Legality of Withholding Salary During Employee Suspension in the Philippines

A comprehensive primer for HR practitioners, employers, and workers

1. Key Concepts at a Glance

Term	What It Means	Salary Effect
Preventive Suspension	A temporary, investigative measure imposed before a decision on the charge, to avert a serious or imminent threat to the employer’s life or property.	No work–no pay up to 30 calendar days. If the investigation drags on, the worker must either be (a) reinstated, or (b) kept on suspension with pay beginning Day 31.
Disciplinary (Penal) Suspension	A penalty imposed after due process when the employee is found guilty of misconduct.	Wages may be withheld for the suspension period—provided the penalty is reasonable, expressly provided in the rules/CBA, and due-process requirements were strictly observed.
Indefinite Suspension	Suspension without a definite period and often without pay.	Disfavored; may ripen into constructive dismissal (requiring back-wages and damages).

2. Legal Foundations

1973 & 1987 Constitutions Art. XIII, Sec. 3 secures labor the right to “humane conditions of work and a living wage.” Any withholding of salary must be anchored on law-recognized grounds.
Labor Code (Pres. Decree 442, as amended)
- Art. 297 [282] – “Just causes” for termination.
- Art. 299 [284] – Suspension of operations > six months.
- Art. 301 [286] – Bona fide suspension of business.
- Art. 113–117 – Prohibitions on wage deductions; withholding salary is lawful only when grounded on no work–no pay or one of the statutory exceptions.
Department Order No. 147-15, Series 2015 (Rules on Termination)
- Caps preventive suspension at 30 days.
- Requires written notice of the reason and the exact period.
- If the employer “cannot complete the investigation” in 30 days, it must reinstate the worker or pay wages & benefits for the extended period.
DOLE Labor Advisory No. 06-20 (and COVID-era updates)
- Re-affirms “no work–no pay,” yet encourages employers to consider paid leaves or wage-sharing schemes to cushion employees during preventive suspension or work stoppage beyond their control.
Collective Bargaining Agreements & Company Codes
- May specify lighter or stiffer rules, but can never reduce statutory benefits or override DO 147-15’s 30-day cap.

3. The “No Work – No Pay” Principle

General rule: Wages accrue only for services actually rendered.
Preventive suspension up to 30 days follows this doctrine, unless the CBA or company practice is more favorable.
Beyond 30 days without pay = violation; the amount due converts to back-wages subject to legal interest.
Penal suspension post-investigation is likewise “no work–no pay,” provided it was validly imposed. Any defect in due process entitles the employee to nominal damages (typically ₱30 000) or outright payment of wages for the period.

4. Due-Process Requirements

Stage	Employer Obligation	Timeline
1️⃣ Notice to Explain (NTE)	Detailed charge, factual bases, rule violated.	Give employee at least 5 calendar days to answer (DO 147-15).
2️⃣ Opportunity to be Heard	Written explanation and hearing/clarificatory conference if requested or warranted.	Within a reasonable time after NTE.
3️⃣ Notice of Decision	Findings, law/rule violated, penalty imposed, effectivity dates.	Serve immediately after the inquiry is concluded.

Failure in any step invalidates the suspension, converting it into illegal withholding of wages (plus possible moral/exemplary damages).

5. Supreme Court & NLRC Benchmarks

Case	Gist	Take-away
Globe Telecom v. Florendo-Flores (G.R. 206462, 05 Apr 2017)	Preventive suspension beyond 30 days w/out pay = illegal; employee gets back-wages for excess period.	The statutory 30-day cap is mandatory.
People’s Broadcasting (Bombo Radyo) v. Secretary of Labor (G.R. 179652, 06 Mar 2012)	Preventive suspension proper where the employee’s continued presence posed “serious threat.”	Employers must prove real, not speculative, danger.
Philippine Airlines v. NLRC (G.R. L-57460, 05 Jul 1989)	Indefinite suspension = constructive dismissal.	Always specify the duration.
Cruz v. Genuino Ice (G.R. 117144, 05 Mar 1996)	Disciplinary suspension without proper investigation invalid; wages ordered paid.	Observe two-notice rule.
Cathedral School of Technology v. NLRC (G.R. 182791, 13 Apr 2010)	Penalty must be commensurate to offense; harsh or excessive suspensions struck down.	Reasonableness test applies.

6. When Withholding Pay Becomes Unlawful

Preventive Suspension Exceeds 30 Days – Unless wages & benefits are restored from Day 31 onward.
Suspension Imposed Without Due Process – Even if the underlying offense exists, wages must be paid for the invalid period.
Indefinite or Vague Period – Treated as constructive dismissal; back-wages, reinstatement or separation pay, and damages may be awarded.
Suspension Contrary to Company Policy/CBA – Example: CBA allows only 5 days but employer imposes 15 days without bargaining.
Retaliatory or Discriminatory Motive – Suspension to punish union activity or whistle-blowing is per se illegal; total wages and damages recoverable.

7. Employer Best Practices

Codify Rules – Clearly state offenses and graduated penalties (including specific suspension periods).
Document Everything – Investigation notes, CCTV, sworn statements; courts frown on “bare allegations.”
Apply Progressive Discipline – From verbal warning to suspension to dismissal; proportionality is key.
Respect the 30-Day Limit – If unavoidable, start paying on Day 31 or temporarily reassign to lower-risk tasks with pay.
Mind Wage-Fixing Holidays & Service Incentive Leave – Even during preventive suspension, holiday pay & SIL credits continue to accrue if the employee qualifies under law or CBA.
Consult DOLE or Counsel – Particularly when facts suggest constructive dismissal risk (e.g., indefinite closure, redundancy overlap).

8. Employee Remedies

Intra-Company Grievance Machinery (if CBA exists)
Single-Entry Approach (SEnA) – 30-day mandatory conciliation-mediation.
Complaint before NLRC – To recover withheld wages, moral/exemplary damages, and attorney’s fees.
Illegal Dismissal Suit – When preventive suspension crosses into constructive dismissal.
Criminal Complaint for Unpaid Wages – Art. 303(e) imposes fines/penalties on willful non-payment.

9. Frequently-Asked Scenarios

Scenario	Is Salary Withholding Lawful?	Why
Employee caught on CCTV stealing; suspended for 20 days pending probe.	Yes.	Preventive suspension ≤ 30 days, “no work–no pay,” threat to property present.
Investigation not finished; employer extends suspension to 45 days without pay.	No.	Must either reinstate or pay wages from Day 31 to 45.
Employee suspended 7 days as penalty for tardiness (3rd offense).	Yes, if rule exists.	Penalty is proportionate, procedure observed.
Company suspends worker “until further notice” while shop is shuttered for renovation.	Unlawful.	This is a bona-fide suspension of business; wages/separation benefits or temporary closure rules apply, not indefinite suspension.
Worker placed on “forced leave” with pay while machine is under repair.	Lawful & beneficial.	This is paid suspension; no violation.

10. Bottom Line

Withholding wages during a valid suspension is lawful only under narrowly defined conditions.
Preventive suspension: pay stops only for the first 30 days; thereafter, wages must resume if suspension continues.
Disciplinary suspension: wages may be withheld only when (a) misconduct is proven, (b) penalty is reasonable, and (c) due process is impeccably followed.
Indefinite or abusive suspensions invite costly illegal-dismissal findings.

Legal Caveat: This article provides general educational information and is not a substitute for tailored legal advice. For specific cases, consult a Philippine labor-law practitioner or the nearest DOLE field office.