Can an Employer Take Away Benefits You Already Get?

Article 100 of the Labor Code (its number did not change in the 2015 renumbering) reads:

Read alone, the text speaks of benefits enjoyed when the Code was promulgated in 1974. The Supreme Court, however, applies the rule to benefits granted later as well, when they rest on a policy, a contract, or a company practice.

In Beltran v. AMA Computer College-Biñan (2019), the Court said Article 100 "expressly prohibits the elimination or reduction of benefits received by employees. However, the basis for the grant of said benefit must be shown through an express policy, written contract, or an unwritten policy that has ripened into a company practice."

So a benefit is protected when it comes from:

1. an express policy of the company;
2. a written contract, such as an employment contract or a collective bargaining agreement; or
3. an unwritten policy that has ripened into company practice.

The Court in Beltran said: "To be considered a practice, it must be consistently and deliberately made by the employer over a significant period of time."

This has two parts:

• Consistently: the benefit is given regularly, not just once or now and then.
• Deliberately: the employer chooses to give it, as its own act.

The law does not set a fixed number of years. In Nippon Paint Philippines v. Nippon Paint Philippines Employees Association (2021), additional holiday pay for Eidul Adha that the employer had given for two years was held to have ripened into a company practice protected by Article 100. The employer could not withdraw it.

In Coca-Cola Bottlers Philippines v. Iloilo Coca-Cola Plant Employees Labor Union (2018), the Court said the benefits in the non-diminution rule are "monetary benefits or privileges given to the employee with monetary equivalents." In that case, the employees had worked on Saturdays, and the company stopped Saturday work. The Court said Saturday work itself was not a benefit, and ruled for the employer.

So the rule protects things like bonuses, allowances and extra pay, but not a work schedule as such.

Two other rules are close to non-diminution:

• Deductions from wages. Under Article 113, an employer may deduct from wages only in the cases the law allows. See Can your employer deduct from your salary?
• Doubts favor labor. Under Article 4, all doubts in the implementation and interpretation of the Labor Code are resolved in favor of labor. For unclear terms in a collective bargaining agreement, the Court in Honda v. Samahan ng Malayang Manggagawa sa Honda (2005) agreed that a doubt about the 13th month pay had to be resolved in favor of labor under Article 1702 of the Civil Code.

A cut in pay or benefits can also be part of constructive dismissal. See Constructive dismissal.

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.

A garment company in Cavite has given every worker a rice allowance every month for six years, without any contract requiring it. If this is shown to be consistent and deliberate, it may have ripened into a company practice that the company cannot simply withdraw.

A small store gave its staff a cash gift once, during a very good year, and never again. A one-time grant is not consistent over a significant period, so it is unlikely to be a company practice.

A factory used to run on Saturdays and stops Saturday work. As in Coca-Cola Bottlers, the schedule itself is not a monetary benefit protected by the rule.

Talk to a lawyer if your employer has stopped or reduced an allowance, bonus or other benefit you received for years, or if you are an employer planning to change benefits. Whether a benefit has become a company practice depends on records and history. Complaints usually start with conciliation at DOLE: see How to file a labor complaint. If you cannot afford a lawyer, see Free legal help in the Philippines.