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No Work, no pay Principle

The age-old rule governing the relation between labor and capital, or management and employee, of a fair
days wage for a fair days labor remains as the basic factor in determining employees wages. If there is no
work performed by the employee, there can be no wage or pay

unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended
or dismissed, or otherwise illegally prevented from working, in which event, he should be entitled to his
wage.

GENERAL RULE:

If there is no work performed by the employee, without the fault of the employer, there can be no wage or
pay.

EXCEPT:

The employee was able, willing and ready to work but was:

a. prevented by the management;

b. illegally locked out;
c. illegally suspended;
d. illegally dismissed; or
e. illegally prevented from working.

In Navarro v. P.V. Pajarillo Liner, Inc., the Court has held that where the failure of employees to work was
not due to the employers fault, the burden of economic loss suffered by the employees should not be shifted to the
employer. Each party must bear his own loss. It would be unfair to allow [the employee] to recover something he has
not earned and could not have earned, since he could not discharge his work as a driver without his drivers license.
[The employer] should be exempted from the burden of paying backwages.

In Escario v. NLRC, Pinakamasarap Corporation, employees who were dismissed after joining an illegal
strike and subsequently reinstated are not entitled to pay for days not worked. Conformably with the long honored
principle of a fair days wage for a fair days labor, employees dismissed for joining an illegal strike are not entitled to
backwages for the period of the strike even if they are reinstated by virtue of their being merely members of the
striking union who did not commit any illegal act during the strike.

COVERAGE & EXCLUSIONS: The title on wages applies to all employees, except the following:

1. Farm tenancy or leasehold;

2. Household or domestic helpers, including family drivers and persons working in the
personal service of another;

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3. Homeworkers engaged in needlework or in any cottage industry duly registered in accordance

with law;

4. Workers in duly registered cooperatives when so recommended by the Bureau of

Cooperative Development and upon approval of the Secretary of Labor and Employment; and

5. Workers of a barangay micro business enterprise, pursuant to R.A. 9178, Barangay Micro
Business Enterprises (BMBE's) Act of 2002

Concept of Facilities and Supplements

Facilities are items of expenses necessary for the laborers and his familys existence and subsistence. It is
for the benefit of the worker and his family. It forms parts of the wage and deductible from the wage.

Supplements are extra remuneration or special privileges or benefits given to or received by the
laborers over and above their ordinary earnings or wages. It is independent of wage and therefore not deductible
from the wage. It is granted for the convenience of the employer.

The criterion in determining whether an item is a supplement or facility is not so much with the kind of the
benefit or item (food, lodging, bonus or sick leave) given, but its purpose (If a benefit or privilege granted to
the employee is clearly for the employers convenience, it will not be considered as a facility but a
supplement)

In order that the cost be charged against the Employee, the employees acceptance of such facilities
must be voluntary.

Requirements for deducting values for facilities to be complied with by the employer:

1. Proof must be shown that such facilities are customarily furnished by the trade;

2. The provision of deductible facilities must be voluntarily accepted in writing; and

3. The facilities must be charged at fair and reasonable value.

(Mabeza v. NLRC, G.R. No. 118506, April 18, 1997)

Are food and lodging, or the electricity and water consumed by a hotel worker, considered facilities?

- No. These are supplements. Considering, therefore, that hotel workers are required to work
different shifts and are expected to be available at various odd hours, their ready availability is
a necessary matter in the operations of a small hotel. Furthermore, granting that meals and
lodging were provided and indeed constituted facilities, such facilities could not be deducted
without the employer complying first with certain legal requirements.

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(Mabeza v. NLRC, G.R. No. 118506, April 18, 1997)

Wages vs. Salaries

The term "wages" as distinguished from "salary", applies to the compensation for manual labor, skilled or
unskilled, paid at stated times, and measured by the day, week, month, or season, while "salary" denotes a
higher degree of employment, or a superior grade of services, and implies a position of office: by contrast, the
term wages " indicates considerable pay for a lower and less responsible character of employment, while
"salary" is suggestive of a larger and more important service - Gaa vs.CA, G.R. No. 44169

Wage distortion contemplates a situation where an increase in wage results in the elimination or severe
contraction of intentional quantitative differences in wage or salary rates between and among the
employeegroups in an establishment as to effectively obliterate the distinctions embodied in such wage
structure based on skills, length of service or other logical bases of differentiation.

