COMPRESSED WORKWEEK WITH SAMPLE WAGE COMPUTATION BASED ON NCR WAGE ORDER NO. 22

Compressed workweek scheme was originally conceived for establishments wishing to save on energy costs, promote greater work efficiency and lower the rate of employee absenteeism, among others.

Normally, establishments require work from Monday to Saturday at eight-hour work per day. Filipinos prefer to spend Saturdays and Sundays with family and for leisure activities among others. Employers would also like to save cost. Hence, the idea came out to compress the work days in a week from six days to five thereby eliminating the Saturday work. But the effect is an increased work hours from Monday to Friday where such excess hours are not compensable under overtime rules. This is the profile of the compressed workweek scheme.

The idea behind compressed workweek is best elucidated in Department Order No. 21 in 1990. Thus:

“The compressed workweek scheme was originally conceived for establishments wishing to save on energy costs, promote greater work efficiency and lower the rate of employee absenteeism, among others. Workers favor the scheme considering that it would mean savings on the increasing cost of transportation fares for at least one (1) day a week; savings on meal and snack expenses; longer weekends, or an additional 52 off-days a year, that can be devoted to rest, leisure, family responsibilities, studies and other personal matters, and that it will spare them for at least another day in a week from certain inconveniences that are the normal incidents of employment, such as commuting to and from the workplace, travel time spent, exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5) days but prolonging the working hours from Monday to Friday without the employer being obliged to pay overtime premium compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits abovecited that will accrue to the employees”

The DOLE normally does not interpose any objection to this kind of scheme provided the following conditions are met:

1. The employees voluntarily agree to work at longer hours from Monday to Friday;
2. There should be no diminution in the take-home pay and fringe benefits of the employees;
3. The value of the benefits that will accrue to the employees under the proposed work schedule is more than or, at least, commensurate with, or equal to, the one-hour overtime pay that is due them during weekdays based on the employee’s qualification;
4. The one-hour overtime pay of the employee will become due and demandable if ever they are permitted or made to work on any Saturday during the effectivity of the new working time arrangement, since the agreement between the employees and the management is that there will be no Saturday work in exchange for a longer work day during week-days;
5. The work of the employees does not involve strenuous physical exertion and they are provided with adequate rest periods or coffee breaks in the morning and afternoon; and
6. The effectivity of the proposed working time arrangement should be of temporary duration as determined by the Secretary of Labor and Employment.

Department Order implementing CWW (D.O. No. 02, Series of 2004)

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PURPOSE AND COVERAGE

The DOLE issued Department Order No. 02, Series of 2004 to guide employers and workers who may opt to adopt a mutually acceptable compressed workweek (CWW) scheme suitable to the requirements of the firm.

It was intended to apply to all establishments except those in the following:

1. Construction industry,
2. Health services,
3. Occupations requiring heavy manual labor, or
4. Occupations or workplaces in which workers are exposed to airborne contaminants, human carcinogens, substances, chemicals or noise that exceed threshold limit values or tolerance levels for an eight-hour workday as prescribed under existing Occupational Safety and Health Standards (OSHS).

As a matter of policy, and taking into account the emergence of new technology and the continuing restructuring and modernization of the work process, the Department of Labor and Employment (DOLE) encourages employers and workers to enter into voluntary agreements adopting CWW schemes based on the following objectives:

1. To promote business competitiveness and productivity, improve efficiency by lower operating costs, and reduce work-related expenses of employees;
2. To give employers and workers flexibility in fixing hours of work compatible with business requirements and the employees’ need for a balanced work life; and
3. To ensure the safety and health of employees at the workplace at all times.

DOLE shall recognize only those CWW schemes that have been entered into consistent with the DOLE Advisory.

The Labor Code provides that the normal work hours per day shall be eight hours. Work may be performed beyond eight hours a day provided the employee is paid for the overtime work. On the other hand, the normal number of workdays per week shall be six days, or a total of forty-eight (48) hours based on the normal workday of eight hours. This is without prejudice to firms whose normal workweek is five days, or a total of forty (40) hours based on the normal workday of eight hours.

For purposes of the DOLE Advisory on CWW, the scheme is an alternative arrangement whereby the normal workweek is reduced to less than six days but the total number of normal work hours per week shall remain at 48 hours. The normal workday is increased to more than eight hours without corresponding overtime premium. This concept can be adjusted accordingly in cases where the normal workweek of the firm is five days.

