Question B.13, Labor Law, 2019 Bar Exam

Mr. A signed a one (1)-year contract with XYZ Recruitment Co. for deployment as welding supervisor for DEF, Inc. located in Dubai. The employment contract, which the Philippine Overseas Employment Administration (POEA) approved, stipulated a salary of US$600.00 a month.

Mr. A had only been in his job in Dubai for six (6) months when DEF, Inc. announced that it was suffering from severe financial losses and thus intended to retrench some of its workers, among them Mr. A. DEF, Inc. hinted, however, that employees who would accept a lower salary could be retained.

Together with some other Filipino workers, Mr. A agreed to a reduced salary of US$400.00 a month and thus, continued with his employment.

(a) Was the reduction of Mr. A’s salary valid? Explain. (2.5%)

(b) Assuming that the reduction was invalid, may Mr. A hold XYZ recruitment Co. liable for underpayment of wages? Explain. (2.5%)

Suggested Answer:

(a) No. Answer

Under the 1987 Constitution and R.A. 8042, the State shall afford full protection to labor, including overseas employment. To add, the Labor Code prohibits reduction of wages via the non-diminution of benefits rule. Rule

In the case at bar, Philippine labor law applies to Mr. A even if he work in Dubai. Since the non-diminution of benefits prohibits reduction of wages, his salary should not have been deducted. Apply

Thus, the reduction of Mr. A’s salary was not valid.

(b) Yes. Answer

Under the implementing rules and regulations ...

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