Summary
▪ The law prescribes a minimum wage required to be observed by the employers.
▪ The minimum wage varies per region as it is set by the Regional Tripartite Wages and Productivity Board (RTWPB)
▪ Violations of minimum wage may result in double indemnity and/or criminal liability.
▪ The RTWPB may provide for exemptions, including those for Barangay Micro Business Enterprises.
▪ Minimum wage earners are exempt from income tax.
1. Concept
A minimum wage is a legal mandate for employers to pay their employees a compensation which should not be less than that prescribed by the Regional Tripartite Wages and Productivity Board (RTWPB) in the different regions.
Hence, every region will have its own minimum wage as several factors are considered in determining the amount, such as cost of living allowance, prices of goods and commodities, and so on.
Further, the same Board prescribes a different minimum wage depending on the industry classification, i.e. non-agricultural, agricultural, retail and service establishments, and manufacturing.
The Board issues Wage Orders containing the prescribed minimum wage at a given time, including the requirements and procedures for exemption thereof. If granted, an establishment may be exempted from complying with the minimum wage for a period of one (1) year.
It is recommended for an employer to inquire with the RTWPB for the prevailing rates.
2. Violation and penalty
The employer may be penalized with double indemnity or be required to pay an amount equivalent to double/twice the unpaid wage owing to the employee.
Notwithstanding payment, the employer may still be held criminally liable for the violation.
3. Barangay Micro Business Enterprises (BMBEs)
Subject to a Certification issued by the Department of Trade and Industry (DTI) as to their status as Barangay Micro Business Enterprises, these establishments may be exempted from the coverage of the minimum wage so long as they obtain the necessary exemption from the RTWPB.
4. Kasambahay’s minimum wage
The Kasambahay’s minimum wage is different as it is regulated by the Kasambahay Law.
It is recommended for an employer to inquire with the RTWPB for the prevailing rates.
5. Workers paid by results
The RTWPB Regional Orders prescribe for the minimum wage of workers paid by results, such as homeworkers, piece-rate workers, takay, pakyaw, or task basis.
6. Apprentices, learners
Apprentices and learners shall receive wages which shall not be less than seventy-five percent (75%) of the minimum wage. The apprenticeship and learnership agreements should be duly approved by the Technical Education and Skills Development Authority (TESDA).
7. Persons with disability
There should be no discrimination against persons with disability. They should be paid the same compensation and benefit as with ordinary employees who are qualified as able-bodied.
8. No income tax due
Minimum wage earners (MWE) are exempt from income tax in relation to their minimum wage inclusive of cost of living allowance, holiday pay, overtime pay, night shift differential pay, and hazard pay.
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References
▪ Republic Act No. 6727, a.k.a. Wage Rationalization Act
▪ Implementing Rules and Regulations (IRR) of R.A. 6727
▪ Republic Act No. 10524, a.k.a. Magna Carta for Persons with Disability
▪ Republic Act No. 10361, a.k.a. Domestic Workers Act or Batas Kasambahay
▪ Implementing Rules and Regulations (IRR) of the Domestic Workers Act or Batas Kasambahay
▪ BIR Revenue Regulations No. 11-2018, Amending Certain Provisions of Revenue Regulations No. 298, as Amended, to Implement Further Amendments Introduced by Republic Act No. 10963
▪ 2020 DOLE-BWC Handbook on Workers’ Statutory Monetary Benefits
▪ Jurisprudence or Supreme Court Decisions
