omnibus rules book 3

8/12/2019 Omnibus Rules Book 3

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OMNIBUS RULES

IMPLEMENTING THE LABOR CODE

BOOK THREE

Conditions of EmploymentRULE IHours of Work

SECTION 1. General statement oncoverage. The provisions of thisRule shall apply to all employees inall establishments and undertakings,whether operated for profit or not,except to those specifically exemptedunder Section 2 hereof. cralaw SECTION 2. Exemption. Theprovisions of this Rule shall not applyto the following persons if theyqualify for exemption under theconditions set forth herein:(a) Government employees whetheremployed by the National

Government or any of its politicalsubdivision, including thoseemployed in government-ownedand/or controlled corporations;(b) Managerial employees, if theymeet all of the following conditions:(1) Their primary duty consists of themanagement of the establishment inwhich they are employed or of a

department or sub-division thereof. cralaw (2) They customarily and regularlydirect the work of two or moreemployees therein. cralaw (3) They have the authority to hireor fire employees of lower rank; or


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their suggestions andrecommendations as to hiring andfiring and as to the promotion or anyother change of status of other

employees, are given particularweight. cralaw (c) Officers or members of amanagerial staff if they perform thefollowing duties and responsibilities:(1) The primary duty consists of theperformance of work directly relatedto management policies of theiremployer;(2) Customarily and regularlyexercise discretion and independentudgment; and

(3) (i) Regularly and directly assist aproprietor or a managerial employeewhose primary duty consists of themanagement of the establishment inwhich he is employed or subdivision

thereof; or (ii) execute under generalsupervision work along specialized ortechnical lines requiring specialtraining, experience, or knowledge;or (iii) execute, under generalsupervision, special assignments andtasks; and(4) Who do not devote more than 20percent of their hours worked in awork week to activities which are notdirectly and closely related to theperformance of the work described inparagraphs (1), (2) and (3) above. cralaw (d) Domestic servants and persons inthe personal service of another if


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they perform such services in theemployer's home which are usuallynecessary or desirable for themaintenance and enjoyment thereof,

or minister to the personal comfort,convenience, or safety of theemployer as well as the members ofhis employer's household. cralaw (e) Workers who are paid by results,including those who are paid onpiece-work, "takay," "pakiao" or taskbasis, and other non-time work iftheir output rates are in accordancewith the standards prescribed underSection 8, Rule VII, Book Three ofthese regulations, or where suchrates have been fixed by theSecretary of Labor and Employmentin accordance with the aforesaidSection. cralaw (f) Non-agricultural field personnel if

they regularly perform their dutiesaway from the principal or branchoffice or place of business of theemployer and whose actual hours ofwork in the field cannot bedetermined with reasonablecertainty. cralaw SECTION 3. Hours worked. Thefollowing shall be considered ascompensable hours worked:(a) All time during which anemployee is required to be on dutyor to be at the employer's premisesor to be at a prescribed work place;and


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control shall be considered workingtime either if the imminence of theresumption of work requires theemployee's presence at the place of

work or if the interval is too brief tobe utilized effectively and gainfully inthe employee's own interest. cralaw SECTION 5. Waiting time. (a)Waiting time spent by an employeeshall be considered as working timeif waiting is an integral part of hiswork or the employee is required orengaged by the employer to wait. cralaw (b) An employee who is required toremain on call in the employer'spremises or so close thereto that hecannot use the time effectively andgainfully for his own purpose shall beconsidered as working while on call.An employee who is not required toleave word at his home or with

company officials where he may bereached is not working while on call. cralaw SECTION 6. Lectures, meetings,training programs. Attendance atlectures, meetings, trainingprograms, and other similar activitiesshall not be counted as working timeif all of the following conditions aremet:(a) Attendance is outside of theemployee's regular working hours;(b) Attendance is in fact voluntary;and(c) The employee does not performany productive work during such


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attendance. cralaw SECTION 7. Meal and Rest Periods. Every employer shall give hisemployees, regardless of sex, not

less than one (1) hour time-off forregular meals, except in the followingcases when a meal period of not lessthan twenty (20) minutes may begiven by the employer provided thatsuch shorter meal period is creditedas compensable hours worked of theemployee:(a) Where the work is non-manualwork in nature or does not involvestrenuous physical exertion;(b) Where the establishmentregularly operates not less thansixteen (16) hours a day;(c) In case of actual or impendingemergencies or there is urgent workto be performed on machineries,

equipment or installations to avoidserious loss which the employerwould otherwise suffer; and(d) Where the work is necessary toprevent serious loss of perishablegoods. cralaw Rest periods or coffee breaks runningfrom five (5) to twenty (20) minutesshall be considered as compensableworking time. cralaw SECTION 8. Overtime pay. Anyemployee covered by this Rule whois permitted or required to workbeyond eight (8) hours on ordinaryworking days shall be paid an


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additional compensation for theovertime work in the amountequivalent to his regular wage plusat least twenty-five percent (25%)

thereof. cralaw SECTION 9. Premium and overtimepay for holiday and rest day work. (a) Except employees referred tounder Section 2 of this Rule, anemployee who is permitted orsuffered to work on special holidaysor on his designated rest days notfalling on regular holidays, shall bepaid with an additional compensationas premium pay of not less thanthirty percent (30%) of his regularwage. For work performed in excessof eight (8) hours on special holidaysand rest days not falling on regularholidays, an employee shall be paidan additional compensation for the

overtime work equivalent to his ratefor the first eight hours on a specialholiday or rest day plus at least thirtypercent (30%) thereof. cralaw (b) Employees of public utilityenterprises as well as thoseemployed in non-profit institutionsand organizations shall be entitled tothe premium and overtime payprovided herein, unless they arespecifically excluded from thecoverage of this Rule as provided inSection 2 hereof. cralaw (c) The payment of additionalcompensation for work performed on


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regular holidays shall be governed byRule IV, Book Three, of these Rules. cralaw SECTION 10. Compulsory overtimework. In any of the following

cases, an employer may require anyof his employees to work beyondeight (8) hours a day, provided thatthe employee required to renderovertime work is paid the additionalcompensation required by theseregulations:(a) When the country is at war orwhen any other national or localemergency has been declared byCongress or the Chief Executive;(b) When overtime work is necessaryto prevent loss of life or property, orin case of imminent danger to publicsafety due to actual or impendingemergency in the locality caused byserious accident, fire, floods,

typhoons, earthquake, epidemic orother disaster or calamities;(c) When there is urgent work to beperformed on machines, installations,or equipment, in order to avoidserious loss or damage to theemployer or some other causes ofsimilar nature;(d) When the work is necessary toprevent loss or damage to perishablegoods;(e) When the completion orcontinuation of work started beforethe 8th hour is necessary to preventserious obstruction or prejudice to


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the business or operations of theemployer; or(f) When overtime work is necessaryto avail of favorable weather or

environmental conditions whereperformance or quality of work isdependent thereon. cralaw In cases not falling within any ofthese enumerated in this Section, noemployee may be made to workbeyond eight hours a day against hiswill.

RULE I-AHours of Work of Hospital and Clinic

PersonnelSECTION 1. General statement oncoverage. This Rule shall apply to:(a) All hospitals and clinics, includingthose with a bed capacity of lessthan one hundred (100) which aresituated in cities or municipalities

with a population of one million ormore; and(b) All hospitals and clinics with abed capacity of at least one hundred(100), irrespective of the size of thepopulation of the city or municipalitywhere they may be situated. cralaw SECTION 2. Hospitals or clinics withinthe meaning of this Rule. Theterms "hospitals" and "clinics" asused in this Rule shall mean a placedevoted primarily to the maintenanceand operation of facilities for thediagnosis, treatment and care ofindividuals suffering from illness,


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disease, injury, or deformity, or inneed of obstetrical or other medicaland nursing care. Either term shallalso be construed as any institution,

building, or place where there areinstalled beds, or cribs, or bassinetsfor twenty-four (24) hours use orlonger by patients in the treatmentof disease, injuries, deformities, orabnormal physical and mental states,maternity cases or sanitorial care; orinfirmaries, nurseries, dispensaries,and such other similar names bywhich they may be designated. cralaw SECTION 3. Determination of bedcapacity and population. (a) Forpurposes of determining theapplicability of this Rule, the actualbed capacity of the hospital or clinicat the time of such determinationshall be considered, regardless of the

actual or bed occupancy. The bedcapacity of hospital or clinic asdetermined by the Bureau of MedicalServices pursuant to Republic Act No.4226, otherwise known as theHospital Licensure Act, shall primafacie be considered as the actual bedcapacity of such hospital or clinic. cralaw (b) The size of the population of thecity or municipality shall bedetermined from the latest officialcensus issued by the Bureau of theCensus and Statistics. cralaw SECTION 4. Personnel covered bythis Rule. This Rule applies to all


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persons employed by any private orpublic hospital or clinic mentioned inSection 1 hereof, and shall include,but not limited to, resident

physicians, nurses, nutritionists,dieticians, pharmacists, socialworkers, laboratory techniciansparamedical technicians,psychologists, midwives, andattendants. cralaw SECTION 5. Regular working hours. The regular working hours of anyperson covered by this Rule shall notbe more than eight (8) hours in anyone day nor more than forty (40)hours in any one week. cralaw For purposes of this Rule a "day"shall mean a work day of twenty-four(24) consecutive hours beginning atthe same time each calendar year. A"week" shall mean the work of 168

consecutive hours, or sevenconsecutive 24-hour work days,beginning at the same hour and onthe same calendar day each calendarweek. cralaw SECTION 6. Regular working days. The regular working days of coveredemployees shall not be more thanfive days in a work week. The workweek may begin at any hour and onany day, including Saturday orSunday, designated by theemployer. cralaw Employers are not precluded fromchanging the time at which the work


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day or work week begins, providedthat the change is not intended toevade the requirements of this Rule. cralaw SECTION 7. Overtime work.

