February 28, 2024

The National Wages and Productivity Commission (NWPC) issued a guide to companies in correcting wage distortion stemming from minimum wage orders.

In Wage Advisory 1, s. 2023, the NWPC reiterated relevant provisions of the Labor Code and jurisprudence on the matter and outlines how instances of wage distortion may be re-cognized.

It also provides suggested formulas with sample computations for addressing and correcting these distortions.

For organized firms (with union), employer and the workers union shall negotiate to correct the distortions.

Any dispute ari-sing from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement.

In cases of unresolved matters on wage distortion, the parties may push through with the process of voluntary arbitration.

For unorganized firms (without union), the employers and workers shall endea-vor to correct the wage distortions.

The NWPC added any dispute arising therefrom shall be subject to mandatory conciliation-mediation through the Single-Entry Approach of the National Conciliation and Mediation Board.

If no settlement is reached, the distortion may be resolved through the labor arbiter or may be submitted by both parties through voluntary arbitration.

The commission encouraged enterprises to seek guidance and technical assistance from the Regional Tripartite Wages and Producti-vity Board in correcting wage distortion issues.

The formulas and examples may serve as a guide in adjusting wage structures to rectify any wage distortions can be viewed through this link https://nwpc.dole.gov.ph/nwpc-advisory-no-01/.

Wage distortion occurs when the variations in wage structures or rates among employee groups within an enterprise are significantly eli-minated or substantially diminished due to mandated wage increases.

Restoring the substantial distinction or gap is permissible under Article 124 of the Labor Code.

It said addressing wage distortions is crucial for maintaining equity, boosting employee morale, and fostering a productive and harmonious workplace.

The NWPC also said by rectifying wage distortions, business enterprises demonstrate their commitment to fair compensation and employee well-being. – PNA