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.
Section 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.chanroblesvirtuallawlibrary
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.cralaw:red
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."
chanroblesvirtuallawlibrary
"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 the Department of Trade and Industry as vice-chairmen of
two [2] members each from workers and employers sectors who shall be
appointed
by the President of the Philippines, upon the 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 [1] 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 [10] 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."chanroblesvirtuallawlibrary
"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-a-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. chanroblesvirtuallawlibrary
"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. chanroblesvirtuallawlibrary
"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.chanroblesvirtuallawlibrary
"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, 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 an increase of
Fifteen
pesos [P15.00]: Provided, 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.chanroblesvirtuallawlibrary
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.cralaw:red
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.cralaw:red
Where the application of
the increases in the wage rates 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.chanroblesvirtuallawlibrary
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.cralaw:red
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.chanroblesvirtuallawlibrary
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.cralaw:red
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 or of any interested union in the
conduct
of the inspection. In non-unionized companies, establishments or
businesses,
the inspection should 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.chanroblesvirtuallawlibrarychanroblesvirtuallawlibrary
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.cralaw:red
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.cralaw:red
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.chanroblesvirtuallawlibrary
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.cralaw:red
If the violation is committed
by a corporation, trust or firm, partnership, association or any other
entity, the penalty of imprisonment shall be imposed on 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.
If 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 hereof 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.chanroblesvirtuallawlibrary
Sec. 15. This Act takes
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. chanroblesvirtuallawlibrary
Approved:
June 9, 1989.
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