On Salary Deductions and Authority to Deduct

On salary deductions and authority to deduct. In 2018, a revision to the Labor Advisory No. 11 Series of 2014 or the Non-interference in the Disposal of Wages and Allowable Deductions was released. However, unlike the 2014 Labor Advisory, the Department Order in 2018 was not met with as much controversy and discussions. So, I am sharing this here because there are questions around the matter. I still hear from employees getting deductions without having signed any Authority to Deduct. And even without them agreeing to the rationale for the deduction to begin with.

For example, take this certain private school in the south. The Accountants wanted to deduct unreturned books by students from the salary of their librarians. These books were not returned when the country went on lockdown. The librarians are not in agreement to the reasoning behind the deduction. This is because they did their due diligence and the books are not with them.

Another example, an employee in the BPO space was sent to a ‘mandatory’ training. Upon resignation, he saw deductions on his final pay. Why? Because he is still within 2 years from the training date. According to the employee, he already applied the knowledge gained from the training. Further, he was not aware of any such a rule, nor did he sign an authority to deduct.

Department Order 195-18 seems to be a simpler version. However still emphasizes the fact that you (employers) cannot deduct. Unless with the employee’s consent through signature on the Authority to Deduct document. Right now, only contributions to SSS, Pag-Ibig, PhilHealth and of course, tax, can be deducted without this signed form. Of course, these are government mandated.

Also, here’s definition of pecuniary. In essence, employers cannot earn or get any benefit from deductions from their employees’ wage or salary.

pecuniary – consisting of or measured in money and, of or relating to money


DO 195-18 Rule Amending Section 10 of Rule VIII of the Implementing Rules and Regulations of the Labor Code on Wage Reduction

There, a very simple presentation of the DO on salary deductions and authority to deduct.

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