Legal Actions for Withheld Salary by an Employer in the Philippines

(A comprehensive practitioner-level guide)

Preface & Disclaimer

This article is written for general information only. It is not a substitute for personalised legal advice. Laws cited are in force as of May 7 2025.

1. Governing Legal Framework

Source	Key Provisions Relevant to Withheld Wages
1987 Constitution	Art. II §18 & Art. XIII §3 guarantee full protection to labor and just compensation.
Labor Code of the Philippines (Pres. Decree No. 442, as amended)	Art. 102 (Legal tender); Art. 103 (Time of payment); Art. 116 (Withholding of wages & kickbacks prohibited); Art. 117 (Unfair wage differentials); Art. 118 (Retaliatory measures); Art. 129 (Summary jurisdiction of DOLE regional directors ≤ ₱5,000); Art. 224/225 (NLRC jurisdiction); Art. 292 [277] (Offenses); Art. 305 [291] (3-year prescriptive period for money claims); Art. 303 [288] as amended by R.A. 8188 (criminal penalties).
Presidential Decree 851	Mandatory 13th-Month Pay.
R.A. 10361 (Domestic Workers Act)	Timely payment rules for kasambahay.
Batas Kasambahay IRR, DOLE Department Orders 20, 118-02, 174-17	Implementing rules on wage payment.
Special Social Legislation	SSS, PhilHealth, HDMF (Pag-IBIG) laws impose fiduciary duties on employers to remit contributions; non-remittance often shows bad faith in withholding salary.

2. Employer’s Core Duty to Pay Wages

Definition of “wage” – All remuneration, however designated, paid to an employee for services rendered.
Time & Manner – Ordinarily at least twice a month, within 15 days of the last pay period (Art. 103).
Legal Tender – Philippine currency; payment in kind requires employee’s free disposal (Art. 102).
Authorized Deductions Only (Art. 113):
- Government-mandated contributions & taxes.
- Court or arbitration awards.
- Employee-authorized payments (e.g., union dues, salary loans) in writing.

Everything else—“inventory losses,” “cash shortages,” “training costs,” “resignation holdbacks,” etc.—is unlawful unless it falls clearly within Art. 113 or a special law.

3. Typical Scenarios of Unlawful Withholding

Scenario	Legality	Comments
Holding last salary or 13th-month pay until clearance is signed	Illegal – wages are never conditional upon clearance; the claim for “accountability” must first be proven.
Deducting alleged losses without written admission	Illegal under Art. 116 & DO 20-02.
Withholding wages for disciplinary suspension beyond the suspension period	Illegal – only suspension days may be unpaid; delay afterward is prohibited.
Delayed release of final pay (DOLE Labor Advisory 06-20 sets 30-day deadline)	Administrative offense; employee may file wage claim.

4. Remedies & Where to File

4.1. Internal Demand or HR Grievance

Always begin with a written demand (keep proof of receipt). This interrupts prescription and evidences good faith.

4.2. DOLE Single-Entry Approach (SENA)

File a Request for Assistance (RFA) at the DOLE Field/Provincial Office or online via DOLE Hotline 1349.
Mandatory conciliation-mediation within 30 calendar days.
If settled, compromise agreement is enforceable as final judgment.

4.3. Summary Wage Proceedings – Art. 129

Available only if (a) money claim ≤ ₱5,000 per employee, and (b) reinstatement not prayed for.
Decided by DOLE Regional Director; appealable to the DOLE Secretary.

4.4. National Labor Relations Commission (NLRC)

File a Verified Complaint (NLRC-SC Form 01) when:
- Claim > ₱5,000;
- You also seek reinstatement, backwages, or damages.
Steps: mandatory SENA referral → raffling to Labor Arbiter → position papers/hearings → decision (≤ 30 days after submission) → appeal to NLRC (within 10 days) → Rule 65 petition to Court of Appeals → Supreme Court.
No filing fees for employees at the Arbiter level in wage cases.

4.5. Criminal Action

Under Art. 303, deliberate refusal or failure to pay wages is punishable by ₱25,000–₱100,000 fine and/or 2–4 years’ imprisonment.
Institution: Sworn complaint with the City/Provincial Prosecutor or DOLE inspection findings endorsed for prosecution.

4.6. Civil Action

If no employer-employee relationship exists (e.g., after bona fide termination upheld), a regular court suit for collection of sum of money may lie.
NOTE: Labor tribunals have primary jurisdiction while the relationship subsists or is in dispute.

