LETTER TO THE ATTORNEY

Dear Attorney,

I am writing to seek your legal counsel regarding my current employment situation. I am employed under a contract that specifies I am to be paid on an hourly basis. However, my employer only compensates me for “billable hours,” rather than the total hours that I am actually required to be present in the office. Compounding this problem, our company’s timekeeping system is faulty, and there appear to be no initiatives from management to address or rectify the system’s technical issues.

When legitimate time entries go uncaptured or are recorded incorrectly, I have requested that our leaders allow manual edits to accurately reflect the hours I worked. Unfortunately, they firmly refuse to do so, even when there is valid documentation or justification for these corrections. Consequently, I have concerns that I am not being fully or properly compensated for all the hours I am required to spend at work.

I would greatly appreciate your advice on how to proceed under Philippine law. I want to understand whether my current payment structure is legally permissible, and what legal remedies might be available if it is determined that my employer is violating labor standards. Thank you very much for your guidance.

Sincerely,

Concerned Professional

LEGAL ARTICLE: EXHAUSTIVE DISCUSSION ON HOURLY WAGE DISCREPANCIES, TIMEKEEPING, AND RECOURSE UNDER PHILIPPINE LAW

In the Philippines, the fundamental provisions on wages, working conditions, and employee rights are found in the Labor Code of the Philippines (Presidential Decree No. 442, as amended). For employees who are paid on an hourly basis, the law provides specific standards for the computation of wages, overtime, and other labor-related entitlements. This article aims to comprehensively examine the legal rules and principles relevant to the situation where an employee is paid on an hourly basis but is compensated only for “billable hours” rather than actual hours present at the workplace. Additionally, we will discuss potential remedies available under Philippine law for employees who believe they are not being properly compensated due to faulty timekeeping systems or employer refusal to correct time records.

1. Legal Framework on Wages and Compensation

1.1 Basic Wages Under Article 82 of the Labor Code, an employee’s wage generally refers to the remuneration or earnings, however designated, for work or services rendered. If the employment contract specifies that the employee is to be paid an hourly rate, the employer is obliged to compute the employee’s wages based on the total hours rendered by the employee, including any overtime, night shift differential, or premium pay required by law.

1.2 Work Hours vs. Billable Hours In some industries—particularly outsourcing, consultancy, legal services, or professional services—employers distinguish between “billable hours” (the hours charged to a client for specific work) and “non-billable hours” (administrative tasks, training, or waiting time). While this may be common practice, especially in project-based contexts, the Labor Code generally requires compensation for all hours during which an employee is required to be on duty or to be at a prescribed workplace. In short, if an employee is mandated to be present in the office (whether working or waiting to be given tasks), this period typically constitutes compensable work hours under Philippine labor regulations.

1.3 Faulty Timekeeping Systems Employers have the responsibility to keep accurate records of an employee’s hours of work. In particular, the Labor Code imposes on employers the legal duty of maintaining proper employment records—this includes the daily time records that reflect all the hours worked by employees. If the timekeeping system is proven to be faulty, the employer remains responsible for ensuring that correct and complete hours of work are reported and compensated accordingly. Failure to address a system glitch or refusal to allow manual corrections (especially with supporting evidence such as logs, emails, or other documentation proving actual work time) could be construed as a violation of labor standards relating to proper compensation.

2. Hourly Employment and Labor Standards

2.1 Determination of Hours Worked Under the rules and regulations governing the implementation of the Labor Code, the term “hours worked” shall include:

All time during which an employee is required to be on duty or to be at a prescribed workplace; and
All time during which an employee is permitted or suffered to work.

If the employee is indeed obligated to remain in the office (or at any assigned work location) even when there are no “billable tasks,” the entire duration of presence, by default, should be compensable unless exceptions under the law exist (e.g., bona fide meal periods of not less than 60 minutes).

2.2 Overtime Compensation For hourly-paid employees, any work performed beyond eight (8) hours in a workday must be compensated with overtime pay, which is at least twenty-five percent (25%) more than the employee’s regular wage rate on ordinary working days. If overtime work falls on a rest day or holiday, higher rates apply. Non-payment of overtime or improperly computed overtime wages (for instance, if the employer only calculates overtime based on “billable hours” rather than the total hours spent on duty) constitutes a labor law violation.

2.3 Night Shift Differential and Other Benefits Employees who work between the hours of 10:00 p.m. and 6:00 a.m. are entitled to a night shift differential pay of not less than ten percent (10%) of their regular wage for each hour of work performed during that period. Hourly workers, therefore, must be properly paid the appropriate premium if they are scheduled to work at night.

