Republic of the Philippines
Congress of the Philippines
Metro Manila
Second Regular Session
Begun and held in Metro
Manila, on Monday, the twenty-
fifth day of July, nineteen hundred and eighty-eight
[REPUBLIC ACT NO. 6727]
AN ACT TO RATIONALIZE WAGE POLICY DETERMINATION
BY ESTABLISHING THE MECHANISM AND PROPER STANDARDS THEREFOR,
AMENDING FOR THE PURPOSE ARTICLE 99 OF, AND INCORPORATING
ARTICLES 120, 121, 122, 123, 124, 126 AND 127 INTO, PRESIDENTIAL
DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR
CODE OF THE PHILIPPINES, FIXING NEW WAGE RATES, PROVIDING
WAGE INCENTIVES FOR INDUSTRIAL DISPERSAL TO THE COUNTRYSIDE,
AND FOR OTHER PURPOSES
Be it enacted by the Senate and
House of Representatives of the Philippines in Congress assembled:
Sec.
1. This Act shall be known as the "Wage Rationalization
Act."
Sec. 2. It is hereby declared
the policy of the State to rationalize the fixing of minimum
wages and to promote productivity-improvement and gain-sharing
measures to ensure a decent standard of living for the workers
and their families; to guarantee the rights of labor to its just
share in the fruits of production; to enhance employment generation
in the countryside through industry dispersal; and to allow business
and industry reasonable returns on investment, expansion and
growth.
The State shall promote
collective bargaining as the primary mode of setting wages and
other terms and conditions of employment; and, whenever necessary,
the minimum wage rates shall be adjusted in a fair and equitable
manner, considering existing regional disparities in the cost
of living and other socio-economic factors and the national economic
and social development plans.
Sec. 3. In line with the
declared policy under this Act, Article 99 of Presidential Decree
No. 442, as amended, is hereby amended and Articles 120, 121,
122, 123, 124, 126 and 127 are hereby incorporated into Presidential
Decree No. 442, as amended, to read as follows:
"Art. 99. Regional
Minimum Wages. - The minimum wage rates for agricultural and
non-agricultural employees and workers in each and every region
of the country shall be those prescribed by the Regional Tripartite
Wages and Productivity Boards."
"Art. 120. Creation
of the National Wages and Productivity Commission. - There is
hereby created a National Wages and Productivity Commission,
hereinafter referred to as the Commission, which shall be attached
to the Department of Labor and Employment (DOLE) for policy and
program coordination."
"Art. 121. Powers
and Functions of the Commission. - The Commission shall have
the following powers and functions:
(a) To act as the national consultative and advisory
body to the President of the Philippines and Congress on matters
relating to wages, incomes and productivity;
(b) To formulate policies and guidelines on wages,
incomes and productivity improvement at the enterprise, industry
and national levels;
(c) To prescribe rules and guidelines for the determination
of appropriate minimum wage and productivity measures at the
regional, provincial or industry levels;
(d) To review regional wage levels set by the Regional
Tripartite Wages and Productivity Boards to determine if these
are in accordance with prescribed guidelines and national development
plans;
(e) To undertake studies, researches and surveys
necessary for the attainment of its functions and objectives,
and to collect and compile data and periodically disseminate
information on wages and productivity and other related information,
including, but not limited to, employment, cost-of-living, labor
costs, investments and returns;
(f) To review plans and programs of the Regional
Tripartite Wages and Productivity Boards to determine whether
these are consistent with national development plans;
(g) To exercise technical and administrative supervision
over the Regional Tripartite Wages and Productivity Boards;
(h) To call, from time to time, a national tripartite
conference of representatives of government, workers and employers
for the consideration of measures to promote wage rationalization
and productivity; and
(i) To exercise such powers and functions as may
be necessary to implement this Act.
"The Commission shall
be composed of the Secretary of Labor and Employment as ex-officio
chairman, the Director-General of the National Economic and Development
Authority (NEDA) as ex-officio vice-chairman, and two (2) members
each from workers and employers sectors who shall be appointed
by the President of the Philippines upon recommendation of the
Secretary of Labor and Employment to be made on the basis of
the list of nominees submitted by the workers and employers sectors,
respectively, and who shall serve for a term of five (5) years.
