In the Philippines, the right to receive fair and timely compensation for work performed is a fundamental labor right protected by the 1987 Constitution and governed primarily by Presidential Decree No. 442, otherwise known as the Labor Code of the Philippines.
When an employer fails to pay wages on time or withholds them without legal justification, employees have specific legal avenues to demand what is due to them.
1. The Legal Standard for Payment of Wages
The Labor Code sets strict rules on how and when wages must be paid:
- Frequency of Payment: Wages must be paid at least once every two weeks or twice a month at intervals not exceeding sixteen (16) days.
- Form of Payment: Generally, wages must be paid in legal tender (cash). Payment by check or money order is allowed only under specific circumstances (e.g., tradition or collective bargaining agreements).
- Direct Payment: Wages must be paid directly to the employee, except in cases of force majeure, death of the employee, or where the employee authorized a family member in writing.
2. Prohibited Acts Regarding Wages
Under Philippine law, it is illegal for an employer to:
- Withhold wages without the employee's consent, except for deductions authorized by law (e.g., SSS, PhilHealth, Pag-IBIG, or income tax).
- Induce employees to give up wages by force, stealth, intimidation, or threat of dismissal.
- Deduct for "Kickbacks": Making deductions to ensure the retention of employment.
- Refuse to pay "13th Month Pay": Under PD 851, all rank-and-file employees who worked for at least one month are entitled to this benefit, which must be paid no later than December 24 of each year.
3. Legal Remedies and Procedures
If an employer delays or refuses to pay salary, the employee can take the following steps:
A. Internal Grievance or Demand Letter
Before filing a formal case, it is often practical to send a formal demand letter via registered mail. This serves as proof that the employee attempted to resolve the matter amicably and puts the employer on notice of a potential legal dispute.
B. Single Entry Approach (SEnA)
The Department of Labor and Employment (DOLE) mandates a 30-day mandatory conciliation-mediation process known as SEnA.
- Process: An employee files a Request for Assistance (RFA) at the nearest DOLE regional or provincial office.
- Goal: A SEADO (Single Entry Assistance Desk Officer) facilitates a meeting between the employer and employee to reach a settlement without going to court.
C. Filing a Formal Labor Case (NLRC)
If SEnA fails, the case is referred to the National Labor Relations Commission (NLRC).
- Labor Arbiter: A Labor Arbiter will hear the case. Both parties submit Position Papers.
- Money Claims: If the claim for unpaid wages (and other benefits) exceeds PHP 5,000.00, or if it involves an illegal dismissal, the NLRC has jurisdiction.
- DOLE Small Money Claims: If the claim is PHP 5,000.00 or less and does not involve a claim for reinstatement, the DOLE Regional Director has jurisdiction to hear the case under summary proceedings.
4. Penalties and Liabilities
The law imposes heavy burdens on employers who violate wage laws:
- Interest: Courts may impose a legal interest (typically 6% per annum) on the total amount of unpaid wages from the time of judicial or extrajudicial demand.
- Attorney's Fees: In cases of unlawful withholding of wages, the employee is entitled to attorney's fees equivalent to 10% of the total amount recovered.
- Criminal Liability: Under Article 288 of the Labor Code, any person convicted of violating wage laws may face a fine or imprisonment.
- Double Indemnity: Under Republic Act No. 8188, employers who refuse to pay the prescribed minimum wage increases may be ordered to pay double the unpaid benefits as a penalty.
5. Separation Pay and Final Pay
Upon resignation or termination, an employee is entitled to "Final Pay." According to DOLE Labor Advisory No. 06, Series of 2020, final pay should be released within thirty (30) days from the date of separation from employment, unless a more favorable company policy or agreement exists.
Final pay typically includes:
- Unpaid salary for actual days worked.
- Pro-rated 13th-month pay.
- Cash conversion of unused Service Incentive Leaves (SIL).
- Any other benefits stipulated in the employment contract.
6. Summary of Employee Rights
| Type of Claim | Jurisdiction | Requirement |
|---|---|---|
| Conciliation/Mediation | DOLE SEnA | Mandatory first step for all labor disputes. |
| Small Money Claims (≤ ₱5k) | DOLE Regional Office | No employer-employee relationship issues. |
| Large Money Claims (> ₱5k) | NLRC Labor Arbiter | Includes claims for illegal dismissal or damages. |
| Minimum Wage Violations | DOLE / NLRC | Subject to "Double Indemnity" under RA 8188. |