Everything an employee, employer, or practitioner needs to know about pursuing, defending, and resolving wage non-payment disputes under Philippine law.

I. Legal Bases and Fundamental Principles

Constitutional anchor. The 1987 Constitution guarantees full protection to labor, including the right to a living wage and humane conditions of work.
Labor Code framework. Wage payment, deductions, hours of work, overtime, premium, night shift differential, and holiday pay are governed by the Labor Code (as renumbered) and implementing rules, wage orders, and DOLE department orders.
Public policy. Non-payment or underpayment of wages is unlawful; labor standards are mandatory and generally cannot be waived by contract or quitclaim unless strict validity requirements are met.
Burden of proof. The employer must keep and present payrolls, daily time records, and proof of payments; doubts are resolved in favor of labor.

II. What Counts as “Unpaid Wages” (and Related Monetary Claims)

Basic wage for actual work performed.
Overtime (OT). Work beyond 8 hours/day on ordinary working days is paid at +25% of the hourly rate; OT on rest days/holidays is higher (commonly +30% on top of the applicable premium).
Night shift differential. +10% of the regular wage for work performed 10:00 p.m.–6:00 a.m.
Premium pay. For work on rest days and special non-working days (commonly +30% of the basic rate if worked).
Holiday pay. Regular holidays: pay is 100% even if unworked (subject to conditions); if worked, 200% for first 8 hours.
Service Incentive Leave (SIL) pay (5 days per year, convertible to cash if unused, with exceptions).
13th-month pay (mandatory for rank-and-file; certain exclusions apply to what forms part of the “basic salary”).
Service charges distribution (where applicable).
Wage differentials due to new minimum wage orders.
Illegal deductions added back (see §III).
Final pay upon separation (release within a reasonable period—commonly 30 days—unless a shorter period is set by company policy or CBA).

Tip: Compute claims per pay period; attach a schedule showing date, hours, rate, amount due, amount paid, variance. Interest (see §VIII) is computed after the principal is determined.

III. Deductions: What’s Allowed and What Isn’t

Authorized deductions generally include:

Withholding tax; SSS, PhilHealth, Pag-IBIG contributions;
Union dues/agency fees if authorized in writing or by CBA;
Employee-authorized deductions (clear, written consent specifying amount/beneficiary);
Deductions for loss or damage only if: employee is clearly at fault, has been heard, and the amount is fair and reasonable.

Prohibited practices include:

Deductions to ensure the employee continues working (“kickbacks”/deposits);
Charging the employee for items that are the employer’s business expense (e.g., uniforms unless mainly for the employee’s benefit, tools of trade);
Labor-only contracting schemes used to depress pay;
Withholding last pay indefinitely pending clearance (beyond a reasonable, defined period).

IV. Choice of Remedy and Proper Forum

1) Conciliation–Mediation (SEnA)

Single Entry Approach (SEnA) via the DOLE Single-Entry Assistance Desk (SEAD) is the default first stop: a quick, non-adversarial conference (typically within 30 days) aimed at settlement and voluntary compliance.
Outcome can be: (a) full/partial settlement with payment; (b) employer compliance order; (c) referral/endorsement to the proper adjudicatory forum.

2) DOLE Regional Office (Visitorial & Enforcement)

When wage underpayment is uncovered during a labor inspection or by a complaint that leads to inspection, the DOLE Regional Director can issue a Compliance Order regardless of amount, provided an employer–employee relationship exists and the issue concerns labor standards (minimum wage, OT, holiday pay, 13th month, etc.).
Appeal: to the Secretary of Labor (usually within 10 calendar days from receipt); decisions may be brought to the Court of Appeals via Rule 65 (grave abuse).

3) NLRC – Labor Arbiter (Money Claims / Illegal Dismissal)

File a complaint with the NLRC Labor Arbiter when:

The dispute requires trial-type reception of evidence, credibility findings, or involves illegal dismissal alongside wage claims;
The matter is not within DOLE’s summary enforcement power (e.g., complex factual issues, claims arising from termination, damages). Appeal: to the NLRC Commission within 10 calendar days; an employer’s appeal of a monetary award generally requires a cash/surety bond equal to the award. Further review by Rule 65 to the Court of Appeals, then Rule 45 to the Supreme Court on questions of law.

4) Voluntary Arbitration

If the dispute involves interpretation/implementation of a CBA or company policy covered by a grievance procedure, jurisdiction lies with a Voluntary Arbitrator, not the NLRC.

5) Courts (Limited)

Regular courts generally do not take wage claims where an employer–employee relationship exists or is alleged. Exceptions are narrow (e.g., independent civil action for torts when no labor dispute is involved).

6) Public Sector and Others

Government workers: pay disputes are generally under CSC and COA rules, not the NLRC.
Overseas Filipino Workers (OFWs): money claims typically filed with NLRC Labor Arbiters under the Migrant Workers Act (as amended); recovery for unpaid wages and, if illegally dismissed, salaries for the unexpired portion of the fixed-term contract plus other entitlements.

V. Prescriptive Periods (Deadlines to Sue)

Money claims arising from employer–employee relations (e.g., unpaid wages, OT, holiday pay, 13th month): 3 years from accrual.
Illegal dismissal: 4 years from dismissal (as an injury to rights).
Criminal actions for labor standards violations: governed by the Revised Penal Code or special laws’ prescriptive rules.

Practice pointer: For continuing underpayment, treat each pay period as a separate accrual; file early to avoid time-barred portions.

VI. Elements and Evidence

Employee’s prima facie case:

There is/was an employer–employee relationship;
The employee rendered work (or was available if unlawfully refused work);
Unpaid/underpaid amounts exist (identify rate, hours, days, and variance).

