Salary Deduction Rules for Tardiness in the Philippines

A comprehensive legal guide

1. Why this topic matters

In Philippine labor law, wages enjoy the highest level of protection. At the same time, the “no-work, no-pay” principle allows employers to pay only for hours actually rendered. Reconciling those two ideas has produced a well-defined—but sometimes misunderstood—set of rules on salary deductions arising from tardiness and undertime (late arrivals / early departures).

2. Primary legal sources

Layer	Key provisions	What they say about tardiness deductions
Labor Code (Pres. Decree 442, as amended)	Art. 113 (now renumbered Art. 117) – Deductions from wages Art. 102 – Forms of payment Art. 100 – Prohibition against diminutions	Deductions are prohibited unless (a) they are required by law, (b) they are authorized by the employee, or (c) they are authorized by a CBA. “Deducting” the value of minutes not worked is treated as non-payment of unearned wages, not as a punitive deduction, provided only the exact unworked time is excluded.
Department of Labor and Employment (DOLE) issuances	2024 DOLE Handbook on Workers’ Statutory Monetary Benefits, Part II(10)(n) (“Deduction for Absence, Tardiness, Undertimes”) Labor Advisory No. 11-14-2007 (Payslip Standards) Labor Advisory No. 1-2020 (Alternative Work Arrangements)	Affirm DOLE’s long-standing view that late minutes may be docked from wages if supported by accurate time records and a written company policy. Payslips must reflect hours actually worked and the basis of any deduction.
Supreme Court jurisprudence	Auto Bus Transport Systems v. Bautista, G.R. 156367 (16 May 2005) – repeated tardiness as just cause for dismissal Philippine Airlines v. NLRC, G.R. 123293 (28 Jan 1998) – “no work, no pay” is not an illegal deduction Mabeza v. NLRC, G.R. 118506 (18 Apr 1997) – unlawful deductions distinguished from non-payment of unearned wages	The Court consistently upholds docking pay only for the precise period not worked. Any amount beyond that constitutes an illegal deduction with penalties and possible criminal liability under Art. 303 (old Art. 288).

Note on renumbering: Republic Act 10151 and R.A. 10395 renumbered the Labor Code. Most HR manuals still cite the old article numbers; state both to avoid confusion.

3. No-work, no-pay vs. “deduction”

Legally, two different ideas operate:

No-work, no-pay – The employer’s wage obligation arises only after work is done. If an employee is 15 minutes late, those 15 minutes were never earned, so nothing is “deducted.”
Illegal salary deductions – Money already earned cannot be withheld except under Art. 113 exceptions.

Courts treat tardiness as the first case, provided the employer’s computation is exact, transparent, and based on recorded time.

4. When is docking pay for tardiness lawful?

Written policy or practice (in the CBA, company handbook, or a posted memo).
Reliable timekeeping system – Bundy clock, biometrics, electronic logs, or verified manual attendance.
Proportionality – Deduct only the minutes/hours not worked. Imposing a fixed ₱50 “late charge,” for example, is an illegal penalty.
Payslip disclosure – The deduction (or non-payment) must appear in the employee’s payslip, usually as “UT/late mins” or a similar line item.
No effect on minimum wage – The resulting pay for hours actually rendered must still equal or exceed the statutory minimum rate for those hours.

5. Computing the amount to be deducted

A. Monthly-paid employees (paid for all days of the month)

Hourly Rate = Monthly Salary ÷ (Estimated working days per year ÷ 12) ÷ 8

A common denominator is 313 days (365 days – 52 rest days). Example:

Monthly salary: ₱25 000
Hourly rate: 25 000 ÷ (313 ÷ 12) ÷ 8 ≈ ₱119.38
Late by 15 minutes (0.25 hour) → ₱119.38 × 0.25 = ₱29.85 nondeductible portion of the salary.

B. Daily-paid employees

Simply multiply the hourly equivalent of the daily rate (daily ÷ 8) by minutes lost.

C. Piece-rate or task-based workers

No fixed deduction principle applies; the worker is paid strictly per unit produced, so unfinished units result in no earnings for that time.