The Executive Director of the Commission Secretariat shall also
be a member of the Commission."
"The Commission shall
be assisted by a Secretariat to be headed by an Executive Director
and two (2) Deputy Directors, who shall be appointed by the President
of the Philippines, upon recommendation of the Secretary of Labor
and Employment."
"The Executive Director
shall have the same rank, salary, benefits and other emoluments
as that of a Department Assistant Secretary, while the Deputy
Directors shall have the same rank, salary, benefits and other
emoluments as that of a Bureau Director. The members of the Commission
representing labor and management shall have the same rank, emoluments,
allowances and other benefits as those prescribed by law for
labor and management representatives in the Employees' Compensation
Commission."
"Art. 122. Creation
of Regional Tripartite Wages and Productivity Boards. - There
is hereby created Regional Tripartite Wages and Productivity
Boards, hereinafter referred to as Regional Boards, in all regions,
including autonomous regions as may be established by law. The
Commission shall determine the offices/headquarters of the respective
Regional Boards.
"The Regional Boards
shall have the following powers and functions in their respective
territorial jurisdiction:
(a) To develop plans, programs and projects relative
to wages, incomes and productivity improvement for their respective
regions;
(b) To determine and fix minimum wage rates applicable
in their region, provinces or industries therein and to issue
the corresponding wage orders, subject to guidelines issued by
the Commission;
(c) To undertake studies, researches, and surveys
necessary for the attainment of their functions, objectives and
programs, and to collect and compile data on wages, incomes,
productivity and other related information and periodically disseminate
the same;
(d) To coordinate with the other Regional Boards
as may be necessary to attain the policy and intention of this
Code;
(e) To receive, process and act on applications
for exemption from prescribed wage rates as may be provided by
law or any Wage Order; and
(f) To exercise such other powers and functions
as may be necessary to carry out their mandate under this Code.
"Implementation of
the plans, programs and projects of the Regional Boards referred
to in the second paragraph, letter (a) of this Article, shall
be through the respective regional offices of the Department
of Labor and Employment within their territorial jurisdiction;
Provided, however, That the Regional Boards shall have technical
supervision over the regional office of the Department of Labor
and Employment with respect to the implementation of said plans,
programs and projects.
"Each Regional Board
shall be composed of the Regional Director of the Department
of Labor and Employment as chairman, the Regional Directors of
the National Economic and Development Authority and Department
of Trade and Industry as vice-chairmen and two (2) members each
from workers and employers sectors who shall be appointed by
the President of the Philippines, upon recommendation of the
Secretary of Labor and Employment, to be made on the basis of
the list of nominees submitted by the workers and employers sectors,
respectively, and who shall serve for a term of five (5) years.
"Each Regional Board to be headed by its chairman
shall be assisted by a Secretariat."
"Art. 123. Wage Order.
- Whenever conditions in the region so warrant, the Regional
Board shall investigate and study all pertinent facts; and, based
on the standards and criteria herein prescribed, shall proceed
to determine whether a Wage Order should be issued.
Any such Wage Order shall
take effect after fifteen (15) days from its complete publication
in at least one (l) newspaper of general circulation in the region.
"In the performance
of its wage-determining functions, the Regional Board shall conduct
public hearings/consultations, giving notices to employees' and
employers' groups, provincial, city and municipal officials and
other interested parties.
"Any party aggrieved
by the Wage Order issued by the Regional Board may appeal such
order to the Commission within ten (l0) calendar days from the
publication of such order. It shall be mandatory for the Commission
to decide such appeal within sixty (60) calendar days from the
filing thereof.
"The filing of the
appeal does not operate to stay the order unless the person appealing
such order shall file with the Commission an undertaking with
a surety or sureties satisfactory to the Commission for the payment
to the employees affected by the order of the corresponding increase,
in the event such order is affirmed."
"Art. 124. Standards/Criteria
for Minimum Wage Fixing. The regional minimum wages to be established
by the Regional Board shall be as nearly adequate as is economically
feasible to maintain the minimum standards of living necessary
for the health, efficiency and general well-being of the employees
within the framework of the national economic and social development
program. In the determination of such regional minimum wages,
the Regional Board shall, among other relevant factors, consider
the following:
(a) The demand for living wages;
(b) Wage adjustment vis-à-vis the consumer price index;
(c) The cost of living and changes or increases therein;
(d) The needs of workers and their families;
(e) The need to induce industries to invest in the countryside;
(f) Improvements in standards of living;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity to pay of
employers;
(i) Effects on employment generation and family income; and
(j) The equitable distribution of income and wealth along the
imperatives of economic and social development.
