Philippine Labor Law Glossary
Definition: Underpayment of wages means paying an employee less than the amount legally due under the applicable wage, payroll or labor-standard rules.
What Underpayment of Wages Means
Underpayment can occur when a covered employee receives less than the applicable statutory minimum wage or when another legally due wage component is not fully paid. The correct comparison depends on the worker’s actual classification, region, sector, work performed and the controlling wage rules.
It should be distinguished from a lawful wage deduction. A deduction starts from an amount otherwise due and removes part of it under a claimed legal basis; underpayment can arise because the employer used the wrong wage rate or failed to include an amount that should have been paid.
Evidence That Matters
- Employment contract or wage agreement
- Payslips and payroll records
- Daily time records and schedules
- Applicable regional wage order
- Bank records or proof of payment
Common Misunderstanding
Misunderstanding: Any salary below another worker’s salary is automatically unlawful underpayment.
Correct approach: The legal question is whether the employee received the wage and monetary benefits actually required by the applicable law, wage order, contract or enforceable policy.
Related Terms
Sources and Legal Citations
- Republic Act No. 6727 — regional minimum wage framework. Lawphil text.
- National Wages and Productivity Commission — current wage orders and regional rates. Official NWPC site.
Editorial Review and Legal-Review Status
Prepared by: LaborCode.ph Editorial Team
Source verification: Official legal sources checked on August 8, 2026
Article-level legal review status: No named lawyer-review credit has been assigned to this glossary entry.
Disclaimer
Whether an underpayment exists depends on the applicable wage order, employee coverage and actual payroll records.