Elements of Wage Distortion:

1. An existing hierarchy of positions with corresponding salary rates;

2. A significant change or increase in the salary rate of a lower pay class without a corresponding
increase in the salary rate of a higher one;

3. The elimination of the distinction between the 2 groups or classes; and

4. The Wage Distortion exists in the same region of the country.

(Alliance Trade Unions v. NLRC, G.R. No. 140689, Feb. 17, 2004)

Is the employer legally obliged to correct Wage Distortion?

- The employer and the union shall negotiate to correct the distortions. If there is no union, the
employer and the workers shall endeavor to correct such distinctions.

Basic principles in Wage Distortion:

1. The concept of wage distortion assumes an existing group or classification of employees which
establishes distinctions among such employees on some relevant or legitimate basis. This
classification is reflected in a differing wage rate for each of the classes of employees.

2. Often results from govt decreed increases in minimum wages.

3. Should a wage distortion exist, there is no legal requirement that, in the rectification of that
distortion by readjustment of the wage rates of the differing classes of employees, the gap
which had previously or historically existed be restored in precisely the same amount.

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In other words, correction of a wage distortion may be done by re-establishing a substantial or

significant gap (as distinguished from the historical gap) between the wage rates of the differing
classes of employees.

4. The reestablishment of a significant difference in wage rates may be the result of resort to
grievance procedures or collective bargaining negotiations. (Metro Transit Org., Inc. v. NLRC,
G.R. No. 116008, July 11, 1995)

Minimum Wage Rates

CURRENT DAILY MINIMUM WAGE RATES REGION VII, Central Visayas Per Wage Order No. ROVII-20
Effective March 10, 2017

GEOGRAPHIC AREAS NON-AGRICULTURE AGRICULTURE

NON-SUGAR SUGAR
New Basic Wage New Basic Wage New Basic Wage

CLASS A

Cities of Carcar, Cebu,

Danao, Lapulapu,
Mandaue, Naga, Talisay
366.00 348.00 316.00
and

Municipalities of
Compostela,
Consolacion, Cordova,
Liloan, Minglanilla, San
Fernando, or Expanded
Metro Cebu

CLASS B

Cities of Toledo, Bogo,

and 333.00 318.00 303.00

the rest of Municipalities

in Cebu Province except
Bantayan and Camotes
Islands

CLASS C

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Tagbilaran city and all 323.00 303.00 303.00

municipalities in Bohol
Province & Negros
Oriental Province

CLASS D

Municipalities in Siquijor 308.00 288.00 303.00

Province & Municipalities
in Bantayan and
Camotes

As a general rule, a Wage Order can only be issued once a year, which means that there could only be one
wage increase every year. No petition for wage increase may be entertained within the 12-month period from
effectivity of the Wage Order. By way of exception, however, a wage increase within the 12-month period is allowed
when there is a supervening condition, such as an extraordinary increase in prices of petroleum products
and basic goods and services. The Regional Wage Boards determines the existence of supervening condition, to
be confirmed by the National Wages and Productivity Council (NWPC).

The Regional Tripartite Wages and Productivity Boards (RTWP), also referred to as the Regional
Board or Regional Wage Board, has the authority to determine and fix minimum wage rates applicable in their
regions, provinces or industries therein, and to issue the corresponding Wage Orders.

The Regional Wage Boards may initiate a new round of study for minimum wage increase. It may do so, on
its own, even without a petition for wage increase.

The regional wage boards cannot issue a Wage Order without conducting public hearings/consultations,
giving notices to employees and employers groups, provincial, city and municipal officials and other interested
parties.

