Dear PAO,

As a punishment, my employer deducts a significant amount from my salary whenever I unintentionally violate the cleanliness policy in the workplace. When I argued that there is a prohibition against unauthorized salary deduction, the HR department reasoned that such punishment is authorized by our company policy. Can our company policy legalize an unauthorized salary deduction? Isn’t there a limited list of allowable deductions?

Maya

Dear Maya,

No, a company policy alone may not legalize an unauthorized salary deduction.

Article 113 of the Labor Code specifically prohibits any deduction from the wages of employees, except in (1) payment of premium in cases where the worker is insured with his consent by the employer, (2) for union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned, and (3) in cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment.

Since salary deduction, as a form of punishment, is not included in the exceptions allowed by the law, such deduction may not be considered legal, even if it is authorized by your company policy. Albeit the enforcement of a company-initiated policy is considered a valid exercise of management prerogative, it is elementary that such policies must not be contrary to law, morals, good customs, or public policies. In Asian Marie Transport Corporation vs. Caseres, G.R. No. 212082, Ponente: Senior Associate Justice Mario Victor F. Leonen, the Supreme Court explained that:

“Management has a wide latitude to conduct its own affairs, so long as it exercises its management prerogative in good faith for the advancement of its interest and not to defeat or circumvent employee rights under the law or valid agreements. Its management prerogative must likewise not be used in a way that is unreasonable, inconvenient, or prejudicial to the employees involved.”

Thus, salary deduction as a form of punishment cannot run against the general proscription provided for by Article 113 of the Labor Code. A company policy cannot supersede the minimum labor standards required by the law.

As for your second question, aside from those mentioned in Article 113 of the said Code, there are other deductions allowed by law, such as but not limited to, payment of Social Security System (SSS) premium under the Republic Act (RA) 8282, insurance premium paid to the Philippine Health Insurance Corporation (Philhealth), payment of withholding tax, if applicable, under the National Internal Revenue Code (NIRC), and salary deductions on the basis of Article 59 of Republic Act (RA) 6938 or the Cooperative Code of the Philippines on cooperative membership or contributory fees.

We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

We appreciate your trust and support.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected].