Compensating a worker below the minimum wage: Is this allowed?

When there exists an employer-employee relationship, the employer is required by law to pay his employee a daily wage not below the daily minimum wage. The daily minimum wage is fixed by the Regional Tripartite Wages and Productivity Board which is created under Republic Act 6727 otherwise known as the "Wage Rationalization Act." The rule therefore is that an employer who pays his employee below the daily minimum wage is guilty of underpayment of wages. In that instance, the employee has the right to sue his employer for underpayment of wages.

There are laws, however, which legally allow the employer to pay his workers below the prescribed daily minimum wage (at least 75 percent thereof). One instance would be those employing apprentices, learners and handicapped workers. These workers are referred to as "special workers" under the Labor Code.

An apprentice is a worker who is covered by a written apprenticeship agreement with an individual employer. An apprenticeship agreement, on the other hand, is an employment contract wherein the employer binds himself to train the apprentice and the latter in turn, accepts the terms of the training. Apprenticeship means practical training on the job supplemented by related theoretical instruction. However, only employers in highly technical industries may employ apprentices, and only in apprenticeable occupations. An apprenticeable occupation means any trade, form of employment or occupation which requires more than three months of practical training on the job supplemented by related theoretical instruction. A highly technical industry is a trade, business, enterprise, industry or other activity which is engaged in the application of advanced technology.

An apprenticeship program requires approval of the Department of Labor. In Nitto Enterpises v. NLRC, et al. (248 SCRA 651 [1995]), the Supreme Court ruled that apprenticeship agreements entered into by the employer with the apprentice must be entered in accordance with the apprenticeship program duly approved by the DOLE. Prior approval is a condition sine qua non before an apprenticeship agreement can be validly entered into. The act of filing the proposed program with the DOLE is a preliminary step towards its final approval, and does not instantaneously give rise to an employer-apprentice relationship.

In case there is a valid apprenticeship agreement, the employer can get the benefit of servies at substandard rates, since it can pay the apprentices wage rates not below 75 percent of the applicable wage law. The same rate of compensation will apply as regards the employment of learners as well as handicapped workers.

As regards handicapped workers, it must be shown that they are hired notwithstanding their impaired earning capacity (which may be by reason of their age, physical disability or mental deficiency). This qualification is important in view of the decision of the Supreme Court in Bernardo, et al. v. NLRC et al. (310 SCRA 186 [1999]). In that case, Far East Bank employed certain handicapped workers specifically "deaf-mutes"as money sorters. Their contractual employment was supposedly based under the Labor Code which allows the employment of special workers. An issue was raised before the Supreme Court on whether or not they were regular workers of the bank. The court ruled that those handicapped workers who worked for more than six months and whose contracts were renewed are deemed regular. The court explained that while the employment contracts conform with the Labor Code, the enactment of Republic Act No. 7277 otherwise known as the "Magna Carta Act for Disabled Persons", however, justify the characterization of their employment as regular specially since their contracts were renewed by the bank. The court further said that they were qualified to perform the responsibilities of their positions. In other words, their disability did not render them unqualified, or unfit for the tasks assigned to them. The Magna Carta Act mandates that a "qualified" disabled employee should be given the same terms and conditions of employment as qualified able bodied persons. They are therefore, covered by the law on regular employment.

Interestingly, it must be stressed that a disabled person as defined under the Magna Carta Act for Disabled Persons may be hired as an apprentice or learner subject to provisions of the Labor Code provided that his handicap is not as much as to effectively impede the performance of job operations in the particular occupation for which they are hired. In the meantime that the disabled worker is undergoing apprenticeship, the employer may pay him a compensation at least 75 percent of the applicable minimum wage.

Payment of compensation below the prescribed daily minimum wage is also allowed with regards to the employment of student trainees under Republic Act No. 7686 otherwise known as the "Dual Training System Act of 1994." This law was enacted by Congress to authorize a dual training system and as one of the preferred means of creating a dependable pool of well-trained operators, craftsmen and technicians for the economy. Subject to compliance with several requirements under this law, an employer may hire a person as trainee. Trainee refers to a person qualified to undergo the dual training system for the purpose of acquiring and developing job qualifications. The trainee will be entitled to an allowance which in no case shall start below 75 percent of the applicable minimum daily wage for a day’s work spent in the establishments.

(The author is the resident partner of the Cebu branch of the Abello Concepcion Regala & Cruz Law Offices (ACCRALAW). He is also a professor of labor law at the University of San Carlos College of Law, Cebu City. He can be contacted at tel. # (032231-4223); fax # (032 231-3614).