National Minimum Wage Act of 2025

E7L1 ten her or sirmay TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session 25 JUL 10 P2:28 SENATE RECEIVED BY: S. No. 373 Introduced by Senator Robinhood Padilla AN ACT STRENGTHENING THE PROTECTION OF PRIVATE SECTOR WORKERS BY ESTABLISHING A NATIONAL MINIMUM WAGE AND ENHANCING PENALTIES FOR NON-COMPLIANCE, AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES EXPLANATORY NOTE In 1989, the enactment of Republic Act No. 6727, otherwise known as the Wage Rationalization Act, introduced a regionalized wage-setting mechanism in the Philippines. This policy replaced the national minimum wage system with a framework wherein Regional Tripartite Wages and Productivity Boards (RTWPBs) determine minimum wage levels for each region, taking into account economic indicators, cost of living, and productivity levels specific to their jurisdictions. The rationale behind this approach was to ensure that wage rates reflect the distinct socio-economic conditions prevailing in different regions of the country. Variations in prices of goods and services, as well as levels of productivity, were cited as justifications for setting wages on a regional basis, with the aim of striking a balance between the welfare of workers and the sustainability of businesses. However, over the years, this system has revealed significant structural gaps. Despite the intent to localize wage adjustments, disparities in income and living conditions have persisted, and in some instances, worsened. Data from independent research institutions such as the IBON Foundation show that a family of five in the Philippines requires an estimated P1,225 per day, or approximately P27,000 per month, to maintain

a decent standard of living. This estimate considers not only basic needs such as food, shelter, and water, but also essential expenditures for education, healthcare, and savings. Across most regions, the prevailing family living wage (FLW) ranges between P1,000 to P1,300 per day, with certain areas such as the Eastern Visayas falling slightly below this range. In contrast, families in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) require over P2,000 per day to meet their basic needs. Despite these figures, the actual minimum wage rates in most regions fall substantially short of the FLW. The situation is particularly concerning in BARMM, where the minimum daily wage stands at only P361, the lowest in the country, compared to P645 in Metro Manila, even though the cost of living is significantly higher in BARMM. The Philippine Statistics Authority (PSA) estimates the poverty threshold for a family of five at P12,030 per month, a figure that highlights the challenges faced by many minimum wage earners, particularly outside the National Capital Region, where wage levels frequently fail to meet even the most basic subsistence requirements. It is also noteworthy that labor productivity in the Philippines has experienced substantial growth, with productivity levels across all sectors increasing from P60,342 in 1991 to P423,408 in 2018, representing an impressive 600% rise. Yet, wage growth has failed to keep pace with these productivity gains, contributing to the widening gap between workers' incomes and the cost of living. In light of these realities, it is incumbent upon the State to uphold its constitutional obligation to ensure that workers receive a just share in the fruits of production, including the right to a living wage. The establishment of a uniform national minimum wage that approximates, if not equates to, the prevailing family living wage is a necessary step towards achieving equitable income distribution and promoting social justice and economic development. Accordingly, the passage of this proposed measure is earnestly sought. ROBINHOOD PADILLA Sénator

subtler of tie sieroti TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 JUL 10 P2:28 First Regular Session SENATE RECEIVED BY S. No. 3*73 Introduced by Senator Robinhood Padilla AN ACT STRENGTHENING THE PROTECTION OF PRIVATE SECTOR WORKERS BY ESTABLISHING A NATIONAL MINIMUM WAGE AND ENHANCING PENALTIES FOR NON-COMPLIANCE, AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. - This Act shall be known as the "National Minimum

2 Wage Act of 2025".

Sec. 2. Declaration of Policy. - Pursuant to Article XIII, Section 3 of the 1987

4 Constitution, which guarantees the rights of workers to security of tenure, humane 5 conditions of work, and a living wage, it is hereby declared the policy of the State to 6 promote and protect the welfare of workers by ensuring their right to a living wage and dignified working conditions. In recognition of this constitutional mandate, the State adopts and institutionalizes the establishment of a national minimum wage as the primary mechanism for setting wage standards for private sector workers across the country. This measure seeks to address and progressively eliminate regional wage disparities, promote equitable income distribution, and uplift the living standards of workers in all regions, in alignment with national economic and social development objectives.

