Workers Paid by Results: Piece-rate, Pakyao, Takay, Task basis

1. Concept

Workers paid by results – refer to ‘those whose pay is calculated in terms of the quantity or quality of their work output which includes “pakyaw” work and other non-time work.’ (David v. Macasio, G.R. No. 195466, 02 July 2014, Per Brion, J.)

They include those who are paid on piecework, takay, pakyaw or task basis. (Paragraph 8, Article 124, Labor Code)

a. Method of pay computation

Engagement of workers paid by results, including piece-rate workers and those engaged as ‘pakyao’, ‘takay’, or task basis, is a method of pay computation and thus not determine the employment relationship between the parties.

David v. Macasio, G.R. No. 195466, 02 July 2014, Per Brion, J.:

⦁ In sum, the existence of employment relationship between the parties is determined by applying the “four-fold” test; engagement on “pakyaw” or task basis does not determine the parties’ relationship as it is simply a method of pay computation. Accordingly, Macasio is David’s employee, albeit engaged on “pakyaw” or task basis.

b. Prescribed wage rate

All workers paid by result, including those who are paid on piecework, takay, pakyaw or task basis, shall receive not less than the prescribed wage rates per eight (8) hours of work a day, or a proportion thereof for working less than eight (8) hours. (Paragraph 8, Article 124, Labor Code)

[I]n the absence of wage rates approved by the Secretary of Labor in accordance with the appropriate time and motion studies, the ordinary minimum wage rates are applicable to piece-rate workers. (Pulp and Paper, Inc. v. NLRC, G.R. No. 116593, September 24, 1997, Per Panganiban, J., cited in Lim & Sons Agricultural Co. Inc., G.R. No. 221967, February 6, 2019, Per Carpio, J.)

Pulp and Paper, Inc. v. NLRC, G.R. No. 116593, September 24, 1997, Per Panganiban, J.:

In the absence of wage rates based on time and motion studies determined by the labor secretary or submitted by the employer to the labor secretary for his approval, wage rates of piece-rate workers must be based on the applicable daily minimum wage determined by the Regional Tripartite Wages and Productivity Commission. To ensure the payment of fair and reasonable wage rates, Article 101 12 of the Labor Code provides that “the Secretary of Labor shall regulate the payment of wages by results, including pakyao, piecework and other nontime work.” The same statutory provision also states that the wage rates should be based, preferably, on time and motion studies, or those arrived at in consultation with representatives of workers’ and employers’ organizations. In the absence of such prescribed wage rates for piece-rate workers, the ordinary minimum wage rates prescribed by the Regional Tripartite Wages and Productivity Boards should apply. This is in compliance with Section 8 of the Rules Implementing Wage Order Nos. NCR-02 and NCR-02-A — the prevailing wage order at the time of dismissal of [the Complainant].

2. Categories

The two (2) categories of employees paid by results:

1) Those whose time and performance are supervised by the employer; and

2) Those whose time and performance are unsupervised. (Lambo v. NLRC [1999], supra.)

Both classes of workers are paid per unit accomplished. (Lambo v. NLRC [1999], supra.)

a. Supervised by the employer

1st category: Those whose time and performance are supervised by the employer.

Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises. (Lambo v. NLRC [1999], supra.)

1) Piece-rate workers

Piece-rate workers – refer to those who are ‘paid per unit accomplished.’ (Lambo v. NLRC, G.R. No. 111042, October 26, 1999, Per Mendoza, J.)

Piece-rate payment is generally practiced in garment factories where work is done in the company premises. (Lambo v. NLRC [1999], supra.)

b. Unsupervised by the employer

2nd category: Those whose time and performance are unsupervised.

Here, the employer’s control is over the result of the work. Workers on pakyao and takay basis belong to this group. (Lambo v. NLRC [1999], supra.)

1) Pakyao, takay, task basis engagement

A distinguishing characteristic of “pakyaw” or task basis engagement, as opposed to straight-hour wage payment, is the non-consideration of the time spent in working. In a task-basis work, the emphasis is on the task itself, in the sense that payment is reckoned in terms of completion of the work, not in terms of the number of time spent in the completion of work. Once the work or task is completed, the worker receives a fixed amount as wage, without regard to the standard measurements of time generally used in pay computation. (David v. Macasio [2004], supra.)

David v. Macasio, G.R. No. 195466, 02 July 2014, Per Brion, J.:

⦁ In Macasio’s case, the established facts show that he would usually start his work at 10:00 p.m. Thereafter, regardless of the total hours that he spent at the workplace or of the total number of the hogs assigned to him for chopping, Macasio would receive the fixed amount of ₱700.00 once he had completed his task. Clearly, these circumstances show a “pakyaw” or task basis engagement that all three tribunals [LA, NLRC, CA] uniformly found.

⦁ In sum, the existence of employment relationship between the parties is determined by applying the “four-fold” test; engagement on “pakyaw” or task basis does not determine the parties’ relationship as it is simply a method of pay computation. Accordingly, Macasio is David’s employee, albeit engaged on “pakyaw” or task basis.

a) Distinguished from: daily-paid employees

In “pakyao” a worker is paid by results. It is akin to a contract for a piece of work where-by the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or consideration. The contractor may either employ his labor or skill, or also furnish the material (Article 1713, Civil Code). Not so in a contract on a daily wage basis, where what is paid for is the labor alone. Under the “pakyao” system, payment is made in a lump sum; the laborer makes a profit for himself, which is justified by the fact that any loss would also be borne by him. On the other hand, no profit inures to the daily wage worker and no materials are furnished by him. The “pakyao” arrangement is not without its advantages. The tendency to dilly-dally on the work, generally experienced in a daily wage contract, is hardly present in labor on a “pakyao” basis. The latter can also be more flexible, with the need for supervision reduced to the minimum. It is not necessarily frowned upon. In fact; it is recognized in the Labor Code (Article 101)… (Dingcong v. Guingona, Jr., G.R. No. 76044, June 28, 1988, Per Melencio-Herrera, J.)

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