Where the exigencies of the serviceso require as determined by theemployer, any employee covered bythis Rule may be scheduled to workfor more than five (5) days or forty(40) hours a week, provided that theemployee is paid for the overtimework an additional compensationequivalent to his regular wage plusat least thirty percent (30%) thereof,subject to the provisions of this Bookon the payment of additionalcompensation for work performed onspecial and regular holidays and onrest days. cralaw SECTION 8. Hours worked. Indetermining the compensable hours

of work of hospital and clinicpersonnel covered by this Rule, thepertinent provisions of Rule 1 of thisBook shall apply. cralaw SECTION 9. Additional compensation. Hospital and clinic personnelcovered by this Rule, with theexception of those employed by theGovernment, shall be entitled to anadditional compensation for workperformed on regular and specialholidays and rest days as provided inthis Book. Such employees shall alsobe entitled to overtime pay forservices rendered in excess of forty


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hours a week, or in excess of eighthours a day, whichever will yield thehigher additional compensation tothe employee in the work week. cralaw

SECTION 10. Relation to Rule I. Allprovisions of Rule I of this Bookwhich are not inconsistent with thisRule shall be deemed applicable tohospital and clinic personnel.

RULE IINight Shift Differential

SECTION 1. Coverage. This Ruleshall apply to all employees except:(a) Those of the government and anyof its political subdivisions, includinggovernment-owned and/or controlledcorporations;(b) Those of retail and serviceestablishments regularly employingnot more than five (5) workers;(c) Domestic helpers and persons in

the personal service of another;(d) Managerial employees as definedin Book Three of this Code;(e) Field personnel and otheremployees whose time andperformance is unsupervised by theemployer including those who areengaged on task or contract basis,purely commission basis, or thosewho are paid a fixed amount forperforming work irrespective of thetime consumed in the performancethereof. cralaw SECTION 2. Night shift differential. An employee shall be paid night shift


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differential of no less than ten percent (10%) of his regular wage foreach hour of work performedbetween ten o'clock in the evening

and six o'clock in the morning. cralaw SECTION 3. Additional compensation. Where an employee is permittedor suffered to work on the periodcovered after his work schedule, heshall be entitled to his regular wageplus at least twenty-five per cent(25%) and an additional amount ofno less than ten per cent (10%) ofsuch overtime rate for each hour orwork performed between 10 p.m. to6 a.m. cralaw SECTION 4. Additional compensationon scheduled rest day/specialholiday. An employee who isrequired or permitted to work on theperiod covered during rest days

and/or special holidays not falling onregular holidays, shall be paid acompensation equivalent to hisregular wage plus at least thirty(30%) per cent and an additionalamount of not less than ten (10%)per cent of such premium pay ratefor each hour of work performed. cralaw SECTION 5. Additional compensationon regular holidays. For work onthe period covered during regularholidays, an employee shall beentitled to his regular wage duringthese days plus an additionalcompensation of no less than ten


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(10%) per cent of such premium ratefor each hour of work performed. cralaw SECTION 6. Relation to agreements. Nothing in this Rule shall justify an

employer in withdrawing or reducingany benefits, supplements orpayments as provided in existingindividual or collective agreements oremployer practice or policy.

RULE IIIWeekly Rest Periods

SECTION 1. General statement oncoverage. This Rule shall apply toall employers whether operating forprofit or not, including public utilitiesoperated by private persons. cralaw SECTION 2. Business onSundays/Holidays. Allestablishments and enterprises mayoperate or open for business onSundays and holidays provided that

the employees are given the weeklyrest day and the benefits as providedin this Rule. cralaw SECTION 3. Weekly rest day. Every employer shall give hisemployees a rest period of not lessthan twenty-four (24) consecutivehours after every six consecutivenormal work days. cralaw SECTION 4. Preference of employee. The preference of the employee asto his weekly day of rest shall berespected by the employer if thesame is based on religious grounds.The employee shall make known his


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preference to the employer in writingat least seven (7) days before thedesired effectivity of the initial restday so preferred. cralaw

Where, however, the choice of theemployee as to his rest day based onreligious grounds will inevitablyresult in serious prejudice orobstruction to the operations of theundertaking and the employer cannotnormally be expected to resort toother remedial measures, theemployer may so schedule theweekly rest day of his choice for atleast two (2) days in a month. cralaw SECTION 5. Schedule of rest day. (a) Where the weekly rest is given toall employees simultaneously, theemployer shall make known suchrest period by means of a writtennotice posted conspicuously in the

work place at least one week beforeit becomes effective. cralaw (b) Where the rest period is notgranted to all employeessimultaneously and collectively, theemployer shall make known to theemployees their respective schedulesof weekly rest through writtennotices posted conspicuously in thework place at least one week beforethey become effective. cralaw SECTION 6. When work on rest dayauthorized. An employer mayrequire any of his employees to workon his scheduled rest day for the


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duration of the following emergenciesand exceptional conditions:(a) In case of actual or impendingemergencies caused by serious

accident, fire, flood, typhoon,earthquake, epidemic or otherdisaster or calamity, to prevent lossof life or property, or in cases offorce majeure or imminent danger topublic safety;(b) In case of urgent work to beperformed on machineries,equipment or installations to avoidserious loss which the employerwould otherwise suffer;(c) In the event of abnormalpressure of work due to specialcircumstances, where the employercannot ordinarily be expected toresort to other measures;(d) To prevent serious loss of

perishable goods;(e) Where the nature of the work issuch that the employees have towork continuously for seven (7) daysin a week or more, as in the case ofthe crew members of a vessel tocomplete a voyage and in othersimilar cases; and(f) When the work is necessary toavail of favorable weather orenvironmental conditions whereperformance or quality of work isdependent thereon. cralaw No employee shall be requiredagainst his will to work on his


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scheduled rest day except undercircumstances provided in thisSection: Provided, However, thatwhere an employee volunteers to

work on his rest day under othercircumstances, he shall express suchdesire in writing, subject to theprovisions of Section 7 hereofregarding additional compensation. cralaw SECTION 7. Compensation on restday/Sunday/holiday. (a) Exceptthose employees referred to underSection 2, Rule I, Book Three, anemployee who is made or permittedto work on his scheduled rest dayshall be paid with an additionalcompensation of at least 30% of hisregular wage. An employee shall beentitled to such additionalcompensation for work performed ona Sunday only when it is his

established rest day.cralaw

(b) Where the nature of the work ofthe employee is such that he has noregular work days and no regularrest days can be scheduled, he shallbe paid an additional compensationof at least 30% of his regular wagefor work performed on Sundays andholidays. cralaw (c) Work performed on any specialholiday shall be paid with anadditional compensation of at least30% of the regular wage of theemployees. Where such holiday workfalls on the employee's scheduled


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rest day, he shall be entitled toadditional compensation of at least50% of his regular wage. cralaw (d) The payment of additional

compensation for work performed onregular holiday shall be governed byRule IV, Book Three, of theseregulations. cralaw (e) Where the collective bargainingagreement or other applicableemployment contract stipulates thepayment of a higher premium paythan that prescribed under thisSection, the employer shall pay suchhigher rate. cralaw SECTION 8. Paid-off days. Nothingin this Rule shall justify an employerin reducing the compensation of hisemployees for the unworkedSundays, holidays, or other rest dayswhich are considered paid-off days or

holidays by agreement or practicesubsisting upon the effectivity of theCode. cralaw SECTION 9. Relation to agreements. Nothing herein shall prevent theemployer and his employees or theirrepresentatives in entering into anyagreement with terms morefavorable to the employees thanthose provided herein, or be used todiminish any benefit granted to theemployees under existing laws,agreements, and voluntary employerpractices.