The legislated national minimum wage shall complement, and in no way 2 diminish, existing wage terms and conditions provided under collective bargaining agreements and other applicable laws, thereby preserving the rights and benefits 4 already enjoyed by workers.

Sec. 3. Definition of Terms. - The following terms as used in this Act shall be

6 defined as follows: a. Worker shall refer to any person in the employ of another, whether in the public sector or private sector, including ambulant, intermittent, rural workers and those without definite employers, regardless of their employment status, tenure or nature of the agreements or contracts; b. Living Wage shall refer to the amount of family income needed to provide for the family's food and non-food expenditures with sufficient allowance for savings/investments for social security so as to enable the family to live and maintain a decent standard of human existence beyond mere subsistence level, taking into account all of the family's physiological, social and other needs; and C. Wage Distortion shall refer to a situation where an increase in prescribed wage results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation.

Sec. 4. Article 99 of Presidential Decree No. 422, or the Labor Code of the

Philippines, as amended, is amended to read as follows: "ART. 99. [Regional] NATIONAL minimum wage[s]. [The] A UNIFORM NATIONAL minimum wage [rates] for agricultural and non- agricultural SECTORS' employees and workers [in each and every region of the] THROUGHOUT THE country shall be [these] ESTABLISHED AND prescribed by the [Regional Tripartitel NATIONAL Wages and Productivity Board[s] (NWPB). THE

NATIONAL MINIMUM WAGE SHALL BE DETERMINED THROUGH LEGISLATION ENACTED BY CONGRESS OR, IN THE ABSENCE THEREOF, BY AN EXECUTIVE ORDER ISSUED BY THE PRESIDENT OF THE PHILIPPINES UPON THE RECOMMENDATION OF THE NWPB. THE NATIONAL MINIMUM WAGE SHALL BE APPLICABLE TO ALL ENTERPRISES OPERATING WITHIN THE TERRITORY OF THE REPUBLIC OF THE PHILIPPINES, INCLUDING THOSE LOCATED IN SPECIAL ECONOMIC ZONES (SEZS), REGARDLESS OF GEOGRAPHICAL LOCATION, SIZE, TYPE OF INDUSTRY, OR LEGAL CLASSIFICATION. FOR PURPOSES OF THIS ACT, THE NATIONAL MINIMUM WAGE SHALL EQUALLY APPLY TO ALL WORKERS, IRRESPECTIVE OF THEIR EMPLOYMENT STATUS, INCLUDING CASUAL, SEASONAL, PROJECT-BASED, CONTRACTUAL, AND OTHER FORMS OF NON-REGULAR EMPLOYMENT, CONSISTENT WITH EXISTING LABOR LAWS AND REGULATIONS."

Sec. 5. Article 120 of the Labor Code, as amended, is amended to read as

follows: "Art. 120. Creation of National Wages and Productivity [Commission] BOARD. There is hereby created a National Wages and Productivity [Commission] BOARD, hereinafter referred to as the [Commission] BOARD, which shall be attached to the Department of Labor and Employment (DOLE) for policy and program coordination."

