WAGE DISTORTION

Reported by : Karla Krisanta Narvadez & Shella Marie Z. Gonzales

WAGE DISTORTION

Wage Distortion shall mean a situation where an

increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation;

Elements of Wage Distortion

1.)Existing hierarchy of positions with corresponding salary rates2.)Significant change in the salary rate of a lower pay class without concomitant increase in the salary rate of the higher class.3.)Elimination of distinction between the two levels.4.)Existence of distortion in the same region.

Prubankers Association v. Prudential Bank & Trust Co.,

302 SCRA 74 (1999)CASE:The bank’s separate & regional

implementation of Wage Order No. VII-03 at its Cebu Branch (Mabolo & P. del Rosario) created a wage distortion in the bank nationwide.

ISSUE:Whether or not the bank’s separate &

regional implementation of Wage Order no. V-03 at its Naga branch & Wage Order no. VII-03 at its Cebu (Mabolo & P. del. Rosario created a wage distortion.

Prubankers Association v. Prudential Bank & Trust Co.,

302 SCRA 74 (1999)RULING:PETITION DENIEDNo wage distortion as the variance in the

salary rates of employees in different regions of the country was justified by RA 6727 (Wage Rationalization Act)

The Court of Appeals ruled that the distinctions between each employee group in the region are maintained, as all employees were granted an increase in minimum wage rate.

In the said branches, there was an increase in the salary rates of ALL pay classes.

No wage distortionWhen the disparity in the pay of 2 or more

employees holding the same position is due to: difference in hiring dates; an employee was initially hired for a position level with higher rate than the rate for others and promotion.

Where there is disparity in pay of two or more employees in different regions

Where the employer made salary adjustments in terms of restructuring of benefits and allowances and there was an increase pursuant in CBA.

Procedural and Technical Remedies

The law compels parties to correct wage distortion but allows voluntary modes such as grievance procedures or collective bargaining negotiations. LCP Art. 124 para. 4-9

Procedures to correct wage distortion: Employer and workers/union negotiates Disputes settled through grievance

procedure in the Collective Bargaining Agreement

If unresolved, voluntary arbitration

Procedural and Technical Remedies

Disputes settled through National Conciliation and Mediation Board

If unresolved, through compulsory arbitration at National Labor Relations Commission

• The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any increase in prescribed wage rates pursuant to the provisions of law or Wage Order

Wage Fixing in relation to the Freedom to Bargain

Wages are undoubtedly among the most important conditions of work and employment at the enterprise level. Being a cost for employers as well as the main source of income for workers, wages may be a potential source of conflict and have thus become the major focus of collective bargaining all over the world.

Wage Fixing in relation to the Freedom to Bargain

• Minimum Wage Fixing Procedures (ILO CO100):

National or regional minimum wage rate set by the government or tripartite body

Sectoral and/or occupational minimum wage rates set by the government or tripartite body

National or regional minimum wage rate set through collective bargaining

A combination of these various means.

Wage Fixing in relation to the Freedom to Bargain

Art. 125. Freedom to bargain. No wageorder shall be construed to prevent workersin particular firms or enterprises or industries from bargaining for higher wages withtheir respective employers. (As amended by Republic Act No. 6727, June 9, 1989) RA 6727 Sec. 2 para. 2 – The State shall promotecollective bargaining as the primary mode of setting wages and other terms and conditions of employment; and whenever necessary the minimum wage rates shall be adjusted in a fair & equitable manner, considering existing regional disparities in the cost of living & other socio-economic factors & the national economic & social development plans.

Enforcement and PenaltyRA 8188

Enforcement and PenaltyRA 8188

Enforcement and PenaltyRA 6727

Thank You!