2.4 Contractual Stipulations vs. Labor Rights While employment contracts, particularly in certain industries, may specify arrangements relating to “billable time,” the contractual stipulations cannot override statutory labor standards. Even if an employee signs a contract that purports to pay only for billable tasks, this provision can be subject to scrutiny by the Department of Labor and Employment (DOLE) if it results in wages below the required minimum or in a failure to pay for all hours worked. The principle that labor contracts are imbued with public interest means that employees cannot waive their statutory rights, including entitlement to minimum wage, overtime pay, and other mandatory benefits.

3. Employer’s Duty to Keep Accurate Time Records

3.1 Relevant Provisions on Record-Keeping DOLE Department Order No. 147-15, Series of 2015, among other regulations, emphasizes that it is the employer’s responsibility to keep and maintain employment records such as payrolls, daily time records, pay slips, and other documents that show that employees are paid the correct wages. If the system in place is faulty, the onus remains on the employer to correct and improve the method of recording time to ensure compliance with labor standards.

3.2 Refusal to Allow Manual Correction of Records When time logs fail to record certain work periods or reflect them inaccurately, employers are expected to allow legitimate adjustments upon verification. A blanket refusal to rectify known errors may create a situation where the employee is systematically underpaid. Such an arrangement can prompt the employee to seek redress through administrative or judicial channels if the employer remains uncooperative.

3.3 Consequences of Non-Compliance Non-compliance with proper record-keeping or refusal to pay for all working hours can subject the employer to administrative fines, orders of compliance, and potential liability for back wages and other monetary claims. In more serious cases, or if there is bad faith or repeated violations, the employer may face more stringent penalties from the DOLE or the National Labor Relations Commission (NLRC).

4. Potential Legal Remedies for Affected Employees

4.1 Filing a Labor Complaint with the Department of Labor and Employment (DOLE) Employees who believe they are underpaid or not receiving the correct compensation due to faulty timekeeping or an employer’s refusal to honor legitimate working hours may file a complaint at the regional office of DOLE with jurisdiction over their workplace. The Single Entry Approach (SEnA) is usually the first step: this mandatory 30-day conciliation-mediation period aims to encourage an amicable settlement between the parties.

4.2 Filing a Case before the National Labor Relations Commission (NLRC) If mediation at the DOLE level fails, the employee may escalate the complaint to the NLRC. Common claims include underpayment of wages, overtime pay, premium pay for holidays/rest days, night shift differential, and similar causes of action. The NLRC has the power to award back wages (covering the difference between what was actually paid and what should have been paid), legal interest, and in certain cases, damages for the employee’s distress.

4.3 Constructive Dismissal Concerns While the primary issue revolves around wages for actual hours worked, if the employer’s conduct (e.g., repeated refusals to rectify time records, punishing employees for requesting corrections, or placing employees under undue pressure) leads to a situation where working conditions become intolerable, the employee might also explore whether it constitutes constructive dismissal. However, constructive dismissal requires a very high standard of proof, requiring the employee to demonstrate that the employer’s conduct was so unreasonable or harsh that it left no choice but to resign. If proven, constructive dismissal would entitle the employee to separation pay, full back wages, and other damages as applicable.

4.4 Legal Assistance and Representation Given the complexity of these issues, consulting with a labor lawyer is highly advisable. A lawyer can review the employment contract, evaluate the hourly records, correspond with the employer regarding corrections, and, if necessary, file the appropriate pleadings before the DOLE, NLRC, or the courts. The employee should gather relevant evidence such as:

Signed timesheets or alternative records of hours worked
Emails, chat logs, or memos instructing the employee to remain in the workplace
Witness statements from co-workers who observed the employee working beyond “billable hours”
Copies of pay slips reflecting the alleged underpayment

5. Analysis of the Refusal to Pay Beyond Billable Hours

5.1 Nature of the Employment Agreement The starting point for any dispute involving wages is the contract of employment, which should outline the rate of pay, hours of work, job duties, and any special stipulations relevant to the employee’s position. Even if the contract specifically highlights “billable hours,” such language must be harmonized with the Labor Code’s definition of compensable time.

5.2 Legal Limits of Management Prerogative Management prerogative allows employers to regulate aspects of employment such as working hours, job assignments, and performance metrics. However, it does not permit employers to circumvent statutory obligations. Consequently, an employer cannot lawfully rely on “management discretion” to deny compensation for time that the employee is required or suffered to work.

5.3 Effect on Minimum Wage Compliance In regions where the daily minimum wage is prescribed by law, the employer must ensure that the computation for hourly wages covers not just the hours the employer deems “billable.” The overall compensation at the end of each pay period should still meet or exceed the applicable minimum wage. If an employee’s final pay ends up falling below minimum wage due to unaccounted hours, the employer risks liability for non-compliance with minimum wage regulations.

