WAGEDISTORTION

ART.124.Standards/Criteriaforminimumwagefixing.
xxxAsusedherein,aWageDistortionshallmeanasituationwhereanincreaseinprescribedwagerates
resultsintheeliminationorseverecontractionofintentionalquantitativedifferencesinwageorsalary
ratesbetweenandamongemployeegroupsinanestablishmentastoeffectivelyobliteratethedistinctions
embodiedinsuchwagestructurebasedonskills,lengthofservice,orotherlogicalbasesof
differentiation.xxx(AsamendedbyRepublicActNo.6727,June9,1989).

Q:Whendoeswagedistortionhappen?
A:Ithappenswhentheemployergrantsanincreaseonlytoacertaingroupofemployees
drasticallyreducingoreliminatingthenormalsalarydifferentialorgap.
ELEMENTSOFWAGEDISTORTION
1.

Anexistinghierarchyofpositionswithcorrespondingsalaryrates.

2.

Asignificantchangeinthesalaryrateofalowerpayclasswithoutaconcomitant
increaseinthesalaryrateofahigherone.

3.

Eliminationofthedistinctionbetweenthetwolevels.

4.

Existenceofthedistortioninthesameregionofthecountry.

POSSIBLECAUSESOFWAGEDISTORTION:
1.

Governmentdecreedincreasethroughwageorders.

2.

Mergerofestablishments[confusionoreliminationofthestatusoftheemployee]

3.

Increasegrantedbytheemployers

4.

PassageofRA6727ortheWageRationalizationAct

METHODSOFRESOLVINGWAGEDISTORTION
(Broughtaboutbytheenactmentorpassageofawageorder)

 ThecourthaspointedoutthatthruthepassageofArt124,thelawrecognizesthe
validityofnegotiatedwageincreasestocorrectwagedistortion.
Thelegislativeintentistoencouragethepartiestoseeksolutiontotheproblemof
wagedistortionsthroughvoluntarynegotiationorarbitration,ratherthanstrikes,
lockouts,orotherconcertedactivitiesoftheemployeesormanagement.
PROCEDUREFORRESOLVINGINANORGANIZEDESTABLISHMENT
ORGANIZEDESTABLISHMENTReferstoafirmoracompanywherethereisa
recognizedorcertifiedexclusivebargainingagreement.
(1)ThedisputeissettledthroughtheGRIEVANCEPROCEDUREundertheirCBA;
GRIEVANCEMACHINERYissimplyadetailedprocedureofhowthepartieswouldresolve
adisputearisingfrom:
.

(a)TheinterpretationorimplementationoftheCBAand

(b)Thosarisingfromtheinterpretationorenforcementofcompanypersonnelpolicies.
WHATSHOULDBECONTAINEDINACBA?
1.TermsandConditionsofemployment
2.Wages
3.Hoursofwork
4.Procedureforresolvinggrievances(includingthechosenArbitrator)

PARTIESWILLBESUBMITTEDTOVOLUNTARYARBITRATIONUNDERTHEIRCBA
NonumberofVAspecifiedbylaw
NoprohibitionofLaborArbitertobeVoluntaryArbiter
NCMBhasalistofVA
DecisionofVAisfinalandexecutoryafter10daysfromthereceiptofthecopyof
thedecisionbythe

parties

OneMRisallowedwithinthe10dayperiod

ATROmaybeappliedwithCAorSCtostayexecutionoftheassailedjudgment
PetitionforReviewunderRule43maybemadetoCAforquestionoflaworfactsor
both,thentoSC
underRule45
Governmentsubsidycanbeappropriatedifonecannotaffordvoluntaryarbitration
TheLegalRemedyoftheDecisionoftheVoluntaryArbitrator
.

(1)FileaMotionforReconsiderationwithin10daysfromthereceiptofthecopyofthe
decisionbytheparties;

(2)TotheCourtofAppealsbywayofPetitionforReviewunderRule43(QuasiJudicial
Agency)within15daysfromnoticeoftheaward,judgment,finalorderorresolution,or
fromthedateofitslastpublication
LuzonStevedoringEmployeesUnionCase
Q:Ifappeal,willthatstaythedecisionofthevoluntaryarbitration?
A:No,becausethedecisionoftheVoluntaryArbitratorisfinalandnotappealable,buta
TemporaryRestrainingOrderandaWritofPreliminaryInjunctionmaybeappliedfor.
SousePetitionforReviewwithMotionforStay,becauseofitsfinalandexecutory
nature.

(3)ThentotheSupremeCourtunderRule45onquestionsoflaw(AppealbyCertiorari)
within15daysfromreceiptofthedecisionoftheCourtofAppealsorreceiptofthe
denialofthemotionforreconsideration.

