Labor Law Rules on Salary Deductions and Penalties for PWD Employees in the Philippines

I. Governing Legal Framework

The employment rights of persons with disability (PWD) in the Philippines are primarily governed by the following laws and issuances:

• Republic Act No. 7277 (Magna Carta for Disabled Persons), as amended by Republic Act No. 10754 (An Act Expanding the Benefits and Privileges of Persons with Disability)
• Presidential Decree No. 442 (Labor Code of the Philippines), as amended
• Republic Act No. 10911 (Anti-Discrimination Against Persons with Disabilities Act)
• Batas Pambansa Blg. 325 (PWD ID Card issuance and benefits)
• DOLE Department Order No. 173-17 (Guidelines on the Employment of Persons with Disabilities)
• DOLE Advisory No. 01-2020 (Guidelines on the Provision of Reasonable Accommodation for PWD Workers)
• Relevant provisions of the Omnibus Rules Implementing the Labor Code and DOLE Explanatory Bulletins

The fundamental principle that runs through all these laws is equal treatment and non-discrimination. Section 5 of RA 7277 as amended expressly states:

“A qualified disabled employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able-bodied person.”

This means that, as a rule, PWD employees are subject to the exact same rules on salary deductions and disciplinary penalties as non-PWD employees. Any deviation that disadvantages a PWD employee constitutes unlawful discrimination.

II. Allowable Salary Deductions Applicable to PWD Employees

PWD employees are subject to the same mandatory and authorized deductions as all other employees. These are:

A. Mandatory Deductions (By Force of Law)

1. SSS contributions (RA 11199 – Social Security Act of 2018)
2. PhilHealth contributions (RA 11223 – Universal Health Care Act)
3. Pag-IBIG (HDMF) contributions (RA 9679)
4. Withholding tax on compensation (TRAIN Law – RA 10963 and CREATE Law amendments)
5. Court-ordered support (Family Code)
6. Debts to the employer that have been acknowledged in writing and with employee consent (Art. 113, Labor Code)

B. Authorized Deductions (With Employee Consent or Legal Basis)

1. Union dues / agency fees (with individual written authorization or CBA check-off provision)
2. Cooperative dues / loan repayments (with written authorization)
3. Premiums for group insurance / HMO (with written consent)
4. Value of meals, housing, or other facilities furnished by the employer (Art. 97(f) and Book III, Rule VIII of the Omnibus Rules) – provided the amount is fair and reasonable and does not exceed the actual cost
5. Payments to third parties authorized in writing by the employee (e.g., loan repayments to banks, credit card bills, etc.)

C. Deductions for Loss or Damage (Article 114, Labor Code)

An employer may deduct from wages the actual cost of loss or damage to tools, equipment, or property only if all of the following conditions are present:

1. The employee is clearly shown to be responsible for the loss or damage
2. The employee is given reasonable opportunity to show cause why deduction should not be made
3. The amount deducted is fair and reasonable and does not exceed 20% of the employee’s wages in a week
4. The deduction does not exceed the actual loss or damage

Special Consideration for PWD Employees:
If the loss or damage is directly related to the employee’s disability and the employer failed to provide reasonable accommodation, the deduction becomes unlawful discrimination. Example: A visually impaired employee knocks over equipment because the workplace layout was not modified despite repeated requests – deduction for the damage would violate RA 7277 and RA 10911.

III. Strictly Prohibited Deductions and Penalties

The following are illegal when applied to any employee, including PWDs:

1. Deductions as penalty for tardiness, absences, or infractions (unless the absence is without approved leave, in which case only “no work, no pay” applies – not additional fines)
2. Blanket deductions for cash shortages, inventory shortages, or uniform breakage without proving individual fault
3. Deductions for business losses or slow sales
4. Forced contributions to company events, uniforms, or medical examinations (unless the examination is required by law)
5. Deductions exceeding 20% of weekly wages for debts to the employer (Art. 113, Labor Code)
6. Any deduction that brings the employee’s take-home pay below the minimum wage (except for mandatory contributions and court-ordered support)

Any monetary penalty disguised as a “deduction” (e.g., “fine for late submission of reports,” “penalty for uniform violation”) is illegal unless expressly authorized by a collective bargaining agreement or company policy that was validly adopted with employee consultation and does not violate the Labor Code.