Standards/criteria for minimum wage fixing

The level of wages under a Wage Order must be nearly adequate as is economically feasible to maintain
the minimum standards of living necessary for the health, efficiency and general well-being of the employees within
the framework of the national economic and social development program. (Art. 124, Labor Code)

Among the relevant factors to be considered in fixing the regional minimum wages are the following:
1. The demand for living wages;
2. Wage adjustment vis--vis the consumer price index;
3. The cost of living and changes or increases therein;
4. The needs of workers and their families;
5. The need to induce industries to invest in the countryside;
6. Improvements in standards of living;

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7. The prevailing wage levels;

8. Fair return of the capital invested and capacity to pay of employers;
9. Effects on employment generation and family income; and
10. The equitable distribution of income and wealth along the imperatives of economic and social,
development.

There are two (2) methods of fixing the Minimum Wage Rates, to wit:

1. Floor-Wage method which involves the fixing of a determinate amount to be added to the prevailing
statutory minimum wage rates. This was applied in earlier wage orders; and

2. Salary-Cap or Salary-Ceiling method where the wage adjustment is to be applied to employees

receiving a certain denominated salary ceiling.

In other words, workers already being paid more than the existing minimum wage (up to a certain amount
stated in the Wage Order) are also to be given a wage increase. The Salary-Cap or Salary-Ceiling method is the
preferred mode. The distinction between the two (2) methods is best shown by way of an illustration.

Under the Floor Wage Method, it would be sufficient if the Wage Order simply set P15.00 as the amount
to be added to the prevailing statutory minimum wage rates; while in the Salary-Ceiling Method, it would be
sufficient if the Wage Order states a specific salary, such as P250.00, and only those earning below it shall be
entitled to the wage increase.

Principle of Non-Diminution of Benefits

GENERAL RULE:

Benefits being given to employees cannot be taken back or reduced unilaterally by the employer because
the benefit has become part of the employment contract, whether written or unwritten.

EXCEPTION:

To correct an error, otherwise, if the error is not corrected for a reasonable time, it ripens into a company
policy and employees can demand it as a matter of right.

When is Non-Diminution of Benefits applicable?

- It is applicable if it is shown that the grant of benefit:

a.) is based on an express policy of the law; or

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b.) has ripened into practice over a long period of time and the practice is consistent and
deliberate and is not due to an error in the construction or application of a doubtful or difficult
question of law.

Payment of Wages

Art. 102, Labor Code.- Forms of Payment. No employers shall pay the wages of an employee by means of
promissory notes, vouchers, coupons, tokens, tickets, chits or any object other than legal tender, even when
expressly requested by the employee.

Payment of wages by check or money order shall be allowed when such payment is customary on the date of
effectivity of this Code, or is necessary because of special circumstances as specified in appropriate regulations
to be issued by the Secretary of Labor or a stipulation in a collective bargaining agreement.

In the case of NFL vs Court of Appeals (G.R. No. 149464), Payment by check- payment of wages by bank
checks, postal checks or money orders is allowed where such manner of wage payment is customary on the
date of the effectivity of the Code, where it is stipulated in a collective bargaining agreement, or where all of the
following conditions are met:

1. There is a bank or other facility for encashment within a radius of one (1) kilometer from the workplace;

2. The employer, or any of his agents or representatives, does not receive any pecuniary benefit directly or
indirectly from the arrangement;

3. The employee are given reasonable time during banking hours to withdraw their wages from the bank
which time shall be considered as compensable hours worked if done during the working hours; and

4. The payment by check is with the written consent of the employees concerned if there is no collective
agreement authorizing the payment of wages by bank checks.

The term wage was defined in Article 97(f) of the Labor Code as the remuneration or earnings, however,
designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task,
piece, or commission basis, or other method of calculating the unwritten contract of employment for work
done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value,
as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the
employer to the employee. Wages shall be paid only by means of legal tender. The only instance when an
employer is permitted to pay wages in forms other than legal tender, that is by checks or money order, is
when the circumstances prescribed in the second paragraph of Article 102 are present.

