1) The core issue

In the Philippine labor setting, questions about withholding salary increases “because an employee is union” (or because the employee is not union) sit at the intersection of:

Constitutional freedom of association and the policy of promoting unionism and collective bargaining;
The Labor Code’s prohibitions on unfair labor practice (ULP), particularly discrimination to encourage or discourage union membership; and
Compensation governance (management prerogative, merit systems, and CBA bargaining), including the line between lawful differentiation and illegal discrimination.

The practical legal risk is that a pay policy tied—directly or indirectly—to union status can be treated as anti-union discrimination, interference, or bad faith bargaining, depending on timing, employer intent, and how the policy is implemented.

2) Governing legal framework in the Philippines

A. Constitutional and statutory policy

Philippine labor law is strongly protective of employees’ rights to self-organization, to form/join unions, and to bargain collectively. This policy matters because courts and labor tribunals often interpret doubtful pay actions in light of whether they chill union rights.

B. Labor Code: discrimination and unfair labor practice

A central prohibition is discrimination in terms and conditions of employment designed to encourage or discourage union membership.

In practice, an employer may commit ULP if it:

Penalizes employees for being union members (e.g., denying increases, bonuses, promotions, benefits, or opportunities); or
Rewards employees for not joining, leaving, or avoiding the union (e.g., granting increases only to non-members, or making non-members materially better off).

Even if the employer labels the action as a “policy” or “program,” labor adjudicators look at effect and surrounding facts: timing, communications, patterns, and consistency with prior practice.

C. “Interference” with self-organization

Beyond discrimination, actions that interfere with, restrain, or coerce employees in exercising the right to self-organization can be actionable. A pay-related move can be “interference” if it is used as pressure to join/avoid the union or to influence union activity.

3) What counts as “withholding salary increases” in this context

The analysis changes depending on what kind of “increase” is being withheld:

CBA-negotiated increases (economic provisions under a collective bargaining agreement)
Company-wide general wage increases (GWI) unilaterally granted by management
Merit increases / performance-based increments under a documented appraisal system
Promotional increases tied to movement to higher roles/grades
Statutory increases (e.g., minimum wage or wage orders for covered employees)
Benefits framed as increases (allowances, COLA, “adjustments,” longevity pay)

Withholding a statutory wage increase is the most straightforwardly unlawful. The more typical dispute is about a discretionary or policy-based increase—where the question becomes: Is the discretion being used to discriminate based on union status or union activity?

4) Common unlawful patterns (high-risk scenarios)

A. “Union members don’t get the increase; non-union employees do”

This is the most direct red flag. Even if framed as “we are not required to give increases,” conditioning it on union status signals discrimination to discourage union membership.

B. “Employees who join the union lose eligibility for merit increases”

This can be treated as a penalty for union membership. Even if merit pay is discretionary, tying eligibility to union membership is a classic chilling mechanism.

C. “We suspended increases because there’s a union”

A freeze targeted at the bargaining unit (or employees supportive of the union) but not applied to similarly situated employees can be interpreted as anti-union retaliation or interference.

D. “Non-union increases to weaken the union during organizing or bargaining”

Timing matters. If increases are selectively granted to non-union employees right as organizing or certification is happening—or withheld from union supporters—that can be treated as interference (dangling benefits to influence choice) or discrimination.

E. “We give increases only if employees sign a waiver or quit union activity”

Any linkage between pay and surrender of union rights is extremely vulnerable to being struck down as interference/coercion.

5) Situations that are often misunderstood

A. “Management prerogative” is not a shield for union-based discrimination

Employers generally have discretion in setting compensation structures, but they must exercise it in good faith and without violating labor rights. If the criterion is union membership or union activity, “prerogative” usually fails as a defense.

B. “Not giving an increase is not illegal” (in the abstract) — but motives and criteria matter

It is true that Philippine law does not impose a universal duty to grant periodic increases. The illegality arises when the denial is:

Selective and tied to union status/activity; or
A device to restrain self-organization; or
In conflict with a binding agreement or established company practice that has ripened into an enforceable obligation.

C. “Union employees already have a CBA; non-union need separate increases”

This can be lawful or unlawful depending on design:

Lawful possibility: CBA employees receive increases/benefits through negotiated terms; non-union employees receive separate adjustments under a non-CBA pay plan; differences reflect distinct compensation frameworks and are not intended to discourage unionism.
Risk: using separate adjustments to undercut the union (e.g., keeping non-union pay artificially higher specifically to discourage union membership) can still be attacked.

D. “Giving a signing bonus or wage increase before an election”

This is sensitive. Even if well-intentioned, granting benefits timed to influence organizing choices may be treated as interference. In the Philippine context, labor tribunals may infer intent from timing and communications.

6) Discrimination analysis: how tribunals typically approach it

A practical way to think about the inquiry:

Is there differential treatment in pay increases?
What is the classification used (union membership, union activity, bargaining unit status, position, performance, tenure, skills, market rate, etc.)?
Is the classification legitimate and job-related, or is it inherently rights-based?
Is the policy consistently applied with documents showing objective criteria?
What is the timing and context (organizing drive, certification, negotiations, strike threats, grievances)?
What communications exist (emails, memos, manager statements, town halls)?
What is the effect (does it pressure employees to avoid the union, resign membership, or refrain from union participation)?

Where union status is the criterion—or where context strongly implies anti-union motivation—the action is vulnerable to being treated as ULP.

