Dear Atty. Joji,

I accidentally damaged a piece of equipment provided by my employer while I was performing my work. My employer informed me that I would have to shoulder the cost of the damaged equipment and that the amount would be deducted from my salary. Can my employer automatically deduct the cost of damaged or lost company property from my salary?

John

Dear John,

An employer cannot automatically deduct the cost of lost or damaged company property from an employee’s wages merely because the employer believes that the employee was responsible for the loss or damage. The Labor Code affords special protection to an employee’s wages. As a general rule, deductions from wages are prohibited except in instances expressly permitted by law or applicable regulations.

With respect to losses or damage to tools, materials, or equipment supplied by the employer, the law likewise imposes safeguards before the corresponding amount may be charged against the employee. In Niña Jewelry Manufacturing of Metal Arts, Inc. v. Montecillo, G.R. No. 188169, 28 November 2011, the Supreme Court discussed the requirements governing deductions for loss or damage. The Labor Code of the Philippines provides:

ART. 113. Wage Deduction.  — No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except:

(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance;

(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and

(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

Article 114. Deposits for loss or damage. — No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules and regulations.

This means that an employer cannot simply discover that company property has been damaged, determine on its own that a particular employee was responsible, and immediately deduct the cost from that employee’s salary. Before a lawful deduction may be made, the employee must be clearly shown to be responsible for the loss or damage and must be given a reasonable opportunity to explain why the deduction should not be imposed.

Thus, if your employer simply deducted the cost of damaged equipment from your salary without clearly establishing your responsibility and without giving you a reasonable opportunity to explain, the deduction may be unlawful.

Hope this helps.

Atty. Joji Alonso