Can Your Employer Require a Cash Bond or Deposit?

The rule on deposits is Article 114 of the Labor Code. Its number did not change in the 2015 renumbering:

So the starting point is a ban. A deposit is allowed only in one of two cases:

1. The employer's trade, occupation or business is one where making deductions or requiring deposits is a recognized practice.
2. The deposit is necessary or desirable as determined by the Secretary of Labor and Employment in rules and regulations.

Deductions from wages have their own rule, Article 113. It allows deductions only for insurance premiums the worker agreed to, union dues where check-off is authorized, and cases where the employer is authorized by law or by regulations of the Secretary of Labor and Employment. A cash bond taken out of each payslip must fit one of these. See can your employer deduct from your salary?

Strictly, against the employer. In Niña Jewelry Manufacturing v. Montecillo (2011), a jewelry maker adopted a new policy requiring its goldsmiths to post cash bonds of up to 15% of their weekly pay, or to sign authorizations for deductions. The Court said Article 113 has only three exceptions, and Article 114 allows deposits only in the cases it lists. It added that it would strictly construe the rules against the employer because "the posting of cash bonds and the making of deductions from the wages would inarguably impose an additional burden upon the employees."

The Court said the employer was "not absolutely precluded from imposing the new policy," but could do so only by complying with the requirements of the law. In that case, the ruling that the policy lacked legal basis stood, although the Court found that the workers were not constructively dismissed.

Two later cases ordered refunds:

• In Agapito v. Aeroplus Multi-Services (2022), the Court found that a monthly cash bond had been illegally deducted from the worker's wages and ordered the total reimbursed, with 6% legal interest.
• In John Kriska Logistics v. Mendoza (2023), the Court upheld an order to refund a weekly cash bond, computed for three years only because of the three-year limit on money claims in [Article 306 [291]](/law/labor-code/article-306).

The implementing rules of the Labor Code (Book III, Rule VIII, Section 14, in the 1989 text on the Supreme Court E-Library) deal with deductions for loss or damage. They apply where the employer is in a trade, occupation or business where deductions or deposits are a recognized practice, and they set four conditions:

1. The employee is clearly shown to be responsible for the loss or damage.
2. The employee is given a reasonable opportunity to show cause why the deduction should not be made.
3. The amount is fair and reasonable and does not exceed the actual loss or damage.
4. The deduction does not exceed 20 percent of the employee's wages in a week.

DOLE may have issued later rules that are not reflected here.

No. Article 116 says:

The article names intimidation and threat among the forbidden means. Whether a worker really consented is decided on the facts of each case.

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

Carla is hired as a cashier at a grocery. On her first payday, her employer deducts an amount labeled "cash bond" without her written authority. As in Agapito, a cash bond deduction that does not fit Article 113 can be ordered refunded with legal interest.

Benny works in a shop where a tool went missing. The owner deducts the full price of the tool from his week's pay without asking him to explain. Under the implementing rules, a deduction for loss needs proof that Benny was responsible, a chance for him to explain, an amount not more than the actual loss, and a limit of 20 percent of his weekly wages.

Rhea worked for five years in a warehouse where a cash bond was deducted every week. When she resigns, she asks for it back. As in John Kriska, a refund claim is limited by the three-year deadline for money claims.

Talk to a lawyer, your union or the Public Attorney's Office if a large cash bond is not returned, if deductions are taken without your written consent, or if you were told to sign a bond or deduction form to keep your job. Employers planning a cash bond or loss policy also need legal advice on whether their business qualifies. If you cannot afford a lawyer, see Free legal help in the Philippines.