The implementation of the ₱85 daily minimum wage increase in the National Capital Region has been placed on hold following orders issued by the Pasig Regional Trial Court (RTC). For employers, the immediate concern is not simply whether the wage increase will ultimately be upheld. The more practical concern is how payroll should be handled while the legal challenge remains unresolved.
Wage Order No. NCR-27 provides for a total ₱85 daily wage increase to be implemented in two tranches. The first ₱60 increase took effect on 25 July 2026, while the remaining ₱25 increase is scheduled to take effect on 20 January 2027. Upon full implementation, the applicable minimum wage rates in the NCR will reflect the total ₱85 increase.
Before the first tranche could take effect, however, the Pasig RTC issued interim orders suspending its implementation. On July 24, its Executive Judge issued a status quo ante order maintaining the wage rates in effect before Wage Order No. NCR-27 while the petition was being raffled. On July 30, Branch 152 of the Pasig RTC subsequently issued a temporary restraining order (TRO) against implementation of the wage order.
The TRO was later followed by a writ of preliminary injunction issued on 13 August 2026, extending the suspension while the underlying case remains pending. The Department of Labor and Employment has since sought the lifting of the injunction.
For employers, this creates an unusual payroll situation: a wage increase that had already been made effective under the wage order is now subject to judicial restraint.
What Does the TRO Mean for Employers?
A TRO is an interim judicial remedy. It does not finally determine whether Wage Order No. NCR-27 is valid.
Its immediate effect, however, is significant. By restraining implementation of the wage order, the Court has temporarily prevented the wage order from being enforced while the application for more permanent injunctive relief and the underlying petition are being resolved.
The same principle applies to the preliminary injunction that followed. The injunction does not amount to a final declaration that the wage order is invalid. It preserves the situation while the Court considers the merits of the dispute.
For an employer processing payroll while the injunction remains effective, the practical issue is the wage rate to be applied going forward. The injunction restrains implementation of Wage Order No. NCR-27, but it does not prevent an employer from voluntarily paying a wage higher than the applicable minimum. An employer may therefore maintain the ₱755 rate notwithstanding the injunction, or apply the wage rate that was in effect before Wage Order No. NCR-27. The employer, however, should be clear about why it is paying the particular rate. A statutory minimum wage and an employer’s voluntary compensation decision do not necessarily have the same legal basis.
Employers that have not yet Implemented the Increase
For an employer that had not yet implemented the ₱60 increase when the Court’s orders took effect, the immediate payroll treatment is comparatively straightforward.
While the injunction remains operative, the employer may continue paying the wage rate that was in effect before Wage Order No. NCR-27. Alternatively, it may voluntarily pay the higher rate prescribed by the wage order. If the employer maintains the previous wage rate, it should nevertheless preserve a copy of Wage Order No. NCR-27 and record the difference between the rate actually paid and the rate prescribed by the wage order.
For example, if the applicable pre-Wage Order No. NCR-27 minimum wage was ₱695 and the first tranche would have increased it to ₱755, the employer may continue paying ₱695 while the injunction is effective. It may also choose to pay ₱755 despite the injunction.
The important point is that the employer should know which basis supports the rate it has chosen to pay.
If the higher rate is maintained voluntarily, the employer should document that decision. If the lower rate is used because implementation of the wage order is presently restrained, the employer should likewise retain the relevant court order and payroll instruction.
Employers that Already Implemented the ₱60 Increase
The more difficult situation concerns an employer that already implemented the wage order on or around 25 July 2026 and paid employees at the increased rate before the TRO took effect. Suppose an employer increased the daily wage from ₱695 to ₱755 beginning 25 July 2026. The employer then learns that implementation of the wage order has been restrained.
The employer now has two separate concerns.
First, what wage should it pay going forward while the injunction remains effective?
Second, what should it do with the ₱60-per-day increase that it has already paid?
The two questions should not be treated as though they have the same answer.