Employer’s defenses:

Payment (prove by payrolls, payslips, bank advice, ORs);
No ER–EE relationship (true independent contracting; test looks at control);
Authorized deductions; prescription;
Valid quitclaim (voluntary, informed, reasonable consideration, no deception/coercion).

Documents to prepare: employment contract/JO, payslips, payroll, DTR/biometrics, schedules, company policies/CBA, notices, computations, demand letters, proof of tax/SSS/PhilHealth/Pag-IBIG remittances.

VII. Computation Cheatsheet (Common Items)

Daily rate → hourly rate: daily ÷ 8.
Overtime (ordinary day): hourly × 1.25 × OT hours.
Night shift differential: (basic wage for hours between 10 p.m.–6 a.m.) × 10%.
Rest day premium (worked): basic × 1.30 for first 8 hours.
Regular holiday (worked): basic × 2.00 for first 8 hours; OT/NSD apply on top.
Special non-working day (worked): basic × 1.30 for first 8 hours (typical rule; check current wage orders/DOLE advisories).
13th-month pay: at least 1/12 of basic salary earned within the calendar year (exclude true allowances and benefits not part of “basic,” unless company practice says otherwise).
Wage order compliance: compare applicable minimum wage by region/sector and date against actual pay; differentials are claimable.

VIII. Interest, Damages, Attorney’s Fees

Legal interest is 6% per annum (post-2013 jurisprudence). For liquidated amounts, interest generally runs from demand or filing; otherwise, from decision or finality—apply controlling case law to your facts.
Moral/exemplary damages may be awarded upon proof of bad faith or malice (e.g., deliberate wage withholding).
Attorney’s fees: commonly 10% of the monetary award when the employee is compelled to litigate or has validly hired counsel.

IX. Penal and Administrative Exposure

Labor standards violations (e.g., non-payment of minimum wage, OT, 13th month) may carry fines and/or imprisonment under the Labor Code and special laws.
Non-compliance with minimum wage can trigger double indemnity (payment of unpaid differentials plus an equal amount), apart from criminal penalties.
Administrative sanctions may include closure, disqualification from permits/accreditations, and other collateral consequences.

X. Practical Pathways for Employees

Document & compute. Gather payslips, DTR, messages, and prepare a clean computation table.
Demand letter. Send a dated written demand (email + courier) itemizing claims and citing the 3-year prescriptive clock.
SEnA filing. Lodge a Request for Assistance at the DOLE SEAD; pursue settlement/voluntary compliance.
Choose forum.
- Inspection-type underpayment → DOLE Regional Office (Compliance Order).
- With termination or complex issues → NLRC Labor Arbiter.
- CBA/company policy interpretation → Voluntary Arbitrator.
Prepare for appeal & execution. If you win, expect an appeal; if the award becomes final, seek a writ of execution (NLRC sheriff or DOLE execution unit).

XI. Employer Compliance Playbook

Audit wages vs. current wage orders and statutory premiums; fix payroll and DTR systems.
Self-assess: where underpayment occurred, self-compute and tender payment with breakdown and receipts.
Train payroll/HR on authorized deductions and record-keeping.
Respond promptly to SEnA/DOLE notices; participate in conferences; consider structured settlements.
Appeal prudently: if appealing a monetary award, post the required bond to perfect the appeal.

XII. Special Topics

Project/Fixed-term employment: unpaid wages are still recoverable; termination disputes depend on proof of genuine project term or fixed duration.
Contracting/Subcontracting: principals may be solidarily liable for unpaid wages where there is labor-only contracting or violations of contracting rules.
Telecommuting/Flexible work: track hours via agreed timekeeping; overtime and NSD still apply where work exceeds statutory thresholds.
Retaliation & whistleblowing: Dismissal or adverse action for asserting wage rights can support claims for illegal dismissal and damages.
Barangay conciliation: Labor disputes covered by the Labor Code are not subject to barangay conciliation pre-condition.

XIII. Templates (Short-Form)

A. Demand Letter (Employee to Employer)

Re: Unpaid Wages and Statutory Benefits Dear [Employer], This is to formally demand payment of the following wage deficiencies: [itemized table: period, hours, rate, amount]. Total: ₱[amount], plus legal interest. Kindly remit within 5 business days from receipt. Failing which, I will initiate SEnA/DOLE/NLRC action to protect my rights. Sincerely, [Name | Position | Contact]

B. Compliance Tender (Employer to Employee/DOLE)

Re: Settlement of Wage Underpayment Dear [Employee/SEAD], Following our review, we tender ₱[amount] representing wage differentials/OT/13th-month for [period], per attached computation and payroll corrections. Please advise on the release schedule and quitclaim draft for this item only (without prejudice to other claims). Respectfully, [Authorized Signatory]

XIV. Quick Checklist

Claim within 3 years (money claims) / 4 years (illegal dismissal)
SEnA filed / explored
Chosen correct forum (DOLE vs. NLRC vs. VA)
Evidence ready (contracts, DTR, payroll, policies)
Computation attached and clear
Consider interest, damages, attorney’s fees
Plan for appeal (bond, timelines) and execution

XV. Key Takeaways

Unpaid wages are enforceable through SEnA, DOLE compliance, or NLRC adjudication, depending on the nature of the dispute.
Three-year prescription for wage claims means time is crucial; compute and file early.
Employers must prove payment and lawful deductions; records matter.
Remedies include principal, interest, damages, attorney’s fees, and possible penal consequences for violations.
Strategic forum selection and meticulous computation are the difference between paper wins and paid wins.

This article is general information and not a substitute for advice from counsel who can assess your specific facts, contracts, and regional wage orders.