Salary Deductions for Non-Compliance with Working Hours
(Philippine Legal Framework, 2025 update)
1. Why the issue matters
Pay is “inviolable,” but so is the employer’s right to pay only for work actually rendered. The friction point is late-coming, undertime, or outright absence. When may an employer lawfully clip an employee’s pay, and when does the deduction cross the line into an illegal wage practice? This article gathers all the Philippine rules, DOLE issuances, and leading cases you need to know.
2. Core statutory and regulatory bases
| Provision | Key take-away |
|---|---|
| Art. 113, Labor Code | General ban on wage deductions unless (a) required by law, (b) authorized in writing by the employee for insurance/union dues or similar purposes, or (c) allowed by a CBA. ( Legal Implications of Salary Deductions for Employee Tardiness in the Philippines, Omnibus Rules, Labor Code, Book III - Labor Law PH Library) |
| § 13, Omnibus Rules, Book III | Mirrors Art. 113 but spells out the allowable instances of deduction (taxes, SSS/PhilHealth/Pag-IBIG, insurance, union dues, court orders, and “other deductions with employee consent” etc.). (Omnibus Rules, Labor Code, Book III - Labor Law PH Library) |
| Art. 116, Labor Code | Criminalizes “withholding or kick-backs” from wages. |
| “No work, no pay” principle (Republic v. Pacheco, 2012) | Salary may simply not accrue for unworked hours; this is not technically a “deduction.” (No Work, No Pay - Labor Law PH) |
| R.A. 11165 (Telecommuting Act, 2018) | Remote work does not waive the employee’s entitlement to full pay for hours rendered; time-tracking is still required. (REPUBLIC ACT No. 11165 - The Lawphil Project) |
Bottom line: The only time money may leave an employee’s pay-slip for attendance issues is when the employee did not work those minutes or hours, and the deduction is strictly limited to the value of the unworked time.
3. Typical attendance breaches and their treatment
| Scenario | Is deduction allowed? | Notes |
|---|---|---|
| Whole-day absence (no paid leave) | Yes, “no work, no pay.” | |
| Tardiness / late arrival | Yes, pro-rated against the hourly or minute rate. 30-minute deduction for 1-minute tardy is excessive and contestable. ( Legal Implications of Salary Deductions for Employee Tardiness in the Philippines) | |
| Undertime / early log-out | Same pro-rated rule as tardiness. | |
| Skipping meal break (employee opts to work through lunch) | Hours actually worked must be paid; no “automatic offset.” | |
| Offsetting lates with overtime | Generally not allowed because overtime hours carry a statutory 25 % (or more) premium and cannot be bargained away. (Offsetting Lates Against Overtime Policy Philippines) | |
| Flexible / compressed schedule (DOLE-registered FWA) | Deductions forbidden if employee still meets the agreed core hours or weekly total. |
4. Computation cheat-sheet
Find the hourly rate
Monthly-paid:Hourly Rate = (Monthly Salary × 12) ÷ 313 ÷ 8
Daily-paid:Hourly Rate = Daily Wage ÷ 8Deduct proportionately
Deduction = Hourly Rate × (minutes/60)Never round-up punitively. A company that docks a full hour for 7 minutes of lateness risks an illegal‐deduction complaint.
5. Jurisprudence every practitioner cites
| Case | What the Court said |
|---|---|
| Super K Drug Corp. v. Lusabia (G.R. 223314, 15 Jul 2020) | Cash-bond and other “salary deductions” must be proven lawful by the employer; failure to justify = refund with interest. (G.R. No. 223314 - The Lawphil Project) |
| Acebedo Optical v. NLRC (G.R. 150171, 17 Jul 2007) | Habitual tardiness is valid ground for dismissal after due process; monetary penalties still have to follow Art. 113. (G.R. No. 150171 July 17, 2007 - The Lawphil Project) |
| Republic v. Pacheco (G.R. 178021, 25 Jan 2012) | Re-states the “no work, no pay” doctrine for both daily- and monthly-paid workers. (No Work, No Pay - Labor Law PH) |
6. Government-sector note
Civil Service rules treat habitual tardiness as an administrative offense that may merit suspension or dismissal; salary deductions still obey the same “no work, no pay” logic but are complemented by disciplinary fines. (A.M. No. 2006-11-SC September 13, 2006 - The Lawphil Project)
7. Employer compliance checklist
- Written policy: spell out cut-off times, grace periods, and exact computation formula.
- Timekeeping tech: biometrics or digital logs; preserve raw data for three (3) years.
- Proportionality: ensure the pesos deducted never exceed the peso-value of time lost.
- Due process: repeated tardiness requires notice and hearing before stiffer sanctions.
- Register FWAs (flexitime, compressed workweek, telecommuting) with DOLE to avoid disputes over “make-up” hours.
8. Employee remedies
- In-house HR protest → internal payroll correction
- Single-Entry Approach (SEnA) at DOLE field office (informal mediation)
- NLRC complaint for illegal deduction or wage-and-hour claim
- Back-pay, interest, and attorney’s fees may be awarded, as in Super K
9. Quick FAQ
- Can my boss deduct penalties in addition to the minutes I was late?
Only if the deduction fits Art. 113 (e.g., is in a CBA) or you voluntarily agreed in writing and it is reasonable. - Does work-from-home change the rules?
No. R.A. 11165 says telecommuters enjoy the same labor standards; only the mode of service delivery differs. - May I “offset” a 30-minute late arrival by extending my shift 30 minutes?
Yes—but only under a documented flexible-time arrangement; otherwise the employer must still pay the overtime premium for work beyond eight hours.
10. Key take-aways
Deduct only what matches the exact time not worked; anything beyond that is an illegal wage practice. Back your policy with Art. 113, keep the math transparent, and remember that even in a hybrid or fully remote setup, timekeeping—and the employee’s right to be paid for every legitimate minute worked—remains king.