Sec. 6. Article 121 of the Labor Code, as amended, is amended to read as

follows: "Art. 121. Powers and functions of the [Commission] BOARD. The [Commission] BOARD shall have the following powers and functions:

a. To act as the national consultative and advisory body to the President of the Philippines and Congress on matters relating to wages, incomes and productivity; b. To formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise, industry and national levels; c. To prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the [regional, provincial, or industry] NATIONAL level[s]; d. [to review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with prescribed guidelines and national development plans] TO FORMULATE, DETERMINE, AND PRESCRIBE PERIODIC ADJUSTMENTS TO THE NATIONAL MINIMUM WAGE, TAKING INTO ACCOUNT ECONOMIC INDICATORS, COST-OF-LIVING CHANGES, PRODUCTIVITY LEVELS, AND OTHER RELEVANT FACTORS, TO ENSURE THAT THE MINIMUM WAGE REMAINS CONSISTENT WITH THE NATIONAL DEVELOPMENT OBJECTIVES; e. To undertake studies, research and surveys necessary for the attainment of its functions and objectives, and to collect and compile data and periodically disseminate information on wages and productivity and other related information, including, but not limited to, employment, cost-of-living, labor costs, investments and returns; f. [Fo review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether these are consistent with national development plans]; g. [To exercise technical and administrative supervision over the Regional Tripartite Wages and Productivity Beards];

[(7)] F. To call, from time to time, a national tripartite conference of representatives of government, workers and employers for the consideration of measures to promote wage rationalization and productivity; and [<i)] G. To exercise such powers and functions as may be necessary to implement this Act. The [Commission] BOARD shall be composed of the Secretary of Labor and Employment as ex-officio chairman, the Director-General of the National Economic and Development Authority (NEDA) as ex-officio vice- chairman, and two (2) members each from workers' and employers' sectors who shall be appointed by the President of the Philippines upon recommendation of the Secretary of Labor and Employment to be made on the basis of the list of nominees submitted by the workers' and employers' sectors, respectively, and who shall serve for a term of five (5) years. The Executive Director of the [Commission] BOARD shall also be a member of the [Commission] BOARD. The [Commission] BOARD shall be assisted by a Secretariat to be headed by an Executive Director and two (2) Deputy Directors, who shall be appointed by the President of the Philippines, upon the recommendation of the Secretary of Labor and Employment. The Executive Director shall have the same rank, salary, benefits and other emoluments as that of a Department Assistant Secretary, while the Deputy Directors shall have the same rank, salary, benefits and other emoluments as that of a Bureau Director. The members of the [Commission] BOARD representing labor and management shall have the same rank, emoluments, allowances and other benefits as those prescribed by law for labor and management representatives in the Employees' Compensation Commission."

Sec. 7. Abolition of the Regional Tripartite Wages and Productivity Board. -

2 Articles 122 and 123 of the Labor Code of the Philippines, as amended, are hereby repealed. Consequently, the Regional Tripartite Wages and Productivity Boards 4 (RTWPBs) established under Republic Act No. 6727, otherwise known as the Wage Rationalization Act, are hereby abolished. The relevant provisions of the Labor Code, as amended, and shall be 7 renumbered accordingly.

Sec. 8. Article 124 of the Labor Code, as amended, is amended and renumbered

to read as follows: "Art. [124] 122. Standards/Criteria for minimum wage fixing. The [regional] NATIONAL minimum wage[s] to be established [by the Regional Beard] shall be [as nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and general well being of the employees within the framework of the national economic and social development program] SET AT A LEVEL THAT IT SHALL BE SUFFICIENT TO COVER THE BASIC AND ESSENTIAL EXPENDITURES NECESSARY FOR RAISING A FAMILY, INCLUDING, BUT NOT LIMITED TO, ADEQUATE FOOD, CLOTHING, SHELTER, EDUCATION, HEALTH CARE, TRANSPORTATION, AND OTHER SOCIAL AND ECONOMIC NEEDS, WITH REASONABLE PROVISION FOR SAVINGS AND SOCIAL SECURITY. In the determination of such [regional] NATIONAL minimum wage[s], the NWPB AND THE CONGRESS [Reginal Board] shall, among other relevant factors, consider the following: a. The [demand for] RIGHT TO living wages; b. MOVEMENTS IN THE [Wage adjustment vis a vis the] consumer price index (CPI); c. The cost of living and changes or increases therein;

