I. Overview

In Philippine labor law, the timely payment of wages is not just a contractual obligation; it is a statutory duty. Employees depend on wages for their and their families’ basic survival, so the Labor Code treats withholding or unjustified delay in salary as a serious violation of labor standards.

This article explains, in the Philippine context:

What counts as wages and salary
Rules on when and how wages must be paid
When withholding or delay is illegal
Legal remedies available to employees
Special issues (final pay, constructive dismissal, prescription, etc.)

This is general legal information, not a substitute for tailored legal advice.

II. What Are “Wages” or “Salary” Under the Labor Code?

Under the Labor Code, “wage” is broadly defined as the remuneration or earnings, capable of being expressed in money, for work done or services rendered, including:

Basic salary
Cost-of-living allowances (if treated as part of pay)
Commissions (if directly tied to sales or output)
Service charges (in hotels/restaurants that must be shared with workers)
Certain guaranteed benefits under law (e.g., 13th month pay, overtime pay, night shift differential, holiday pay, rest day premium, etc.)

Key points:

Label does not control. Even if called “allowance” or “incentive,” if it is compensation for work, it can be considered part of “wages” for purposes of labor standards and unlawful withholding.
Non-wage benefits (like purely discretionary bonuses, gifts, or certain non-monetary perks) are treated differently and are generally not demandable unless contract, company practice, or CBA has made them enforceable.

III. Rules on Payment of Wages

1. Frequency and Timing

The Labor Code requires that wages be paid:

At least once every two (2) weeks or
Twice a month at intervals not exceeding sixteen (16) days.

Many companies have a 15th and 30th/31st pay schedule or similar. While cut-off periods (e.g., pay days covering work done from 1–15, then 16–30) are allowed, what the law requires is that earned wages must be paid within these permissible intervals.

Chronic, unjustified payment beyond these intervals can be considered illegal delay.

2. Form of Payment

Wages must be paid in legal tender (Philippine currency), but:
- Payment by check, bank transfer, or ATM payroll is allowed if:
  - There is a written agreement or company policy, and
  - The arrangement doesn’t prejudice the employee (e.g., no unreasonable withdrawal charges passed to the employee without consent).

Payment in promissory notes, vouchers, or company scrip in lieu of money is not allowed.

3. Place of Payment

As a rule, wages should be paid:

At or near the place of work; or
Through an agreed bank or payment facility that is safe and accessible.

IV. Prohibition on Withholding and Illegal Deductions

1. General Rule: No Withholding of Wages

Employers cannot withhold wages that are already earned and due, except in limited, lawful situations. A few examples of unlawful withholding:

“We will not release your salary until you resign”
“We are holding your pay until you meet your quota” (for already-earned wages)
“We won’t release your last pay unless you pay for alleged company losses with no proof or due process”

2. Allowed Deductions from Wages

Only specific deductions are allowed, such as:

Mandatory deductions required by law
- Income tax
- SSS contributions
- PhilHealth contributions
- Pag-IBIG contributions
- Other statutory contributions
Deductions authorized in writing by the employee for:
- Insurance premiums
- Union dues (in a unionized establishment)
- Legitimate company loans or advances
- Savings plans or cooperative shares
Court or administrative orders, e.g., wage garnishment in satisfaction of a judgment.

3. Prohibited Deductions and Kickbacks

Generally prohibited are:

Kickbacks or forced returns of wages to the employer or its agents
Deposits for loss or damage to tools, equipment, or property, unless strict conditions are met (e.g., there is clear proof of fault and due process, and deduction is limited and reasonable)
Deductions for:
- Alleged shortage or pilferage without investigation
- Disciplinary fines that are not legally sanctioned
- Business losses that are part of the employer’s risk

When an employer makes any of these prohibited deductions, it is legally treated as unlawful withholding of a portion of wages.

V. What Counts as “Withholding” or “Delayed” Salary?

1. Illegal Withholding

Examples:

Salary is completely withheld without valid reason, despite employee rendering work.
Employer refuses to pay unless the employee signs a waiver or quitclaim.
Employer withholds pay as a form of punishment, outside of any lawful disciplinary scheme.
Employer withholds final pay (including last salary, 13th month, unused leave convertible to cash, etc.) beyond a reasonable period or contrary to DOLE advisories and company policy.

2. Illegal Delay

Even if wages are eventually paid, there can be a violation if:

Salaries are habitually or significantly late beyond the legally allowed intervals without valid justification.
Company systematically pays weeks or months late, claiming “cash flow problems.”
Employer intentionally moves payday without notice and to the detriment of employees.