"The wages prescribed
in accordance with the provisions of this Title shall be the
standard prevailing minimum wages in every region. These wages
shall include wages varying with industries, provinces or localities
if in the judgment of the Regional Board conditions make such
local differentiation proper and necessary to effectuate the
purpose of this Title.
"Any person, company,
corporation, partnership or any other entity engaged in business
shall file and register annually with the appropriate Regional
Board, Commission and the National Statistics Office an itemized
listing of their labor component, specifying the names of their
workers and employees below the managerial level, including learners,
apprentices and disabled/handicapped workers who were hired under
the terms prescribed in the employment contracts, and their corresponding
salaries and wages.
"Where the application
of any prescribed wage increase by virtue of a law or Wage Order
issued by any Regional Board results in distortions of the wage
structure within an establishment, the employer and the union
shall negotiate to correct the distortions. Any dispute arising
from wage distortions shall be resolved through the grievance
procedure under their collective bargaining agreement and, if
it remains unresolved, through voluntary arbitration. Unless
otherwise agreed by the parties in writing, such dispute shall
be decided by the voluntary arbitrator or panel of voluntary
arbitrators within ten (10) calendar days from the time said
dispute was referred to voluntary arbitration.
"In cases where there
are no collective agreements or recognized labor unions, the
employers and workers shall endeavor to correct such distortions.
Any dispute arising therefrom shall be settled through the National
Conciliation and Mediation Board and, if it remains unresolved
after ten (10) calendar days of conciliation, shall be referred
to the appropriate branch of the National Labor Relations Commission
(NLRC). It shall be mandatory for the NLRC to conduct continuous
hearings and decide the dispute within twenty (20) calendar days
from the time said dispute is submitted for compulsory arbitration.
"The pendency of a
dispute arising from a wage distortion shall not in any way delay
the applicability of any increase in prescribed wage rates pursuant
to the provisions of law or Wage Order.
"As used, herein,
a wage distortion shall mean a situation where an increase in
prescribed wage rates results in the elimination or severe contraction
of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure based
on skills, length of service, or other logical bases of differentiation.
"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 work a day, or a proportion thereof
for working less than eight (8) hours.
"All recognized learnership
and apprenticeship agreements shall be considered automatically
modified insofar as their wage clauses are concerned to reflect
the prescribed wage rates."
"Art. 126. Prohibition
Against Injunction. - No preliminary or permanent injunction
or temporary restraining order may be issued by any court, tribunal
or other entity against any proceedings before the Commission
or the Regional Boards."
"Art. 127. Non-Diminution
of Benefits. - No Wage Order issued by any Regional Board shall
provide for wage rates lower than the statutory minimum wage
rates prescribed by Congress."
Sec. 4. (a) Upon the effectivity
of this Act, the statutory minimum wage rates of all workers
and employees in the private sector, whether agricultural or
non-agricultural, shall be increased by twenty-five pesos (P25.00)
per day, except that workers and employees in plantation agricultural
enterprises outside of the National Capital Region (NCR) with
an annual gross sales of less than five million pesos (P5,000,000.00)
in the preceding year shall be paid an increase of twenty pesos
(P20.00), and except further that workers and employees of cottage/handicraft
industries, non-plantation agricultural enterprises, retail/service
establishments regularly employing not more than ten (10) workers,
and business enterprises with a capitalization of not more than
five hundred thousand pesos (P500,000.00) and employing not more
than twenty (20) employees, which are located or operating outside
the NCR, shall be paid only an increase of fifteen pesos (P15.00):
Provided, That those already receiving above the minimum wage
rates up to one hundred pesos (P100.00) shall also receive an
increase of twenty-five pesos (P25.00) per day, and except that
the workers and employees mentioned in the first exception clause
of this section shall also be paid only an increase of twenty-pesos
(P20.00), and except further that those employees enumerated
in the second exception clause of this Section shall also be
paid only an increase of fifteen pesos (P15.00): Provide, further,
That the appropriate Regional Board is hereby authorized to grant
additional increases to the workers and employees mentioned in
the exception clauses of this Section if, on the basis of its
determination pursuant to Article 124 of the Labor Code such increases are necessary.
