In the Philippine labor landscape, the principle of "A Fair Day's Wage for a Fair Day's Work" governs the compensation of employees. When an employee is late or tardy, they fail to render service during the specific minutes or hours missed. Consequently, employers have the legal right to withhold payment for that unworked time.

However, the computation and implementation of these deductions must strictly adhere to the Labor Code of the Philippines and prevailing jurisprudence to avoid being classified as "illegal deduction" or "diminution of benefits."

1. The Basic Principle: "No Work, No Pay"

The "No Work, No Pay" doctrine is the foundational justification for salary deductions due to tardiness. If an employee does not report for work at the designated start time, the employer is not obligated to pay for the period of absence.

Proportionality: Deductions must be strictly proportional to the time lost.
Rate Base: The deduction is computed based on the employee’s Basic Monthly Salary, excluding allowances (unless such allowances are integrated into the basic wage by company policy or CBA).

2. The Mathematical Computation

To compute the deduction accurately, the employer must first determine the employee's Hourly Rate and Minute Rate.

Step A: Determine the Daily Rate

The daily rate depends on the number of working days in a year (the "Factor"). Common factors include:

313 days: For those who work Monday to Saturday.
261 days: For those who work Monday to Friday.

Step B: Determine the Hourly and Minute Rate

Standard Philippine law assumes an 8-hour workday.

Hourly Rate:
Minute Rate:

Example Calculation

If an employee earns PHP 30,000 per month (Factor 261) and is 15 minutes late:

Daily Rate:
Hourly Rate:
Minute Rate:
Total Deduction:

3. Prohibited Practices: "Offsetting" and Over-Deduction

Employers often attempt to simplify payroll through methods that may be legally questionable:

The "No Offsetting" Rule: Under Article 87 of the Labor Code, an employer cannot offset tardiness on one day with overtime on another. If an employee is 1 hour late in the morning but stays 1 hour late in the evening, the employer must still deduct the 1 hour of tardiness and pay the 1 hour of overtime (plus the applicable 25% premium).
Rounding Up: It is generally illegal to deduct more time than was actually lost. For example, if an employee is 5 minutes late, the employer cannot "round up" and deduct 15 minutes of pay. This constitutes a "penalty" rather than a wage deduction, which is prohibited under Article 113 of the Labor Code.

4. Administrative Penalties vs. Wage Deductions

While the deduction of wages is a purely financial correction for unworked time, tardiness is also a disciplinary issue.

Wage Deduction: A reflection of the "No Work, No Pay" principle (Non-disciplinary).
Disciplinary Action: Habitual tardiness is a form of neglect of duty. Employers may impose warnings, suspensions, or even dismissal for Gross and Habitual Neglect of Duty under Article 297.

Note: An employer cannot fine an employee as a disciplinary measure. You can suspend them (where they earn nothing for the day), but you cannot let them work and then take a portion of their earned wage as a penalty.

5. Grace Periods and Company Policy

Many Philippine companies provide a "Grace Period" (e.g., 5 to 15 minutes).

Status of Grace Periods: These are not mandated by law but are considered Company Policy or Voluntary Employer Practice.
The Trap: If a grace period exists, the employer must clarify if it is a waiver of the deduction or merely a waiver of the disciplinary "tardy" count. If an employee is late beyond the grace period, most companies compute the deduction from the actual start time, not the end of the grace period.

6. De Minimis and Deductions

Deductions for tardiness should be reflected clearly in the payslip. Transparency is required under the Labor Code's Implementing Rules and Regulations to ensure the employee can verify that the deduction corresponds exactly to the time-tracking records (Biometrics/Logbook).

Summary Table: Legal Checklist for Employers

Feature	Legal Status
Basis of Deduction	Actual minutes/hours missed only.
Offsetting with OT	Prohibited. Tardiness and OT must be treated separately.
Rounding Up	Illegal. Deducting 30 mins for 10 mins tardiness is a violation.
Disciplinary Action	Allowed for habitual offenders following Due Process.
Grace Period	Discretionary; becomes binding if established by practice.