Ma REPRISE
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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

= pate:

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. 2878

Introduced by
HON. YEDDA MARIE K. ROMUALDEZ

and
HON. FERDINAND MARTIN G. ROMUALDEZ

EXPLANATORY NOTE

This bill proposes to amend proposes to amend Presidential Decree No.
442, known as the Labor Code of the Philippines and institute the rationalization
of wage levels on a per industry basis, instead of the current regional minimum
wage structure. For this purpose, it seeks to abolish the existing Regional
Tripartite Wages and Productivity Boards (RTWPBs) and instead empower the
National Wages and Productivity Commission to determine and fix the national

minimum wage rates according to industries and address regional wage
distortions.

The current regional minimum wage set-up, introduced by Republic Act
6727, otherwise known as the Wage Rationalization Act, allows each region in
the Philippines has a unique minimum wage set by the Regional Tripartite
Wages and Productivity Boards (RTWPBs) based on the poverty threshold,
‘employment rate, and cost of living specific to the region. As a result, however,
despite its original intent to encourage industries to disperse to areas outside
Manila, Cebu and Davao and other urban areas, wage distortions have
emerged in different regions. The RTWPBs have failed to ensure decent
standard of living for the Filipino workers, especially in the regional
countryside, especially since there is a significant disparity in wages across
regions while the difference in the cost of living is minimal.

The rationalization of wage levels on a per industry basis will result in

“equitable pay between workers in the different regions and in the process,

decongest the country's overpopulated capital, which is often the top choice of
workers due to higher wages. Most businesses still concentrate in these urban
centers where the bulk of their markets or customers are, intensifying the
internal migration to urban centers.

RECEIVED *

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Replacing the regional with an industrial-based minimum wage set-up
will ensure that the national minimum wage remains responsive to certain
peculiarities unique to each industry. With an equitable pay structure between
urban and rural workers, industries will now be encouraged to invest in regions
where operating and production costs are significantly lower than in the urban
centers. This will result in higher income productivity and ensure a more

inclusive economic growth that will benefit ordinary Filipino workers and their
families.

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

Rep. YEDDA MARIE K. ROMUALDEZ
Representative, /Yingog Sinirangan

Rep. ERDINAND MARTIN G/ ROMUALDEZ
Representative, First District deyte


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. eB

Introduced by
HON. YEDDA MARIE K. ROMUALDEZ

an
HON. FERDINAND MARTIN G. ROMUALDEZ

AN ACT PROVIDING FOR THE RATIONALIZATION OF WAGE LEVELS ON
A NATIONAL AND INDUSTRIAL BASIS, AMENDING FOR THIS PURPOSE
PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN
AS THE LABOR CODE OF THE PHILPPINES

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

Section 1. In line with the declared policy of the State to promote the
productivity-improvement and gain-sharing measures to ensure a decent
standard of living for the workers and their families and to guarantee the rights
of labor to its just share in the fruits of production, Article 99 of Presidential
Decree No. 442, as amended, is hereby amended and Articles 121, 122, 123,
124, 126, and 127, are hereby incorporated into Presidential Decree No. 442,
as amended to read as follows:

“Article 99 [Regional] Minimum Wages. - The NATIONAL
minimum wage rates for agricultural and non-agricultural
employees and workers [in—-each—and-every_+tegion—ot_the
country] shall be those prescribed by the [Regienaltiparite
Wages—and—Preductivity Beards] NATIONAL WAGES AND
PRODUCTIVITY COMMISSION.”

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“Article 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 DETERMINE AND FIX NATIONAL MINIMUM
WAGES RATES ACCORDING TO INDUSTRIES AND TO
ISSUE THE CORRESPONDING WAGE ORDERS;

“()] (d) To prescribe rules and guidelines for the
determination of appropriate minimum wage and productivity
measures at the [regional provincial of industry levels;

*(@) 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;

Boards|]
“{¢9)] (f) 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

“[()] (g) 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 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 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 the 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, 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 and
allowances and other benefits as those prescribed by law for
labor and management representatives in the Employees’
Compensation Commission.

“Article 121. Creation of [Regional] INDUSTRY Tripartite
Wages and Productivity Boards. — [There-is-hereby-created


Regional] THE COMMISSION SHALL ESTABLISH INDUSTRY
Tripartite Wages and Productivity Boards, hereinafter referred
to as [Regional] INDUSTRY Boards, [in-all-regions.-including

] IN INDUSTRIES WHERE IT
DEEMS APPROPRIATE TO DO SO.

“The [Regional] INDUSTRY Boards shall have the
following powers and functions in their respective [territorial]
INDUSTRIES:

“(a) To develop plans, programs and projects relative to
wages, incomes and productivity improvement for their
respective [regions] INDUSTRIES;

“(0) To determine and fix minimum wage rates applicable
in their [regions,provinces-or] INDUSTRIES [therein] and to
issue the corresponding wage orders, subject to guidelines
issued by the Commission;

“(©) 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] INDUSTRY
Boards as may be necessary to attain the policy and intention
of this [Cede] ACT;

“(@) 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 [Cede] ACT.



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“Each [Regional] INDUSTRY Board shall be composed
of the [Regional-Director] Secretary of the Department of Labor

and Employment as chairman, the [Regional—Directors)
SECRETARIES of the National Economic and Development

Authority and the Department of Trade and Industry as vice-
chairmen and two (2) members each from worker’ 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] INDUSTRY Board to be headed by its
chairman shall be assisted by a Secretariat.”

