Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
Second Regular Session

HOUSE BILL NO®O37

Introduced by Representative Manuel Luis T. Lopez

EXPLANATORY NOTE

According to the Manulife Investor Sentiment Index (MISI) survey conducted in
2016, "Four in Ten (41%) Filipino investors carry debt - the second highest proportion
in the region after Malaysia.” It added further that A third of respondents cited daily living
expenses as the main factor contributing to their debt, which could indicate that
investors’ ability to save regularly may rely on the use of credit to pay for day-to-day
living expenses, while other loan items include children’s current education, and medical
expenses, among others.” Finally, the study indicated that the “average debt across age
groups stands at P291,582 for those aged below 35; P207,418 for those aged 35 to 49;
and P143,958 for those 50 and older.”

One contributing factor giving rise to this high proportion of debt is the late
payment of wages/ salaries. Workers and employees in both the public and private sector
continue to experience late payment of their salaries. This is in turn gives them no choice
but to incur debt in order to be able to meet their daily needs. The employees are not
really able to enjoy the so-called fruits of their labor since by the time they are paid, they
would have to pay the interests on their loans as well as the principal amount.

‘Thus, this representation seeks curb this injustice by penalizing the late payment
of wages/ salaries without any justifiable reason.

In view of the foregoing, the passage of this bill is earnestly sought.

Med) IS T. LOPEZ

Rephesahtative
1 District. City of Manila


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
Second Regular Session

6537

HOUSE BILL NO.

Introduced by Representative Manuel Luis T. Lopez

AN ACT
PENALIZING THE FAILURE TO PAY EMPLOYEES IN GOVERNMENT OR PRIVATE
INSTITUTIONS OR OFFICES THEIR SALARIES, WAGES, REMUNERATIONS OR FEES
ON THE AGREED DATE/TIME WITHOUT JUSTIFIABLE REASONS/ GROUNDS
THEREOF AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Republic of the Philippines
in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the “Timely Payment of
Wages and/or Salaries Act of 2017.”

SEC. 2. Declaration of Policy. - The 1987 Constitution provides that “the State
shall promote a just and dynamic social order that will ensure the prosperity and
independence of the nation and free the people from poverty through policies that
provide adequate social services, promote full employment, a rising standard of living,
and an improved quality of life for all.”

Further, the Constitution states that “The State shall promote social justice in all

phases of national development.”

Finally, the Constitution provides that “The State affirms labor as a primary social

economic force. It shall protect the rights of workers and promote their welfare.”

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Consistent with these principles, it is the duty of the State to ensure that the
welfare and interests of the members of the labor force is protected.

SEC. 3. Definition of Terms. ~ As used in this Act, the following terms are defined
as follows:

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a. Employer- includes any person acting directly or indirectly in the interest
ofan employer in relation to an employee and shall include the government
and all its branches, subdivisions and instrumentalities, all government-
owned or controlled corporations and institutions, as well as non-profit
private institutions, or organizations.

b. Employee - any individual employed by an employer in whatever nature or
capacity and regardless of the existence of an employer-employee
relationship.

¢. Wages/Salary- shall mean 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. "Fair and reasonable value" shall not include
any profit to the employer, or to any person affiliated with the employer.

d. Grace Period- refers to a period of fifteen (15) days beginning on the due
date of the payment of wages/ salaries of the employees.

e. justifiable Reason- refers to the excuse provided by the employer for failing
to pay the wages/ salaries of the employees on time which shall be
determined by the Secretary of Labor or the Civil Service Commissioner as
the case may be and must be in accordance with the circumstances
surrounding each case.

f, Payroll Master- refers to the individual/s tasked to disburse the wages/
salaries to the employees.

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SEC. 4. Coverage. - This Act shall apply to all employees whether there exists an
employer-employee relationship or not, in all establishments and undertakings whether
for profit or not, including government employees, managerial employees, field
personnel, seasonal/project employees, members of the family of the employer who are
dependent on him for support, domestic helpers, persons in the personal service of
another, and workers who are paid by results as determined by the Secretary of Labor in
appropriate regulations.

SEC. 5. Timely payment of wages/salaries. - All employers are mandated to pay
their employees on the given date/ schedule previously agreed upon in the employment
contract and within the grace period allowed, otherwise they shall suffer the penalties
prescribed by this Act.

SEC. 6. Prohibition. - Itis expressly prohibited for any employer to delay payment
of wages/salaries for a period longer than fifteen (15) days from the agreed date as found
in the contract of employment ar any other employment agreement.

SEC. 6, Mandatory Summary Proceedings, - pon a duly verified complaint, the
Secretary of Labor or his duly designated representative for employees in the private
sector, and the Commissioner of the Civil Service Commission or his duly authorized
representative for employees in government service, must conduct a summary
proceeding within ten (10) days from the filing of the complaint, wherein he/she shall
evaluate the grounds for failure to pay wages/ salaries of an employee within the grace
period. The Secretary of Labor or the Commissioner of the Civil Service must then issue a
resolution within five (5) days from the conduct of the proceedings.

SEC. 7. Interest Accrual, - If the wages/ salaries of an employee have not been
paid upon expiration of the grace period, the outstanding balance will earn interest at the
prevailing legal rate until it is fully satisfied by the employer.

SEC. 7. Penalties. ~ A fine of One Hundred Thousand Pesos (P100,000) shall be
imposed on the payroll master if he/she fails to disburse to prescribed wages/salaries
when funds are made available for this purpose. If the payroll master fails to inform the

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employer regarding the absence of funding to satisfy the salaries of its employees, he shall
be imposed a fine of Two Hundred Thousand Pesos (P200,000).

The employer shall be solidarily liable with the payroll master for failure to pay
wages/ salaries without any justifiable reason. In addition, the employer shall be imposed
a fine of Five Hundred Thousand Pesos (P500,000) and the accessory penalty of
suspension of business operations for thirty (30) days for the first offense.

A fine of One Million Pesos (P1,000,000) and suspension of business operations
for ninety (90) days shall be imposed on the employer for the second offense.

A fine of Three Million Pesos (P3,000,000) and perpetual cessation of business
operations shall be imposed on the employer for the third offense.

SEC. 8. Implementing Rules and Regulations and Standard Forms, - Within
sixty (60) days from the promulgation of this Act, the necessary rules and regulations for
the proper implementation of its provisions shall be formulated by the Department of
Labor and Employment (“DOLE”) and the Civil Service Commission in coordination with
all the stakeholders, employers, and other sectors affected.

SEC. 9. Repealing Clause. - All laws, ordinances, executive orders, administrative
orders, rules, regulations, decrees, and other issuances or parts thereof, which are
inconsistent with the provisions of this Act are hereby revoked, repealed, or modified
accordingly.

SEC, 10, Separability Clause. - If any provision of this Act is held unconstitutional
or invalid, the other provisions not affected thereby shall continue in operation and
remain in full force and effect.

SEC. 11. Effectivity Clause. - This Act shall take effect fifteen (15) days after its

publication in a newspaper of general circulation or the Official Gazette.

Approved,

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