6. Effects on statutory benefits

Benefit	Impact of late-minute deduction
13th-Month Pay	Computed as 1/12 of total basic wages earned in the calendar year. If wages were reduced due to tardiness, the 13th-month pay proportionately falls.
SSS, PhilHealth, Pag-IBIG contributions	Based on actual monthly compensation. A few minutes’ deduction rarely changes the salary credit bracket, but if repeated and large enough to cross a bracket, contributions adjust downward.
Overtime & night-shift differentials	Base hourly rate remains the same; late minutes do not re-compute the premium rates.
Holiday & leave pay accrual	Generally pegged to length of service and basic daily rate; isolated tardiness has no effect unless company policy ties vacation/sick-leave credits to punctuality.

7. Jurisprudential guideposts

Case	Gist
Auto Bus v. Bautista (2005)	Reiterated that frequent tardiness may support dismissal, provided procedural due process is observed. Salary docking for each late instance was not questioned because it covered only unworked minutes.
PAL v. NLRC (1998)	Affirmed management right to pay only for hours actually rendered; dismissed claim of “illegal deduction.”
Mabeza v. NLRC (1997)	Clarified that deductions for breakages or penalties without consent violate Art. 113; contrasted with lawful non-payment for tardiness.
Insular Life v. NLRC (1990)	Held that converting minutes of tardiness into a monetary fine beyond actual wage equivalent is illegal.
Pepsi-Cola v. NLRC (1997)	Distinguished union-imposed fines (deductible only with employee’s written authority) from management’s wage computations.

8. Prohibited practices

Fixed “late fees.” Only the time value may be withheld.
Double penalties. Do not dock pay and impose an additional suspension or fine for the same tardiness, unless the CBA explicitly allows both and they are proportionate.
Rounding down excessive fractions. Example: treating 5 minutes late as 30 minutes for convenience is unlawful.
Withholding previously earned compensation to “offset” anticipated future tardiness.
Deductions that push pay below minimum wage or reduce tips/service charges reserved for employees.

9. Penalties for illegal deductions

Money claims filed before the DOLE Regional Office (if ≤₱5 000 per employee) or the NLRC (> ₱5 000).
Criminal liability under Labor Code Art. 303 (old Art. 288) – fines and/or imprisonment.
Wage Order administrative penalties during DOLE inspections.
Moral and exemplary damages in egregious cases of bad faith (awarded by the NLRC or courts).

10. Employer compliance checklist

✔︎	Action
☐	Publish a clear lateness/undertime policy in the handbook or CBA.
☐	Install accurate and tamper-proof timekeeping (biometric or digital).
☐	Train payroll staff on the correct hourly-rate formula for monthly-paid employees.
☐	Reflect every deduction (or zero pay for minutes lost) on the payslip, citing the date and minutes concerned.
☐	Keep Daily Time Records and payslips for 3 years (Labor Code, Art. 127) for DOLE inspection or litigation.
☐	Apply progressive discipline—verbal, written warnings—separate from salary docking when tardiness becomes habitual.

11. Frequently asked questions

Can an employee “offset” late minutes with overtime on the same day? Only if the company policy allows. Otherwise, overtime is voluntary on the employer’s part.
Is a grace period mandatory? No. Many companies grant a 5- or 15-minute grace period as a benefit, but it is discretionary.
What if a supervisor edits the biometrics log to help an employee? Falsification of company records may constitute serious misconduct for both parties and expose the firm to payroll audits and penalties.
Does Work-From-Home change the rule? The same principles apply. Employers may rely on VPN login times, productivity trackers, or electronic acknowledgments as the “time clock.”

12. Key take-aways

Dock only what was never earned. Anything beyond the exact minutes lost is an illegal deduction.
Document everything. Time records and written policies are the first line of defense in a DOLE inspection or NLRC complaint.
Discipline separately. Salary docking addresses the economic loss; disciplinary action addresses the behavior. Mixing the two can expose the company to double-penalty arguments.
Mind the minimum wage. Even properly computed deductions must not drag effective pay below the statutory floor for the actual hours worked.

13. Conclusion

The Philippine legal framework strikes a balance: it protects wages fiercely, yet respects the employer’s right to pay only for labor actually rendered. Employers who follow the five-point legality test—written policy, accurate timekeeping, proportionality, payslip transparency, and minimum-wage compliance—will find that deducting the value of minutes lost to tardiness is straightforward and defensible. Employees, meanwhile, can be assured that any deduction beyond that is unlawful and fully actionable.

(All information reflects laws, DOLE issuances, and jurisprudence up to June 27, 2025. Subsequent amendments or new Wage Orders should always be checked.)