“Article 12[3]2. Wage Order. - Whenever conditions in
the [regien] country so warrant, the [Regienal—Beard]
COMMISSION 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-(4)-newspaper-of
general circulation in-the-ragion_] TWO (2) NEWSPAPERS OF
GENERAL CIRCULATION.

“In the performance of its wage determining functions,
the [Regienat-Beard] COMMISSION shall conduct public
hearings/consultations, giving notices to employees’ and


employers’ groups, provincial, city, municipal officials and other
interested parties,

“Any party aggrieved by the Wage Order issued by the
[Regional—Beard] COMMISSION may [appeal] SEEK A
RECONSIDERATION OF 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] MOTION FOR RECONSIDERATION within sixty (60)
calendar days from the filing thereof.

“The filing of the [appeal] MOTION FOR
RECONSIDERATION does not 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.”

“Article 12[4]3. Standards/Criteria for Minimum Wage
Fixing. - The [regional] NATIONAL minimum wagefs] to be
established by the [Regienat Beard] COMMISSION 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 wage, the
[Regienal-Beard] COMMISSION 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;


Oar anne none

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“[(e} Fhe-needte—induce—industries—to—invest-inthe
sountryside;]

“[€] (E) Improvements in standards of living;

“[{g)-the prevailing wage-tevels;]

“[¢)] (F) Fair return of the capital invested and capacity
to pay employers; AND

“ee . .
income;]

“{@\G) The equitable distribution of income and wealth
along the imperatives of economic and social development.”

“The [wages] WAGE prescribed in accordance with the
provisions of the Title shall be the standard prevailing
NATIONAL minimum [wages-in-every-region] WAGE. [Fhese
wages] THIS shall include wages varying within industries
[provinces-orocalities] if in the judgment of the [Regional
Beard] COMMISSION 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 Beard] COMMISSION and the
Philippine Statistics Authority 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
pursuant to law or Wage Order issued by [any] THE [Regional
Beard] COMMISSION results in distortions of the wage
structure within an establishment, the employer and the union
shall negotiate to correct the distortions. Any dispute arising


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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 of work

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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."

“Article 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 [erthe—Regienat
Boards].”

“Article 127. Non-diminution of Benefits. - No Wage
Order issued by [any Regional Beard] THE COMMISSION shall
provide for wage rates lower than the statutory minimum wage
rates prescribed by Congress.”

Section 2. (a) 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 Commission. Whenever an
applicant for exemption has been duly filed with the Commission, action on
any complaint for alleged non-compliance with this Act shall be deferred
pending resolution of the application for exemption by the Commission.

In the event that applications for exemptions are not granted,
employees shall receive the appropriate compensation due them as may be

ott


granted them pursuant to this Act plus interest of one percent (1%) per month
retroactive to the effectivity of this Act.

(b) 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 as may be prescribed
pursuant to this Act, provided that, where such increases are less than the
increases in the wage rates that may be prescribed pursuant to this Act, the
employer shall pay the difference. Such increases shall not include
anniversary wage increases, merit wage increases and those resulting from
regularization or promotion of employees.

Where the application of the increases in the wage rates that may be
prescribed pursuant to this Act 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 branches of the National Labor
Relations Commissions (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 was submitted for resolution. Any dispute arising
from a wage distortion shall not in any way delay the applicability of any
increase in the wage rates that may be prescribed pursuant to this Act.

Section 3. In the case of contracts for construction projects and for
security, janitorial and similar services, 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

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rates, the construction/service contractor shall be jointly and severally liable
with his principal or client.

Section 4. Upon written permission 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 of payment of wages fixed by Presidential Decree No. 442, as
amended, otherwise known as the Labor Code of the Philippines.

Section 5. Whenever applicable and upon the request of a concerned
worker or union, the bank shall issue a certificate of the record of payment of
wages of a particular worker or workers for a particular payroll period.

Section 6. 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 minimum 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.

Section 7. The Regional Tripartite Wages and Productivity Boards
created under Republic Act No. 6727 are hereby abolished. All properties,
records, equipment, buildings, facilities, and other assets, liabilities and

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appropriations belonging to the abovementioned offices, as well as other
matters pending therein, shall be transferred to the Commission.

Any official or employee separated from the service as a result of the
abolition of any office 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 employees, he/she shall be
preferentially considered for employment in the Industry Wage Boards that the
Commission may establish or in any of the government's subdivisions,
instrumentalities, or agencies, including government-owned or controlled
corporations and their subsidiaries.

Section 8. Any person, corporation, trust, firm, partnership, association
or entity which refuses or fails to pay any prescribed increases or adjustments
in the wage rates made in accordance with this Act shall be punished by a fine
not exceeding fifty thousand pesos (P50,000.00) 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.

Furthermore, the business permit of the violating entity shall be
suspended for one (1) month to three (3) years for second offenses; for third
offenses, the business permit of the offender shall be cancelled.

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.

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The Department of Labor and Employment shall have the authority to
impose such other administrative penalties it sees fit to impose under the
circumstances of each case of violation.

Section 9. The Secretary of Labor and Employment shall promulgate
the necessary rules and regulations to implement the provisions of this Act.

Section 10. If any part or provision of this Act is held unconstitutional
or invalid, other parts for provisions hereof which are not affected shall
continue to remain in full force and effect.

Section 11. Republic Act No. 6727, otherwise known as the “Wage
Rationalization Act’, is hereby expressly repealed. 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 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 the employers.

Section 12. 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.

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