CWW GUIDELINES

DOLE shall recognize CWW schemes adopted in accordance with the following:

1. The CWW scheme is undertaken as a result of an express and voluntary agreement of majority of the covered employees or their duly authorized representatives. This agreement may be expressed through collective bargaining or other legitimate workplace mechanisms of participation such as labor-management councils, employee assemblies or referanda.
2. In firms using substances, chemicals and processes or operating under conditions where there are airborne contaminants, human carcinogens or noise prolonged exposure to which may pose hazards to the employees’ health and safety, there must be a certification from an accredited health and safety organization or practitioner or from the firm’s safety committee that work beyond eight hours is within threshold limits or tolerable levels of exposure, as set in the OSHS.
3. The employer shall notify DOLE, through the Regional Office having jurisdiction over the workplace, of the adoption of the CWW scheme. The notice shall be in DOLE CWW Report Form attached to the DOLE Advisory.

Effects of compliant CWW scheme

A CWW scheme which complies with the foregoing conditions shall have the following effects:

1. Unless there is a more favorable practice existing in the firm, work beyond eight hours will not be compensable by overtime premium provided the total number of hours worked per day shall not exceed twelve (12) hours. In any case, any work performed beyond 12 hours a day or 48 hours a week shall be subject to overtime premium.
2. Consistent with Articles 85 of the Labor Code, employees under a CWW scheme are entitled to meal periods of not less than sixty (60) minutes. Nothing in the CWW guidelines shall impair the right of employees to rest days as well as to holiday pay, rest day pays or leaves in accordance with law or applicable collective bargaining agreement or company practice.
3. Adoption of the CWW scheme shall in no case result in diminution of existing benefits. Reversion to the normal eight-hour workday shall not constitute a diminution of benefits. The reversion shall be considered a legitimate exercise of management prerogative, provided that the employer shall give the employees prior notice of such reversion within a reasonable period of time.

Administration of CWW Scheme

The parties to the CWW scheme shall be primarily responsible for its administration. In case of differences of interpretation, the following shall be observed:

1. The differences shall be treated as grievances under the applicable grievance mechanism of the firm.
2. If there is no grievance mechanism or if this mechanism is inadequate, the grievance shall be referred to the Regional Office which shall conduct a training and assistance visit (TAV) pursuant to Section 3 of Department Order No. 57-04.
3. The purpose of the TAV is to ascertain, through the most practical and least litigious way possible, whether or not the scheme is the result of a voluntary agreement or is supported by the appropriate certification from an accredited safety and health organization or practitioner. Where appropriate, the TAV may include the conduct, as may be appropriate, of a referendum or work environment measurement (WEM) to determine actual work conditions.

To facilitate the resolution of grievances, employers are required to keep and maintain, as part of their records, the documentary requirements proving that the CWW scheme was voluntarily adopted and the certification that the scheme is consistent with OSHS.

4. In the absence of proof of voluntary agreement or safety and health certification, the employer shall pay the employees concerned any overtime pay that may be owing to them as if the CWW scheme did not exist. If it turns out that work beyond eight hours is not consistent with OSHS, the parties shall immediately revert to a normal eight-hour workday.

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Illustration:

Company Y, based in NCR, has a workweek of Monday to Saturday and working hours of 8:00 a.m. to 5:00 p.m. The management has decided to adopt a compressed workweek which was approved by the DOLE.

      With the CWW, Company Y makes Saturday as non-working day. Instead, the 8 hours for such day were distributed evenly among Monday-Friday workdays for a total of 1.6 hours per day (8 hours / 5 days = 1.6 hours/day). Thus, each workday became a total of 9.6 hours (8 hours + 1.6 hours/day). Hence, the CWW schedule is 8:00 a.m. to 6:36 p.m.

      If employee X, who is paid minimum wage in NCR, works until until 7:36 p.m. every Tuesday, what would his pay look like without CWW and with CWW?

Without CWW:

Work from 8:00 a.m. to 5:00 p.m.                   PhP537.00

Work from 5:01 p.m. to 7:36 p.m.                   PhP134.25

TOTAL PAY                                             PhP671.25

The hourly rate of PhP537.00 is PhP67.13, rounded off. Overtime work grants him an additional 25% of the hourly rate. X worked for one hour and 36 minutes. The hourly OT rate is PhP83.90 (PhP67.125 x 125%). X’s OT work for 1.6 hours should be paid PhP134.25.

With CWW:

Work from 8:00 a.m. to 5:00 p.m.                   PhP537.00

Work from 5:01 p.m. to 7:36 p.m.                   PhP107.41

TOTAL PAY                                             PhP644.41

The work from 5:01 p.m. to 7:36 p.m. is not paid overtime considering that it is regular workday on Saturday that is compressed across the five working days (Monday to Friday).