(b) The increase of twenty-five
pesos (P25.00) prescribed under this Section shall apply to all
workers and employees entitled to the same in private educational
institutions as soon as they have increased or are granted authority
to increase their tuition fees during school year 1989-1990.
Otherwise, such increase shall be so applicable not later than
the opening of the next school year beginning 1990.
(c) Exempted from the provisions
of this Act are household or domestic helpers and persons employed
in the personal service of another, including family drivers.
Retail/service establishments
regularly employing not more than ten (10) workers may be exempted
from the applicability of this Act upon application with and
as determined by the appropriate Regional Board in accordance
with the applicable rules and regulations issued by the Commission.
Whenever an application for exemption has been duly filed with
the appropriate Regional Board, action on any complaint for alleged
non-compliance with this Act shall be deferred pending resolution
of the application for exemption by the appropriate Regional
Board.
In the event that applications
for exemptions are not granted, employees shall receive the appropriate
compensation due them as provided for by this Act plus interest
of one percent (1%) per month retroactive to the effectivity
of this Act.
(d) If expressly provided
for and agreed upon in the collective bargaining agreements,
all increases in the daily basic wage rates granted by the employers
three (3) months before the effectivity of this Act shall be
credited as compliance with the increases in the wage rates prescribed
herein, provided that, where such increases are less than the
prescribed increases in the wage rates under this Act, the employer
shall pay the difference. Such increases shall not include anniversary
wage increases, merit wage increases and those resulting from
the regularization or promotion of employees.
Where the application of
the increases in the wage rate under this Section results in
distortions as defined under existing laws in the wage structure
within an establishment and gives rise to a dispute therein,
such dispute shall first be settled voluntarily between the parties
and in the event of a deadlock, the same shall be finally resolved
through compulsory arbitration by the regional arbitration branch
of the National Labor Relations Commission (NLRC) having jurisdiction
over the workplace.
It shall be mandatory for
the NLRC to conduct continuous hearings and decide any dispute
arising under this Section within twenty(20) calendar days from
the time said dispute is formally submitted to it for arbitration.
The pendency of a dispute arising from a wage distortion shall
not in any way delay the applicability of the increases in the
wage rates prescribed under this Section.
Sec. 5. Within a period
of four (4) years from the effectivity of this Act and without
prejudice to collective bargaining negotiations or agreements
or other employment contracts between employers and workers,
new business enterprises that may be established outside the
NCR and export processing zones whose operation or investments
need initial assistance as may be determined by the Department
of Labor and Employment in consultation with the Department of
Trade and Industry or the Department of Agriculture, as the case
may be shall be exempt from the application of this Act for not
more than three (3) years from the start of their operations:
Provided, That such new business enterprises established in Region
III (Central Luzon) and Region IV (Southern Tagalog) shall be
exempt from such increases only for two (2) years from the start
of their operations, except those established in the Provinces
of Palawan, Oriental Mindoro, Occidental Mindoro, Marinduque,
Romblon, Quezon and Aurora, which shall enjoy such exemption
for not more than three (3) years from the start of their operations.
Sec. 6. In the case of
contracts for construction projects and for security, janitorial
and similar services, the prescribed increases in the wage rates
of the workers shall be borne by the principals or clients of
the construction/service contractors and the contract shall be
deemed amended accordingly. In the event, however, that the principal
or client fails to pay the prescribed wage rates, the construction/service
contractor shall be jointly and severally liable with his principal
or client.
Sec. 7. Upon written petition
of the majority of the employees or workers concerned, all private
establishments, companies, businesses, and other entities with
twenty five (25) or more employees and located within one (1)
kilometer radius to a commercial, savings or rural bank shall
pay the wages and other benefits of their employees through any
of said banks and within the period for payment of wages fixed
by Presidential Decree No. 442, as amended, otherwise known as
the Labor Code of the Philippines.
