1. Increasing the daily wages of affected workers to make them at least on the minimum amount
2. Correct if there is any wage distortion

Wage distortion means the disappearance or virtual disappearance of pay differentials between lower and higher positions in an enterprise because of compliance.

Wage distortion involves four elements:

1. An existing hierarchy of positions with corresponding salary rates
2. A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one
3. The elimination of the distinction between the two levels
4. The existence of the distortion in the same region of the country

As defined, there are two possible effects in the increase in the wage rates:

1. Elimination or
2. Severe contraction of intentional quantitative differences in wage or salary rates

There is elimination if the difference in salary between the employees mentioned in the definition is removed. While there is severe contraction of intentional quantitative difference when the former gap in salary between affected employees is severely reduced.

It is severely reduced if the gap shrinks by more than 50%.

Is the employer obliged to correct wage distortion regardless of its cause?

No. It is clear in Article 124 of the Labor Code that it is only when the “prescribed wage increase by virtue of a law or wage order issued by the Regional Board results in distortions” that the correction is in order.

Further, the employee claiming that his salary was distorted has the burden of proving the existence of wage distortion. However, even if the employee does not claim wage distortion if the resulting wage eliminates or renders the previous salary gaps really small, it could cause demotivation among workers. This is especially so if they know each other’s salary.

There is no specific formula mandated to correct any wage distortion.

In fact, the NWPC provides only the suggested formulas for correcting the effects of the implementation of wage orders.

As to the formula to use to correct the same, it depends upon the choice agreed upon by the management and employees. Thus, closer scrutiny of the suggested formula below is highly recommended.

The Pineda Formula was authored by Mr. Marcelino Pineda, an HR Manager of Nestle Philippines. He is the former member of the RTWPB-IV or the CALABARZON area.

His method provides pay increases for higher-paid employees at a decreasing rate.

Wage Distortion Adjustment = Previous Minimum Wage / Wage of Employee

Mandated x Wage Increase

Learn how to Validly Terminate Employee in the Philippines with this Tutorial Video of Atty. Elvin

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So many events had transpired afterwards, especially in 2020 when the COVID-19 struck the country. This naturally put on hold any attempt to adjust such minimum wage considering the business losses of most companies.

However, this 2022, the RTWPB of NCR has issued Wage Order No. 23 increasing the NCR minimum wage by PhP33.000 per day making the new minimum for non-agricultural sector at PhP570.00.

With the increase in the minimum wage, business owners may be interested to see the picture of how it would look like in numbers. Below are the illustrations of this projected implementation although the wage order still has to take effect following the completion of its publication.

Reportedly, it shall take effect 4 June 2022. Here is the PDF copy of the Wage Order No. 23.

For instance, Curdapia T. Lapia is a minimum wage earner employee in NCR which currently receives PhP537.00 per day for her work. Thus:

For Work under the normal working day for eight hours

Old    –        PhP537.00

New   –        PhP570.00

For work during the regular holiday

Old    –        PhP1,074.00

New   –        PhP1,140.00

For work during the special day

Old    –        PhP698.10

New   –        PhP741.00

For work during the rest day

Old    –        PhP698.10

New   –        PhP741.00

For work during the holiday falling on rest day

Old    –        PhP805.50

New   –        PhP855.00

For overtime work per hour during normal day

Old    –        PhP83.91 per hour

New   –        PhP89.06 per hour

For overtime work per hour during any holiday

Old    –        PhP87.26 per hour

New   –        PhP92.62 per hour

Learn how to Validly Terminate Employee in the Philippines with this Tutorial Video of Atty. Elvin

Read more on procedural due process discussion by Atty. Elvin:

Read more on procedural due process by Atty. Villanueva:

Twin Requirements of Notice and Hearing

Procedural Due Process for Other Types of Employment

Notice to Explain: Contents and Requirements