For future payroll, the employer may decide whether to maintain the ₱755 rate or return to the wage rate that was in effect before Wage Order No. NCR-27, taking into account the basis upon which the higher rate was granted. For amounts already paid, however, the employer should not automatically treat the ₱60 difference as an overpayment. The payment was made at a time when the employer understood that Wage Order No. NCR-27 had become effective. The subsequent issuance of a TRO does not, by itself, establish that every amount paid under the wage order immediately became a debt owed by the employee. The employer should therefore preserve the payroll records showing the higher rate and the reason it was implemented.
Can the Employer Recover the ₱60 Already Paid?
This is where employers should exercise particular caution. An employer may be tempted to calculate the amount paid in excess of the rate presently maintained by the court and deduct that amount from the employee’s next payroll.
That should not be done automatically.
Article 113 of the Labor Code restricts deductions from employees’ wages to specified circumstances. The rule generally prohibits an employer from making deductions on its own behalf unless the deduction falls within an authorized category. Consequently, an employer that paid ₱755 instead of ₱695 cannot simply insert a “₱60 overpayment” deduction into the employee’s next payslip merely because a TRO was subsequently issued. Doing so could create a separate wage-deduction issue.
The better approach while the injunction remains pending is to leave the amounts already paid undisturbed unless and until there is a legally sufficient basis for recovery.
What if the Employer Wants to Recover the Money Now?
An employer that has already paid the ₱60 increase may nevertheless decide that it wants to recover the amount while the injunction remains in force. In that situation, the employer should not recover the amount by simply deducting it from the employee’s succeeding wages.
The employer should first determine and document that the payment was made solely pursuant to Wage Order No. NCR-27 and that, based on the operative court order, the amount paid exceeds the wage presently applicable to the employee. Once the amount has been established, the employer may notify the employee in writing of the alleged overpayment and request voluntary reimbursement. The notice should identify the payroll periods involved, the wage rate actually paid, the rate that the employer considers applicable, and the resulting amount claimed.
If the employee agrees to reimburse the amount, the employer should obtain a written acknowledgment and repayment agreement setting out the amount to be returned and the manner and schedule of payment. The employer should not simply take the amount from the employee’s next paycheck unless the proposed deduction is independently authorized under applicable law and the necessary requirements have been satisfied. Article 113 of the Labor Code restricts deductions from wages, while Article 116 prohibits withholding wages without the employee’s consent.
If the employee does not agree to reimburse the amount, the employer should not force the recovery through payroll. It should instead evaluate whether it has a legally enforceable claim for restitution or recovery of the alleged overpayment and, if appropriate, pursue the proper legal remedy.
There is an additional reason for employers to proceed carefully in the present situation. The legal status of Wage Order No. NCR-27 remains unresolved. If the wage order is ultimately upheld and its original effectivity date is given effect, an amount that the employer presently regards as an overpayment may turn out to have been properly payable.
Accordingly, an employer may seek voluntary recovery now, but it should not unilaterally convert the alleged overpayment into a payroll deduction simply because the wage order’s implementation has been restrained.
What Should the Employer Do with the Amount Already Paid?
For most employers, the prudent interim approach is:
Do not deduct it from the employee’s next payroll merely because of the TRO.
Instead:
1. Record the amount already paid.
2. Identify the payroll periods affected.
3. Document that the increase was implemented pursuant to Wage Order No. NCR-27.
4. Separately calculate the amount that would have been payable under the wage rate presently maintained by the court.
5. Do not treat the resulting difference as an immediately collectible employee debt.
6. Obtain legal advice before making any deduction or commencing a recovery process.
This allows the employer to preserve its position without taking an aggressive step that could itself result in a wage claim. If the employer ultimately has a legally enforceable right to recover the amount, the appropriate method of recovery can then be determined.
What Should Payroll Do While the Injunction Remains Effective?
Employers should separate current payroll from historical payroll.
For current payroll, the payroll system should reflect the wage rate the employer has elected to apply, provided that the rate complies with the operative court order and applicable labor standards. For historical payroll, the employer should preserve the actual amounts paid under Wage Order No. NCR-27.