Minor delays due to bank holidays, system glitches, or emergencies may not automatically result in liability, especially if promptly corrected and not habitual. But as a rule, “We have no funds” is not a complete defense for non-payment of earned wages.

VI. Special Issues: Final Pay, Last Salary, and Clearances

In practice, problems often arise when an employee resigns or is terminated:

The employer must still pay:
- Unpaid salaries
- Pro-rated 13th month pay
- Monetized unused leave credits (if convertible based on policy or CBA)
- Separation pay, if legally required (e.g., certain authorized causes)

DOLE has issued advisories stating that final pay and certificate of employment should be released within a specific period (commonly within 30 days from separation, unless another period is set by company policy or CBA).

Potentially illegal withholding:

“No clearance, no last pay” policies that:
- Have no reasonable basis; or
- Are used to indefinitely delay final pay for issues that are unproven or unrelated.
Charging the employee for alleged losses without proof and without due process, then netting the amount from final pay.

Legitimate scenarios may include offsetting clearly established, acknowledged debts (e.g., unpaid company loan) against final pay, but the employer bears the burden of proving the legality of the deduction.

VII. Employee Rights in Case of Withheld or Delayed Salary

An employee whose salary is withheld or delayed has the right to:

Be paid in full and on time for work actually performed.
Demand payment of all earned wages, including legally mandated benefits.
File a complaint with appropriate government agencies (DOLE, NLRC) without fear of retaliation.
Protection from retaliation – dismissal or harassment because the employee enforced their rights can give rise to an illegal dismissal or unfair labor practice case.
Refuse unlawful arrangements, such as signing a waiver that waives labor standards rights in exchange for partial payment.

Any waiver of minimum labor standards (minimum wage, overtime, etc.) is generally void.

VIII. Legal Remedies for Withholding or Delayed Salary

Remedies can be administrative, quasi-judicial, criminal, or civil. They may be pursued separately or in combination, depending on the facts.

A. Internal and Workplace Remedies

Before going to government, it is often practical to:

Raise the issue with HR or payroll in writing or through email/chat.
Use any grievance machinery provided in the company policy or collective bargaining agreement (CBA).
Request a written explanation for the delay or withholding.

While not required by law before filing a complaint, having this documented often becomes useful evidence later.

B. DOLE-Assisted Settlement and Labor Standards Complaints

1. Single-Entry Approach (SENA)

The Department of Labor and Employment (DOLE) has the Single-Entry Approach (SENA), a mandatory conciliation-mediation system for labor disputes.

The employee can file a Request for Assistance (RFA) at the nearest DOLE office.
A conciliation-mediation conference is scheduled where DOLE helps the parties discuss and possibly reach a settlement.
If a settlement is reached, it is recorded and becomes binding.

SENA is often faster and less formal than filing a full-blown case.

2. Labor Standards Inspection and Enforcement

If there is a suspected labor standards violation (e.g., systematic non-payment or underpayment of wages across workers):

DOLE may conduct a labor inspection or investigation.
Under its visitorial and enforcement powers, DOLE can:
- Examine payrolls and records
- Interview workers
- Issue a Compliance Order directing the employer to pay deficiencies or unpaid wages.

This remedy is especially useful in cases involving many workers or companywide wage violations.

C. NLRC Complaint for Money Claims and Constructive Dismissal

The National Labor Relations Commission (NLRC) handles:

Complaints for unpaid or underpaid wages and benefits, and
Cases involving termination, constructive dismissal, or unfair labor practices.

1. Money Claims

An employee may file a complaint with the proper NLRC Regional Arbitration Branch for:

Unpaid salaries
Underpayment of minimum wage
Non-payment of overtime, holiday pay, premium pay, night differential
Non-payment of 13th month pay and other legally mandated benefits
Illegal deductions

Prescriptive period:

As a general rule, money claims under the Labor Code must be filed within three (3) years from when the cause of action accrued (i.e., from when the wage should have been paid).

2. Constructive Dismissal Due to Non-Payment

Repeated or serious withholding of salary may amount to constructive dismissal, where:

Continued employment has become impossible, unreasonable, or unlikely because of the employer’s acts; and
A reasonable employee would feel forced to resign.

If constructive dismissal is proven, the employee may be entitled to:

Reinstatement (or separation pay in lieu of reinstatement)
Full backwages from the time of constructive dismissal until reinstatement or finality of judgment
Payment of all unpaid wages and benefits
Possible damages and attorney’s fees

In such a case, the NLRC will examine not just the fact of delayed salaries but also their frequency and effect on the employment relationship.

