Salary Adjustment Due to COVID-19 Pandemic
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Salary adjustment is a possibility as an alternative approach to business closure or any severe economic decision of a business.
The Department of Labor and Employment on May 16, 2020 issued Labor Advisory 17, Series of 2020 providing that employers and employees may agree voluntarily in writing to temporarily adjust employees’ wage and wage-related benefits as provided for in the existing employment contract, company policy or collective bargaining agreement.
View the PDF Copy of the Labor Advisory 17, Series of 2020 here.
The adjustments in wage and/or wage-related benefits shall not exceed six (6) months or the period agreed upon in the collective bargaining agreement (CBA), if any. After such period, employers and employees shall review their agreement and may renew the same.
The obvious reason here is the difficulty that the company is in with the non-operation due to lockdown situation or lack of economic activity. Many business suffer due to lack of revenue and business income.
Further, the DOLE requires that the employers shall submit the duly certified copy of all agreements pursuant to alternative working schemes. For notification purposes, the agreement of the parties on wage adjustment may also be submitted to DOLE.
Below is the sample template that the employer and employee may execute for the above purpose. You can buy the template for P300.00 and an editable copy will be sent to you via email:
SALARY ADJUSTMENT AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Salary Adjustment Agreement is entered into by and between:
XYZ CORPORATION, a domestic corporation duly organized and existing under, and by virtue of, the laws of the Republic of the Philippines, with principal place of business at ______________, represented herein by its HR Manager, __________________, hereinafter referred to as the “Company;”
-and-
JUAN DELA CRUZ, Filipino, of legal age, and a resident of ____________________________, hereinafter referred to as the “Employee;”
WITNESSETH, THAT:
WHEREAS, the Company was prohibited from operating during the community quarantine period from March 17, 2020 until May 31, 2020 due to government’s response towards COVID-19 Pandemic. This resulted in great loss of revenue, customers, and income;
WHEREAS, the business situation of the Company is not seen to improve for at least another six (6) months where revenues or sales are expected to be low;
WHEREAS, the Employee understands the economic situation and financial predicaments of the company and agrees to the stipulations below to minimize job attrition;
NOW, THEREFORE, for and in consideration of the foregoing premises, the parties agree as follows:
WAGE ADJUSTMENT
- The employee agrees to reduce her basic monthly salary from PhP20,000.00 to PhP15,000.00 for a period of six (6) months or from May ____, 20____ until November ____, 20____;
- After the six-month period, the parties shall review the business condition and may extend the adjustment for another similar period;
BENEFITS ADJUSTMENT
- During the same six-month period, the Employee likewise agrees to reduce the benefits in accordance with the reduced monthly basic salary such as 13th month pay, monetary equivalent of service incentive leave, among others;
- However, for purposes of contributions with the Social Security System (SSS), PhilHealth, and Pag-Ibig, the Employee shall be considered in the original bracket or at PhP20,000.00 range;
NON-LIABILITY
- Both the Employer and the Employee freely and voluntarily agreed to this arrangement without any force, duress, intimidation or undue pressure exerted by one over the other;
- The Employee holds the Employer free and harmless from any, and all liabilities, claims for damages, arising from this agreement;
- The Employee admits that the stipulations herein do not constitute constructive dismissal since the adjustments are borne by the extraordinary situation brought by COVID-19 pandemic.
REPORTING
- The Employer shall submit a copy of this Agreement with the Department of Labor and Employment (DOLE).
For the employer: Employee:
_______________________ _________________________
ID: ____________________ ID: ______________________
ACKNOWLEDGMENT
BEFORE ME, this _____ day of _____ 20____ personally appeared, known to me and to me known to be the same persons who executed the foregoing instrument and acknowledged to me that the same is their own free, voluntary act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal, the day, year and place above written.
Page No: ______;
Doc. No: ______;
Book No. ______;
Series of ______.
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