Basic Salary and Minimum Wage

“Basic salary” shall include all remunerations or earnings paid by an employer to an employee for services rendered, but does not include allowances and monetary benefits which are not considered, or integrated as part of the regular/basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay. For minimum wage earners, Cost-of-living allowances (COLA) will be included in the concept of Basic Salary.

The Wage Rationalization Act, Republic Act No. 6727, mandates the fixing of the daily minimum wage applicable to different regions and industrial sectors.  For non-daily paid workers, the estimated equivalent monthly rate can be used for compliance with the minimum wage rate.

The basis of the minimum wage rates shall be the normal working hours of eight (8) hours a day. You’d better check the latest minimum wage rate applicable to your business from DOLE national wages and productivity commission since it is reviewed regularly.

EX) Nation Capital Region Daily Minimum Wage Table (Effective: 05 October 2017)

Sector/Industry	Basic Wage	Basic Wage Increase	New Basic Wage	COLA	New Minimum Wage Rates
Non-Agriculture	₱481.00	₱21.00	₱502.00	₱10.00	₱512.00
Agriculture  (Plantation and Non Plantation)	₱444.00	₱21.00	₱465.00	₱10.00	₱475.00
Retail/Service Establishments   employing 15 workers or less
Manufacturing Establishments   regularly employing less than   10 workers

Notes: Penalties for the violations:

● A fine of not less than P25,000 nor more than P100,000;

● And/or imprisonment of not less than two (2) years nor more than four (4) years to the responsible officers;

● The employer concerned shall be ordered to pay an amount equivalent to double the unpaid benefits owing to the employees;

Notes: Excluded employees are:

● Workers of duly registered Barangay Micro Business Enterprises (BMBEs) with Certificate of Authority issued by the Office of the Municipal or City Treasureer;

● Workers under Apprenticeship/Learnership contract;

Notes: Income Tax Exemptions

Minimum wage earners (including COLA) will be exempted from Income Tax.

Holiday pay, Overtime Pay, NSD, Hazard pay received by minimum wage earners will be exempted from income tax also.

     Starting 2018, all employees earning up to 250,000 pesos yearly are exempted from income tax.



Cost of Living Allowance (COLA)
The Cost Of Living Allowance (COLA) is a government mandated allowance for minimum wage earners. It aims to help workers cope with the continuing increase in the prices of essential commodities, while minimizing cost to employers. Cost of Living Allowance (COLA) is given to workers to compensate for loss in purchasing power due to inflation. Rate of COLA is commonly pegged to a general index such as consumer price index (CPI).

COLA is a part of the minimum wage that is excluded from the computation of wage related benefits such as overtime pay, night differential, and 13th month pay but is part of the computation of mandatory contributions to the Social Security System (SSS), PhilHealth, and Pag-ibig.