NOTE:Allworkerspaidbyresult,includingthosewhoarepaidonpiecework,takay,pakyaw,or
taskbasis,shallreceivenotlessthantheprescribedwageratespereight(8)hoursofworkaday,
oraproportionthereofforworkinglessthaneight(8)hours.
Allrecognizedlearnershipandapprenticeshipagreementsshallbeconsideredautomatically

modifiedinsofarastheirwageclausesareconcernedtoreflecttheprescribedwagerates.(As
amendedbyRA6727)
PROCEDUREFORRESOLVINGWAGEDISTORTIONINANUNORGANIZED
ESTABLISHMENT
UNORGANIZEDESTABLISHMENTwherethereisnorecognizedunionorcollective
bargainingagreement
(1)Theemployersandtheworkersshouldnegotiatefortheadjustmentofthewagerates
Shouldtheemployerrefusetograntanadjustment,thenBshouldfileacomplaintwiththe
NCMBonthegroundofwagedistortion.
(2)Ifthenegotiationsfail,thedisputeshouldbereferredtotheNationalConciliationand
MediationBoard[NCMB]forconciliation
PROCEDURE:
a.

ThisprocedureisinitiatedbythefilingofaletterrequestwiththeNCMBontheground
ofwagedistortion.

b.

TheRegionalDirectoroftheNCMBwillnowissueaNOTICEdirectedtotheemployer
invitinghimtomeet
withthematadesignatedtime,dateandplace.

c.

AttheNCMB,theaggrievedemployee(s)andtheemployerwillhavetobepresent.This
proceedingwillbe
supervisedbyanNCMBMediator.
Thisisentirelydifferentfromthefirststepbecausethethirdperson(NCMBMediator)
nowinterferesandaskstheemployers
Howmuchcanyouafford?
Andtotheemployees
Howmuchincreasedoyouwant?
Insodoing,ittakesintoconsiderationthefinancialcapacityoftheemployerandtheneed
oftheworkers.
d.TheNCMBwilltrytosettlethedisputethroughAMICABLESETTLEMENT.
Example:EmployerwantstopayP1increase.
EmployeewantsP5increase
NCMBwillsettleforP3andsuggeststhissolutiontobothparties.

e.ShouldtheemployerrefusetoaccedetotheremedysuggestedbytheNCMB,the
NCMBcannotmakenegotiationstobindbothpartiesbecausethemainpurposeofNCMBisto
conciliateanditwillsuggestthatthepartiessubmittoVOLUNTARYARBITRATION.
3)Ifnosettlementisarrivedafter10calendardaysofconciliation,thedisputeshouldbebrought
totheappropriatebranchoftheNLRCforCOMPULSORYARBITRATION,whichshall
conductcontinuoushearingsanddecidethedisputewithin20calendardaysfromthetimesaid
disputeissubmittedforcompulsoryarbitration.
AppropriatebranchofNLRCmeanstoLaborArbiter(acomplainthastobefiled),
thenappealabletoNLRCwithin10calendardays(noappeal),remedyisRule65toCA,
thenRule45toSC.
ThisispresidedoverbyLaborArbiters(Article217)
Theproceedingisusuallyadversarialincharacterbecauseitisinitiatedbya
complaintbeforetheLabor
Arbiterandtheotherpartyisrequiredtoanswer.
So,therewillbeafullblownhearingtoresolvewagedistortion
AnydecisioncomingoutoftheLaborArbitershallbebindingonbothparties,
whethertheylikeitor
not.
NOTE:InthecaseofUNORGANIZEDESTABLISHMENTS:
PriortothetimethepartiessubmittheirdisputetotheNCMB,theycouldresortto
VOLUNTARYARBITRATION.
VOLUNTARYARBITRATIONisnotcompulsory;thepartieswillhavetogivetheir
consentiftheywanttosubmittheir
disputetovoluntaryarbitration.
TheywillbegivenaLISTofvoluntaryarbitratorsfromwhichtheywillpickout
thosewhichtheyhavechosentobethe
arbitrators.

 However,mostoftenthannot,thepartiesdonotsubmittheirdisputetovoluntary
arbitrationbecausemostofthem
donottrusttheVoluntaryArbitrators.
ThedecisionoftheVoluntaryArbitratorisBINDINGupontheparties.Why?Thisis
acontractualproceedingandthe
contractisthelawoftheparties.
Inresolvingwagedistortions,youdonotalwaysconsidermonetarymatters.You
alsohavetotakeintoconsideration
thelengthofservice,theskills.
IsthedecisionofthevoluntaryArbitratorappealabletotheNLRC?No,remedyis
Rule43.