Wages or salaries are the amounts workers or employees receive as compensation from employers for the work they regularly perform. While business owners and workers are allowed to agree on specific amounts as salaries, these must not be lower than the minimum wage set by the Regional Tripartite Wages and Productivity Boards (RTWPBs).
What are wage orders?
Minimum wages vary depending on the industry and location (region) of the business. Regional Wage Orders specify:
- the daily minimum wage rates and
- exemptions from compliance
Wage increases occur when Wage Orders are issued. These affect all private sector workers and employees receiving the daily minimum wage rates or those receiving up to a certain daily wage ceiling.
But not everyone may be entitled to the minimum wage.
There are exceptions such as househelpers and family drivers as well as companies that are granted limited exemptions.
What happens when a company or business pays its employees or workers salaries or wages below the minimum amount set by law?
Wage orders should not be ignored as stiff fines and the penalty of imprisonment may be imposed upon an employer who refuses or fails to pay the prescribed increases or adjustments in the wage rates.
But what about Wage/salary distortion?
Companies often follow salary pay scales or pay grades according to differentiate work roles, positions and levels. Occasionally, mandated wage increases elevate salaries of lower positions so that the salary of a Grade Level One position may become equal to the salary of the next higher rank. In this case, what should the employer do? Assuming the company has decided to address wage distortion, how should he go about it?
This Guide includes various formulae in resolving wage distortion and demonstrates each with an example. It also presents a solution for companies that are unionized.
Exemptions from wage orders
Some employers may be exempt from compliance with minimum wage orders. But in certain instances, a prior application for exemption must first be obtained through application and approval. If the application is disapproved, at what point should the company pay its employees the minimum wage? From the date of the application or from the date of disapproval?
These and other related issues are discussed in the Guide on Wage Orders and Minimum Wage. The eBook version now includes:
- the latest Wage Order No. NCR-16 granting P22.00 COLA
- updated list of regional wage rates as of July 1, 2011
- Labor Advisory dated July 07, 2011 on the treatment of COLA in regular holiday pay