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PROHIBITIONS REGARDING WAGES RUSSEL R. ROMERO

Prohibitions Regarding Wages

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PROHIBITIONS REGARDING WAGES

RUSSEL R. ROMERO

ART. 112 Non-Interference in Disposal of Wages

No employer shall limit or otherwiseinterfere with the freedom of anyemployee to dispose of his wages.

He shall not in any manner force,compel, or oblige his employees topurchase merchandise, commoditiesor other property from any otherperson, or otherwise make use of anystore or services of such employer orany other person.

ART. 113 Wage Deduction

No employer, in his own behalf or in behalf of anyperson, shall make any deduction from the wagesof his employees, except:

a. In cases where the worker is insured with hisconsent by the employer, and the deduction isto recompense the employer for the amountpaid by him as premium on the insurance.

ART. 113 Wage Deduction

b. For union dues, in cases where the right of theworker or his union to check-off has beenrecognized by the employer or authorized inwriting by the individual worker concerned; and

c. In cases, where the employer is authorized bylaw or regulations issued by the Secretary ofLabor and Employment.

ART. 114 Deposits for Loss or Damage

No employer shall require his worker to makedeposits from which deductions shall be madefor the reimbursement of loss of or damage totools, materials, or equipment supplied by theemployer, except when the employer isengaged in such trades, occupations orbusiness where the practice of makingdeductions or requiring deposits is arecognized one, or is necessary or desirable asdetermined by the Secretary of Labor andEmployment in appropriate rules andregulations.

ART. 115 Limitations

No deduction from the deposits of an employee for the actual amount of the loss or damage shall be made unless the employee has been heard thereon, and his responsibility has been clearly shown.

ART. 116 Withholding of Wages and Kickbacks Prohibited

It shall be unlawful for any person, directly orindirectly, to withhold any amount from the wagesof a worker or induce him to give up any part of hiswages by force, stealth, intimidation, threat or byany other means whatsoever without the worker’sconsent.

ART. 117 Deduction to Ensure Employment

It shall be unlawful to make any deduction from the wages of any employee for the benefit of the employer or his representative or intermediary as consideration of a promise of employment or retention in employment.

ART. 118 Retaliatory Measures

It shall be unlawful for an employer to refuse topay or reduce the wages and benefits, discharge orin any manner discriminate against any employeewho has filed any complaint or instituted anyproceeding under this Title or has testified or isabout to testify in such proceedings.

ART. 119 False Reporting

It shall be unlawful for any person to make any statement, report, or record filed or kept pursuant to the provisions of this Code knowing such statement, report or record to be false in any material respect.

TAX EXEMPTION OF MINIMUM WAGE

EARNERS(RA 9504)

EXEMPTION FROM TAX OF THE MINIMUM WAGE EARNERS

All minimum wage earners in the private and

public sector shall be exempt from payment of

income tax. The exemption will cover not only the

basic pay but also holiday pay, overtime pay, night

shift differential, and hazard pay received by the

minimum wage earners.

• Individual employees whose compensation income

does not exceed the statutory minimum wage or

P5,000 per month were exempted from withholding

tax. Nonetheless, these were not exempted from

income tax.

• The minimum wage earners whose compensation

were not subjected to withholding taxes were still

required to file annual income tax returns and pay

the corresponding income tax due.

EXEMPTION FROM TAX OF THE MINIMUM WAGE EARNERS

• Minimum wage depends on the statutory minimum

wage fixed by the Regional Tripartite Wage and

Productivity Board, as defined by the Bureau of

Labor and Employment Statistics of the Department

of Labor and Employment.

• Regional Tripartite Wage and Productivity Boards of

each region determine the wage rates in the

different regions. The statutory minimum wage will

depend on the region where the employee is

working and not where he is residing.

EXEMPTION FROM TAX OF THE MINIMUM WAGE EARNERS

• Minimum wage depends on the statutory minimum

wage fixed by the Regional Tripartite Wage and

Productivity Board, as defined by the Bureau of

Labor and Employment Statistics of the Department

of Labor and Employment. Regional Tripartite

Wage and Productivity Boards of each region

determine the wage rates in the different regions.

The statutory minimum wage will depend on the

region where the employee is working and not

where he is residing.

EXEMPTION FROM TAX OF THE MINIMUM WAGE EARNERS

• RA 9504 increased the level of allowable personal

exemption of each individual taxpayer to a uniform

amount of P50,000 regardless of the status of the

taxpayer.

INCREASE IN PERSONAL AND ADDITIONAL EXEMPTIONS

TYPE OF TAXPAYER OLD LAW NEW LAW

SINGLE 20,000 50,000

HEAD OF FAMILY 25,000 50,000

MARRIED INDIVIDUAL 32,000 50,000

ADDITIONAL EXEMPTION FOR EACH QUALIFIED DEPENDENT/CHILD

8,000 25,000

• The OSD is a scheme whereby a taxpayer is given

the option to deduct from his gross revenue or

gross income a lump sum equivalent to a

percentage of such gross revenue or gross income

for purposes of computing the net taxable income

on which the income tax rate will be applied.

• This is in lieu of the itemized deduction schemewhere the taxpayer lists down all his expenses andthe corresponding amounts incurred to determinethe amount of allowable deductions.

OPTIONAL STANDARD DEDUCTION (OSD) FOR CORPORATIONS AND INCREASED OSD FOR INDIVIDUALS

• The 10% OSD allowed to an individual engaged in

business and practice of profession was increased

to 40% of gross sales or gross receipts.

• Furthermore, corporations are now given the option

to avail of the OSD at 40% of gross income.

Previously, they were only allowed to claim itemized

deductions in computing their taxable net income.

OPTIONAL STANDARD DEDUCTION (OSD) FOR CORPORATIONS AND INCREASED OSD FOR INDIVIDUALS

IMPLICATIONS OF(RA 9504)

• The 10% OSD allowed to an individual engaged in

business and practice of profession was increased

to 40% of gross sales or gross receipts.

• Furthermore, corporations are now given the option

to avail of the OSD at 40% of gross income.

Previously, they were only allowed to claim itemized

deductions in computing their taxable net income.

COST OF LIVING ALLOWANCE (COLA) AND VOLUNTARY SSS,PHIC & PAGIBIG CONTRIBUTIONS