d. The ESTIMATED COST REQUIRED TO PROVIDE A WORKER AND HIS OR HER FAMILY WITH ADEQUATE ACCESS TO FOOD, CLOTHING, DECENT HOUSING, EDUCATION, HEALTH CARE, AND OTHER ESSENTIAL NON-FOOD EXPENDITURES NECESSARY TO ENSURE THEIR WELL-BEING AND MAINTAIN A DIGNIFIED STANDARD OF LIVING [needs of workers and their families]; e. [The need to induce industries to invest in the countryside] THE PHYSICAL, SOCIAL, AND OTHER ESSENTIAL NEEDS OF WORKERS AND THEIR FAMILIES NECESSARY TO PROMOTE THEIR HEALTH, WELL-BEING, AND OVERALL QUALITY OF LIFE; f. Improvements in standards of living; AND g. [The prevaiting wage levels;] h. [Fair return of the capital invested and capacity to pay of employers; ] i. [Effects on employment generation and family income; and] [G)] G. The equitable distribution of income and wealth along the imperatives of economic and social development. Ithe wages prescribed in accordance with the provisions of this Title shalt be the standard prevailing minimum wages in every region. These wages shall include wages varying with industries, provinces or localities if in the judgment of the Regional Beard, conditions make such locat differentiation proper and necessary to effectuate the purpose of this Fitle.] Any person, company, corporation, partnership or any other entity engaged in business shall file and register annually with the appropriate [Regional Beard, Commission] REGIONAL OFFICE OF THE DEPARTMENT OF LABOR AND EMPLOYMENT and the [National Statistics Office] PHILIPPINE STATISTICS AUTHORITY (PSA), an

itemized listing of their labor component, specifying the names of their workers and employees below the managerial level, including learners, apprentices and disabled/handicapped workers who were hired under the terms prescribed in the employment contracts, and their corresponding salaries and wages. Where the application of any prescribed wage increase by virtue of a law or EXECUTIVE wage order [issued by any Regional Board] results in distortions of the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary arbitration. XXX The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any increase in prescribed wage rates pursuant to the provisions of law [er wage order]. XXX All workers paid by result, including those who are paid on piecework, takay, pakyaw or task basis, shall receive not less than the prescribed NATIONAL MINIMUM wage rates per eight (8) hours of work a day, or a proportion thereof for working less than eight (8) hours OR OUTPUTS PRODUCED. All recognized learnership and apprenticeship agreements shall be considered automatically modified insofar as their wage clauses are concerned to reflect the prescribed NATIONAL MINIMUM wage [rates].

PROJECT EMPLOYEES AND SEASONAL EMPLOYEES SHALL BE ENTITLED TO THE PRESCRIBED NATIONAL MINIMUM WAGE.

Sec. 9. Credible Wage Increase. - Any wage increase granted under a collective

bargaining agreement (CBA) or through other voluntary employer-initiated 5 arrangements shall be considered separate and distinct from the minimum wage increase mandated under this Act. Such wage increases shall not be credited or applied as compliance with the statutory minimum wage adjustments prescribed herein. This provision is without prejudice to the continued validity and enforceability 9 of any existing wage benefits or favorable terms under CBAs or other agreements that 10 provide higher rates than the prescribed minimum wage.

Sec. 10. Prohibition on Layoffs and Downsizing. - It shall be unlawful for any

company, corporation, partnership, or other business entity to terminate employees or implement downsizing solely for the purpose of avoiding compliance with the wage increases mandated under this Act.

Sec. 11. Terms of Service of the Regional Tripartite Wages and Productivity

Board Secretariat. - The terms of service of the members of the secretariat of each RTWPB shall terminate upon the effectivity of this Act: Provided, That said members shall be given preferential consideration for appointment to equivalent positions in government agencies or bureaus, subject to existing rules and regulations of the Civil 20 Service Commission (CSC).

