I. Introduction

Philippine labor law strictly protects the worker’s right to receive at least the statutory minimum wage for work actually performed. Paying an employee less than the applicable regional minimum wage rate is illegal, except in very limited cases of approved wage distress exemptions or apprentices/learners under DOLE-approved programs. Consequently, there are almost no legally “below minimum wage employees” in regular employment.

The phrase “below minimum wage employees” in practice refers to minimum wage earners (those whose basic wage is exactly or very close to the statutory floor) and the question of whether deductions for absenteeism, tardiness, or undertime can push their effective daily or monthly pay below the statutory minimum wage rate.

This article exhaustively discusses the rules, DOLE interpretations, and Supreme Court jurisprudence governing such deductions.

II. Core Principles Involved

No Work, No Pay – A fair, equitable, and constitutionally recognized principle (Aklan Electric Cooperative v. NLRC, G.R. No. 121439, January 25, 2000). An employee who does not work is not entitled to wages for the time not worked, except when the law or contract provides otherwise (paid leaves, holidays, etc.).
Minimum Wage as an Inviolable Floor for Work Performed – The statutory minimum wage is the lowest amount an employer may pay for a normal 8-hour workday actually rendered (RA 6727, as amended by RA 8188 and current regional wage orders).
Prohibition Against Wage Deductions – Article 113 of the Labor Code enumerates the only allowable wage deductions. Anything outside these is illegal.
Non-Diminution of Benefits – Article 100 of the Labor Code prohibits the elimination or diminution of existing benefits.

III. Types of Absenteeism and Allowable Deductions

A. Full-Day Absence (Without Pay)

Rule: Full application of “no work, no pay.”
Daily-paid employees: No pay for the absent day.
Monthly-paid employees: Deduct the amount corresponding to the absent day/s using the factor 393/12 or the company’s established divisor (usually 313, 314, or 365 days/year, depending on policy).

Even for minimum wage earners, this deduction is lawful because the employee rendered no service on that day. The Supreme Court has consistently upheld this (Legend Hotel v. Realuyo, G.R. No. 153511, July 18, 2012; many others).

Result: The employee’s pay for the payroll period will be lower, and the effective daily rate for days actually worked remains at or above the minimum.

B. Tardiness and Undertime (Partial-Day Absence)

This is where the strictest protection for minimum wage earners applies.

DOLE’s Long-Standing Position (reiterated in every edition of the Handbook on Workers’ Statutory Monetary Benefits, latest 2024 edition, p. 17):

“For minimum wage earners, deduction from wages on account of tardiness or undertime is not allowed because it will result in payment of less than the minimum wage.”

Reason: If the regional daily minimum wage is ₱610 (NCR 2025 rate, for example), and the employee is late by 2 hours, a proportionate deduction would result in paying only ₱457.50 for that day — clearly below the statutory floor. This violates the minimum wage law.

Allowed employer recourse for minimum wage earners:

Disciplinary action (verbal warning → written reprimand → suspension → termination for habitual tardiness under Article 297 [282] of the Labor Code).
Offset against available paid leaves (if any).
Implementation of flexible time or grace period policies.
But never monetary deduction that reduces the day’s pay below the minimum.

Employees paid above the minimum wage: Proportionate deduction for tardiness/undertime is allowed, provided the written company policy or CBA authorizes it and the deduction is reasonable.

IV. What Constitutes a “Minimum Wage Earner” for Purposes of the No-Deduction Rule

DOLE defines a minimum wage earner as one whose wage rate has no excess over the applicable statutory minimum wage (before allowances, overtime, holiday pay, etc.).

Thus:

Service incentive leave pay, 13th month pay, holiday pay, etc., are computed on top of the minimum and do not make the employee “above minimum.”
COLA (if still existing in the region) merged into the basic wage does not count as excess.
Only if the basic wage itself exceeds the regional floor (e.g., ₱650 when minimum is ₱610) may proportionate tardiness deductions be made.

V. Other Related Deductions That Cannot Reduce Pay Below Minimum

Even for reasons other than absenteeism, the following cannot reduce a minimum wage earner’s pay below the statutory rate:

Uniforms, tools, equipment (considered facilities, not supplements)
Cash bond or deposits for possible loss/damage (except when expressly allowed by law)
Value of meals, housing, or other facilities (unless DOLE-approved and the employee signs a written authorization stating the fair value)
SSS, PhilHealth, Pag-IBIG contributions are allowed because they are mandated by law (Article 113 exception)
Union dues (with check-off authorization)
Debt to employer (salary loans, cash advances) – deduction limited to not more than 20% of wage if it would reduce net take-home pay below ₱7,000 per month (RA 10361, Batas Kasambahay, is different, but for regular employees the principle is similar via jurisprudence)

VI. Supreme Court Jurisprudence Confirming the Rules

SHS Perforated Materials, Inc. v. Diaz, G.R. No. 185814, October 13, 2010 – Reaffirmed that tardiness deductions are allowed only if they do not violate the minimum wage law.
Nina Jewelry Manufacturing v. Montecillo, G.R. No. 188169, November 28, 2011 – Deductions that reduce pay below minimum are illegal.
Wesleyan University-Philippines v. Reyes, G.R. No. 208321, July 30, 2018 – Non-diminution rule applies; once a company allows tardiness without deduction, it becomes a benefit that cannot be unilaterally withdrawn.
Milan v. NLRC, G.R. No. 202961, February 4, 2015 – Habitual absenteeism and tardiness are just causes for termination even without monetary deduction.

VII. DOLE Department Orders and Advisories

Department Order No. 196-18 (Rules on the Payment of Wages through ATM) – Repeats the prohibition on deductions that reduce below minimum.
Labor Advisory No. 06-20 – Reiterates that for minimum wage earners, disciplinary measures, not wage deductions, should be used for tardiness.
Handbook on Workers’ Statutory Monetary Benefits (2024 ed.) – The most authoritative DOLE publication; explicitly states on page 17: “No deduction for tardiness/undertime for minimum wage earners.”

VIII. Practical Consequences of Illegal Deductions

Money claims with 100% backwages plus 10% attorney’s fees
Criminal liability under Article 116 (withholding of wages) and Article 288 (unfair labor practice)
Administrative fines from DOLE regional offices (₱25,000–₱500,000 per violation under RA 11360)
Constructive dismissal claim if deductions are substantial and habitual

IX. Best Practices for Employers

Clearly distinguish in the company policy between minimum wage earners and above-minimum employees regarding tardiness rules.
Use biometric or bundy clock systems and implement progressive discipline.
For minimum wage earners, impose suspension without pay (which is legal) instead of daily monetary deductions.
If the company grants a grace period (e.g., 15–30 minutes), document it as company practice to avoid non-diminution claims.
Pay at least the exact regional minimum wage daily rate for every day actually worked in full (8 hours).

X. Conclusion

Full-day absences trigger the lawful application of “no work, no pay” even for minimum wage earners. Tardiness and undertime, however, may not be subjected to monetary deduction if the employee is a minimum wage earner, because such deduction would violate the inviolable floor set by the statutory minimum wage. Employers must instead resort to lawful disciplinary sanctions. This rule has been consistently upheld by the Supreme Court and DOLE for over three decades and remains one of the strongest wage protection mechanisms in Philippine labor law.