In the present case, the petitioners separation pay, other benefits, and the wages from January 1 to 17 were
paid in check. Strictly speaking, SDPI violated the Labor Code when it included wages from January 1 to 17,
1998 in the check. Considering, however, the amount of other monetary benefits to be paid, payment in
check was the most convenient form for both the petitioners and the respondent. Further, as pointed out by
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the respondents, the petitioners are deemed estopped from questioning the legality of payment of wages
from January 1 to 17, 1998 in check because the same was raised for the first time only in their appeal
before the NLRC.

ART. 103, Labor Code. TIME OF PAYMENT Wages shall be paid at least once every two (2) weeks or twice
a month at intervals not exceeding sixteen (16) days.

If on account of force majeure or circumstances beyond the employers control, payment of wages on or within
the time herein provided cannot be made, the employer shall pay the wages immediately after such force
majeure or circumstances have ceased.

No employer shall make payment with less frequency than once a month.

The payment of wages of employees engaged to perform a task which cannot be completed in two (2) weeks
shall be subject to the following conditions, in the absence of a collective bargaining agreement or arbitration
award:

(1) That payments are made at intervals not exceeding sixteen (16) days, in proportion to the amount of
work completed;

(2) That final settlement is made upon completion of the work.

ART. 104. PLACE OF PAYMENT.

As a general rule, the place of payment shall be at or near the place of undertaking. Payment in a place
other than the workplace shall be permissible only under the following circumstances:

(1) When payment cannot be effected at or near the place of work by reason of the deterioration of
peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood,
epidemic or other calamity rendering payment thereat impossible;

(2) When the employer provides free transportation to the employees back and forth; and

(3) Under any other analogous circumstances; provided that the time spent by the employees in
collecting their wages shall be considered as compensable hours worked.

No employer shall pay his employees in any bar, night or day club, drinking establishment, massage clinic,
dance hall, or other similar places or in places where games are played with stakes of money or things
representing money except in the case of persons employed in said places.

PAYMENT THROUGH BANKS - Upon written permission of the majority of the employees or workers
concerned, all private establishments, companies, businesses, and other entities with twenty-five (25) or
more employees and located within one (1) kilometer radius to a commercial, savings or rural bank shall pay
the wages and other benefits of their employees through any of said banks and within the period of payment
of wages fixed by the Labor Code.

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Whenever applicable and upon request of a concerned worker or union, the bank shall issue a certification
of the record of payment of wages of a particular worker or workers for a particular payroll period.

Payment of wages through automated teller machines (ATM) is allowed under a labor advisory dated
November 25, 1996.

ART. 105. DIRECT PAYMENT OF WAGES - Wages shall be paid directly to the workers to whom they are due,
except:

(a) In cases of force majeure rendering such payment impossible or under other special circumstances to be
determined by the Secretary of Labor in appropriate regulations, in which case the worker may be paid
through another person under written authority given by the worker for the purpose; or

(b) Where the worker has died, in which case the employer may pay the wages of the deceased worker to
the heirs of the latter without the necessity of intestate proceedings.

The claimants, if they are all of age, shall execute an affidavit attesting to their relationship to the deceased
and the fact that they are his heirs, to the exclusion of all other persons. If any of the heirs is a minor, the
affidavit shall be executed on his behalf by his natural guardian or next of kin. The affidavit shall be
presented to the employer who shall make payment through the Secretary of Labor or his representatives.
The representative of the Secretary of Labor shall act as referee in dividing the amount paid among the
heirs. The payment of wages under this Article shall absolve the employer of any further liability with respect
to the amount paid.

Prohibition Regarding Wages

In the case of Special Steel Products vs. Lutgardo Villareal & Frederick So, the Court held that, the
employer cannot withhold respondents 13th month pay and other monetary benefits.

Article 116 of the Labor Code, as amended, provides:

Withholding of wages and kickbacks prohibited. It shall be unlawful for any person, directly or indirectly, to
withhold any amount from the wages (and benefits) of a worker or induce him to give up any part of his
wages by force, stealth, intimidation, threat or by any other means whatsoever without the workers
consent.