3. Procedure in Brief

File a complaint (using a standard form) at the NLRC branch with territorial jurisdiction.
Attend mandatory conciliation/mediation conference (with the Labor Arbiter).
Submit position papers and supporting evidence.
The Labor Arbiter issues a decision, which can be appealed to the NLRC Commission and, later, to the Court of Appeals and Supreme Court on questions of law.

D. Criminal Liability for Non-Payment of Wages

The Labor Code provides penal provisions for willful violations of labor standards, including willful refusal to pay wages.

Responsible corporate officers or managers may be personally liable, including:
- Fine
- Imprisonment
- Or both, at the court’s discretion.

Criminal cases usually require:

A final administrative finding or judgment establishing the labor standards violation; and
Evidence showing the non-payment was willful (not due to honest error or excusable mistake).

Because criminal cases have a higher burden of proof (beyond reasonable doubt), these are less frequently pursued than administrative/quasi-judicial remedies but remain a powerful legal option.

E. Civil Actions for Collection of Sum of Money

Separately from labor tribunals, an employee may file a civil action in regular courts to recover unpaid wages, especially when:

The employment relationship has ended, and
The issue is framed as a breach of contract or a civil debt.

However, Philippine law generally favors channeling wage-related disputes through labor authorities (DOLE/NLRC), which have special competence and more worker-friendly procedures. Civil actions are usually considered suppletory or alternative, depending on how the claim is characterized.

IX. Prescription (Time Limits)

Time limits are critical:

Money claims under the Labor Code – generally 3 years from the time the cause of action accrued.
Illegal dismissal / constructive dismissal – generally 4 years (as an action based on injury to rights), but this may vary depending on how the courts classify a particular claim. Many practitioners treat dismissal-related claims as fitting within a 4-year period, while wage claims remain subject to the 3-year limit.

If an employee waits too long, the claim may be barred by prescription, even if the employer clearly violated the law.

X. Evidence to Prepare

Employees asserting that salary was withheld or delayed should prepare:

Employment documents:
- Employment contract or appointment letter
- Company policies, handbooks, CBA (if any)
Payslips and payroll records (or pictures/scans of them)
Bank/ATM statements showing irregular or missing salary deposits
Time records or attendance logs
Communications:
- Emails, chats, or texts with HR or management about pay
- Notices or announcements about delayed salaries
Any computation of amounts due (e.g., list of missing pay periods, underpaid overtime, etc.).

The employer is legally required to keep payroll and records; in cases of doubt and missing records, courts and DOLE may resolve Ambiguities in favor of labor, given the worker’s weaker bargaining position.

XI. Can an Employee Stop Working if Salary Is Unpaid?

This is a sensitive point. Generally:

Employees are expected to continue reporting for work, especially if they intend to claim backwages and avoid allegations of abandonment.
However, persistent and serious non-payment can justify:
- Filing a case for constructive dismissal, and/or
- Resigning with cause, citing the employer’s serious breach of its obligation to pay wages.

In practice, employees often:

Raise the issue internally first;
If unresolved and non-payment is serious or repeated, file a DOLE or NLRC complaint;
Consult a lawyer or legal aid if they are considering resignation or stopping work, to minimize legal risks.

XII. Practical Guidance

For Employees

Document everything. Keep copies of payslips, contracts, and conversations.
Act promptly. Remember the 3-year prescriptive period for wage claims.
Start with DOLE SENA if you want a faster, less adversarial option.
For repeated or serious non-payment, consider NLRC remedies and the possibility of constructive dismissal.
Be cautious about signing quitclaims or waivers; seek advice if possible before signing anything that may waive your rights.

For Employers

Ensure salary is paid on time and in full in accordance with the Labor Code.
Avoid any deductions not expressly allowed by law or not authorized in writing by the employee.
Release final pay within the period set by DOLE advisories or company policies.
Maintain proper payroll and timekeeping records and ensure transparency.
Remember that non-payment or underpayment of wages is not just a civil issue—it can lead to DOLE compliance orders, NLRC judgments, and even criminal liability.

XIII. Conclusion

Under Philippine law, withholding or delaying salaries without lawful justification violates both the Labor Code’s labor standards provisions and the basic constitutional protection of workers’ rights. Employees have multiple remedies—DOLE assistance, NLRC complaints, possible criminal and civil actions—to enforce their right to timely and full payment of wages.

At the same time, because each case is fact-specific (e.g., reasons for delay, company financial conditions, presence of written authorizations, length of delay, etc.), anyone facing a serious salary issue is well-advised to consult with DOLE, a union, or a legal professional to choose the most appropriate remedy and strategy.