Requiring cash bond from employees prohibited, DOLE explains

LAGAWE, Ifugao, Aug. 2 (PIA)- -A Labor Inspector from the Regional Office of the Department of Labor and Employment (DOLE) warned employers of this province that it is prohibited for them to require cash bond or cash deposit from their employees to answer for loss or damage of materials or equipment supplied by the employers.


Mark Anthony Tungpalan of the DOLE said that this is by virtue of DOLE Department Advisory No. 11-14 which provides for the “Non-Interference in the Disposal of Wages and Allowance Deduction as Cash Deposit from Employees”.

Tungpalan explained  that deduction or cash deposits from employees to answer for loss or damage on tools, materials or equipment supplied by the employer is allowed only in private security agencies as a recognized and reasonable industry practice given the nature of their business or service.

The guiding principle is that no employer shall limit or interfere with the freedom of the employee to dispose of his wages except: when deduction is authorized by law including deduction for insurance premium advanced by the employer in behalf of the employee as well as union dues where the right to check-off has been recognized by the employer or authorized by the employee himself,  or when the deduction are with the written authorization of the employee for the payment to a third person and the employer agrees to do so provided the latter does not receive pecuniary benefits directly or indirectly from the transaction.

Other unauthorized deductions are deductions made from the employees’ wages for company uniform, cash deposits for loss or damage, personal protective equipment, capital share or capital build-up in service cooperatives, training fees and other deductions not included in the enumeration of exceptions.

For the deductions to be valid in private security agencies, the employee concerned is clearly shown to be responsible for the loss or damage. Employee is given reasonable opportunity to show cause why deduction shall not be made and the deduction from the wages of the employee does not exceed 20% of the employee’s wages in a week.

Tungpalan explained that unauthorized deductions made by the employer prior to this Advisory issued on September 3, 2014 shall not be deemed a violation or illegal deduction. Daniel B. Codamon(JDP/DBC-PIA CAR, Ifugao)


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