Payment for the Cost of Employee Uniform

As a rule, the company cannot deduct from the wages of the employee the cost of uniform. This may be interference in the disposal of employee’s wages.

However, can the employer and employee agree on the payment of the cost of uniform? This contemplates the situation where parties agreed before engagement that the company will have a uniform to cost of which to be split with employee.

If the employee agrees then he incurs a valid obligation. However, the story is different if the employee did not enter into such agreement and the employer just deducts the cost from the employee’s wage. In such case, the can be interference.

Articles 113 to 115 of the Labor Code states, that:

“Art. 113. Wage deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except:

In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance;

For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and

In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment.

Art. 114. Deposits for loss or damage. No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deductions or requiring deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor and Employment in appropriate rules and regulations.

Art. 115. Limitations. No deduction from the deposits of an employee for the actual amount of the loss or damage shall be made unless the employee has been heard thereon, and his responsibility has been clearly shown.” [Emphasis supplied]

Based on the above provisions, the prohibited acts are: 1) Making deduction from wages, and 2) Requiring deposits and effecting deductions against them.

Hence, on September 3, 2014, the DOLE issued Labor Advisory 11, Series of 2014 on Non-Interference in the Disposal of Wages and Allowable Deductions. The premise of this Labor Advisory is that no employer shall interfere with the freedom of the employee to dispose of his/her wages.

While these are subject to exceptions, the recognized items are very limited. These are insurance premium (actually refers to EC in SSS contribution), and Union dues for check-off. The other authorized practice as expressed in the Labor Advisory is the deduction made in security agency operation. Other than that the advisory states that no company shall effect deduction from wages or require deposits where deductions shall be made.

Paragraph 7 of Labor Advisory mentions that deductions made from the employees’ wages for company uniforms, among others, not included in the enumeration, are unauthorized.

As can be observed in the above, what are prohibited are straight deductions from wages and deductions from the deposit required. If the costs of uniform are passed on to the employees in this manner these will certainly violate the law since these will be interference in the disposal of wages.

However, if it is the employee’s free and voluntary decision to dispose of his wage without any deduction or deposit requirement then it may fall outside of the prohibition. For instance, as soon as the employer pays the wage of the employee, the latter is free to decide on what to do with it. The employee can pay debt, make purchase, etc.

Hence, if the company has made known to the employee that the uniform will be subsidized or a part thereof should be paid by him and he agreed indubitably as shown by his express agreement, it may not form as interference of wages. The employee has full power and consent in this case.

Thus, if the company subsidizes PhP2,500.00 of the cost of uniform worth PhP5,000.00 and 50% shall be on the account of the employee, the parties can freely enforce the stipulation. The parties can also stipulate that the employee shall pay his share upon receipt of his wage.

Hence, the pay slip of the employee may still reflect his full pay, less mandatory contributions and taxes. Then of the net pay he can decide to get PhP2,500.00 to pay the employer for his share on the uniform. Alternatively, he may have agreed to pay on installment in which case the full amount of his share may be spread in several payroll periods. In this situation, there is no deduction or deposit. There is payment by the employee after he received his wage. There is no interference.

The agreement by the parties on that score cannot be said to be illegal because the law allows the parties to stipulate as to terms of employment. In fact, Art. 113 of the Labor Code states that:

“Art. 113. Wage deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except:

In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance;

For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and

In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment.” [Emphasis mine]

The law referred to in Art. 113 includes Article 1706 of the Civil Code. This provision states that:

“Article 1706. Withholding of the wages, except for a debt due, shall not be made by the employer.”

If, for instance, the parties agreed in writing that the employee shall shoulder 50% of the cost of uniform, that can be a valid agreement where obligation may arise. When the obligation becomes due and demandable it becomes debt.

“Debt” refers to any obligation due from the employee to the employer. It includes any accountability that the employee may have to the employer. (See Milan vs. NLRC, G.R. No. 202961, February 04, 2015)

As long as the documents can prove that no deduction was made and that there was debt obligation in the form of the cost of uniform advanced by the employer, then payment made after receipt of the wage cannot be deemed as interference in the disposal of wages.