Deductions in worker’s pay are only those authorized by law


Dear PAO,
May an employer lawfully make deductions from the employee’s wage for cash bonds?

Dear RS,
Article 97 of the Labor Code of the Philippines defines wage as the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of board, lodging, or other facilities customarily furnished by the employer to the employee. Being the compensation of an employee for a hard day’s work, it should not be subjected to deductions other than those authorized by law.

Our law prohibits employers, on their own behalf or in behalf of any person, to make deductions from the wages of their employees except in the following instances: 1) where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; 2) for union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and 3) the employer is authorized by law or regulations issued by the Secretary of Labor and Employment (Article 113, Labor Code of the Philippines).

The making of deductions for cash bonds or deposits is one of the allowable deductions from the employee’s wages (Article 114, Labor Code of the Philippines). However, the employers cannot just unilaterally declare and impose upon their employees the giving of bonds and/or deposits. Before the employers may make deductions from wages for cash bonds, they must first establish that the same is authorized by law, or regulations issued by the Secretary of Labor. They should also prove that posting of cash bonds is a recognized practice in their business or if there be none, the employers should seek for the determination by the Secretary of Labor through the issuance of appropriate rules and regulations that the policy that they wish to implement is necessary or desirable in the conduct of their business (Niña Jewelry Manufacturing of Metal Arts, Inc., vs. Montecillo, G.R. No. 188169, November 28, 2011). The failure of the employers to comply with the foregoing will render the deductions baseless and illegal.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.


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1 Comment

  1. Thanks for this info maam. But i would like to ask if i am obliged to pay the 10k cash bond kahit Proby pa lang ako provided that my no. 1 reason of resigning is di ko po gusto yung patakaran nila na 1min late is equivalent to 1 hour. Minsan po kasi umabot ng 1hr ang total late ko in 15 working days, tapos yung sweldo namin tama lang pambayad ng mga late namin. Plz help. Gusto ko na po maghanap ng ibang work.. naiipit kami sa patakaran nila.