RULE IV


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Holidays with PaySECTION 1. Coverage. This ruleshall apply to all employees except:(a) Those of the government and any

of the political subdivision, includinggovernment-owned and controlledcorporation;(b) Those of retail and serviceestablishments regularly employingless than ten (10) workers;(c) Domestic helpers and persons inthe personal service of another;(d) Managerial employees as definedin Book Three of the Code;(e) Field personnel and otheremployees whose time andperformance is unsupervised by theemployer including those who areengaged on task or contract basis,purely commission basis, or thosewho are paid a fixed amount for

performing work irrespective of thetime consumed in the performancethereof. cralaw SECTION 2. Status of employeespaid by the month. Employeeswho are uniformly paid by themonth, irrespective of the number ofworking days therein, with a salaryof not less than the statutory orestablished minimum wage shall bepaid for all days in the monthwhether worked or not. cralaw For this purpose, the monthlyminimum wage shall not be less thanthe statutory minimum wage


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multiplied by 365 days divided bytwelve. cralaw SECTION 3. Holiday Pay. Everyemployer shall pay his employees

their regular daily wage for anyworked regular holidays. cralaw As used in the rule, the term 'regularholiday' shall exclusively refer to:New Year's Day, Maundy Thursday,Good Friday, the ninth of April, thefirst of May, the twelfth of June, thelast Sunday of August, the thirtiethof November, the twenty-fifth andthirtieth of December. Nationwidespecial days shall include the first ofNovember and the last day ofDecember. cralaw As used in this Rule legal or regularholiday and special holiday shall nowbe referred to as 'regular holiday'and 'special day', respectively. cralaw

SECTION 4. Compensation forholiday work. Any employee whois permitted or suffered to work onany regular holiday, not exceedingeight (8) hours, shall be paid at leasttwo hundred percent (200%) of hisregular daily wage. If the holidaywork falls on the scheduled rest dayof the employee, he shall be entitledto an additional premium pay of atleast 30% of his regular holiday rateof 200% based on his regular wagerate. cralaw SECTION 5. Overtime pay for holidaywork. For work performed in


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excess of eight hours on a regularholiday, an employee shall be paidan additional compensation for theovertime work equivalent to his rate

for the first eight hours on suchholiday work plus at least 30%thereof. cralaw Where the regular holiday workexceeding eight hours falls on thescheduled rest day of the employee,he shall be paid an additionalcompensation for the overtime workequivalent to his regular holiday-restday for the first 8 hours plus 30%thereof. The regular holiday rest dayrate of an employee shall consist of200% of his regular daily wage rateplus 30% thereof. cralaw SECTION 6. Absences. (a) Allcovered employees shall be entitledto the benefit provided herein when

they are on leave of absence withpay. Employees who are on leave ofabsence without pay on the dayimmediately preceding a regularholiday may not be paid the requiredholiday pay if he has not worked onsuch regular holiday. cralaw (b) Employees shall grant the samepercentage of the holiday pay as thebenefit granted by competentauthority in the form of employee'scompensation or social securitypayment, whichever is higher, if theyare not reporting for work while onsuch benefits. cralaw


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(c) Where the day immediatelypreceding the holiday is a non-working day in the establishment orthe scheduled rest day of the

employee, he shall not be deemed tobe on leave of absence on that day,in which case he shall be entitled tothe holiday pay if he worked on theday immediately preceding the non-working day or rest day. cralaw SECTION 7. Temporary or periodicshutdown and temporary cessation ofwork. (a) In cases of temporary orperiodic shutdown and temporarycessation of work of anestablishment, as when a yearlyinventory or when the repair orcleaning of machineries andequipment is undertaken, the regularholidays falling within the periodshall be compensated in accordance

with this Rule.cralaw

(b) The regular holiday during thecessation of operation of anenterprise due to business reversesas authorized by the Secretary ofLabor and Employment may not bepaid by the employer. cralaw SECTION 8. Holiday pay of certainemployees. (a) Private schoolteachers, including faculty membersof colleges and universities, may notbe paid for the regular holidaysduring semestral vacations. Theyshall, however, be paid for theregular holidays during Christmas


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vacation;(b) Where a covered employee, ispaid by results or output, such aspayment on piece work, his holiday

pay shall not be less than hisaverage daily earnings for the lastseven (7) actual working dayspreceding the regular holiday;Provided, However, that in no caseshall the holiday pay be less than theapplicable statutory minimum wagerate. cralaw (c) Seasonal workers may not bepaid the required holiday pay duringoff-season when they are not atwork. cralaw (d) Workers who have no regularworking days shall be entitled to thebenefits provided in this Rule. cralaw SECTION 9. Regular holiday fallingon rest days or Sundays. (a) A

regular holiday falling on theemployee's rest day shall becompensated accordingly. cralaw (b) Where a regular holiday falls on aSunday, the following day shall beconsidered a special holiday forpurposes of the Labor Code, unlesssaid day is also a regular holiday. cralaw SECTION 10. Successive regularholidays. Where there are two (2)successive regular holidays, like HolyThursday and Good Friday, anemployee may not be paid for bothholidays if he absents himself fromwork on the day immediately


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preceding the first holiday, unless heworks on the first holiday, in whichcase he is entitled to his holiday payon the second holiday. cralaw

SECTION 11. Relation toagreements. Nothing in this Ruleshall justify an employer inwithdrawing or reducing anybenefits, supplements or paymentsfor unworked holidays as provided inexisting individual or collectiveagreement or employer practice orpolicy.

RULE VService Incentive Leave

SECTION 1. Coverage. This ruleshall apply to all employees except:(a) Those of the government and anyof its political subdivisions, includinggovernment-owned and controlledcorporations;

(b) Domestic helpers and persons inthe personal service of another;(c) Managerial employees as definedin Book Three of this Code;(d) Field personnel and otheremployees whose performance isunsupervised by the employerincluding those who are engaged ontask or contract basis, purelycommission basis, or those who arepaid a fixed amount for performingwork irrespective of the timeconsumed in the performancethereof;(e) Those who are already enjoying


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the benefit herein provided;(f) Those enjoying vacation leavewith pay of at least five days; and(g) Those employed in

establishments regularly employingless than ten employees. cralaw SECTION 2. Right to serviceincentive leave. Every employeewho has rendered at least one yearof service shall be entitled to a yearlyservice incentive leave of five dayswith pay. cralaw SECTION 3. Definition of certainterms. The term "at least one-yearservice" shall mean service for notless than 12 months, whethercontinuous or broken reckoned fromthe date the employee startedworking, including authorizedabsences and paid regular holidaysunless the working days in the

establishment as a matter of practiceor policy, or that provided in theemployment contract is less than 12months, in which case said periodshall be considered as one year. cralaw SECTION 4. Accrual of benefit. Entitlement to the benefit provided inthis Rule shall start December 16,1975, the date the amendatoryprovision of the Code took effect. cralaw SECTION 5. Treatment of benefit. The service incentive leave shall becommutable to its money equivalentif not used or exhausted at the endof the year. cralaw


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SECTION 6. Relation to agreements. Nothing in the Rule shall justify anemployer from withdrawing orreducing any benefits, supplements

or payments as provided in existingindividual or collective agreements oremployer's practices or policies.

RULE VIService Charges

SECTION 1. Coverage. This ruleshall apply only to establishmentscollecting service charges such ashotels, restaurants, lodging houses,night clubs, cocktail lounge, massageclinics, bars, casinos and gamblinghouses, and similar enterprises,including those entities operatingprimarily as private subsidiaries ofthe Government. cralaw SECTION 2. Employees covered. This rule shall apply to all employees

of covered employers, regardless oftheir positions, designations oremployment status, and irrespectiveof the method by which their wagesare paid except to managerialemployees. cralaw As used herein, a "managerialemployee" shall mean one who isvested with powers or prerogativesto lay down and executemanagement policies and/or to hire,transfer, suspend, lay-off, recall,discharge, assign, or disciplineemployees or to effectivelyrecommend such managerial actions.


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All employees not falling within thisdefinition shall be considered rank-and-file employees. cralaw SECTION 3. Distribution of service

charges. All service chargescollected by covered employers shallbe distributed at the rate of 85% forthe employees and 15% for themanagement. The 85% shall bedistributed equally among thecovered employees. The 15% shallbe for the disposition bymanagement to answer for lossesand breakages and distribution tomanagerial employees at thediscretion of the management in thelatter case. cralaw SECTION 4. Frequency ofdistribution. The shares referred toherein shall be distributed and paidto the employees not less than once

every two (2) weeks or twice amonth at intervals not exceedingsixteen (16) days. cralaw SECTION 5. Integration of servicecharges. In case the servicecharges is abolished the share ofcovered employees shall beconsidered integrated in their wages.The basis of the amount to beintegrated shall be the averagemonthly share of each employee forthe past twelve (12) monthsimmediately preceding the abolitionof withdrawal of such charges. cralaw SECTION 6. Relation to agreements.


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Nothing in this Rule shall preventthe employer and his employeesfrom entering into any agreementwith terms more favorable to the

employees than those providedherein, or be used to diminish anybenefit granted to the employeesunder existing laws, agreement andvoluntary employer practice. cralaw SECTION 7. This rule shall be withoutprejudice to existing, future collectivebargaining agreements. cralaw Nothing in this rule shall beconstrued to justify the reduction ordiminution of any benefit beingenjoyed by any employee at the timeof effectivity of this rule.

