Can Your Employer Deduct From Your Salary?

The rule is Article 113 of the Labor Code. Its number did not change in the 2015 renumbering. It reads:

The starting point is a ban: no deduction, except in the listed cases. It applies whether the employer deducts for itself or "in behalf of any person".

Only three kinds:

1. Insurance premiums, when the employer insured the worker with the worker's consent and the deduction pays back the premium.
2. Union dues, when the right to "check-off" (the employer deducting dues and remitting them to the union) is recognized by the employer or authorized in writing by the worker.
3. Deductions authorized by law or by regulations of the Secretary of Labor and Employment.

The employee's share of SSS, PhilHealth and Pag-IBIG contributions and the withholding tax on compensation fall under the third case, because laws require them. To see how these reduce your pay, use the take-home pay calculator, the SSS contribution calculator and the withholding tax calculator.

The Supreme Court has ordered cash bonds refunded in these cases:

• In Agapito v. Aeroplus Multi-Services (2022), the Court found that the employer "illegally deducted P200.00 as monthly cash bond" from the worker's wages. It ordered the employer to reimburse the total of the monthly deductions over the whole period, plus 6% legal interest.
• In John Kriska Logistics v. Mendoza (2023), the Court upheld an order to refund a ₱100 cash bond deducted weekly, computed for three years only under the three-year limit on money claims in Article 306 [291].

Article 113 allows them only if they fit one of its three cases, for example a deduction authorized by regulations of the Secretary of Labor and Employment. The conditions set by those regulations are not explained here. Without such authority, the general rule of Article 113 applies: no deduction.

An illegal deduction is a money claim. You can:

• go through conciliation at DOLE first: see How to file a labor complaint;
• for a small claim without reinstatement, have it decided by the DOLE Regional Director under Article 129, within the amount limit set there;
• file within three years from the time the cause of action accrued under [Article 306 [291]](/law/labor-code/article-306). See Labor money claims: how long do you have?

In cases of unlawful withholding of wages, Article 111 allows attorney's fees of ten percent of the wages recovered.

For an overview of the rules on pay, see wages, hours and pay under the Labor Code.

These are made-up examples to show how the rules work. They are not advice for any real case.

Joel is a delivery rider in Quezon City. His employer deducts ₱300 from every payslip as a "cash bond" without any written authority from him. As in Agapito, a cash bond deduction that does not fit Article 113 can be ordered refunded with legal interest.

Weng is a union member. She signed a written authorization for her union dues to be deducted from her pay. This is the second case allowed by Article 113.

Dante works as a cashier. At the end of a shift, his drawer is short, and his manager deducts the shortage from his next salary without any process. Under Article 113, the deduction must fit one of the allowed cases; otherwise it is not allowed.

Talk to a lawyer if large or repeated deductions are taken from your pay without your written consent, if a cash bond is not returned, or if you are an employer setting up a cash bond or loss policy. If you cannot afford a lawyer, see Free legal help in the Philippines.