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Minimum Wage

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Republic Act No. 6727 (also known as the “Wage Rationalization Act” ) mandates the fixing of the minimum wages applicable to different industrial sectors, namely, non-agriculture, agriculture plantation, and nonplantation, cottage/handicraft, and retail/service, depending on the number of workers or capitalization or annual gross sales in some sectors.

The Rules Implementing RA 6727 define the industrial sectors as follows:

“Agriculture” refers to farming in all its branches and, among others, includes the cultivation and tillage of the soil, production, cultivation, growing and harvesting of any agricultural or horticultural commodities, dairying, raising of livestock or poultry, the culture of fish and other aquatic products in farms or ponds, and any activities performed by a farmer or on a farm as an incident to or in conjunction with such farming operations, but does not include the manufacturing and/or processing of sugar, coconut, abaca, tobacco, pineapple, aquatic or other farm products.

“Retail Establishment” is one principally engaged in the sale of goods to end-users for personal or household use. A retail establishment that regular ly engages in wholesale activities loses its retail character.

“Service Establishment” is one principally engaged in the sale of service to individuals for their own or household use and is generally recognized as such.

The said law rationalized wage determination by establishing the mechanism and proper standards through the creation of Regional Tripartite Wages and Productivity Boards (RTWPBs) authorized to determine the daily minimum wage rates in the following different regions based on established criteria:

  • National Capital Region (NCR) or Metro Manila
  • Cordillera Administrative Region (CAR)
  • Region 1 – Northern Luzon or Ilocos
  • Region 2 – Cagayan Valley
  • Region 3 – Central Luzon
  • Region 4-A – CALABARZON (Cavite, Laguna, Batangas, Rizal, Quezon)
  • Region 4-B – MIMAROPA (Mindoro, Marinduque, Romblon, Palawan)
  • Region 5 – Bicol
  • Region 6 – Western Visayas
  • Region 7 – Central Visayas
  • Region 8 – Eastern Visayas
  • Negros Island Region – (Negros Oriental & Negros Occidental)
  • Region 9 – Western Mindanao or Zamboanga Peninsula
  • Region 10 – Northern Mindanao
  • Region 11 – Southern Mindanao or Davao
  • Region 12 – Central Mindanao or SOCCSKSARGEN (South Cotabato, North Cotabato, Sultan Kudarat- Sarangani, General Santos)
  • Region 13 – Caraga
  • Autonomous Region in Muslim Mindanao (ARMM)

The Regional Wage Orders prescribe the daily minimum wage rates per industry per locality within the region and in some instances depending on the number of workers and the capitalization of enterprises. The Wage Orders likewise provide the basis and procedure for application for exemption from compliance therefrom. Some Wage Orders grant allowances instead of wage increases.