Sec. 8. Whenever applicable
and upon request of a concerned worker or union, the bank shall
issue a certification of the record of payment of wages of a
particular worker or workers for a particular payroll period.
Sec. 9. The Department
of Labor and Employment shall conduct inspections as often as
possible within its manpower constraint of the payroll and other
financial records kept by the company or business to determine
whether the workers are paid the prescribed wage rates and other
benefits granted by law or any Wage Order. In unionized companies,
the Department of Labor and Employment inspectors shall always
be accompanied by the president or any responsible officer of
the recognized bargaining unit of any interested union in the
conduct of the inspection. In non-unionized companies, establishments
or businesses, the inspection shall be carried out in the presence
of a worker representing the workers in the said company. The
workers' representative shall have the right to submit his own
findings to the Department of Labor and Employment and to testify
on the same if he cannot concur with the findings of the labor
inspector.
Sec. 10. The funds necessary
to carry out the provisions of this Act shall be taken from the
Compensation and Organizational Adjustment Fund, the Contingent
Fund, and other savings under Republic Act No. 6688, otherwise
known as the General Appropriations Act of 1989, or from any
unappropriated funds of the National Treasury: Provided, That
the funding requirements necessary to implement this Act shall
be included in the annual General Appropriations Act for the
succeeding years.
Sec. 11. The National Wages
Council created under Executive Order No. 614 and the National
Productivity Commission created under Executive Order No. 615
are hereby abolished. All properties, records, equipment, buildings,
facilities, and other assets, liabilities and appropriations
of and belonging to the abovementioned offices, as well as other
matters pending therein, shall be transferred to the Commission.
All personnel of the above abolished offices shall continue to
function in a holdover capacity and shall be preferentially considered
for appointments to or placement in the Commission.
Any official or employee
separated from the service as a result of the abolition of offices
pursuant to this Act shall be entitled to appropriate separation
pay and retirement and other benefits accruing to them under
existing laws. In lieu thereof, at the option of the employee,
he shall be preferentially considered for employment in the government
or in any of its subdivisions, instrumentalities, or agencies,
including government-owned or controlled corporations and their
subsidiaries.
Sec. 12. Any person, corporation,
trust, firm, partnership, association or entity which refuses
or fails to pay any of the prescribed increases or adjustments
in the wage rates made in accordance with this Act shall be punished
by a fine not exceeding twenty-five thousand pesos (P25,000.00)
and/or imprisonment of not less than one (1) year nor more than
two (2) years: Provided, That any person convicted under this
Act shall not be entitled to the benefits provided for under
the Probation Law.
If the violation is committed
by a corporation, trust or firm, partnership, association or
any other entity, the penalty of imprisonment shall be imposed
upon the entity's responsible officers, including, but not limited
to, the president, vice president, chief executive officer, general
manager, managing director or partner.
Sec. 13. The Secretary
of Labor and Employment shall promulgate the necessary rules
and regulations to implement the provisions of this Act.
Sec. 14. All laws, orders,
issuances, rules and regulations or parts thereof inconsistent
with the provisions of this Act are hereby repealed, amended
or modified accordingly. In any provision or part of this Act,
or the application thereof to any person or circumstance, is
held invalid or unconstitutional, the remainder of this Act or
the application of such provision or part thereof to other persons
or circumstances shall not be affected thereby.
Nothing in this Act shall
be construed to reduce any existing wage rates, allowances and
benefits of any form under existing laws, decrees, issuances,
executive orders, and/or under any contract or agreement between
the workers and employers.
Sec. 15. This Act shall
take effect fifteen (15) days after its complete publication
in the Official Gazette or in at least two (2) national newspapers
of general circulation, whichever comes earlier.
Approved,
(SGD)
RAMON V. MITRA
Speaker of the House of Representatives |
(SGD)
JOVITO R. SALONGA
President of the Senate |
This Act which is a consolidation of Senate Bill
No. 1084 and House Bill No. 23227 was finally passed by both
the Senate and the House of Representatives on June 5, 1989.
(SGD)
QUIRINO D. ABAD SANTOS, JR
Secretary of the House of Representatives |
(SGD)
EDWIN P. ACOBA
Secretary of the Senate |
Approved: June 9, 1989
(SGD) CORAZON C. AQUINO
President of the Philippines
|