6. Strategies for Employees to Protect Their Rights

6.1 Documentation of Work Hours In situations where the company’s official timekeeping system is unreliable, employees should keep personal records of their log-ins and log-outs, breaks, and other relevant data. Emails or chat timestamps, internal time logs, and personal notes can serve as evidence, especially in a labor dispute setting.

6.2 Open Communication with Management Before resorting to legal measures, employees are encouraged to communicate their concerns with management or human resources in writing. A well-documented request for time correction, along with supporting proof, can demonstrate good faith on the part of the employee. It can also help establish a paper trail showing the employer’s refusal to address valid concerns about miscalculated hours.

6.3 Seeking Assistance from DOLE If internal mechanisms fail, contacting the DOLE is often the next step. DOLE may conduct an inspection to verify compliance with labor standards. This approach is less adversarial than filing an immediate formal complaint, although employees can escalate to a full-blown complaint if the company remains non-compliant.

6.4 Exploring Amicable Settlement Many labor disputes are resolved through compromise agreements supervised by the DOLE or the NLRC. A settlement might involve the employer agreeing to pay back wages for unrecorded hours or instituting a more reliable timekeeping system moving forward. Employees benefit from an early settlement as it saves time and reduces litigation expenses, but they must ensure that their statutory rights are not waived unjustly.

7. Employers’ Perspective and Best Practices

7.1 Risk Management From an employer’s standpoint, maintaining fair and accurate compensation systems is critical to minimizing legal exposure. Failing to pay for all hours worked can lead to substantial back pay awards and possible administrative sanctions.

7.2 Implementing Reliable Attendance Systems Employers are advised to invest in reliable timekeeping software or tools, including biometric scanning systems, to reduce the risk of errors. A prompt review and approval process for corrections can further prevent disputes regarding missing or invalid entries.

7.3 Establishing Clear Policies on Billable vs. Non-Billable Hours Especially in service-oriented industries, there should be clear written policies distinguishing between truly non-compensable times (e.g., long, uninterrupted meal periods) and compensable times when the employee must remain available. Training managers and team leads on labor standards can prevent inadvertent underpayment or wrongful classification of work hours.

8. Key Philippine Jurisprudence on Wage Claims

8.1 Applicable Court Decisions The Supreme Court of the Philippines has consistently held that all hours required to be spent in the workplace or on the job should be compensated, especially if the nature of the job demands physical presence. Court rulings underscore that employer policies or instructions cannot override statutory labor entitlements.

8.2 Burden of Proof In labor cases involving underpayment or non-payment of wages, the employer generally bears the burden of proving compliance with the law. When records are inadequate or nonexistent, the employee’s credible testimony and secondary evidence often carry significant weight, resulting in a decision favorable to the employee.

8.3 Equitable Principles Philippine labor law leans heavily in favor of protecting employees, applying the principle that doubts in labor controversies should be resolved in favor of the worker. This principle can play a pivotal role if the dispute arises from ambiguous or incomplete timekeeping practices.

9. Comprehensive Checklist for Employees

Review Your Employment Contract: Check the specific provisions regarding hourly pay, overtime policies, and work schedules.
Document Everything: Maintain personal records of attendance, projects, and tasks completed, especially if the employer’s official record is flawed.
Engage in Good-Faith Dialogue: Attempt to resolve discrepancies through internal channels, ideally by sending written requests for corrections.
Gather Evidence: Secure copies of relevant communications, pay slips, or timesheets to substantiate your claim of unpaid hours.
Know Your Rights: Familiarize yourself with the Labor Code’s provisions on wages, overtime, holiday pay, and minimum wage rates in your region.
Consult a Labor Lawyer: For serious disputes, legal representation is often crucial to building a strong case for claims of underpayment.
Utilize Government Resources: The DOLE and its attached agencies offer mediation, advice, and legal remedies for employees facing payment disputes.

10. Conclusion

Being paid hourly is intended to reflect a straightforward system: if you are at work, on duty, and fulfilling employer-directed tasks (or even merely waiting for assignments), you should be compensated for that time. While “billable hours” might be a convenient measure for certain clients or industries, it does not typically override the employee’s right to be paid for the entire duration they are required to be in the workplace.

If an employee finds themselves in a situation where their total hours worked are not being recorded or paid correctly, Philippine law provides multiple avenues for redress. This includes initiating dialogue with the employer, filing administrative complaints with the DOLE, or lodging a formal case before the NLRC to recover any unpaid wages, overtime, or related benefits. Employers, on the other hand, would do well to maintain clear policies, accurate timekeeping systems, and transparent processes to avoid potential liability and uphold fair labor practices.

Ultimately, the protection of employee welfare undergirds the Labor Code’s provisions on wages. Statutory rights—such as payment for all hours worked, compliance with minimum wage thresholds, and premium pay for overtime—cannot be waived or diminished through contractual stipulations. With the help of competent legal counsel, affected employees can ensure these fundamental labor rights are respected.