RULE VIIWages

SECTION 1. Definition of Terms. Asused in this Rules

a) "Act" means Republic Act No.6727;b) "Commission" means the NationalWages and Productivity Commission;c) "Board" means the RegionalTripartite Wages and ProductivityBoard;d) "Agriculture" refers to all farmingactivities in all its branches andincludes among others, thecultivation and tillage of the soil,production, cultivation, growing andharvesting of any agricultural orhorticultural commodities, dairying,raising of livestock or poultry, the


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culture of fish and other aquaticproducts in farms or ponds, and anyactivities performed by a farmer oron a farm as an incident to or in

conjunction with such farmingoperations, but does not include themanufacturing and/or processing ofsugar, coconut, abaca, tobacco,pineapple, aquatic or other farmproducts;e) "Plantation Agricultural Enterprise"is one engaged in agriculture withinan area of more than 24 hectares ina locality and/or which employs atleast 20 workers. Any otheragricultural enterprise shall beconsidered as "Non-PlantationAgricultural Enterprises";f) "Retail Establishment" is oneprincipally engaged in the sale ofgoods to end-users for personal or

household use;g) "Service Establishment" is oneprimarily engaged in the sale ofservice to individuals for their own orhousehold use and is generallyrecognized as such;h) "Cottage/HandicraftEstablishment" is one engaged in aneconomic endeavor in which theproducts are primarily done in thehome or such other places for profitwhich requires manual dexterity andcraftsmanship and whosecapitalization does not exceedP500,000, regardless of previous


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registration with the defunctNACIDA;i) "National Capital Region" coversthe cities of Kalookan, Manila, Pasay

and Quezon and the municipalities ofLas Pias, Makati, Malabon,Mandaluyong, Marikina, Muntinlupa,Navotas, Paraaque, Pasig, Pateros,San Juan, Taguig and Valenzuela;) "Region III" covers the provinces

of Bataan, Bulacan, Nueva Ecija,Pampanga, Tarlac, and Zambalesand the cities of Angeles,Cabanatuan, Olongapo, Palayan andSan Jose;k) "Region IV" covers the provincesof Aurora, Batangas, Cavite, Laguna,Marinduque, Occidental Mindoro,Palawan, Quezon, Rizal and Romblonand the cities of Batangas, Cavite,Lipa, Lucena, Puerto Princesa, San

Pablo, Tagaytay and Trece Martires;l) "Department" refers to theDepartment of Labor andEmployment;m) "Secretary" means the Secretaryof Labor and Employment;n) "Basic Wage" means allremuneration or earnings paid by anemployer to a worker for servicesrendered on normal working daysand hours but does not include cost-of-living allowances, profit sharingpayments, premium payments, 13thmonth pay or other monetarybenefits which are not considered as


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part of or integrated into the regularsalary of the workers on the date theAct became effective."o) "Statutory Minimum Wage" is the

lowest wage fixed by law that anemployer can pay his workers;p) "Wage Distortion" means asituation where an increase inprescribed wage rates results in theelimination or severe contraction ofintentional quantitative differences inwage or salary rates between andamong employee groups in anestablishment as to effectivelyobliterate the distinctions embodiedin such wage structure based onskills, length of service, or otherlogical bases of differentiation;q) "Capitalization" means paid-upcapital, in the case of a corporation,and total invested capital, in the case

of a partnership or singleproprietorship.CHAPTER I

Wage IncreaseSECTION 1. Coverage. The wageincrease prescribed under the Actshall apply to all workers andemployees in the private sectorregardless of their position,designation or status, andirrespective of the method by whichtheir wages are paid, except:a) Household or domestic helpers,including family drivers and workersin the personal service of another;


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b) Workers and employees inretail/service establishmentsregularly employing not more than10 workers, when exempted from

compliance with the Act, for a periodfixed by the Commission/Boards inaccordance with Section 4 (c) of theAct and Section 15, Chapter 1 ofthese Rules;c) Workers and employees in newbusiness enterprises outside theNational Capital Region and exportprocessing zones for a period of notmore than two or three years, as thecase may be, from the start ofoperations when exempted inaccordance with Section 5 of the Actand Section 15, Chapter I of theseRules;d) Workers and employees receivinga basic wage of more than P100.00

per day.cralaw

SECTION 2. Effectivity. The Acttakes effect on July 1, 1989, 15 daysfollowing its complete publication intwo newspapers of generalcirculation on June 15, 1989pursuant to Section 15 thereof. cralaw SECTION 3. Amount of MinimumWage Increase. Effective July 1,1989, the daily statutory minimumwage rates of covered workers andemployees shall be increased asfollows:a) P25.00 for those in the NationalCapital Region;


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b) P25.00 for those outside theNational Capital Region, except forthe following:P20.00 for those in plantation

agricultural enterprises with anannual gross sales of less than P5million in the fiscal year immediatelypreceding the effectivity of the Act;P15.00 for those in the followingenterprises:1. Non-plantation agriculture2. Cottage/handicraft3. Retail/Service regularly employingnot more than 10 workers4. Business enterprises with acapitalization of not more thanP500,000 and employing not morethan 20 workers. cralaw SECTION 4. When Wage IncreaseDue Other Workers. a) All workersand employees who, prior to July 1,

1989, were already receiving a basicwage above the statutory minimumwage rates provided under RepublicAct 6640 but not over P100.00 perday shall receive a wage increaseequivalent to that provided in thepreceding Section. cralaw b) Those receiving not more than thefollowing monthly basic wage ratesprior to July 1, 1989 shall be deemedcovered by the preceding subsection:(i) P3,257.50 where the workersand employees work everyday,including premium payments forSundays or rest days, special days


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and regular holidays. cralaw (ii) P3,041.67 where the workersand employees do not work butconsidered paid on rest days, special

days and regular holidays. cralaw (iii) P2,616.67 where the workersand employees do not work and arenot considered paid on Sundays orrest days. cralaw (iv) P2,183.33 where the workersand employees do not work and arenot considered paid on Saturdaysand Sundays or rest days. cralaw c) Workers and employees who, priorto July 1, 1989, were receiving abasic wage of more than P100.00 perday or its monthly equivalent, arenot by law entitled to the wageincrease provided under the Act.They may however, receive wageincreases through the correction of

wage distortions in accordance withSection 16, Chapter I of these Rules. cralaw SECTION 5. Daily Statutory MinimumWage Rates. The daily minimumwage rates of workers andemployees shall be as follows:Sector/Industry UnderUnder

R. A. 6640 R. A. 6727(Effective (EffectiveDec. 14, July 1,1987) 1989)

A. NATIONAL CAPITAL REGIONNon-Agriculture P64.00P89.00


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AgriculturePlantation 54.0079.00Non-Plantation 43.50

68.50Cottage/HandicraftEmploying more than 30workers 52.00 77.00Employing not more than30 workers 50.0075.00Private HospitalsWith bed capacity of morethan 100 64.00 89.00With bed capacity of 100or less 60.00 85.00Retail/ServiceEmploying more than 15workers 64.00 89.00Employing 11 to 15workers 60.00 85.00

Employing not more than10 workers 43.00 68.00B. OUTSIDE NATIONAL CAPITALREGIONNon-Agriculture 64.0089.00AgriculturePlantation with annual grosssales of P5M or more54.00 79.00Plantation with annual grosssales of less than P5M54.00 74.00Non-plantation 43.5058.50


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Cottage/HandicraftEmploying more than30 workers 52.00 67.00Employing not more

than 30 workers 50.0065.00Private Hospitals 60.0085.00Retail/ServiceCities w/ population of morethan 150,000Employing more than15 workers 64.00 89.00Employing 11 to 15 workers60.00 85.00Employing not more than10 workers 43.00 58.00Sugar MillsAgriculturePlantation w/ annual grosssales of P5M or more 48.50

73.50Plantation w/ annual grosssales of less than P5M 48.5068.50Non-plantation 43.5058.50Business Enterprises w/Capitalizationof not more than P500,000 andemploying not more than 20workersNon-Agriculture 64.0079.00Agriculture PlantationProducts Other than Sugar


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54.00 69.00Sugar 48.50 63.50Private Hospitals 60.0075.00

Retail/ServiceCities w/ population of morethan 150,000Employing more than15 workers 64.0079.00Employing 11 to 15 workers60.00 75.00Municipalities and Citiesw/ population of not morethan 150,000Employing more than 10workers 60.0075.00SECTION 6. Suggested Formula inDetermining the Equivalent MonthlyStatutory Minimum Wage Rates.

