• What is the present minimum wage fixing system in the country today?
• What are the criteria for minimum wage fixing adopted by the Boards?
• Can the Regional Boards issue a wage order even without a petition for wage increase?
• Can the Regional Boards grant across-the-board wage increases?
• How is the equivalent monthly rate (EMR) of monthly-paid and daily-paid employees computed?
• What is the formulae on the Computation of the Equivalent Monthly Mimimum Wage Rates for Muslim and Non-Muslim Sector.

• How long does it take the Regional Boards to issue a wage order?
• How often can the Boards issue a wage order?
• Can the wage order issued by the Boards be appealed?
• How are wage distortions corrected?

• Who are covered by wage orders issued by the Boards?
• Who are exempted from wage orders issued by the Boards?
• What are the criteria and requirements to qualify for exemption?
• How long is the exemption granted to qualified establishments?
• What is the effect of a disapproved application for exemption?

What is the present Minimum Wage Fixing System in the country today?

     Since 1989, minimum wage fixing is done on a regional basis. Previously, it was done at the national level through acts of Congress or by presidential decrees or executive orders.

    The Regional Boards, located in each of the 16 regions of the country, are the wage setting bodies established by virtue of Republic Act RA 6727 , also known as the Wage Rationalization Act issued on 01 July 1989. These Boards set minimum wages for workers in the private sector.

What are the criteria for Minimum Wage Fixing adopted by the boards?

     There are 10 criteria for minimum wage fixing under RA 6727 and one under the Rules of Procedures for Minimum Wage Fixing, categorized into four major groups, namely:

(1) Needs of workers and their families

• demand for living wage
• wage adjustment vis-à-vis CPI
• cost of living and changes therein
• needs of workers and their families
• improvements in standards of living

(2) Capacity to pay of employers/industry

• fair return on capital invested and to pay of employers
• productivity

(3) Comparable wages

• prevailing wage levels

(4) Requirements for national development

• need to induce industries to invest in the countryside
• effects on employment generation and family income
• equitable distribution of income and wealth along the imperatives of economic social development

Can the Regional Boards issue a Wage Order even without a petition for wage increase?

     Yes, even in the absence of a filed petition for wage increase, Regional Boards can, motu proprio, initiate action or inquiry on whether a wage order should be issued.

     A public hearing is required before the Boards can issue a wage order.

     Records show that the Boards issued a total of 133 Wage Orders since 1990. Of this number, 62% (83) was issued motu proprio, while 38% (50) was issued by virtue of a petition for wage increase.

Can the Regional Boards grant Across-the-Board wage increases?

     The wage-setting function of the Regional Boards is confined to minimum wages.
     
     While across-the-board (ATB) wage increases have been granted in the past, current policy discourages the Boards from granting ATB adjustments as they create more distortions in the labor market which in turn affect adversely the incomes and standard of living of workers and thier families. Specifically:

• ATB wage increases have greater impact on inflation
• ATB wage increases are disincentives to trade unionism
• ATB increases are not consistent with minimum wage fixing mandate of the Boards

How long does it take the boards to issue a wage order?

     In general, the Boards can issue a wage order within 90 days, given the procedural requirements under the Rules of Procedures for Minimum Wage Fixing. The Boards are specifically required to issue a wage order within 30 days from date of the last public hearing. Thereafter, a Wage Order becomes effective 15 days after it has been published in a newspaper of general circulation in the area of jurisdiction.    

How often can the Boards issue a wage order?

     In general, the Boards can issue a Wage Order only once in a given year.

     Within the 12-month period from effectivity of the wage order, no petition for wage increase may be entertained, except when there is a supervening condition, such as an extraordinary increase in prices of petroleum products and basic goods and services.

     The existence of supervening condition is to be determined by the Boards and confirmed by the NWPC.

Can the Wage Orders issued by the Boards be appealed?

     Yes, any aggrieved party may file an appeal with the NWPC through the Board within 10 days from the date of publication of the Wage Order

The grounds for appeal are:

• non-conformity with prescribed guidelines;
• question of law;
• grave abuse of discretion.

How are Wage Distortion corrected?

     Should disputes arise as a result of wage distortion, RA 6727 provides for correcting the distortions as follows:

     This provision for correcting wage distortions is also stipulated in all Wage Orders being issued by the Regional Boards.

Who are covered by wage orders issued by the boards?

     Wage Orders issued by the Boards cover only private sector workers, except for household helpers and persons in the personal employ of another, including family drivers.

Who are exemted from Wage Orders issued by the boards?

     Per the Rules on Exemption, the following categories of establishments may be exempted upon application with and as determined by the Board:

• distressed establishments
• new business enterprises
• retail/service establishments employing not more than 10 workers
• establishments adversely affected by natural calamities
  

     The Boards may also exempt establishments other than those enumerated above only if they are in accord with the rationale for exemption stated in the Rules on Exemption and upon strong justifiable reasons.

What are the criteria and requirements to qualify for exemption?

     Sections 3 and 4 of the Rules on Exemption list down the specific criteria and requirements to qualify for exemption, namely:

Distressed Establishments

a. For Stock Corporations/Cooperatives

• registers  a  deficit of  20%  or  more  of the paid up  capital  as of last accounting period and interim period immediately preceding the  effectivity of the Wage Order.
  
• registers   capital    deficiency/negative   stockholders'    equity   as   of the  last full accounting   period  or   interim  period   immediately preceding  the effectivity of the Wage Order.

        b. For Single Proprietorships/Partnerships/Non-stock,Non-profit Organization

• registers  a  deficit  of   20%  or  more  of  the  total  invested  capital  as  of the 2 accounting  periods and  interim  period  immediately  preceding  the  effectivity of the Wage Order.
• registers capital  deficiency/negative net worth as of the last full accounting period or interim period immediately preceding the effectivity of the Wage Order

        c. For Banks and Quasi-banks

• under receivership/liquidation certified by the Bangko Sentral ng Pilipinas
• under controllership/conservatorship

       New Business Enterprises

• NBEs  established  outside  the  NCR  and outside  Export  Zones within 2 years from the effectivity of the Wage Order, classified as agricultural establishments or establishments with total assets of 5M and below.

       Retail/Service Establishments Regularly Employing Not More Than Ten Employees

• engaged in the ratil sale of goods/services to end users, and
• employing not more than ten workers

       Establishments Adversely Affected by Natural Calamities

• establishments located in an area under a state of calamity
• occurence  of  natural  calamities in the area within 6 months prior to the effectivity of the Wage Order.
• losses   or   damage  to  properties  as  a  result of the calamity amount to 20% or more of the capital/stockholders' equity

What is the effect of a disapproved application for exemption?

     In case an application for exemption is not approved by the Board, the company shall pay the mandated wage increase/allowance to all covered workers retroactive to the date of effectivity of the Wage Order plus simple interest of 1% per month.