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Sunday, February 22, 2009

The Much Abused Wage Order Exemption in the Philippines.

I said it before and I will say it again. Not everything that's legal is moral.
The last wage order and the other wage orders I've seen carry these exemptions:

"EXEMPTIONS. Upon application with and as determined by the Board, based on documentation and other requirements in accordance with applicable rules and regulations issued by the Commission, the following may be exempted from the applicability of this Order:
1. Distressed Establishments;
2. Establishments Facing Potential Losses;
3. Retail/Service Establishments Employing Not More Than Ten (10)Workers;
4. Establishments whose total assets, including those arising from loans, but exclusive of the land on which the particular business entity’s office, plant and equipment are situated, are not more than Three Million Pesos (P= 3,000,000.00); and,
5. Establishments adversely affected by natural calamities".

In this post, I'm highlighting # 3 which states that Retail and Service establishments employing not more than 10 workers are exempt from paying the minimum wage. This exemption makes it perfectly legal for anyone in the retail business no matter how hugely profitable can be exempt from following the law.

I heard many gas station owners pay their employees between P150 to 250 which is way below the minimum wage of P382. I also heard that a successful new chain of Filipino themed restaurants are not paying their employees the minimum required because they employ less people in their branches which happened to be franchised, no matter how profitable these branches are. The owners get away with paying less because they invoke this exemption.

I kind of understand why an exemption like this particular one is made. It allows employers who CANNOT AFFORD the payment of minimum wage still continue their operation until such time that they are able to afford it. Unfortunately, these are not stated in the wage order. It is the spirit of the exemption, I believe, but not the spirit of the employers who use this as an excuse... perpetually.

Imagine some of the owners of these companies enjoy all the spoils that life can offer while their employees are stuck deep in the quagmire of poverty. Imagine them enjoying a 500-buck lunch while their employees and their families have to survive with P200 for entire day. That is if they are not buried deep in debt. Imagine them changing cars every time they like a new model while, their workers squander for jeepney fare in order to get to work. Imagine these business owners cannot afford to pay the minimum wage because it will prevent them from living their lavish life styles! Imagine all the injustice of it!

I call on the law makers of the land and those in the Department of Labor and Employment to see the flaws of this law and fix it for the sake of those who are oppressed by it... by those who take advantage of it.

I also call on the employers who use this excuse even if they don't have to. Grow some conscience will you?!


  1. Hi. I respect your opinion. However, just like what you stated that there are "some" retail establishments who use these exemptions even if their business are highly profitable, I believe it is difficult to set the line between those who a)hire less than 10 people but earn just enough profits and b)hire less than 10 people but earns a lot. Therefore, the given condition is just one factor by which a business can be exempted from the law. In my opinion then, the government should revise instead, the provision where Total Assets are less than three million pesos. That amount is too high, highly profitable business may have less than 3M assets...but they may have 3M profits. On the other hand, I believe that the enjoyment of eating 500 peso lunch is the fruits of an entrepreneur's labor,ideas,perseverance,creativity, decision-making skills,intelligence and risks. Being an employee is just one part of the whole business..but being the owner-entrepreneur,you have to be the "whole" all the time. ;)

  2. what is the most recent wage order? the last one i read states P5,000,000 instead of P3,000,000.

  3. Anonymous1:03 AM

    don't look at employers as devils on the have to give them the respect due to them for taking the risk of capitalizing on something they believe without the hesitation of loosing they're money and most of the time....they're retirement money to earn...and by earning they also participate in hiring people to lessen the percentage of unemployment hence, giving employment especilally who doesn't have any enlighten you up....the gov't is encouraging people to engage into business and be entrepreneurs and as a matter of fact, the gov't is helping small ent to start and this exemption is a big help for s and m said...helpers or labors work only 8 to 10 hours a day most of the time sitting and waiting for a costumer.unlike the employers who's been doing the buisness 24 hours a day...making necessary loans to make sure that the salaries of the workers are paid on are paid, taxes, and at the same time guarding their merchandise from the workers themselves...being in business is no fun...sorry to say bit obviously you are not into business and all you can do is comment and suggest as if you are a guardian angel sent from above who wan't to teach even the calibers of juan ponce enrile regarding labor are making a mockery of yourself...the exemption again is a privileged...and privileges are meant to be exercised if not....they
    might end up just like you....

  4. I'm not generalizing. I don't say employers are evil. I am also an entrepreneur and hence an employer. I am also entitled to the exemption because I have less than 10 employees. I also work much, much harder than any of my employees but I choose to pay them what is right. Some employers do deserve the exemptions because they really can't afford to pay the minimum. My concern is with those who can afford much more but couldn't find it in their hearts to pay. This exemption is in deed a privilege but I believe we all have a moral obligation to be fair to the people we work with. It makes sound business sense. If you for example is an employer who can afford to pay your employees the minimum and still be profitable, I encourage you to do what is right. If you don't want to, that is entirely up to your conscience do what you want.

  5. Anonymous2:01 PM

    Wow very interesting topic. By the way, i am working as an Admin/Accounting staff. Everything is transparent to me especially when it comes to profit. But unfortunately, we have 2 employees who's wage is under minimum. They have P200 and P167/ per day.

    They work and go home after 13 hours a day. They also work over 6 months now. No benefits added too. No SSS/PHILHEALTH/ & PAG IBIG.

    The management always tell them that the company is "NAGHIHINGALO" because of his debt that he is paying monthly to the bank.

    But actually he has debt because he open a new business in other city which is not gaining. And he is using the profit of the business to where we are working and gaining much to pay off his debt.

    Do you think it is exempted?

  6. It depends. How many employees do you have? Do you have more than 10?

  7. Anonymous11:42 PM

    I am an employee but does not earn a minimum wage rate am i entitled to have a withgolding tax deducttion? i am a weekly paid employee and we have less than 5 employees and a homebase company.

  8. Anonymous10:09 AM

    On minimum wage exemption, I dont think it was intended to totally give the employer the discretion on how much he would like to pay his employees. He is only exempt from paying the increase as mandated by law. But after the period of exemption, he is mandated to pay the salary increase. In short, the payment of the increase is only suspended. Eventually, the employer must comply with the minimum wage order.

  9. Anonymous9:25 PM

    I am an employee (Agriculture)and I am not paid in minimum wage in Region 11, am I entitled for the underpayment claim? Is it my full 15 years or only 3 years?

  10. Anonymous2:43 AM

    how many people in the Philippines earn below the minimum wage?

  11. Anonymous6:41 PM

    Our small company have more than 10 employees we dont have holiday pay and were not in minimum wage rate :(


If you have an opinion about this topic or a related experience you want to share, please feel free to leave a comment but please be respectful. No bad words please or I will be constrained to delete it.