Coverage of Wage Orders and Exemption

Who are covered by wage orders issued by the Boards?

Wage Orders issued by the Boards cover only private sector workers, except for
household helpers and persons in the personal employ of another, including family
drivers.

Who are exempted from wage orders issued by the Boards?

Per the Rules on Exemption, the following categories of establishments may be

exempted upon application with and as determined by the Board:

distressed establishments

new business enterprises

retail/service establishments employing not more than 10 workers

establishments adversely affected by natural calamities

The Boards may also exempt establishments other than those enumerated above
only if they are in accord with the rationale for exemption stated in the Rules on
Exemption and upon strong justifiable reasons.

What are the criteria and requirements to qualify for exemption?

Sections 3 and 4 of the Rules on Exemption list down the specific criteria and
requirements to qualify for exemption, namely:

Distressed Establishments

a. For Stock Corporations/Cooperatives

registersdeficit of 20% or more of the paid up capital as of last accounting

period and interim period immediately preceding the effectivity of the
Wage Order.

registers capital deficiency/negative stockholders' equity as of the last full

accounting period or interim period immediately preceding the effectivity
of the Wage Order.

b. For Single Proprietorships/Partnerships/Non-stock,Non-profit Organization

 registers a deficit of 20% or more of the total invested capital as of the 2
accounting periods and interim period immediately preceding the
effectivity of the Wage Order.

registers capital deficiency/negative net worth as of the last full

accounting period or interim period immediately preceding the effectivity
of the Wage Order

c. For Banks and Quasi-banks

under receivership/liquidation certified by the Bangko Sentral ng Pilipinas

under controllership/conservatorship

New Business Enterprises

NBEs established outside the NCR and outside Export Zones within 2 years
from the effectivity of the Wage Order, classified as agricultural
establishments or establishments with total assets of 5M and below.

Retail/Service Establishments Regularly Employing Not More Than Ten

Employees

engaged in the ratil sale of goods/services to end users, and

employing not more than ten workers

Establishments Adversely Affected by Calamities such as Natural and Human

Induced Disasters

establishments located in an area under a state of calamity

occurence of natural calamities in the area within 6 months prior to the

effectivity of the Wage Order. The 6-month period be extended to 1 year if
the damage to properties is at least 50% and the period of recovery will
exceed one (1) year.

losses or damage to properties as a result of the calamity amount to 20%

or more of the capital/stockholders' equity

What is the effect of a disapproved application for exemption?

 In case an application for exemption is not approved by the Board, the company
shall pay the mandated wage increase/allowance to all covered workers retroactive to
the date of effectivity of the Wage Order plus simple interest of 1% per month.

What is the maximum period of exemption allowed?

The maximum period of exemption that may be granted to qualified applicant

establishment is one year only.

When should an application for exemption be filed?

An application for exemption together with the supporting documents shall be filed
not later than 75 days from publication of the approved implementing rules of the wage
order. No extension of filing and submission of required documents will be allowed.

Can the decision of the Board on the application for exemption be appealed?

Yes, the decision of the Board on the application for exemption may be appealed to
the NWPC within 10 days from date of receipt of the decision.

Grounds for the appeal:

a. Non-conformity with the prescribed guidelines and/or procedure on exemption

b. Prima facie evidence of grave abuse of discretion on the part of the Board

c. Question of law

Republic of the Philippines Department of Labor and Employment National

Wages and Productivity Commission NWPC GUIDELINES NO. _02 Series of
2007

AMENDED RULES ON EXEMPTION FROM COMPLIANCE WITH THE

PRESCRIBED WAGE INCREASES/ COST OF LIVING ALLOWANCES GRANTED
BY THE REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARDS

Pursuant to Section 3, Article 121 b of RA 6727 and Section 1, Rule VIII of

the amended Rules of Procedure on Minimum Wage Fixing, the following
rules on exemption are hereby issued for strict compliance by all
concerned:

B. New Business Enterprises Exemption may be granted to New Business

Enterprises located outside the National Capital Region (NCR) and Export Processing
Zones and established within two (2) years from effectivity of the Order, classified
under any of the following: 1. Agricultural establishments whether plantation or
non-plantation. 2. Establishments with total assets after financing of five million
pesos (P5,000,000.00) and below. C. Retail/Service Establishments Regularly
Employing Not More Than Ten (10) Workers Exemption may be granted to a
retail/service establishment when: 1. It is engaged in the retail sale of goods and/or
services to end users for personal or household use. 2. It is regularly employing not
more than ten (10) workers regardless of status, except the owner/s, for at least six
(6) months in any calendar year

SECTION 4. DOCUMENTS REQUIRED. The following supporting documents shall be

submitted together with the application: For All Categories of Exemption Proof of
notice of filing of the application to the President of the union/contracting party if
one is organized in the establishment, or if there is no union, a copy of a circular
giving general notice of the filing of the application to all the workers in the
establishment. The proof of notice, which may be translated in the vernacular, shall
state that the workers' representative was furnished a copy of the application with
all the supporting documents. The notice shall be posted in a conspicuous place in
the establishment. B. For New Business Enterprises 1. Affidavit from employer
regarding the following: a. Principal economic activity b. Date of registration with
appropriate government agency c. Amount of total assets 2. Certificate of
registration from the appropriate government agency. C. For Retail/Service
Establishments Employing Not More Than Ten (10) Workers: 1. Affidavit from
employer stating the following:a. It is a retail/service establishment. b. It is regularly
employing not more than ten (10) workers for at least six months in any calendar
year. 2. Business Permit for the current year from the appropriate government
agency.