5. Prescriptive Periods

Claim	Limitation	Computation
Money claims under the Labor Code	3 years	From the date each wage became due.
Illegal deductions under Art. 116	3 years	Same as above.
Criminal action (Art. 303)	3 years	From commission of offense.

Written demands, SENA filing, or complaints interrupt prescription.

6. Evidence Needed

Payslips, payroll summaries, bank statements.
Time cards, biometrics logs, overtime approvals.
Employment contract, company policies, resignation/termination letters.
Sworn co-employee affidavits corroborating non-payment.
Your written demand and employer’s response—or silence.

7. Possible Awards & Penalties

Unpaid wages, benefits, wage differentials.
Legal interest – 6 % p.a. (Nacar v. Gallery Frames).
Attorney’s fees – up to 10 % of award when employer acted with bad faith.
Moral & exemplary damages – when withholding is malicious or oppressive.
Criminal fine/imprisonment of corporate officers + potential DOLE “stop-work order” or business closure for repeat violators.
Inspection Citation Ticket (ICT) penalties per DO 236-23 (₱40k – ₱200k per violation).

8. Employer Defenses & How Tribunals Treat Them

Defense	Usual Tribunal View
“Employee has unliquidated cash advances.”	Must be proved; deduction cannot exceed 20 % of disposable pay per Batas Kasambahay IRR; total withholding still illegal if no written authorization.
“No employer-employee relationship (EER).”	Four-fold test (selection, payment of wages, power of dismissal, control). If EER absent, NLRC dismisses for lack of jurisdiction; but civil court may still entertain claim.
“Claim prescribed.”	Checked against any tolling acts (demand letters, SENA).
“Force majeure/COVID-19.”	Force majeure suspends operations but does not extinguish wage liability for work already rendered.

9. Select Jurisprudence

Case	G.R. No.	Doctrine
Solidbank Corp. v. Onate	159988 (Jan 19 2011)	Withholding of the last salary pending audit clearance illegal; bank liable for damages.
PNCC v. NLRC	57291 (May 31 1984)	Clearance requirement cannot delay payment beyond statutory period.
Manila Midtown Hotel v. NLM-Katipunan	15472-73 (Mar 23 1993)	Deductions for guest walk-outs void absent employee fault.
Martinez v. NLRC	106806 (Oct 13 1993)	Individual corporate officers may be solidarily liable for unpaid wages.

10. Practical Road-Map for Employees

Document everything early.
Send a written demand (e-mail + registered mail). Give a reasonable 5- to 10-day deadline.
File SENA promptly if unpaid.
Escalate to NLRC if conciliation fails or the amount/relief exceeds Art. 129 limits.
Attend all hearings; non-appearance can lead to dismissal.
Enforce the decision – NLRC sheriffs can levy on bank accounts, receivables, and corporate assets.
Consider criminal complaint for egregious, repeated non-payment.
Act within the three-year prescriptive window. Delay kills the claim.

11. Preventive Compliance Tips for Employers

Pay salaries no later than the 15th and 30th of each month.
Secure written employee consent for any deduction beyond taxes & statutory contributions.
Release final pay within 30 days (DOLE Labor Advisory 06-20).
Keep payroll & remittance records for at least 3 years, ready for DOLE inspection.
Train payroll & HR on current wage orders and labor advisories.
Conduct internal audits to flag late or skipped payments before they ripen into complaints.

12. Sample Demand Letter (annex)

Date: 7 May 2025
To: [Employer / HR Manager]
Subject: Demand for Release of Withheld Salary and 13th-Month Pay

Dear Sir/Madam:

I was employed as ___ from ___ to ___ with a monthly salary of ₱. My salary for the period ___ to , amounting to **₱**, together with my proportionate 13th-month pay of **₱**, remain unpaid despite repeated verbal follow-ups.

Pursuant to Articles 102, 103, 116 and related provisions of the Labor Code, I formally demand full payment within five (5) calendar days from receipt of this letter, failing which I shall seek appropriate remedies before the Department of Labor and Employment and the National Labor Relations Commission, including criminal charges under Article 303.

Very truly yours,

Employee’s Name & Signature

13. Conclusion

The Philippine legal system gives employees robust, multi-layered remedies—administrative, civil, and criminal—against employers who withhold wages. The keys to successful recovery are timely action, complete evidence, and use of the proper forum. Conversely, employers who understand and faithfully implement wage-payment laws avoid not only litigation costs but also reputational and criminal exposure.

Prepared by: ___ (Labor & Employment Law practitioner)