7) The role of bargaining and the CBA

A. If the increase is a mandatory subject of bargaining

Wages are a central subject for collective bargaining. Once a union is the exclusive bargaining representative for a unit, unilateral wage changes affecting the bargaining unit can raise bargaining-related issues.

Two overlapping risks appear:

Bad faith bargaining / refusal to bargain if the employer unilaterally changes wages in a way that circumvents the union; and/or
Interference if the unilateral grant is designed to persuade employees that they do not need the union.

B. If the issue is during CBA negotiations

During negotiations, selective withholding can be framed as pressure tactics. The legality often depends on whether the employer is implementing a neutral company-wide policy (supported by objective financial justification) or acting in a targeted anti-union manner.

C. CBA “non-diminution” and established practice

Even if an increase is not explicitly written, repeated and consistent granting of increases over time—especially if represented as a benefit—can become an enforceable practice that cannot be unilaterally withdrawn without legal consequences. This is especially relevant when the employer historically granted annual increases then suddenly withholds only from union employees.

8) Distinguishing “union status” from “bargaining unit coverage”

A frequent confusion is mixing up:

Union membership (a choice of the employee), and
Bargaining unit coverage (a classification based on job/position that determines whether the CBA applies).

A wage policy that differs by coverage (CBA-covered vs managerial/confidential/excluded positions) can be legitimate if it tracks real differences in role and bargaining framework.

But if the policy is really “members vs non-members,” or if coverage is used as a pretext to punish union supporters, it can still be unlawful.

9) “Union security” and its limits

Where union security clauses exist (e.g., union shop/closed shop/maintenance of membership), membership affects continued employment within the allowed legal framework. But those clauses do not authorize an employer to impose pay penalties or rewards tied to union membership beyond what is negotiated and lawful.

An employer cannot say: “Because you are a union member, we will freeze your merit pay.” Union security is not a license to discriminate.

10) Lawful differentiation: what can be defensible

An employer can differentiate increases when the criteria are legitimate, documented, and not tied to union rights, such as:

Performance metrics under a bona fide appraisal system;
Skills scarcity, licensing, certifications, or market adjustments for specific roles;
Tenure-based steps (provided they are consistently applied);
Geographic differentials or shift differentials;
Promotion-based pay increases;
Structural pay-grade adjustments to correct compression or inequities;
Company-wide wage freeze applied neutrally due to financial distress (if genuine, consistently applied, and not selectively enforced against union-related groups).

Even then, documentation and consistency matter. A lawful merit system can still become unlawful if managers apply it to punish union supporters (e.g., suddenly downgrading performance ratings of union officers).

11) Retaliation via performance ratings and “merit” increases

One common mechanism is indirect discrimination:

A manager downgrades union members’ ratings to justify denial of increases.
Standards are altered or applied inconsistently around union activities.
Documentation becomes inconsistent with historical evaluations.

In such cases, the legal problem is not “merit pay exists,” but that merit pay is used as a tool for anti-union retaliation or interference.

Best practice in compliance terms is an appraisal system with clear criteria, calibration, audit trails, and the ability to show that union members are not being penalized.

12) Remedies and consequences in Philippine labor disputes

If withholding increases is found to be unlawful discrimination/ULP or otherwise illegal, consequences can include:

Payment of withheld wage increases or wage differentials where appropriate;
Backwages and financial restitution depending on the case posture and findings;
Orders to cease and desist from discriminatory policies;
Potential damages where warranted under applicable doctrines;
Administrative and litigation costs; and
Workplace relations impact (grievances, bargaining breakdown, further disputes).

ULP findings are serious because they implicate protected rights and can carry broader consequences than an ordinary wage claim.

13) Compliance checklist for employers (Philippine context)

To reduce risk when managing increases in a unionized or organizing environment:

Never use union membership/activity as a criterion for increases, bonuses, or eligibility.
Separate “coverage” from “membership”: ensure policies distinguish bargaining unit coverage by role, not union choice.
Document objective criteria for merit and market adjustments.
Apply consistently across comparable employees; audit outcomes.
Control manager communications: avoid statements implying pay consequences for union decisions.
Be careful with timing during organizing/elections/negotiations; ensure decisions are supported by pre-existing plans and documented business reasons.
Coordinate with bargaining obligations: if a union is the exclusive representative, assess whether wage changes require bargaining or consultation under the governing framework and the CBA.
Maintain records: business justifications, compensation committee approvals, pay bands, appraisal data, and comparative analyses.
Avoid “divide-and-conquer” pay strategies: raising non-union pay solely to make union membership unattractive invites scrutiny.
Respect non-diminution principles where a wage practice has become entrenched.

14) Practical framing for employees and unions

For employees or unions assessing whether withholding increases is unlawful, the most probative indicators usually are:

Statements linking increases to union membership or activity;
A sudden change from past practice coinciding with organizing or bargaining;
Differential treatment between union supporters and similarly situated employees;
Disproportionate negative appraisal outcomes for union members/officers without performance basis; and
Written policies or manager directives explicitly referencing the union.

Evidence tends to be document-heavy: payslips, payroll summaries, memos, appraisal records, organizational charts (to show coverage), and timelines.

15) Key takeaways

Withholding salary increases because of union status is a high-risk legal issue in the Philippines and can amount to unfair labor practice or interference with self-organization.
The legality often turns on motive, criteria, timing, and consistency—not merely on whether increases are discretionary.
Differentiation is most defensible when based on objective, job-related, consistently applied standards (performance, role, market), not on union membership or union activity.
In unionized settings, wage actions can also trigger bargaining-related obligations, especially when they affect the bargaining unit.