The above provision is clear and needs no further elucidation. Indeed, petitioner has no legal authority to
withhold respondents 13th month pay and other benefits. What an employee has worked for, his employer must
pay. Thus, an employer cannot simply refuse to pay the wages or benefits of its employee because he has either
defaulted in paying a loan guaranteed by his employer; or violated their memorandum of agreement; or failed to
render an accounting of his employers property.

_______________________

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In the case of Agabon vs. NLRC, Nov. 17, 2004, the Court held that, the dismissal should be upheld
because it was established that the petitioners abandoned their jobs to work for another company. Private
respondent, however, did not follow the notice requirements and instead... argued that sending notices to the
last known addresses would have been useless because they did not reside there anymore. Unfortunately for
the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the
employee's last... known address. Thus, it should be held liable for non-compliance with the procedural
requirements of due process.

Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not
nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee
for the violation of his statutory rights. The violation of the petitioners' right to statutory due process by the
private respondent warrants the payment of indemnity in the form of nominal damages.

____________________________

ART. 127, of the Labor Code. NON-DIMINUTION OF BENEFITS No Wage Order issued by any regional
board shall provide for wage rates lower than the statutory minimum wage rates prescribed by Congress.

____________________________

In the case of TSPI, INCORPORATION VS. TSPIC EMPLOYEES UNION, the Court held that:

Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the
employees. There is diminution of benefits when it is shown that:

(1) the grant or benefit is founded on a policy or has ripened into a practice over a long period;

(2) the practice is consistent and deliberate;

(3) the practice is not due to error in the construction or application of a doubtful or difficult question of
law; and

(4) the diminution or discontinuance is done unilaterally by the employer.

As correctly pointed out by TSPIC, the overpayment of its employees was a result of an error. This error
was immediately rectified by TSPIC upon its discovery. We have ruled before that an erroneously granted benefit
may be withdrawn without violating the prohibition against non-diminution of benefits.

Here, no vested right accrued to individual respondents when TSPIC corrected its error by crediting the
salary increase for the year 2001 against the salary increase granted under WO No. 8, all in accordance with the
CBA.

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Hence, any amount given to the employees in excess of what they were entitled to, as computed above,
may be legally deducted by TSPIC from the employees salaries. It was also compassionate and fair that TSPIC
deducted the overpayment in installments over a period of 12 months starting from the date of the initial deduction to
lessen the burden on the overpaid employees. TSPIC, in turn, must refund to individual respondents any amount
deducted from their salaries which was in excess of what TSPIC is legally allowed to deduct from the salaries based
on the computations discussed in this Decision.

As a last word, it should be reiterated that though it is the states responsibility to afford protection to labor,
this policy should not be used as an instrument to oppress management and capital. In resolving disputes between
labor and capital, fairness and justice should always prevail.

____________________________

In the case of American Wire and Cable Union vs. American Wire and Cable Co., April 29, 2005, the
Court held that, the consequential question therefore that needs to be settled is if the subject benefits/entitlements,
which are bonuses, are demandable or not. Stated another way, can these bonuses be considered part of the wage
or salary or compensation making them enforceable obligations? The Court does not believe so.

For a bonus to be enforceable, it must have been promised by the employer and expressly agreed upon by
the parties, or it must have had a fixed amount and had been a long and regular practice on the part of the employer.

The benefits/entitlements in question were never subjects of any express agreement between the parties.
They were never incorporated in the Collective Bargaining Agreement (CBA)

The Christmas parties and its incidental benefits, and the giving of cash incentive together with the service
award cannot be said to have fixed amounts. What is clear from the records is that over the years, there had been a
downtrend in the amount given as service award. There was also a downtrend with respect to the holding of the
Christmas parties in the sense that its location changed from paid venues to one which was free of charge, evidently
to cut costs. Also, the grant of these two aforementioned bonuses cannot be considered to have been the private
respondents long and regular practice. To be considered a regular practice, the giving of the bonus should have been
done over a long period of time, and must be shown to have been consistent and deliberate. The downtrend in the
grant of these two bonuses over the years demonstrates that there is nothing consistent about it.

To hold that an employer should be forced to distribute bonuses which it granted out of kindness is to
penalize him for his past generosity.

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