A Philippine legal article on when a “salary increase” is a right, when it is discretionary, and what remedies exist when it is unlawfully withheld.

1) The baseline rule: there is no general legal right to a yearly raise

In the Philippines, non-union employees do not have an automatic statutory right to an annual salary increase simply because they performed well, stayed another year, or inflation went up. As a general rule, salary increases are management prerogative—the employer may grant, delay, stagger, or deny increases—unless the increase is required by law, contract, or a binding company practice, or unless the denial is unlawful for another reason (e.g., discrimination, retaliation, or minimum wage noncompliance).

That said, many employees do have enforceable “increase rights,” but those rights usually come from (a) minimum wage laws and wage orders, (b) employment contracts and written policies, or (c) long-standing company practice that has ripened into a demandable benefit.

2) “Salary increase” can mean different things legally

Employees often use “salary increase” to describe any of these:

Minimum wage compliance adjustment (mandatory when the legal minimum increases beyond your current pay)
Across-the-board increase / COLA / wage order increase (mandatory if you are within coverage of the wage order)
Merit increase / performance increase (usually discretionary unless promised by contract/policy)
Promotion or reclassification increase (depends on policy/contract; can become enforceable if promised)
Regularization increase (not legally automatic; depends on contract/policy)
Correction of pay inequity (may be required to avoid unlawful discrimination or to comply with equal pay principles)

Understanding which kind you mean is crucial because the legal rules differ.

3) The strongest legal “raise right”: minimum wage and wage orders

A) Minimum wage is a legal floor

The most concrete raise entitlement for many non-union workers is the right not to be paid below the applicable minimum wage (set through the wage-setting system and implemented via Regional Tripartite Wages and Productivity Boards through wage orders).

If a new wage order raises the minimum and your pay falls below the new floor, your employer must increase your wage to comply.

B) Coverage and common exceptions

Minimum wage rules and wage orders generally cover private sector employees, but coverage and exemptions can vary by wage order and by category, including common special regimes such as:

Apprentices/learners (often allowed a percentage of the minimum under conditions set by law)
Household service workers (kasambahay) who are governed by a separate framework with their own minimum standards
Barangay Micro Business Enterprises (BMBEs) which have special treatment under law (often including minimum wage-related relief, subject to conditions)
Distressed establishments or other categories that may apply for exemption if allowed by the wage order and properly granted

An employer can’t just “declare” itself exempt; exemptions are typically formal, rule-based, and documented.

C) “But I’m already above minimum wage—do I still get the wage order increase?”

Often, if you already earn above the new minimum, the employer may not be legally required to add the same peso increase—unless the wage order’s structure expressly covers your category or creates mechanisms that affect your bracket. Many wage orders function as minimum floors, not universal increases for everyone.

4) Wage distortion: when mandated increases compress pay differences

When a wage order increases the pay of lower-paid employees, it can narrow or eliminate the intentional wage gaps between ranks or job levels—this is called wage distortion.

A) What “wage distortion” means in practice

A distortion exists when a mandated wage increase results in the disappearance or severe contraction of wage differentials between groups of employees that used to reflect legitimate distinctions (e.g., skill, tenure, rank).

B) Why it matters to non-union employees

Wage distortion is a recognized legal issue with settlement mechanisms. Even in unorganized establishments, there are procedures aimed at encouraging resolution through dialogue and labor dispute settlement channels.

Important limitation: Distortion rules don’t guarantee that every employee above the minimum automatically gets a raise; they provide a framework to address severe compression and restore a rational pay structure.

5) Contractual rights: when a raise becomes enforceable

A non-union employee can have a true legal right to an increase if it is promised by any of these:

A) The employment contract or job offer

If your contract/offer letter states:

scheduled increases (e.g., “automatic ₱X increase after 6 months”), or
guaranteed annual adjustments, or
salary step progression, then it’s enforceable like any contract term.

B) Company policies, handbooks, and pay programs

If the employer issues written policies that commit to:

annual merit increases using defined criteria,
longevity/tenure increases,
salary step systems,
across-the-board adjustments, then employees may enforce them—especially if the policy uses mandatory language (“shall,” “will,” “entitled”).

C) Commission/bonus plans that are actually wages

If a pay component is integrated into compensation and is not purely discretionary, it may be treated as a wage-related benefit that can’t be arbitrarily withheld.

6) Company practice and the “non-diminution of benefits” principle

Even without a written contract term, a benefit can become demandable through consistent practice.

A) The rule (in plain language)

If an employer has consistently, deliberately, and over a significant period granted a wage-related benefit (including patterned increases) as a matter of practice, employees may argue it has become a company benefit that cannot be unilaterally withdrawn—this is tied to the principle that benefits, once established, generally may not be reduced or removed without legal basis.

