The Proposed Law Against Late Salaries and Wages

salarium
val.aragon@salarium.com
Administrator

Everybody hates delayed salaries, but workers in the Philippines may no longer have to worry about them soon. Employers who pay their their workers late will be penalized — that is, if the the bill against delayed wages and salaries passes Congress and sees the light of day.

House Bill 6537, short-titled “Timely Payment of Wages and/or Salaries Act of 2017,” is now being reviewed by the House of Representatives. It seeks to cover both government agencies and private companies, whether they’re for profit or not. It’s also set to apply to all employees: managers, field personnel, seasonal or project based workers, domestic helpers, personal assistants, workers paid by results, and even an employer’s family members who are dependent on him or her for support.

Debt: the problem the bill addresses

To defend the relevance of the proposed law, its author, Manila Congressman Manuel Lopez, cited data from the 2016 Manulife Investor Sentiment Index (MISI) survey. The bill’s explanatory note includes the following figures.

  • Four out of ten or 41% of Filipino investors have debts, the second highest proportion in the Southeast Asian region after that in Malaysia.
  • One-third of the survey’s respondents reported their daily living expenses as the main factor contributing to their debt, along with loan items such as children’s education and medical expenses.
  • The average debt across age groups stands at Php291,582 for those who are below 35 years old; Php207,418 for those who are aged 35 to 49; and Php143,958 for those who are 50 and older.

Lopez said that one contributing factor that led to the abundance of debt is the late payment of wages and salaries, something that workers in both public and private sectors experience. Late payouts leave employees with no choice but to borrow money just to get through each day. By the time they get their hard-earned money, they will also have racked up some debts and interest rates to settle.

Grace period and penalties

The bill mandates employers to pay their people on the date or schedule they agreed upon in the employment contract. A grace period of 15 days from the supposed pay date is allowed; if an employer delays wages or salaries longer than that, he/she or the payroll master (i.e. the individual or group tasked to do the pay disbursement) will be held accountable and will be penalized.

Here are the fines that payroll masters may be subjected to under House Bill 6537.

  • Php100,000 – For failure to disburse the prescribed wages or salaries when payroll funds are already available
  • Php200,000 – For not informing employers about the absence of funding to be used for payout

The following penalties will be imposed upon both employers and payroll masters who fail to pay wages or salaries without any justifiable reason.

  • Php500,000 and suspension of business operations for 30 days – First offense
  • Php1,000,000 and suspension of business operations for 90 days – Second offense
  • Php3,000,000 and perpetual cessation of business operations – Third offense

Pay employees on time!

The above fines and penalties are rather heavy, especially if yours is a small or medium-sized business that runs under a very tight budget. While House Bill 6537 is under review, you can take measures that will help your company avoid late payouts as early as now.

One of your best ounces of prevention is payroll automation, which instantly saves you from being fined for missing a pay date. It’ will also help you streamline your payroll disbursement process and ensure that the entire management knows whether funds for wages or salaries are available or not.

We’re lucky we live at a time when disbursement can be done with just a push of a button. With the right tools, you’ll have no reason to fear any new law that simply seeks to protect everyone from abuse and malpractices.

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