AN ACT TO RATIONALIZE WAGE POLICY DETERMINATION BY ESTABLISHING THE MECHANISM AND PROPER STANDARDS THEREFOR

Case Overview and Summary

Summary of Republic Act No. 6727 (Wage Rationalization Act)

Title: An Act to Rationalize Wage Policy Determination by Establishing the Mechanism and Proper Standards Therefor

Objectives (Section 2):
- Rationalize the fixing of minimum wages
- Promote productivity-improvement and gain-sharing measures
- Ensure a decent standard of living for workers and their families
- Guarantee the rights of labor to its just share in the fruits of production
- Enhance employment generation in the countryside through industry dispersal
- Allow business and industry reasonable returns on investment, expansion and growth

Minimum Wage Determination:
- Regional minimum wages to be determined by Regional Tripartite Wages and Productivity Boards (Section 3)
- Standards/criteria for minimum wage fixing (Section 124):
  - Demand for living wages
  - Wage adjustment vis-a-vis the consumer price index
  - Cost of living and changes or increases therein
  - Needs of workers and their families
  - Need to induce industries to invest in the countryside
  - Improvements in standards of living
  - Prevailing wage levels
  - Fair return of capital invested and capacity to pay of employers
  - Effects on employment generation and family income
  - Equitable distribution of income and wealth

Wage Increase (Effective July 1, 1989) (Section 4):
- P25.00 per day for workers in the National Capital Region
- P25.00 per day for workers outside NCR, except:
  - P20.00 for plantation agricultural enterprises with annual gross sales less than P5 million
  - P15.00 for non-plantation agriculture, cottage/handicraft, retail/service employing not more than 10 workers, and business enterprises with capitalization not more than P500,000 and employing not more than 20 workers
- Workers receiving above minimum wage up to P100.00 per day shall also receive P25.00 increase, subject to exceptions above

Coverage and Exclusions (Section 1):
- Covers all workers and employees in the private sector, regardless of position, designation or status, and irrespective of the method by which their wages are paid
- Excludes:
  - Household or domestic helpers, including family drivers (Section 1)
  - Workers and employees in retail/service establishments regularly employing not more than 10 workers, when exempted (Section 1)
  - Workers and employees in new business enterprises outside NCR and export processing zones for up to 2 or 3 years from start of operations, when exempted (Section 1)
  - Workers and employees receiving a basic wage of more than P100.00 per day (Section 1)

Exemptions (Section 15):
- Retail/service establishments regularly employing not more than 10 workers may be exempted upon application with and as determined by the appropriate Board
- New business enterprises outside NCR and export processing zones may be exempted for up to 3 years from start of operations, or 2 years in Regions III and IV (except certain provinces)

National Wages and Productivity Commission (Sections 120-121):
- Created as the national consultative and advisory body on wages, incomes and productivity
- Formulates policies and guidelines on wages, incomes and productivity improvement
- Prescribes rules and guidelines for minimum wage and productivity measures
- Reviews regional wage levels set by Regional Boards
- Undertakes studies, researches and surveys on wages and productivity
- Reviews plans and programs of Regional Boards
- Exercises technical and administrative supervision over Regional Boards
- Calls national tripartite conferences on wage rationalization and productivity

Regional Tripartite Wages and Productivity Boards (Section 122):
- Created in all regions to develop plans, programs and projects on wages, incomes and productivity improvement
- Determine and fix minimum wage rates applicable in their region, provinces or industries
- Undertake studies, researches and surveys on wages, incomes and productivity
- Coordinate with other Regional Boards
- Receive, process and act on applications for exemption from prescribed wage rates

Wage Distortion (Section 124):
- Where wage increase results in distortions in the wage structure, the employer and union shall negotiate to correct the distortions
- If unresolved, it shall be decided through voluntary arbitration or compulsory arbitration by NLRC
- Pendency of a dispute shall not delay the applicability of wage increase

Penalties (Section 12):
- Refusal or failure to pay prescribed wage increases shall be punished by a fine not exceeding P25,000 and/or imprisonment of not less than 1 year nor more than 2 years
- Convicted persons shall not be entitled to benefits under the Probation Law
- If violation is committed by a corporation, trust, firm, partnership, association or entity, the penalty of imprisonment shall be imposed on the responsible officers

Registration/Reporting Requirement (Section 124):
- Any person, company, corporation, partnership or entity engaged in business shall file and register annually with the appropriate Board, Commission and 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, and their corresponding salaries and wages

Other Provisions:
- Prohibition against injunction on proceedings before the Commission or Boards (Section 126)
- Non-diminution of benefits under existing laws, decrees, issuances, executive orders and/or contracts or agreements (Section 127)
- Payment of wages through banks upon written petition of majority of workers (Section 7)
- Duty of banks to issue certification of record of payment of wages upon request (Section 8)
- Abolition of National Wages Council and National Productivity Commission (Section 11)