Labor Law Review

Assignment 003 - 2020

1. Define the terms Wage and Salary? Distinguish the two, exhaustively.
Wage applies to the compensation for manual labor, whether skilled or not, paid at
stated times, and measured by the day, week, month, or season. Wage is indicative of a
lower payment and less responsible character of employment. Wage is more restrictive
and used to refer to the compensation for domestic or menial work. A sales commission
is considered part of wage.
Salary denotes a higher degree of employment, or a superior grade of services, and
implies a position or office. Salary is suggestive of a larger and more permanent or fixed
compensation for more important employment or service.
2. Define and Distinguish Facilities and Supplements.
Facilities are items of expense necessary for the laborer’s and his family’s existence and
subsistence. These include articles or services for the benefit of the employee or his
family but does not include tools of trade or articles or service primarily for the benefit of
the employer. Facilities are wage deductible because they are furnished by the employer
for the laborer to use. If these were not furnished, the laborer must acquire the same
using his own wages, hence why they are instead supplied by the employer but
deducted from the laborers’ wages.
Supplements constitute extra remuneration or special privileges or benefits given to or
received by the laborers over their ordinary earnings or wages. These include food,
lodging, bonus, or sick leave. Supplements are not wage deductible.
3. Provide the requirements for deducting the amount of facilities.
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 by the
employee; and
3. Facilities must be charged at fair and reasonable price.
4. Explain the circumstances regarding payment of wages:
a. As to Form of wages - No employer 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 shall be allowed when such manner of payment is customary on the
date of effectivity of the Labor Code of the Philippines. This is enjoined so as to allow the
employee more freedom in using his wages and to prevent the employer from
compensating the employee by limiting the latter’s means of redeeming/using his wages
within the employer’s establishment/s.
b. As to mode or time of payment - Wages shall be paid at least once every two weeks
or twice a month at intervals not exceeding sixteen days. If on account of force majeure
or circumstances beyond the employer’s control, payment of wages on or within the time
 above 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. This is enjoined so as to enable the employees to survive
between the wage periods. As a larger gap between each wage period would serve to
prejudice the employee’s means of acquiring daily sustenance.
c. As to place or Venue of Payment - Wages shall be made at or near the place of
undertaking, except as otherwise provided by such regulations as the Secretary of Labor
may prescribe under conditions to ensure greater protection of wages. This is so
enjoined so as to allow the employee to acquire his wage at a safe and familiar
environment, free from worries, and at his own convenience.
d. As to whom payment of wages is undertaken - Wages shall be paid directly to the
workers to whom they are due except: 1. In cases of force majeure rendering such
payment impossible 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 2.
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.
This is so enjoined so as to ensure that only the employee, or in certain circumstances
his authorized representative, can receive the fruits of his hard labor.
5. Define and Explain the difference if any, Minimum Wage from Living Wage.
Minimum wage is the lowest wage rate fixed by the law that an employer can pay his
workers. Compensation which is less than such minimum rate is considered an
underpayment that violates the law. Whereas the Living wage refers to the average
wage required to sustain a basic lifestyle in a region. The Living wage is necessarily
higher than the minimum wage.
6. Who determines the minimum wage?
The Regional Tripartite Wages and Productivity Boards
7. State and Explain the factors in determining minimum wage?
It is determined by factors such as poverty threshold, prevailing wage rates as
determined by the Labor Force Survey, and socio-economic indicators.
8. When is the Non-Diminution of Benefits principle applicable?
It must be shown that:
1. The grant of the 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 of application of a doubtful or
difficult question of law; and
4. The diminution or discontinuance is done unilaterally by the employer
9. What are the exceptions to the Non-Diminution Principle or Rule?
1. Correction of error;
2. Negotiated benefits;
 3. Wage Order compliance;
4. Benefits on reimbursement basis;
5. Reclassification of position;
6. Contingent benefits or conditional bonus; and
7. Productivity incentives
10. What is Bonus? Is Bonus a demandable right?
As a rule, a bonus is an amount granted and paid to an employee for his industry and
loyalty which contributed to the success of the employer’s business and made possible
the realization of profits. It is an act of generosity. From the legal point of view, a bonus
is not a demandable and enforceable obligation. It is only demandable and enforceable if
it is made part of the wage or salary or compensation.
11. How is Bonus different from 13th month pay?
Bonus is, generally, based on the employer’s discretion. It can only be demanded if it is
made part of the salary/wage. Whereas the 13th month pay is provided for by law, as
such, demandable.
12. Explain the term Wage Distortion?
Wage distortion is the phenomenon that occurs when the wage rate of a lower pay class
is increased without the concomitant increase in the wage rate or a higher pay class,
which results in the elimination of the distinction between the similarly situated wage rate
classes.
13. When does Wage Distortion happen?
It is the occurs when the application of a mandated wage increase results in the
elimination or severe contraction of existing salary differentials among employee groups
in the same establishment.
14. Provide the Elements of Wage Distortion?
1. There is an existing hierarchy of positions with corresponding salary rates;
2. There is a significant change in the salary rate of a lower pay class, without a
concomitant increase in the salary rate of a higher pay class;
3. There is an elimination of the distinction between the two levels; and
4. There is the existence of the distortion in the same region.
15. How do you correct Wage Distortion?
It can be corrected by implementing a substantial wage gap between both classes,
without restoring the previous wage rates.