Labor Law: Wage Compensation & Benefits Regulations
Compensation and Wage Regulations
Article 129: Salary Determination
The salary shall be freely determined, but in no case shall it be less than the minimum fixed by the competent authority as prescribed by law.
Article 130: Wage Fixing Criteria
In fixing the amount of wages for each type of work, the quantity and quality of service shall be taken into account, as well as the need to ensure a humane and dignified living for the worker and their family.
Article 131: Worker’s Right to Dispose of Wages
The worker shall freely dispose of their wages. Any limitation on this right under this Act is void.
Article 132: Inalienability of Salary
The right to salary is inalienable and not transferable, in whole or in part, whether gratuitous or not, except to the spouse or person living with the worker, and to their children. It may only be offered as security in cases and to the extent determined by law.
Paragraph: Wage Deductions for Organizations
However, in enterprises employing more than fifty (50) workers, the worker may request the employer to deduct from their regular wage rate for the benefit of the union to which they are affiliated, or for charities, civil society and non-profit foundations, cooperatives, cultural, artistic, sporting, or other social interest organizations. The employer shall be obligated to do so when the beneficiaries are eligible for legalization. The employee may revoke the authorization at any time.
Article 133: Definition of Wages and Inclusions
Wages mean remuneration, benefit, or advantage, whatever their denomination or calculation method, capable of being expressed in cash, which corresponds to the worker for the provision of service. Among others, this includes commissions, bonuses, profit-sharing, vacation bonuses, and surcharges for public holidays, overtime, or night work, as well as food and housing allowances.
Paragraph One: Non-Wage Character of Grants and Facilities
Grants and facilities provided by the employer to the employee for the purpose of obtaining goods and services that enhance their quality of life and that of their family shall not be considered wage-related.
Collective agreements, and in companies where there are no unionized workers, collective agreements or individual employment contracts, may stipulate that up to twenty percent (20%) of wages form the basis for calculating benefits, facilities, or compensation arising from the employment relationship, regardless of their legal or contractual source. The minimum wage shall be considered in its entirety as the basis for calculating such benefits, facilities, or compensation.
Paragraph Two: Definition of Normal Salary
For the purposes of this Act, “normal salary” means the remuneration earned by the employee for regular and continuous service delivery. Therefore, accidental perceptions, those arising from seniority, and those that this law considers to be non-wage in character are excluded.
To estimate the normal pay, none of the concepts that comprise it shall have an effect on itself.
Paragraph Three: Non-Remunerative Social Benefits
Social benefits considered non-remunerative include:
- Catering services, provision of meals and food, and child care.
- Reimbursement of medical, pharmaceutical, and dental services.
- Provision of workwear.
- Provision of school supplies and toys.
- Granting of scholarships and payment for training or expertise.
- Payment of funeral expenses.
These social benefits shall not be considered as salary, unless otherwise stipulated in collective agreements or individual employment contracts.
Paragraph Four: Calculation of Contributions and Taxes
When the employer or the worker are obligated to pay a contribution or tax, the rate shall be calculated based on the normal salary for the month immediately preceding the date on which it became due.
Paragraph Five: Employer’s Obligation to Inform Employees
The employer shall inform their employees, in writing, with itemized details, and at least once a month, of their salary allowances and deductions.
Article 134: Service Charges and Surcharges
In establishments where a service charge percentage is customarily added to the customer’s consumption, such surcharge shall be calculated on the salary, with the proportion corresponding to each worker in accordance with the agreement, custom, or usage.