SECTION 1. DEFINITION OF TERMS

F. Service Establishment refers to an entity principally engaged in the sale of

services to individuals for their own or household use and is generally recognized as
such. For purposes of this Guidelines, service establishments must be regularly
employing not more than 10 workers.

W. New Business Enterprises - refers to establishments, including non-profit

institutions, established within two (2) years from effectivity of the Wage Order
based on the latest registration with the appropriate government agency such as
SEC, DTI, CDA and Mayor's Office.

SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS Exemption of

establishments from compliance with wage increases and cost of living allowances
prescribed by the Boards may be granted in order to (1) assist establishments
experiencing temporary difficulties due to losses maintain the financial viability of
their businesses and continued employment of their workers; (2) encourage the
establishment of new businesses and the creation of more jobs, particularly in areas
outside the National Capital Region and Export Processing Zones, in line with the
policy on industry dispersal and (3) ease the burden of micro establishments,
particularly in the retail and service sector, that have a limited capacity to
pay.Pursuant to the above, the following categories of establishments may be
exempted upon application with and as determined by the Board, in accordance
with applicable criteria on exemption as provided in this Guidelines; provided
further that such categories are expressly specified in the Order. 1. Distressed
establishments 2. New business enterprises (NBEs) 3. Retail/Service establishments
employing not more than ten (10) workers 4. Establishments adversely affected by
natural calamities Any Board may seek the inclusion of other exemptible categories
outside of the abovementioned list, subject to the (a) submission of a strong
justification for the proposed category; and (b) prior review and approval of the
Commission. SECTION 3. CRITERIA FOR EXEMPTION The following criteria shall be
used to determine whether the applicant-establishment is qualified for exemption:

B. New Business Enterprises Exemption may be granted to New Business

Enterprises located outside the National Capital Region (NCR) and Export Processing
Zones and established within two (2) years from effectivity of the Order, classified
under any of the following: 1. Agricultural establishments whether plantation or
non-plantation. 2. Establishments with total assets after financing of five million
pesos (P5,000,000.00) and below. C. Retail/Service Establishments Regularly
Employing Not More Than Ten (10) Workers Exemption may be granted to a
retail/service establishment when: 1. It is engaged in the retail sale of goods and/or
services to end users for personal or household use. 2. It is regularly employing not
more than ten (10) workers regardless of status, except the owner/s, for at least six
(6) months in any calendar year.

SECTION 4. DOCUMENTS REQUIRED. The following supporting documents shall be

submitted together with the application: For All Categories of Exemption Proof of
notice of filing of the application to the President of the union/contracting party if
one is organized in the establishment, or if there is no union, a copy of a circular
giving general notice of the filing of the application to all the workers in the
establishment. The proof of notice, which may be translated in the vernacular, shall
state that the workers' representative was furnished a copy of the application with
all the supporting documents. The notice shall be posted in a conspicuous place in
the establishment.

B. For New Business Enterprises 1. Affidavit from employer regarding the following:
a. Principal economic activity b. Date of registration with appropriate government
agency c. Amount of total assets 2. Certificate of registration from the appropriate
government agency. C. For Retail/Service Establishments Employing Not More Than
Ten (10) Workers: 1. Affidavit from employer stating the following:a. It is a
retail/service establishment. b. It is regularly employing not more than ten (10)
workers for at least six months in any calendar year. 2. Business Permit for the
current year from the appropriate government agency.
SECTION 10. PROCEDURES ON EXEMPTION A. For Filing of Application 1. An
application, in three (3) legible copies may be filed with the appropriate Board by
the owner/manager or duly authorized representative of an establishment, in person
or by registered mail. The date of mailing shall be deemed as the date of filing.
Applications for exemption filed with the DOLE regional, district or provincial offices
are considered filed with the appropriate Board in the region. 2. Applications for all
categories shall be filed not later than 75 days from publication of the approved
implementing rules of the Order, provided that all the required documents in
support of the application must be filed within the said 75-day filing period and that
no further extension of filing and submission of required documents shall be
allowed. In the case of NBEs, applications shall be filed not later than sixty (60) days
after date of registration. 3. The application shall be under oath and accompanied
by complete supporting documents as enumerated under Section 4 of this
Guidelines.