place an employee on preventive suspension during an investigation when the employee’s continued presence poses a serious and imminent threat to life/property or to the investigation. Preventive suspension is time-limited (commonly treated as up to 30 days under labor rules and jurisprudence).

Key points:

Preventive suspension is generally without pay (because the employee does not work), but it must be justified and not extended indefinitely.
If the employer extends it beyond the allowed period, the employer may be required to reinstate the employee or pay wages for the extended period, depending on circumstances and applicable rules.

C. Lawful “withholdings” and deductions recognized by law

Not all “withholdings” are illegal. Some are required or allowed:

1) Statutory deductions (generally lawful)

Examples:

Withholding tax (BIR requirements)
SSS, PhilHealth, Pag-IBIG contributions
Other legally mandated contributions/withholdings

These are not “withholding wages” in the prohibited sense; they’re legal payroll deductions.

2) Deductions with employee authorization (lawful if valid)

Certain deductions can be made if:

There is written authorization, and
The deduction is for a legitimate purpose, and
It complies with legal limits and does not circumvent minimum wage and labor standards

Examples:

Employee loan payments to the employer or a third party (with written authority)
Union dues/agency fees (subject to labor relations rules)
Insurance premiums or savings plans (with proper consent)

3) Garnishment/levy by legal process (lawful)

If a court or competent authority orders garnishment (e.g., child support, judgment debts), the employer may be required to withhold part of wages subject to legal constraints.

4) Deductions for loss/damage (highly regulated)

The Labor Code allows limited schemes such as deposits for loss or damage and certain deductions for losses, but these are not a free pass. Deductions for alleged shortages, breakage, or loss are generally scrutinized and typically require safeguards such as:

The employee’s responsibility/control over the property,
Proof of loss attributable to the employee’s fault/negligence (as applicable),
Observance of due process (notice and opportunity to explain),
Compliance with any DOLE rules and limits on the amount and manner of deduction

A common red flag is an employer unilaterally deducting large amounts for “cash shortage” or “damaged item” without documentation, investigation, or employee consent/participation in an agreed scheme.

When withholding salary is usually illegal

These are common scenarios where withholding is typically unlawful or highly vulnerable to complaint:

1) Withholding wages as punishment or discipline

Examples:

“No salary this payday because you violated company policy.”
“We’ll hold your pay until you admit you did it.”

Discipline should be imposed through company rules and due process, not by refusing to pay wages already earned.

2) Withholding pay because an employee refused to sign a document

Examples:

Forcing an employee to sign a quitclaim, resignation letter, or settlement in exchange for salary
Holding wages until the employee signs a memo “admitting liability”

3) Withholding final pay pending “clearance,” return of property, or unresolved accountability

This is one of the most frequent disputes.

Employers may require clearance and return of company property as part of offboarding.
However, earned wages are not supposed to be held hostage, especially if the employer could instead:
- demand return of property,
- document accountabilities,
- pursue lawful deductions only where allowed, or
- file a civil claim if needed.

DOLE has issued guidance commonly followed in practice that final pay should be released within a reasonable period (often cited as 30 days) from separation, unless a more favorable company policy/CBA applies. While employers can process accountabilities, indefinite delay is risky.

4) Offsetting wages against alleged employer claims without proper basis

Example:

“You owe us for training costs; we’ll just take it from your salary.”

Training bond recoveries and similar claims can be valid only under strict conditions (e.g., clear agreement, reasonable amounts, not contrary to law/public policy). Unilateral offsetting from wages can be challenged, especially if it results in underpayment or violates wage protections.

5) Withholding because the company is experiencing financial difficulty

Cash flow problems do not automatically excuse non-payment. Employers should explore lawful remedies (restructuring, lawful suspension of operations with proper process, etc.), but earned wages remain due.

Special contexts that affect legality

A. Employees on commission, piece-rate, incentives

Commissions that are already earned under the agreed scheme are generally payable.
Employers may structure commission policies with conditions (e.g., collected sales vs booked sales), but policies must be clear, consistently applied, and not used to defeat wage rights.
“Incentives” that are discretionary may differ from wages, but once promised and earned, withholding can still be contested depending on the nature of the benefit.

B. Managers vs rank-and-file

Wage protection rules apply broadly, though some benefits and working time rules vary for managerial employees. Still, non-payment/withholding of earned salary is generally problematic regardless of rank.

C. Government employees

Public sector compensation disputes often fall under Civil Service and COA rules rather than DOLE/NLRC processes. The principles are different procedurally, so forum and remedies may change.

What employees can do if salary is withheld

Step 1: Document everything

Keep:

Payslips, time records, employment contract, company policy excerpts
Screenshots/emails/messages about withheld salary
Proof of hours worked and the expected payday

Step 2: Raise the issue internally (optional but practical)

Ask HR/payroll for:

The specific legal basis for withholding
The exact amount withheld and computation
The date of release

Step 3: Use DOLE’s SEnA (Single Entry Approach)

A common first formal step is filing for SEnA conciliation-mediation at DOLE to attempt settlement quickly.

Step 4: File the appropriate complaint

Depending on the issue and circumstances:

DOLE (often for labor standards enforcement where applicable), or
NLRC (for money claims and disputes within its jurisdiction, especially when tied to termination issues or claims requiring adjudication)

Potential outcomes can include:

Payment of back wages/underpaid wages
Possible damages and/or attorney’s fees in proper cases
Administrative/criminal consequences for willful violations (depending on facts and enforcement)

What employers should do to avoid illegal withholding

Pay earned wages on time, even while investigating misconduct.
If discipline is needed, use progressive discipline and due process (notice, hearing/opportunity to explain, decision).
For losses/damages, follow a compliant process: documentation, proof, and only lawful deductions.
For resignations/terminations, release final pay within a reasonable, policy-compliant period and avoid indefinite “clearance holds.”
Put all deductions/loans in clear written authorizations and keep records.

Quick guide: Is it legal to withhold in these situations?

Employee absent without leave → Pay for that day may be not due (“no work, no pay”).
Employee under investigation → Generally still must pay earned wages; preventive suspension may be allowed but limited.
Company property not returned → Employer may demand return and document accountability; withholding final pay indefinitely is risky; deductions must be lawful.
Cash shortage/breakage → Deductions are heavily regulated; unilateral withholding is commonly challenged.
Employee owes a loan to employer → Deduction may be legal with valid written authorization and lawful limits.
Employer wants employee to sign quitclaim → Withholding wages to force signature is generally unlawful.
Court-ordered garnishment → Withholding may be required and lawful.

Bottom line

Withholding an employee’s salary is generally illegal in the Philippines when it involves non-payment or delay of earned wages or using pay as punishment or leverage. It becomes lawful only in clearly defined situations—primarily no work, no pay, valid preventive suspension within limits, and statutory/authorized deductions or legal garnishment.

If you want, describe your scenario (e.g., “withheld last cutoff due to pending clearance,” amount, dates, and what the employer said). A tailored analysis can be provided on likely violations, best next steps, and what documents matter most.