Without prejudice to existingcompany practices, agreements orpolicies, the following formula maybe used as guides in determining theequivalent monthly statutoryminimum wage rates:a) For those who are required towork everyday including Sundays orrest days, special days and regularholidays:Equivalent Applicable daily wage rate(ADR) x 390.90 daysMonthly = Rate (EMR) 12


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Where 390.90 days =302 days Ordinary working days20 days 10 regular holidays x 200%66.30 days 51 rest days x 130%

2.60 days 2 special days x 130%390.90 days Total equivalent numberof days.b) For those who do not work butconsidered paid on rest days, specialdays and regular holidays:ADR x 365 daysEMR = 12Where 365 days =302 days Ordinary working days51 days Rest days10 days Regular holidays2 days Special days365 days Total equivalent number ofdaysc) For those who do not work and are

not considered paid on Sundays orrest days:ADR x 314 daysEMR = 12Where 314 days =302 days Ordinary working days10 days Regular holidays2 days Special days (If consideredpaid; If actually worked,this is equivalent to 2.6 days)314 days Total equivalent number ofdaysd) For those who do not work andare not considered paid on Saturdays


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or rest days:ADR x 262 daysEMR = 12

Where 262 days =250 days Ordinary working days10 days Regular holidays2 days Special days (If consideredpaid; If actuallyworked, this is equivalent to 2.6days)262 days Total equivalent number ofdaysNote: For workers whose rest daysfall on Sundays, the number of restdays in a year is reduced from 52 to51 days, the last Sunday of Augustbeing a regular holiday underExecutive Order No. 201. For

purposes of computation, saidholiday, although still a rest day for

them, is included in the ten regularholidays. For workers whose restdays do not fall on Sundays, thenumber of rest days is 52 days, asthere are 52 weeks in a year. Nothing herein shall be considered asauthorizing the reduction of benefitsgranted under existing agreementsor employer practices/policies. cralaw SECTION 7. Basis of Minimum WagesRates. The statutory minimumwage rules prescribed under the Actshall be for the normal workinghours, which shall not exceed eighthours work a day. cralaw


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SECTION 8. Creditable WageIncrease. a) No wage increase shall be creditedas compliance with the increases

prescribed under the Act unlessexpressly provided under collectivebargaining agreements; and, suchwage increase was granted notearlier than April 1, 1989 but notlater than July 1, 1989. Where thewage increase granted is less thanthe prescribed increase under theAct, the employer shall pay thedifference. cralaw b) Anniversary wage increaseprovided in collective agreements,merit wage increase, and thoseresulting from the regularization orpromotion of employees shall not becredited as compliance thereto. cralaw SECTION 9. Workers Paid by Results.

a) All workers paid by results,including those who are paid onpiecework, takay, pakyaw, or taskbasis, shall receive not less than theapplicable statutory minimum wagerates prescribed under the Act forthe normal working hours which shallnot exceed eight hours work a day,or a proportion thereof for work ofless than the normal working hours. cralaw The adjusted minimum wage ratesfor workers paid by results shall becomputed in accordance with thefollowing steps:


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1) Amount of increase in AMW -Previous AMW x 100 = % Increase;2) Existing rate/piece x % increase =increase in rate/piece;

3) Existing rate/piece + increase inrate/piece = Adjusted rate/piece. cralaw Where AMW is the applicableminimum wage rate. cralaw b) The wage rates of workers whoare paid by results shall continue tobe established in accordance withArticle 101 of the Labor Code, asamended and its implementingregulations. cralaw SECTION 10. Wages of SpecialGroups of Workers. Wages ofapprentices, learners andhandicapped workers shall in no casebe less than 75 percent of theapplicable statutory minimum wagerates. cralaw

All recognized learnership andapprenticeship agreements enteredinto before July 1, 1989 shall beconsidered as automatically modifiedinsofar as their wage clauses areconcerned to reflect the increasesprescribed under the Act. cralaw SECTION 11. Application toContractors. In the case ofcontracts for construction projectsand for security, janitorial and similarservices, the prescribed wageincreases shall be borne by theprincipals or clients of theconstruction/service contractors and


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the contract shall be deemedamended accordingly. In the event,however, that the principal or clientfails to pay the prescribed wage

rates, the construction/servicecontractor shall be jointly andseverally liable with his principal orclient. cralaw SECTION 12. Application to PrivateEducational Institution. Privateeducational institutions whichincreased tuition fees beginningschool year 1989-1990 shall complywith the P25.00 per day wageincrease prescribed under the Acteffective as follows:a) In cases where the tuition feeincrease was effected before theeffectivity of the Act, the wageincrease shall take effect only July 1,1989. cralaw

b) In cases where the tuition feeincrease was effected on or after theeffectivity of the Act, the wageincrease shall take effect not laterthan the date the school actuallyincreased tuition but in the lattercase, such wage increase may not bemade retroactive in July 1, 1989. cralaw Beginning school year 1990-1991, allschools shall implement the wageincrease regardless of whether or notthey have actually increased tuitionfees. cralaw SECTION 13. Mobile and BranchWorkers. The statutory minimum


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wage rates of workers, who by thenature of their work have to travel,shall be those applicable in thedomicile or head office of the

employer. cralaw The minimum wage rates of workersworking in branches or agencies ofestablishments in or outside theNational Capital Region shall bethose applicable in the place wherethey are stationed. cralaw SECTION 14. Transfer of Personnel. The transfer of personnel to areasoutside the National Capital Regionshall not be a valid ground for thereduction of the wage rates beingenjoyed by the workers prior to suchtransfer. The workers transferred tothe National Capital Region shall beentitled to the minimum wage rateapplicable therein. cralaw

SECTION 15. Exemptions. a) The following establishments maybe exempted from compliance withthe wage increase prescribed underthe Act:1) Retail/Service establishmentsregularly employing not more than10 workers upon application with andas determined by the appropriateBoard in accordance with applicableguidelines to be issued by theCommission. cralaw 2) New business enterprises thatmay be established outside theNational Capital Region and export


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processing zones from July 1, 1989to June 30, 1993, whose operation orinvestments need initial assistancemay be exempted for not more than

three years from the start ofoperations, subject to guidelines tobe issued by the Secretary inconsultation with the Department ofTrade and Industry and theDepartment of Agriculture. cralaw New business enterprises in RegionIII (Central Luzon) and Region IV(Southern Tagalog) may beexempted for two years only fromstart of operations, except those thatmay be established in the provincesof Palawan, Oriental Mindoro,Occidental Mindoro, Marinduque,Romblon, Quezon and Aurora, whichmay also be exempted for not morethan three years from the start of

operations.cralaw

b) Whenever an application forexemption has been duly filed withthe appropriate office in theDepartment/Board, action by theRegional Office of the Department onany complaints for alleged non-compliance with the Act shall bedeferred pending resolution of theapplicant for exemption. cralaw c) In the event that the applicationfor exemption is not granted, theworkers and employees shall receivethe appropriate compensation duethem as provided for under the Act


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plus interest of one percent permonth retroactive to July 1, 1989 orthe start of operations whichever isapplicable. cralaw

SECTION 16. Effects on ExistingWage Structure. Where theapplication of the wage increaseprescribed herein results indistortions in the wage structurewithin an establishment which givesrise to a dispute therein, suchdispute shall first be settledvoluntarily between the parties. Inthe event of a deadlock, such disputeshall be finally resolved throughcompulsory arbitration by theregional arbitration branch of theNational Labor Relations Commission(NLRC) having jurisdiction over theworkplace. cralaw The NLRC shall conduct continuous

hearings and decide any disputearising from wage distortions withintwenty calendar days from the timesaid dispute is formally submitted toit for arbitration. The pendency of adispute arising from a wagedistortion shall not in any way delaythe applicability of the increases inthe wage rates prescribed under theAct. cralaw Any issue involving wage distortionshall not be a ground for astrike/lockout. cralaw SECTION 17. Complaints for Non-Compliance. Complaints for non-


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compliance with the wage increasesprescribed under the Act shall befiled with the Regional Offices of theDepartment having jurisdiction over

the workplace and shall be thesubject of enforcement proceedingsunder Articles 128 and 129 of theLabor Code, as amended. cralaw SECTION 18. Conduct of inspectionby the Department. TheDepartment shall conduct inspectionsof establishments, as often asnecessary, to determine whether theworkers are paid the prescribed wagerates and other benefits granted bylaw or any Wage Order. In theconduct of inspection in unionizedcompanies, Department inspectorsshall always be accompanied by thepresident or other responsible officerof the recognized bargaining unit or

of any interested union. In the caseof non-unionized establishments, aworker representing the workers inthe said company shall accompanythe inspector. cralaw The worker's representative shallhave the right to submit his ownfindings to the Department and totestify on the same if he does notconcur with the findings of the laborinspector. cralaw SECTION 19. Payment of Wages. Upon written petition of the majorityof the workers and employeesconcerned, all private


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establishments, companies,businesses and other entities with atleast twenty workers and locatedwithin one kilometer radius to a

commercial, savings or rural bank,shall pay the wages and otherbenefits of their workers through anyof said banks, within the period andin the manner and form prescribedunder the Labor Code as amended. cralaw SECTION 20. Duty of Bank. Whenever applicable and uponrequest of concerned worker orunion, the bank through which wagesand other benefits are paid issue acertification of the record of paymentof said wages and benefits of aparticular worker or workers for aparticular payroll period.