B) Not every repeated increase becomes a right

Employers often defend by showing the increases were:

explicitly discretionary each year,
tied to profits or performance and not guaranteed, or
given inconsistently, or
accompanied by clear reservations that no vested right is created.

Employees often strengthen their claim with:

memos announcing patterned increases,
payslips showing consistent adjustments,
handbook provisions,
emails showing management treated it as expected/standard.

7) Management prerogative—and its limits

Employers in the Philippines generally have the prerogative to manage business operations, including compensation systems, but it is not absolute. It must be exercised:

in good faith,
without discrimination,
without violating law, contract, or established practice, and
without being used to defeat employee rights.

So while an employer may deny a merit increase, it cannot use “discretion” to justify illegal wage levels, punitive retaliation, discrimination, or arbitrary withdrawal of vested benefits.

8) When denial of a raise may be unlawful (even if raises are “discretionary”)

You may have a legal claim if a raise denial is connected to any of the following:

A) Minimum wage / wage order noncompliance

If your pay fell below the legal floor after a wage order (or you were never compliant), that’s a violation.

B) Discrimination and unequal pay

Philippine law and policy recognize equal pay / non-discrimination principles, including sex-based protections and broader constitutional and labor standards against discriminatory treatment.

A raise denial may be unlawful if it is based on protected characteristics or used in a discriminatory way (e.g., women systematically denied increases given to similarly situated men; pregnancy-related disadvantage; discriminatory practices against certain groups).

C) Retaliation / interference with labor rights

Even if you’re non-union, you have rights to:

self-organization,
lawful concerted activities,
filing labor complaints, and
participating as a witness.

If an employer denies raises because you asserted labor rights or reported violations, the act can be attacked as unlawful retaliation or bad faith conduct.

D) Constructive dismissal-type scenarios (when “raise denial” is part of coercion)

A simple denial of increase is usually not dismissal. But if it comes with:

demotion,
pay cut,
forced resignation pressure,
unbearable conditions, it may support broader labor claims depending on facts.

9) Common misconceptions (Philippine workplace reality check)

“Regularization means automatic salary increase.” Not automatically. Regularization gives security of tenure, not guaranteed pay progression (unless policy/contract says so).
“Inflation means the employer must increase salary.” Not as a general rule—except when minimum wage/wage orders require it or a contract/practice provides it.
“If others got increases, I’m legally entitled too.” Not necessarily. But if the difference is discriminatory, retaliatory, or violates a defined policy, you may have a claim.
“My employer can avoid wage orders by re-labeling pay as ‘allowance.’” Reclassification games don’t defeat minimum standards if the substance shows you’re below required wage.

10) Practical steps: how non-union employees can protect and assert raise-related rights

A) Document your compensation history

Keep:

contracts/offer letters,
employee handbook/policies,
wage increase memos,
payslips,
performance appraisals (if relevant),
emails/messages about promised increases.

B) Identify the legal basis of your claim

Ask:

Is this a minimum wage/wage order issue?
Is there a contract/policy promise?
Is there a consistent company practice?
Is there discrimination/retaliation?

C) Use internal channels first (when safe)

A written query to HR asking for:

the policy basis of increases,
your wage classification/level,
whether a wage order adjustment applies, can sometimes resolve issues and creates a paper trail.

D) External remedies: where to go

Common avenues include:

DOLE assistance and enforcement mechanisms (especially for standards compliance like wage issues)
Single Entry Approach (SEnA) as an early dispute-resolution step
NLRC/Labor Arbiter for broader money claims, illegal dismissal-related claims, and disputes requiring adjudication

Which forum fits best depends on your issue (simple standards compliance vs. contested claims involving factual/legal disputes).

E) Prescriptive periods (deadlines) matter

Many wage-related money claims under Philippine labor law are subject to time limits (often shorter for monetary claims than for other causes). If you suspect a violation, it’s safer to act early.

11) What employers can lawfully do (and what they should do to stay compliant)

A compliant employer typically:

tracks wage orders and adjusts affected employees promptly,
maintains clear written compensation policies,
uses objective performance criteria for merit increases,
keeps documentation showing increases are discretionary if intended as such,
reviews pay equity to avoid discrimination risks,
addresses wage distortion through structured internal processes.

12) Bottom line: your “raise rights” usually come from one of three sources

For non-union employees in the Philippines, a salary increase is enforceable when it is:

Legally mandated (minimum wage / wage order compliance; related distortion mechanisms), or
Promised (employment contract, offer, handbook, written policy, pay plan), or
Vested by practice (consistent, deliberate company practice that becomes a demandable benefit),

…and even when an increase is discretionary, the employer’s decision can still be attacked if it is illegal, discriminatory, retaliatory, or in bad faith.

If you want, paste your situation (region, current basic pay, whether you’re minimum-wage level, and what document/policy exists about increases). I can map it to the most likely legal basis and the strongest next steps.