Disclaimer: The following discussion is provided for informational purposes only and does not constitute legal advice. For specific concerns and guidance tailored to your circumstances, it is best to consult a qualified lawyer or seek assistance from the Philippine Department of Labor and Employment (DOLE).

Unlawful Salary Deductions for On-Call Workers in the Philippines: An Overview

1. Introduction

In the Philippines, “on-call” work arrangements have become increasingly common—particularly in industries such as healthcare, security services, hospitality, and customer support. These arrangements generally require workers to be available and ready to report to work if called upon by their employer, often on short notice. However, along with on-call responsibilities come certain issues related to wage protection, including whether (and how) salary deductions can be made.

This article explores the legal standards that govern wage deductions in the Philippine setting, focusing on on-call workers. It also discusses common scenarios where unlawful deductions may arise, the remedies available to workers, and best practices for employers to avoid legal liability.

2. The Legal Basis for Salary Deductions in the Philippines

The framework for lawful salary deductions can be found in:

Presidential Decree No. 442, otherwise known as the Labor Code of the Philippines;
The Implementing Rules and Regulations (IRR) of the Labor Code;
Department of Labor and Employment (DOLE) Orders and Labor Advisories; and
Relevant court decisions interpreting these laws.

2.1. Prohibited Deductions Under the Labor Code

Article 113 of the Labor Code generally stipulates that “[n]o employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except in the following cases…” The allowable deductions typically include:
1. Deductions that are required by law (e.g., SSS, PhilHealth, Pag-IBIG contributions, and withholding tax).
2. Deductions for insurance premiums advanced by the employer, provided the employee has given written authorization.
3. Deductions for union dues, where the worker is a member of a legitimate labor union and authorized the deduction in writing.
Any deduction outside of the above scenarios could be deemed unauthorized or unlawful, unless there is a clear, voluntary, and written consent of the employee, and such deduction is not otherwise prohibited by law.

2.2. Minimum Wage and Wage Fixing

The law emphasizes that wages should never fall below the prescribed minimum wage. Employers cannot use deductions to circumvent minimum wage regulations.
Even when deductions are authorized, employees’ net pay should not fall below the applicable minimum wage.

3. On-Call Work Arrangements: Definition and Key Characteristics

On-call workers are employees who are not necessarily working on a continuous schedule but must be ready to report to work when called.
These employees may be required to stay within a certain distance of the workplace or have their phones accessible at all times.
Key consideration: The concept of working time or “hours worked.” If an employee’s freedom is so restricted that they cannot effectively use their on-call hours for personal purposes, such on-call hours may be considered compensable time.

4. Common Salary Deductions and Their Legality

4.1. Equipment and Uniform Costs

Employers sometimes attempt to deduct the costs of company uniforms, tools, or equipment from employees’ salaries.
Under the Labor Code and DOLE regulations, requiring employees to shoulder expenses essential to the performance of their job is generally not allowed, unless there is a valid agreement and the deduction does not bring the employee’s wage below the minimum.

4.2. Damages and Losses

Another frequent issue is when an employer deducts pay for damages to company property or for losses (e.g., cash shortages or lost company assets).
DOLE maintains that deductions for damages/losses are permissible only if:
1. The employee freely consented in writing;
2. The employee is clearly at fault or negligent; and
3. The deduction is reasonable and does not violate minimum wage laws.
Even in those instances, the employer bears the burden of proof to show fault or negligence on the part of the worker.

4.3. Training Costs

Some employers deduct training fees from employees who leave the company within a certain period or fail to meet certain job requirements.
Legality: As a general rule, mandatory training related to an employee’s role should be shouldered by the employer, unless a specific training agreement (approved by the employee and consistent with DOLE’s guidelines) justifies such deductions.

4.4. Withholding Pay for Waiting or Standby Time

In an on-call context, there can be confusion over whether an employee should be paid for the hours spent waiting to be called.
Principle: If the on-call requirement is restrictive enough that the worker cannot use the time effectively for personal pursuits—meaning they must remain in or near the workplace, or are frequently interrupted—this time is generally considered hours worked and must be compensated.
Withholding or deducting pay for time spent “on standby” that is effectively controlled by the employer could amount to an unlawful deduction or non-payment of wages.

5. Unlawful Deductions in On-Call Settings: Examples

Deductions for On-Call “Idle” Periods
- If the on-call period is sufficiently restrictive, the employer must compensate it. Deducting wages simply because the worker did not receive many calls within that period can be unlawful.
Payment for Mistakes or Customer Complaints
- Employers may not arbitrarily deduct from wages for alleged “poor performance” or repeated mistakes without following due process and abiding by lawful deduction rules.
Charges for Missing Work Equipment
- If equipment is lost or damaged but there is no clear, written admission of fault by the employee, automatic deductions are not permitted.
Penalties for Resignation During an On-Call Contract
- Employers cannot penalize employees by deducting wages due to resignation before a contract ends, unless expressly agreed upon in a valid contract and compliant with labor laws.

6. Enforcement and Remedies for Employees

Filing a Complaint with DOLE
- Employees who believe unlawful deductions have been made can file a request for assistance (RFA) with the nearest DOLE regional office.
- DOLE’s Single Entry Approach (SEnA) can mediate between the employer and employee to resolve the dispute.
Legal Action
- If mediation fails, employees may file a labor case before the National Labor Relations Commission (NLRC).
- Claims may include restitution for unlawfully deducted amounts, and if proven, the employer can be liable for payment of back wages, damages, and attorney’s fees.
Documentation
- Employees should keep pay slips, employment contracts, company memos, and other documentation that reflect their hours, wages, and any deductions to substantiate their claims.

7. Employer’s Best Practices to Avoid Liability

Maintain Clear Policies
- Create a written policy clarifying what periods are considered “on-call” or “standby” time and whether it is compensable.
- Ensure that workers are aware of and have acknowledged these policies.
Obtain Written Consents
- Before making any salary deductions, secure an express, written consent from the employee that meets the legal requirements.
Comply with Minimum Wage and OT Rules
- Even if deductions are valid, an employer must ensure that the employee’s wage does not drop below the minimum wage.
Carefully Evaluate Fault or Negligence
- If an employee is accused of losing or damaging equipment, conduct an internal investigation and follow due process (e.g., show-cause notices) before making any deduction.
Consult with Legal or HR Experts
- Given that the Labor Code and DOLE regulations can be complex, seeking professional guidance helps reduce legal risks.

8. Conclusion

The Philippine Labor Code and implementing regulations strictly regulate deductions from employees’ wages. For on-call workers—who often face unique compensation challenges—understanding these rules is critical. Many seemingly benign deductions (e.g., for uniforms, standby hours, or equipment) can be unlawful if they do not comply with legal requirements, bring wages below the minimum, or lack proper written authorization.

Key takeaway: Employers must exercise caution in implementing any kind of salary deductions, especially for on-call workers. Conversely, employees should be vigilant about their pay slips and any deductions that appear illegitimate. When in doubt, consulting DOLE or a legal professional is the safest route.

Disclaimer: This article is for general information only and does not substitute for individualized legal advice. If you have specific concerns about your situation, consult a qualified attorney or approach the DOLE for guidance and clarification.