CHAPTER IIThe National Wages and Productivity

Commission and Regional TripartiteWages and Productivity BoardsSECTION 1. Commission. TheNational Wages and ProductivityCommission created under the Actshall hold office in the NationalCapital Region. The Commission shallbe attached to the Department forpolicy and program coordination. cralaw SECTION 2. Powers and Functions ofthe Commission. The Commissionshall have the following powers andfunctions:a) To act as the national consultativeand advisory body to the President of


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the Philippines and Congress onmatters relating to wages, incomesand productivity;b) To formulate policies and

guidelines on wages, incomes andproductivity improvement at theenterprise, industry and nationallevels;c) To prescribe rules and guidelinesfor the determination of appropriateminimum wage and productivitymeasures at the regional, provincialor industry levels;d) To review regional wage levels setby the Regional Tripartite Wages andProductivity Board to determine ifthese are in accordance withprescribed guidelines and nationaldevelopment plans;e) To undertake studies, researchesand surveys necessary for the

attainment of its functions andobjectives, and to collect and compiledata and periodically disseminateinformation on wages andproductivity and other relatedinformation, including, but notlimited to, employment, cost-of-living, labor costs, investments andreturns;f) To review plans and programs ofthe Regional Tripartite Wages andProductivity Boards to determinewhether these are consistent withnational development plans;g) To exercise technical and


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administrative supervision over theRegional Tripartite Wages andProductivity Boards;h) To call, from time to time, a

national tripartite conference ofrepresentatives of government,workers and employers for theconsideration of measures topromote wage rationalization andproductivity; andi) To exercise such powers andfunctions as may be necessary toimplement this Act. cralaw SECTION 3. Composition of theCommission. The Commissionshall be composed of the Secretaryas ex-officio Chairman, the DirectorGeneral of the National Economic andDevelopment Authority (NEDA) asex-officio Vice-Chairman and twomembers each from workers and

employers sectors who shall beappointed by the President for a termof five years upon recommendationof the Secretary. The recommendeesshall be selected from the lists ofnominees submitted by the workers'and employers' sectors. TheExecutive Director of the CommissionSecretariat shall be also a member ofthe Commission. cralaw The members of the Commissionrepresenting labor and managementshall have the same rank,emoluments, allowances and otherbenefits as those prescribed by law


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for labor and managementrepresentatives in the Employees'Compensation Commission. cralaw SECTION 4. Commission Secretariat.

The Commission shall be assistedby a Secretariat to be headed by anExecutive Director and two DeputyDirectors who shall be appointed bythe President upon recommendationof the Secretary. cralaw The Executive Director shall have therank of a Department AssistantSecretary, while the Deputy Directorsthat of a Bureau Director. TheExecutive Director and DeputyDirectors shall receive thecorresponding salary, benefits andother emoluments of the positions. cralaw SECTION 5. Regional TripartiteWages and Productivity Boards. The Regional Wages and Productivity

Boards created under the Act in allregions, including autonomousregions as may be established bylaw, shall hold offices in areas wherethe Regional Offices of theDepartment are located. cralaw SECTION 6. Powers and Functions ofthe Boards. The Boards shall havethe following powers and functions:a) To develop plans, programs andprojects relative to wages, incomesand productivity improvement fortheir respective regions;b) To determine and fix minimumwage rates applicable in their region,


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provinces or industries therein and toissue the corresponding wage orders,subject to guidelines issued by theCommission;

c) To undertake studies, researches,and surveys necessary for theattainment of their functions,objectives and programs, and tocollect and compile data on wages,incomes, productivity and otherrelated information and periodicallydisseminate the same;d) To coordinate with the otherBoards as may be necessary to attainthe policy and intention of the LaborCode;e) To receive, process and act onapplications for exemption fromprescribed wage rates as may beprovided by law or any Wage Order;and

f) To exercise such other powers andfunctions as may be necessary tocarry out their mandate under theLabor Code. cralaw Implementation of the plans,programs and projects of the Boardsshall be through the respectiveRegional Offices of the Department,provided, however, that the Boardsshall have technical supervision overthe Regional Office of theDepartment with respect to theimplementation of these plans,programs and projects. cralaw SECTION 7. Compositions of the


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Boards. Each Board shall becomposed of the Regional Director ofthe Department as Chairman, theRegional Directors of the National

Economic and Development Authority(NEDA) and Department of Tradeand Industry (DTI) as Vice-Chairmenand two members each of workersand employers sectors who shall beappointed by the President for a termof five years upon therecommendation of the Secretary.The recommendees shall be selectedfrom the list of nominees submittedby the workers and employerssectors. cralaw Each Board shall be assisted by aSecretariat. cralaw SECTION 8. Authority to Organizeand Appoint Personnel. TheChairman of the Commission shall

organize such units and appoint thenecessary personnel of theCommission and Board Secretaries,subject to pertinent laws, rules andregulations.

CHAPTER IIIMinimum Wage Determination

SECTION 1. Regional MinimumWages. The minimum wage ratesfor agricultural and non-agriculturalworkers and employees in everyregion shall be those prescribed bythe Boards which shall in no case belower than the statutory minimumwage rates. These wage rates may


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include wages by industry, provinceor locality as may be deemednecessary by the Boards. cralaw SECTION 2. Standards/Criteria for

Minimum Wage Fixing. Theregional minimum wages to beestablished by the Boards shall be asnearly adequate as is economicallyfeasible to maintain the minimumstandards of living necessary for thehealth, efficiency and general well-being of the workers within theframework of the national economicand social development programs. Inthe determination of regionalminimum wages, the Boards, shall,among other relevant factors,consider the following:a) The demand for living wages;b) Wage adjustment vis-a-vis theconsumer price index;

c) The cost of living and changes orincreases therein;d) The needs of workers and theirfamilies;e) The need to induce industries toinvest in countryside;f) Improvements in standards ofliving;g) The prevailing wage levels;h) Fair return of the capital investedand capacity to pay of employers;i) Effects on employment generationand family income; and) The equitable distribution of

income and wealth along the


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imperatives of economic and socialdevelopment. cralaw SECTION 3. Wage Order. Whenever conditions in the region so

warrant, the Board shall investigateand study all pertinent facts; and,based on standards and criteriaprescribed herein, shall determinewhether a Wage Order should beissued. cralaw In the performance of its wagedetermining functions, the Boardshall conduct public hearings andconsultations giving notices toemployees' and employers' groups,provincial, city and municipal officialsand other interested parties. cralaw SECTION 4. Effectivity of WageOrder. Any Wage Order issued bythe Board shall take effect 15 daysafter its complete publication in at

least one newspaper of generalcirculation in the region. cralaw SECTION 5. Appeal to theCommission. Any party aggrievedby the Wage Order issued by theBoard may file an appeal with theCommission within ten calendar daysfrom the publication of the Order.The Commission shall decide theappeal within sixty calendar daysfrom the date of filing. cralaw SECTION 6. Effect of Appeal. Thefiling of the appeal shall not suspendthe effectivity of the Wage Orderunless the person appealing such


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order files with the Commission anundertaking with a surety or suretiesin such amount as may be fixed bythe Commission. cralaw

SECTION 7. Wage Distortions. Where the application of any wageincrease resulting from a Wage Orderissued by any Board results indistortions in the wage structurewithin an establishment, theemployer and the union shallnegotiate to correct the distortionsusing the grievance procedure undertheir collective bargainingagreement. If it remains unresolved,it shall be decided through voluntaryarbitration ten calendar days fromthe time the dispute was referred forvoluntary arbitration, unlessotherwise agreed by the parties inwriting. cralaw

Where there are no collectiveagreements or recognized laborunions, the employer and workersshall endeavor to correct the wagedistortion. Any dispute arisingtherefrom shall be settled throughthe National Conciliation andMediation Board and if it remainsunresolved after ten calendar days ofconciliation, it shall be referred to theappropriate branch of the NationalLabor Relations Commission (NLRC).The NLRC shall conduct continuoushearings and decide the disputewithin twenty calendar days from the


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time said dispute is submitted forcompulsory arbitration. cralaw The pendency of a dispute arisingfrom a wage distortion shall not in

any way delay the applicability of anywage increase prescribed pursuant tothe provisions of law or Wage Order. cralaw SECTION 8. Non-Diminution ofBenefits. Nothing in the Act and inthese Rules shall be construed toreduce any existing laws, decrees,issuances, executive orders, and/orunder any contract or agreementbetween the workers and employers. cralaw SECTION 9. Prohibition AgainstInjunction. No preliminary orpermanent injunction or temporaryrestraining order may be issued byany court, tribunal or other entityagainst any proceedings before theCommission or Boards. cralaw

SECTION 10. Penal Provisions. Any person, corporation trust, firm,partnership, association or entitywhich refuses or fails to pay any ofthe prescribed increases oradjustments in the wage rates madein accordance with the Act shall bepunished by a fine not exceedingP25,000 and/or imprisonment of notless than one year nor more thantwo years: Provided, that any personconvicted under the Act shall not beentitled to the benefits provided forunder the Probation Law. cralaw If the violation is committed by a


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corporation, trust or firm,partnership, association or any otherentity, the penalty of imprisonmentshall be imposed upon the entity's

responsible officers, including, butnot limited to, the president, vice-president, chief executive officer,general manager, managing directoror partner. cralaw SECTION 11. Registration/ReportingRequirement. Any person,company, corporation, partnership orany other entity engaged in businessshall submit annually a verifieditemized listing of their laborcomponent to the appropriate Boardand the National Statistics Office notlater than January 31 of each year,starting on January 31, 1990 inaccordance with the form to beprescribed by the Commission. The

listing shall specify the names,salaries and wages of their workersand employees below the manageriallevel including learners, apprenticesand disabled/handicapped workers.

CHAPTER IVTransitory Provisions

SECTION 1. Abolition of the NationalWages Council and the NationalProductivity Commission. TheNational Wages Council createdunder Executive Order No. 614 andthe National Productivity Commissioncreated under Executive Order No.615 are abolished. All properties,


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records, equipment, buildings,facilities, and other assets, liabilitiesand appropriations of and belongingto the abovementioned offices, as

well as other matters pending herein,shall be transferred to theCommission. All personnel of theabove abolished offices shall continueto function in a hold-over capacityand shall be preferentially consideredfor appointments to or placements inthe Commission/Boards. cralaw Any official or employee separatedfrom the service as a result of theabolition of offices pursuant to theAct shall be entitled to appropriateseparation pay of one month salaryfor every year of service and/orretirement and other benefitsaccruing to them under existing laws.In lieu thereof, at the option of the

employee, he shall be preferentiallyconsidered for employment in thegovernment or in any of itssubdivisions, instrumentalities, oragencies, including governmentowned or controlled corporations andtheir subsidiaries. cralaw SECTION 2. Interim Processing ofApplications for Exemption andSubmission of Reports. Pendingthe operationalization of theCommission and Boards, the NationalWages Council shall, in the interim,receive and process applications forexemption subject to guidelines to be


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issued by the Secretary, inaccordance with Section 11 of theAct. cralaw Reports of establishments on their

labor component, including wagesand salaries of their workersprescribed under the Act, shall besubmitted to the National WagesCouncil through the Regional Officesof the Department. cralaw SECTION 3. Funding Requirement. The funds necessary to carry out theprovisions of the Act shall be takenfrom the Compensation andOrganization Adjustment Fund, theContingent Fund, and other savingsunder Republic Act No. 6688,otherwise known as the GeneralAppropriations Act of 1989, or fromany unappropriated funds of theNational Treasury; Provided, that the

funding requirements necessary toimplement the Act shall be includedin the annual General AppropriationsAct for the succeeding years. cralaw SECTION 4. Repealing Clause. Alllaws, orders, issuances, rules andregulations or parts thereofinconsistent with the provisions ofthe Act and this Rules are herebyrepealed, amended or modifiedaccordingly. If any provision or partof the Act and this Rules, or theapplication thereof to any person orcircumstance is held invalid orunconstitutional, the remainder of


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the Act and these Rules or theapplication of such provision or partthereof to other persons orcircumstance shall not be affected

thereby. cralaw SECTION 5. Effectivity. Theserules shall take effect on July 1,1989.

RULE VIIIPayment of Wages

SECTION 1. Manner of wagepayment. As a general rule, wagesshall be paid in legal tender and theuse of tokens, promissory notes,vouchers, coupons, or any otherform alleged to represent legaltender is absolutely prohibited evenwhen expressly requested by theemployee. cralaw SECTION 2. Payment by check. Payment of wages by bank checks,

postal checks or money orders isallowed where such manner of wagepayment is customary on the date ofthe effectivity of the Code, where itis so stipulated in a collectiveagreement, or where all of thefollowing conditions are met:(a) There is a bank or other facilityfor encashment within a radius ofone (1) kilometer from theworkplace;(b) The employer or any of hisagents or representatives does notreceive any pecuniary benefit directlyor indirectly from the arrangement;


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(c) The employees are givenreasonable time during bankinghours to withdraw their wages fromthe bank which time shall be

considered as compensable hoursworked if done during working hours;and(d) The payment by check is with thewritten consent of the employeesconcerned if there is no collectiveagreement authorizing the paymentof wages by bank checks. cralaw SECTION 3. Time of payment. (a)Wages shall be paid not less thanonce every two (2) weeks or twice amonth at intervals not exceedingsixteen (16) days, unless paymentcannot be made with such regularitydue to force majeure orcircumstances beyond the employer'scontrol in which case the employer

shall pay the wages immediatelyafter such force majeure orcircumstances have ceased. cralaw (b) In case of payment of wages byresults involving work which cannotbe finished in two (2) weeks,payment shall be made at intervalsnot exceeding sixteen days inproportion to the amount of workcompleted. Final settlement shall bemade immediately upon completionof the work. cralaw SECTION 4. Place of payment. Asa general rule, the place of paymentshall be at or near the place of


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undertaking. Payment in a placeother than the work place shall bepermissible only under the followingcircumstances:

(a) When payment cannot beeffected at or near the place of workby reason of the deterioration ofpeace and order conditions, or byreason of actual or impendingemergencies caused by fire, flood,epidemic or other calamity renderingpayment thereat impossible;(b) When the employer provides freetransportation to the employees backand forth; and(c) Under any other analogouscircumstances; Provided, That thetime spent by the employees incollecting their wages shall beconsidered as compensable hoursworked;

(d) No employer shall pay hisemployees in any bar, night or dayclub, drinking establishment,massage clinic, dance hall, or othersimilar places or in places wheregames are played with stakes ofmoney or things representing moneyexcept in the case of personsemployed in said places. cralaw SECTION 5. Direct payment ofwages. Payment of wages shall bemade direct to the employee entitledthereto except in the following cases:(a) Where the employer is authorizedin writing by the employee to pay his


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wages to a member of his family;(b) Where payment to anotherperson of any part of the employee'swages is authorized by existing law,

including payments for the insurancepremiums of the employee and uniondues where the right to check-off hasbeen recognized by the employer inaccordance with a collectiveagreement or authorized in writingby the individual employeesconcerned; or(c) In case of death of the employeeas provided in the succeedingSection. cralaw SECTION 6. Wages of deceasedemployee. The payment of thewages of a deceased employee shallbe made to his heirs without thenecessity of intestate proceedings.When the heirs are of age, they shall

execute an affidavit attesting to theirrelationship to the deceased and thefact that they are his heirs to theexclusion of all other persons. Incase any of the heirs is a minor, suchaffidavit shall be executed in hisbehalf by his natural guardian ornext of kin. Upon presentation of theaffidavit to the employer, he shallmake payment to the heirs asrepresentative of the Secretary ofLabor and Employment. cralaw SECTION 7. Civil liability of employerand contractors. Every employeror indirect employer shall be jointly


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and severally liable with hiscontractor or sub-contractor for theunpaid wages of the employees ofthe latter. Such employer or indirect

employer may require the contractoror sub-contractor to furnish a bondequal to the cost of labor undercontract on condition that the bondwill answer for the wages due theemployees should the contractor orsubcontractor, as the case may be,fail to pay the same. cralaw SECTION 8. Job Contracting. There is job contracting permissibleunder the Code if the followingconditions are met:(a) The contractor carries on anindependent business andundertakes the contract work on hisown account under his ownresponsibility according to his own

manner and method, free from thecontrol and direction of his employeror principal in all matters connectedwith the performance of the workexcept as to the results thereof; and(b) The contractor has substantialcapital or investment in the form oftools, equipment, machineries, workpremises, and other materials whichare necessary in the conduct of hisbusiness. cralaw SECTION 9. Labor-only contracting. (a) Any person who undertakes tosupply workers to an employer shallbe deemed to be engaged in labor-


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only contracting where such person:(1) Does not have substantial capitalor investment in the form of tools,equipment, machineries, work

premises and other materials; and(2) The workers recruited and placedby such person are performingactivities which are directly related tothe principal business or operationsof the employer in which workers arehabitually employed. cralaw (b) Labor-only contracting as definedherein is hereby prohibited and theperson acting as contractor shall beconsidered merely as an agent orintermediary of the employer whoshall be responsible to the workers inthe same manner and extent as ifthe latter were directly employed byhim. cralaw (c) For cases not falling under this

Rule, the Secretary of Labor andEmployment shall determine throughappropriate orders whether or notthe contracting out of labor ispermissible in the light of thecircumstances of each case and afterconsidering the operating needs ofthe employer and the rights of theworkers involved. In such case, hemay prescribe conditions andrestrictions to insure the protectionand welfare of the workers. cralaw SECTION 10. Payment of wages incase of bankruptcy. Unpaid wagesearned by the employees before the


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declaration of bankruptcy or judicialliquidation of the employer's businessshall be given first preference andshall be paid in full before other

creditors may establish any claim toa share in the assets of theemployer. cralaw SECTION 11. Attorney's fees. Attorney's fees in any judicial oradministrative proceedings for therecovery of wages shall not exceed10 percent of the amount awarded.The fees may be deducted from thetotal amount due the winning party. cralaw SECTION 12. Non-interference indisposal of wages. No employershall limit or otherwise interfere withthe freedom of any employee todispose of his wages and noemployer shall in any manner obligeany of his employees to patronize

any store or avail of the servicesoffered by any person. cralaw SECTION 13. Wages deduction. Deductions from the wages of theemployees may be made by theemployer in any of the followingcases:(a) When the deductions areauthorized by law, includingdeductions for the insurancepremiums advanced by the employerin behalf of the employee as well asunion dues where the right to check-off has been recognized by theemployer or authorized in writing by


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exceed 20 percent of the employee'swages in a week.

