Title: Inquiry on Unlawful Deductions, Non-Filing of Mandatory Contributions, and Lack of Benefits and Salary Increase

Dear Attorney,

I hope this letter finds you well. I am currently employed at a company where I have been facing a number of issues related to our employment conditions. I would like to seek your legal advice on these matters to clarify if the company's practices are lawful and what steps I can take to address them.

Here are the concerns I would like to bring to your attention:

Late Penalty Charges: Whenever we are late to work, we are being charged a penalty twice, which seems excessive. I would like to understand if there are any legal limits on penalties that employers can impose on employees for tardiness and if being charged twice for the same infraction is lawful.
Break Time: We do not have any formal break time during the workday, not even for meals or coffee breaks. I am aware that labor laws provide for certain breaks, and I would like clarification on what breaks we are entitled to and whether the absence of these breaks is a violation of labor laws.
Non-Filing of SSS, Pag-IBIG, and PhilHealth Contributions: The company has not been filing our Social Security System (SSS), Home Development Mutual Fund (Pag-IBIG), and Philippine Health Insurance Corporation (PhilHealth) contributions, even though I have been employed for seven months. When I raised this issue with the employer, I was told that they would just give me their share of the contributions and that we could voluntarily file for our benefits. I would like to understand if this is a lawful arrangement and what my employer's obligations are regarding these mandatory contributions.
Regularization Without Salary Increase or Benefits: I have recently been regularized, but I have not received any salary increase or benefits as a result. I would like to know if there is a legal requirement for an employer to provide an increase in salary or additional benefits upon regularization, or if this is purely discretionary on the part of the employer.

I hope you can provide guidance on these issues and advise me on the proper legal steps I can take. Your assistance in helping me understand my rights as an employee under the law would be greatly appreciated.

Thank you for your time and expertise.

Sincerely,
[Employee Concerned]

Comprehensive Legal Article on the Concerns Presented

1. Late Penalty Charges: The Limits on Employer-Imposed Penalties for Tardiness

Under Philippine labor law, the employer has the right to enforce reasonable workplace rules, including penalties for tardiness. However, the penalties must be reasonable and must not amount to unlawful deductions. According to the Labor Code of the Philippines (Presidential Decree No. 442), deductions from an employee’s salary must generally be made with the consent of the employee and must comply with the strict rules laid down in Article 113. These deductions are typically limited to those authorized by law, such as tax withholdings, SSS contributions, Pag-IBIG contributions, and PhilHealth premiums.

The practice of imposing multiple penalties for a single instance of tardiness, as described, may be excessive and could be considered an unreasonable form of discipline. Employers can impose sanctions for being late but charging twice for the same infraction may constitute an unfair labor practice or result in constructive dismissal. Furthermore, if the penalty for tardiness exceeds the proportionate deduction for the time lost, it may be considered unlawful under the rule against unjust and excessive wage deductions.

While there are no specific laws dictating the exact amount an employer can deduct for being late, penalties that are disproportionate or arbitrary can be contested. Employees have the right to file a complaint with the National Labor Relations Commission (NLRC) if they believe they are being subjected to unfair deductions or penalties.

2. Absence of Break Time and Legal Provisions for Rest Periods

The Labor Code of the Philippines, particularly in Book III, Title I, provides clear guidelines on working hours and the right to rest periods. Article 83 of the Labor Code mandates that employees are entitled to a one-hour meal break after working continuously for five hours. This break is considered unpaid unless the employee is required to work during this time, in which case the employer must compensate the employee.

In addition to meal breaks, employees are entitled to rest days under Article 91, which mandates that employees should have at least one rest day for every six consecutive days of work. Employers cannot deny these rest periods except in cases of emergency work or business necessity, which must also be compensated as overtime if the employee is required to work during these times.

Failure to provide meal and rest breaks is a violation of the Labor Code. Employees can file a complaint with the Department of Labor and Employment (DOLE) if they are denied their statutory rest periods.

3. Non-Filing of SSS, Pag-IBIG, and PhilHealth Contributions: Employer’s Obligations

One of the most significant issues raised in the letter is the employer’s failure to file SSS, Pag-IBIG, and PhilHealth contributions, which are mandatory under Philippine law. The Social Security Act of 2018 (Republic Act No. 11199), Republic Act No. 9679 for Pag-IBIG, and the National Health Insurance Act (Republic Act No. 7875) mandate that employers must enroll their employees in these systems and remit the required contributions on time.

Employers are required by law to deduct the employee’s share from their salary and remit it, along with the employer’s counterpart, to the relevant agencies. The failure to do so exposes the employer to both civil and criminal liability. For example, under the SSS law, non-remittance of contributions is considered a criminal offense punishable by fines and imprisonment. The same applies to Pag-IBIG and PhilHealth contributions.

Moreover, the employer’s suggestion that employees should "volunteer" for these contributions and that the employer will simply give its share directly to the employee is unlawful. Under no circumstances can employers delegate their statutory responsibilities to employees or make contributions voluntary. Contributions to these social protection systems are non-negotiable and compulsory under law.

Employees can report these violations to the DOLE or file a complaint with the SSS, Pag-IBIG, or PhilHealth, which will conduct investigations and impose penalties on non-compliant employers.

4. Regularization and the Absence of Salary Increase or Benefits

The concept of regularization under Philippine labor law is governed by Article 295 (formerly Article 280) of the Labor Code, which provides that employees who have rendered at least six months of continuous service are deemed regular employees. Regular employees are entitled to security of tenure, which means they cannot be dismissed without just or authorized cause and due process.

However, regularization does not automatically guarantee a salary increase or additional benefits unless such provisions are stated in the company’s policy or collective bargaining agreement (CBA). Employers are not legally mandated to grant a salary increase upon regularization unless this has been contractually agreed upon. The Labor Code requires only that employees receive at least the minimum wage and that their terms of employment comply with labor standards (e.g., hours of work, overtime pay, holiday pay).

On the other hand, regularization should entitle employees to benefits that are mandatory under law, such as overtime pay, holiday pay, service incentive leave, and 13th-month pay. If the employer fails to provide these benefits upon regularization, the employee has the right to demand them.

Conclusion and Legal Remedies

Based on the issues raised, it appears that the employer is in violation of several labor laws concerning wage deductions, rest periods, and mandatory contributions. The employee in question may have valid claims for:

Unlawful deductions: The imposition of double penalties for tardiness may be challenged before the NLRC as an unreasonable and excessive deduction from wages.
Violation of rest periods: The absence of proper break times can be brought before the DOLE for investigation and enforcement.
Failure to remit SSS, Pag-IBIG, and PhilHealth contributions: Employees should file complaints with the respective agencies, which will compel the employer to remit contributions and may impose penalties on the employer for non-compliance.
Non-provision of benefits: While there may not be a legal mandate for salary increases upon regularization, the employee is entitled to all statutory benefits, and any failure to provide these can be contested.

Employees should first seek to resolve these matters internally by filing a grievance or communicating with the employer. If the issues are not rectified, employees may seek legal recourse through the appropriate government agencies. These complaints should be filed promptly to avoid any prescription of claims.

By taking these steps, employees can ensure that their rights are protected under Philippine labor law. It is important to gather all relevant documentation, such as pay slips, attendance records, and employment contracts, to support any legal claims.