Management prerogative in dispensing compensation

Published by rudy Date posted on March 24, 2009

Dear PAO,

I am a Human Resources practitioner, and I want to know:

1) Does the Labor Code contain any provision relating to the kind of employee who should be monthly paid or daily paid?

2) Is there any provision in the said code prescribing that probationary employees who have been regularized should be paid either on a monthly or daily basis? 

Thank you, 

Judith 

Dear Judith,

For the purpose of a clearer discussion, there is first a need to define the terms “monthly paid employee” and “daily paid em­ployee.” The term “monthly-paid employee is one who is paid everyday of the month although he does not regularly work on his rest day or Sundays and/or regular holidays and special holidays. In other words, a monthly paid employee is one who is paid irrespective of the number of working days therein and is considered paid during rest days or holidays even if not worked.” (Reviewer in Labor and Social Legislation, Alcantara and Alcantara, 2001 edition, p. 228). 

The term “daily paid employee,” on the other hand, “is one who is paid only on the days he actually works, except on unworked regular holidays where he is paid his basic wage if he is present or on leave of absence with pay on the working day immediately preceding the regular holiday.” (Reviewer in Labor and Social Legislation, Alcantara and Alcantara, 2001 edition, p. 228). 

Anent your query, there is no provision in the Philippine Labor Code that specifies or mandates which of employees are to be paid on a monthly basis and which on a daily basis. This is within the discretion and prerogative of the management. However, if the employer abuses the exercise of this power tantamount to unfair labor practices as proscribed by the Labor Code, then this may result in the criminal prosecution of the offending employer. 

Additionally, there is also no provision in the Philippine Labor Code mandating that a regular employee should be a monthly-paid employee. However, the payment scheme used for other regular employees who discharge the same functions and duties as the newly regularized employee should be the same. If such employees are being paid on a monthly basis, then the newly regularized employee should also be paid on a monthly basis. However, if these employees are not paid on a monthly basis but on a daily basis then there is no cogent reason why a newly regularized employee should be paid monthly while the other regular employees who discharge the same functions are being paid on a daily basis.

What is of primal importance is that the minimum benefits conferred upon regular employees provided under the law are given to them. Under the Labor Code, these are the following: 

1. Security of Tenure

2. Normal working hours of 8 hours a day

3. Weekly Rest Day

4. Minimum wage

5. Holiday pay

6. Premium pay for work within 8 hours

7. Overtime pay for work in excess of 8 hours

8. Nightshift Differential Pay

9. Service Incentive Leave (Title I, Book Three of the Labor Code).

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we have fully addressed your queries.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net or via text message (key in: Times dearpao <YOUR QUESTION> and send to 2299).

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