IV. Disciplinary Penalties and Due Process for PWD Employees

PWD employees may be subjected to the same disciplinary actions as non-PWD employees (verbal warning, written reprimand, suspension, termination), provided:

1. Due process is strictly observed (twin-notice rule under Book VI, Rule I of the Omnibus Rules)
2. The infraction is clearly established
3. The penalty is proportionate to the offense
4. Reasonable accommodation was provided before the infraction occurred

Critical Rule: An employer cannot impose disciplinary action for performance deficiencies that are directly caused by the employee’s disability if reasonable accommodation was not provided.

Examples of unlawful disciplinary action against PWD employees:

• Suspending a deaf employee for “failure to answer phone calls” when no text-based alternative was provided
• Terminating an employee with mobility impairment for chronic tardiness when the workplace is inaccessible and no flexible time arrangement was offered
• Issuing warnings to an employee with psychosocial disability for “mood swings” that are manifestations of the disability without prior medical coordination or accommodation

DOLE Advisory No. 01-2020 explicitly requires employers to consider disability-related factors before imposing discipline.

V. Reasonable Accommodation and Its Effect on Deductions/Penalties

Under Section 8(g) of RA 7277 as amended and DOLE D.O. 173-17, employers with 100 or more employees must designate a Reasonable Accommodation Committee. Even smaller employers are required to provide reasonable accommodation.

Failure to provide reasonable accommodation is itself an offense punishable by fines from ₱50,000 to ₱200,000 (RA 10754 implementing rules).

Common reasonable accommodations that affect deductions/penalties:

• Modified work schedules / flexible hours
• Redistribution of non-essential functions
• Provision of assistive devices or sign language interpreters
• Modified workstations or equipment
• Additional break periods for medication or therapy
• Work-from-home arrangements when feasible

If an employer fails to provide these and then deducts salary or imposes penalties for performance issues arising from the lack of accommodation, the deduction/penalty is void and constitutes discrimination.

VI. Remedies Available to PWD Employees for Illegal Deductions or Penalties

1. File a complaint for illegal deduction/money claims at the NLRC Regional Arbitration Branch (30% jurisdiction for money claims)
2. File a complaint for discrimination at the DOLE Regional Office or NCDA
3. File criminal charges for violation of RA 7277/10754 (imprisonment of 6 months to 2 years or fine ₱50,000–₱200,000)
4. File constructive dismissal if the illegal deductions/penalties render continued employment intolerable
5. Claim moral and exemplary damages plus attorney’s fees (10%) in appropriate cases

The Supreme Court has consistently ruled in favor of PWD employees in discrimination cases (e.g., Bernardo v. NLRC and Philippine Telegraph and Telephone Company, G.R. No. 122917, July 12, 1999, and subsequent jurisprudence).

VII. Summary of Key Principles

1. PWD employees enjoy exactly the same salary structure, benefits, and deduction rules as non-PWD employees.
2. Any deduction or penalty that singles out or disproportionately affects a PWD employee because of their disability is illegal discrimination.
3. Employers must provide reasonable accommodation before imposing any penalty for performance or attendance issues related to disability.
4. Monetary fines or deductions as punishment are generally prohibited under Philippine law, regardless of disability status.
5. Violations carry both labor and criminal liabilities.

Employers are well-advised to document all accommodations provided and to consult with the employee (and, when necessary, medical professionals) before imposing any salary deduction or disciplinary penalty on a PWD worker. Compliance is not merely legal obligation — it is a recognition of the dignity and equal worth of every Filipino worker.