RULE IXWage Studies and Determination

SECTION 1. Definition of terms. (a) "Industry" shall mean anyidentifiable group of productive unitsor enterprises, whether operated forprofit or not, engaged in similar orallied economic activities in whichindividuals are gainfully employed. cralaw (b) A "branch" of an industry is awork, product or service groupingthereof which can be considered adistinct division for wage-fixingpurposes. cralaw (c) "Substantial number" shall meansuch an appreciable number ofemployees in an industry as, in theCommission's opinion, considering allrelevant facts, may require action

under Art. 121 of the Code toeffectuate the purposes of wagedetermination, regardless of theproportion of such employees to thetotal number of employees in theindustry. cralaw SECTION 2. Wage studies. TheNational Wages Council shall conducta continuing study of wage rates andother economic conditions in allindustries, agricultural and non-agricultural. The results of suchstudy shall be periodicallydisseminated to the government,labor and management sectors for


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their information and guidance. cralaw SECTION 3. Wages recommendation. If after such study, theCommission is of the opinion that a

substantial number of employees inany given industry or branch thereofare receiving wages, which althoughcomplying with the minimumprovided by law, are less thansufficient to maintain them in health,efficiency and general well-being,taking into account, among others,the peculiar circumstances of theindustry and its geographicallocation, the Commission shall, withthe approval of the Secretary ofLabor and Employment, proceed todetermine whether a wagerecommendation should be issued. cralaw SECTION 4. Criteria for wage fixing. (a) In addition to the criteria

established by Art. 123 of the Codefor minimum wage fixing, theCommission shall consider, amongother factors, social services andbenefits given free to workers andthe possible effect of a givenincrease in the minimum wage onprices, money supply, employment,labor mobility and productivity, labororganization efficacy, domestic andforeign trade, and other relevantindicators of social and economicdevelopment. cralaw (b) Where a fair return to capitalinvested cannot be reasonably


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determined, or where the industryconcerned is not operated for profit,its capacity to pay, taking intoaccount all resources available to it,

shall be considered. cralaw SECTION 5. Quorum. Three (3)members of the Commission,including its Chairman, shallconstitute a quorum to transact theCommission's business. cralaw SECTION 6. Commission actions,number of votes required. Thevotes of at least three (3) membersof the Commission shall be necessaryto effect any decision orrecommendation it is authorized toissue under the Code and this rule:Provided, That in the internalregulation and direction of thefunctions of the Commission's staffincluding the conduct of

administrative processes and themaintenance of proper liaison andcoordination with otherorganizations, the Chairman shall notneed the consent of the Commissionor any member thereof. cralaw SECTION 7. Outside assistance. The Commission may call upon theassistance and cooperation of anygovernment agency or official, andmay invite any private person ororganization to furnish information inconnection with industry studies andwage fixing hearings or in aid of theCommission's deliberations. cralaw


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SECTION 8. Schedule of hearingsand notices. The Commission shallprepare a schedule of hearings forthe reception of evidence necessary

for wage fixing in an industry,including a list of witnesses that itwill invite and the date, time andplace of the hearings. A noticethereof to all sectors of the industryshall be given in the mostexpeditious manner. It may haveprior consultations with labor andmanagement leaders in the industryfor the above purpose. cralaw SECTION 9. Unsolicited testimony. Persons who offer to testify beforethe Commission shall be heard onlyafter the Commission is satisfied,upon brief preliminary examination,that they are in possession of factsrelevant to the subject of inquiry.

The Chairman, or in other cases, theperson conducting the hearing, shallrevise the schedule of hearingswhenever necessary to achievelogical sequence of testimony. cralaw SECTION 10. Compulsory processes. Recourse to compulsory processesunder the Revised AdministrativeCode to ensure the attendance ofwitnesses and/or the production ofrelevant documentary evidence shallbe used only on occasions of extremeimportance and after other meansshall have failed, subject to theapproval of the Secretary of Labor


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and Employment. cralaw SECTION 11. Hearings; where, bywhom conducted. Commissionhearings may be conducted by the

Commission en banc, or, whenauthorized by the Commission, byany member or hearing officerdesignated by the Chairman. Thehearings may be held wherever theindustry or branches thereof aresituated; otherwise they shall be heldin the Greater Manila Area. Thehearings shall be open to the public. cralaw SECTION 12. Hearings before singlemember or hearing officer. Hearings conducted by a dulyauthorized member or hearing officershall be considered as hearingsbefore the Commission. The recordsof such hearings shall be submittedto the Commission as soon as they

are completed, indicating the timeand place of the hearings and theappearances thereat, together with abrief statement of the findings andrecommendations of the member orhearing officer concerned. cralaw SECTION 13. Testimony under oath. The testimony of all witnessesshall be made under oath oraffirmation and shall be taken downand transcribed by a duly appointedstenographic reporter. cralaw SECTION 14. Non-applicability oftechnical rules. The technical rulesof evidence applied by the courts in


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proceedings at law or equity shall notstrictly apply in any proceedingsconducted before the Commission. cralaw SECTION 15. Stipulation of fact.

Stipulations of fact may be admittedwith respect to any matter at issue inthe proceedings. cralaw SECTION 16. Documentary evidence. Written evidence submitted to theCommission or any member orhearing officer shall be properlymarked to facilitate identification. cralaw SECTION 17. Submission of industry-report. Within sixty (60) workingdays from the date of the firsthearing, the Commission shall submitto the Secretary of Labor andEmployment an "Industry Report"which shall relate in brief theoperations that led thereto, the basicfindings of economic facts about the

industry and the recommendationsmade on the basis thereof. cralaw SECTION 18. Action by the Secretaryof Labor and Employment. Withinthirty (30) working days after thesubmission of the "Industry Report,"the Secretary of Labor andEmployment shall either reject orapprove the recommendation of theCommission in accordance with Art.122 of the Code. If he approves therecommendation, he shall issue aWage Order adopting the same,subject to the approval of thePresident of the Philippines,


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prescribing the minimum wage orwages for the industry concerned. cralaw SECTION 19. Wage Order. TheWage Order shall specify the industry

or branch to which the minimumwages prescribed therein shall apply;Provided, That no definite rates shallbe prescribed for specific job titles inthe industry. cralaw SECTION 20. Varying minimumwages. To justify differentminimum wages for differentlocalities, the economic and otherconditions found in a particularlocality must not only be more orless uniform therein but alsodifferent from those prevailing inother localities. cralaw SECTION 21. Publication of WageOrder. Only such portions of aWage Order shall be published as

shall effectively give notice to allinterested parties that such an Orderhas been issued, the industryaffected, the minimum wagesprescribed and the date of itseffectivity. cralaw SECTION 22. Effectivity. A WageOrder shall become effective afterfifteen (15) days from its publicationas provided in Article 124 of theCode. cralaw SECTION 23. Internal rules of theCommission. Subject to theapproval of the Secretary of Laborand Employment, the National


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Wages Council may issue rules andregulations governing its internalprocedure.

RULE X

Administration and EnforcementSECTION 1. Visitorial power. TheSecretary of Labor and Employmentor his duly authorizedrepresentatives, including LaborRegulations Officers or IndustrialSafety Engineers, shall have accessto employer's records and premisesat any time of the day or nightwhenever work is being undertakentherein, and right to copy therefrom,to question any employee, and toinvestigate any fact, condition ormatter relevant to the enforcementof any provision of the Code and ofany labor law, wage order or rulesand regulations issued pursuant

thereto.cralaw

SECTION 2. Enforcement power. (a) The Regional Director in caseswhere employer relations shall exist,shall have the power to order andadminister, after due notice andhearing, compliance with the laborstandards provisions of the Code andother labor legislations based on thefindings of the Labor RegulationOfficers or Industrial SafetyEngineers (Labor Standard andWelfare Officer) and made in thecourse of inspection, and to issuewrits of execution to the appropriate


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authority of the enforcement of hisorder. In line with the provisions ofArticle 128 in relation to Articles 289and 290 of the Labor Code as

amended in cases, however, wherethe employer contests the findings ofthe Labor Standards and WelfareOfficers and raises issues whichcannot be resolved withoutconsidering evidentiary matters thatare not verifiable in the normalcourse of inspection, the RegionalDirector concerned shall indorse thecase to the appropriate arbitrationbranch of the National LaborRelations Commission foradjudication. cralaw (b) The Regional Director shall givethe employer fifteen (15) days withinwhich to comply with his orderbefore issuing a writ of execution.

Copy of such order or writ ofexecution shall immediately befurnished the Secretary of Labor andEmployment. cralaw SECTION 3. Enforcement power onhealth and safety of workers. (a)The Regional Director may likewiseorder stoppage of work orsuspension of operations of any unitor department of an establishmentwhen non-compliance with the law,safety order or implementing rulesand regulations poses grave andimminent danger to the health andsafety of workers in the workplace. cralaw


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(b) Within 24 hours from issuance ofthe order of stoppage or suspension,a hearing shall be conducted todetermine whether the order for the

stoppage of work or suspension ofoperation shall be lifted or not. Theproceedings shall b

omnibus rules book 3

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