Can My Employer Deduct From My Salary?

Deductions the Law Allows

Article 113 of the Labor Code says no employer may deduct from an employee's wages, except in the cases the law allows. The implementing rules list them. In everyday terms:

• Withholding tax on your compensation, as the BIR requires;
• your share of SSS, PhilHealth and Pag-IBIG contributions, and repayments of your SSS or Pag-IBIG loans;
• union dues, where the union's right to collect them through payroll (check-off) is recognized, and other union fees with your written authorization;
• insurance premiums or other payments to a third party (someone other than you and your employer), like a cooperative or a lending program, that you authorized in writing;
• a debt you owe the employer that is already due, like a salary loan or cash advance; and
• amounts a court or other proper authority orders deducted.

Ask for a payslip that shows each deduction, so you can check it against your contributions online.

Shortages, Losses and Damage

Article 115 and the implementing rules set strict conditions before an employer can make you pay for a loss or damage, like a cash shortage, a broken tool or lost stock:

1. you are clearly shown to be responsible for it;
2. you are given a reasonable opportunity to explain why you should not be charged;
3. the amount is fair and reasonable and does not go beyond the actual loss; and
4. the deduction does not take more than 20% of your wages in a week.

This is a matter of due process (being told the charge and heard before a decision). An automatic deduction, with no chance to explain, does not meet it. Being "penalized" with salary deductions for being late, for mistakes, or for breaking a company rule is generally not one of the allowed deductions either. Late hours that were not worked can simply go unpaid, but that is different from a fine.

Cash Bonds and Deposits

Under Article 114, an employer may not require you to make a deposit (a cash bond) to answer for possible loss or damage to its tools, materials or equipment, except:

• in a trade or business where requiring deposits is a recognized practice, or
• where DOLE has found it necessary or desirable.

Even where a cash bond is allowed, it can be used to cover a loss only under the same conditions above: you were clearly responsible and given a chance to explain. What is left of your bond should be returned to you when you leave, with your final pay.

For kasambahay, the rule is stricter: the Domestic Workers Act bans any deposit for loss or damage. See rights of a kasambahay.

Other Things Employers Cannot Do

• Withhold your wages or force you to give part of them back as a "kickback" (Art. 116).
• Deduct or ask for anything as a condition for hiring you or keeping your job (Art. 117).
• Cut your pay because you filed a complaint or testified in a labor case (Art. 118).

When you leave a job, the employer may settle what you clearly owe, like an unpaid salary loan, from your final pay. But unproven "accountabilities" are subject to the same rules above.

Getting an Illegal Deduction Back

1. Keep your payslips, any memo or message about the deduction, and anything you were asked to sign.
2. Ask in writing for the reason and the legal basis, and for a refund if there is none. You can adapt our Demand Letter.
3. File a request for assistance at DOLE under the Single Entry Approach (SEnA), a 30-day settlement process. If it does not settle, the claim goes to the DOLE regional office or the NLRC.

Money claims must be filed within three years from when the money was due (Art. 306).

For the steps and papers, see complaining about your employer.