Sec. 12. Wage Subsidies. - Micro- and small enterprises unable to meet the

22 new national minimum wage may apply for wage subsidies equivalent to a fraction of the mandated wage, subject to the implementing rules and regulations of this Act. The necessary funds for the wage subsidy program shall be incorporated in the annual appropriations of the DOLE.

Sec. 13. Non-Diminution of Benefits. - Nothing in this Act shall be interpreted

to reduce, eliminate, or otherwise impair existing benefits granted to workers, whether provided under collective bargaining agreements, existing laws, or other applicable regulations.

Sec. 14. Penalties. - Section 12 of Republic Act No. 6727, which was amended

by Section 1 of Republic Act No. 8188, is hereby further amended to read as follows: "Sec. 12. Any person, corporation, trust, firm, partnership, association or entity [which] THAT refuses or fails to pay THEIR WORKERS [any ef] THE NATIONAL MINIMUM WAGE [the] prescribed UNDER THIS ACT, INCLUDING ANY SUCCEEDING LEGISLATIVE WAGE increases or adjustments, Lin the wage rates made in accordance with this Act] shall be LIABLE TO [punished by] a fine EQUIVALENT TO ONE HUNDRED PERCENT (100%) OF THE TOTAL WAGE INCREMENT DUE TO THE EMPLOYEE, MULTIPLIED BY THE NUMBER OF WORKING DAYS THE WAGE INCREMENT REMAINS UNPAID, [not less than Twenty five thousand pesos (P25,000) nor more One hundred thousand pesos (P100,000)] or TO imprisonment of not less than [two (2)] THREE (3) years BUT NOT [nor] more than [four (4)] FIVE (5) years, or both, [such fine and imprisonment] at the discretion of the court: Provided, That any person convicted under this Act shall not be entitled to the benefits provided for under the Probation Law. The employer concerned shall LIKEWISE be ordered to pay EACH AFFECTED EMPLOYEE MORAL DAMAGES [an] amountING TO FIFTY THOUSAND PESOS (P50,000.00), IN ADDITION TO DOUBLE THE AMOUNT OF UNPAID BENEFITS DUE. [equivalent to double the unpaid benefits owing to the employees: Provided, That] THE payment of indemnity shall not absolve the employer from the criminal liability imposable under this Act. IN ADDITION, THE BUSINESS PERMIT OF THE OFFENDING ENTITY SHALL BE SUSPENDED FOR A PERIOD OF ONE (1) MONTH TO THREE (3) YEARS FOR A SECOND OFFENSE. FOR A THIRD OFFENSE, THE BUSINESS PERMIT SHALL BE REVOKED.

If the violation is committed by a corporation, trust or firm, partnership, association or any other entity, the penalty of imprisonment shall be imposed upon the entity's responsible officers, including, but not limited to, the president, vice-president, chief executive officer, general manager, managing director or partner." THE DOLE SHALL LIKEWISE HAVE THE AUTHORITY TO IMPOSE SUCH OTHER ADMINISTRATIVE PENALTIES AS IT MAY DEEM APPROPRIATE, BASED ON THE CIRCUMSTANCES OF EACH CASE OF VIOLATION.

Sec. 15. Implementing Rules and Regulations. - DOLE, in coordination with

other concerned government agencies, shall promulgate the necessary rules and regulations for the effective implementation of this Act within sixty (60) days from its effectivity.

Sec. 16. Separability Clause. - If any provision or part hereof is held invalid or

unconstitutional, the remaining provisions not affected thereby shall remain valid and subsisting.

Sec. 17. Repealing Clause. - Any law, presidential decree or issuance, executive

order, letter of instruction, administrative order, rule or regulation contrary to or inconsistent with the provisions of this Act is hereby repealed, modified or amended accordingly.

Sec. 18. Effectivity. - This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or in any two (2) newspapers of general circulation in the Philippines. Approved,