A simple internal schedule may therefore contain:
1. Employee name;
2. Applicable pre-NCR-27 wage rate;
3. NCR-27 wage rate;
4. Actual wage paid;
5. Dates covered;
6. Number of days worked;
7. Overtime hours;
8. Holiday and premium-pay computations; and
9. Resulting difference.
The purpose is not to assume that the difference is presently payable or recoverable. It is to ensure that the employer can accurately determine the consequences of a later court or government directive. This becomes especially important because a change in the minimum wage can affect more than the employee’s basic daily wage. Depending on the circumstances, it may also affect the computation of overtime pay, holiday pay, premium pay, and other wage-based benefits. It also prevents the common problem of having to reconstruct payroll several months later because the company changed its records every time a new court development occurred.
What If the Employer Wants to Return to the Previous Rate?
An employer that has already implemented the ₱60 increase should likewise avoid simply reducing employees’ wages without reviewing the basis on which the increase was given.
If the increase was purely an implementation of Wage Order No. NCR-27 and the employer has not otherwise undertaken to maintain the higher rate, the current injunction may provide the basis for adjusting future payroll to the rate presently applicable under the operative court order. But if the employer separately announced the increase as a permanent salary adjustment, incorporated it into employment contracts, or otherwise created an enforceable company practice, the analysis may be different. Before reducing the rate, therefore, the employer should review the actual communication or document through which the increase was granted.
What Employers Should Do Now
While the injunction remains in force, employers covered by Wage Order No. NCR-27 should take the following steps:
1. Decide what wage rate to apply going forward. The injunction does not prevent an employer from voluntarily paying above the applicable minimum. If the employer maintains the ₱755 rate, document that decision. If it returns to the previous rate, document the legal and business basis for doing so.
2. If the ₱60 increase has already been paid, do not automatically deduct it from future wages. The TRO does not by itself establish an immediately recoverable employee debt, and wage deductions are subject to Article 113 of the Labor Code.
3. Determine why the increase was paid. Review the wage order, payroll instructions, employee notices, contracts, compensation policies, and other documents.
4. Preserve the amount already paid. Keep a separate record of the increased wage and the corresponding payroll periods.
5. Prepare a wage-differential schedule. Calculate both the amount actually paid and the amount that would have been paid under the wage order and under the wage rate presently being applied by the employer.
6. If recovery is desired, make a written demand rather than a unilateral payroll deduction. Give the employee the details of the alleged overpayment and request reimbursement. If the employee agrees, document the repayment arrangement in writing.
7. If the employee refuses to reimburse the amount, do not force recovery through payroll. Determine with counsel whether a separate legal action or other remedy is available.
8. If reducing the wage going forward, review how the increase was originally communicated. A statutory implementation and a voluntary salary increase may have different consequences.
9. Preserve all court and government issuances. The employer should be able to establish exactly which order governed each payroll period.
10. Have HR and payroll coordinate with legal. One person should be responsible for monitoring the case and communicating any change in the applicable wage rate to payroll.
Final Word
The Pasig RTC’s orders have created an unusual situation for employers covered by Wage Order No. NCR-27. The wage order prescribed an increase beginning 25 July 2026, but its implementation was subsequently restrained by the Court while the legal challenge proceeds. The injunction itself has also become the subject of controversy, including questions concerning the extent of judicial authority over the wage-fixing process.
For employers that have not yet implemented the increase, the immediate task is to determine the wage rate they will apply while the injunction remains effective and to ensure that the chosen rate complies with the prevailing legal requirements.
For employers that already implemented and paid the increase, the approach should be more cautious. The employer should document what was paid, determine the basis for the payment, and avoid automatically treating the ₱60 difference as an employee debt.
Most importantly, an employer should not simply deduct the alleged overpayment from the employee’s next paycheck while the legal position remains unsettled. Article 113 of the Labor Code places limits on wage deductions, and Article 116 prohibits the withholding of wages without the worker’s consent.
If the employer wants to recover the amount now, it should make a written demand for reimbursement and, if the employee agrees, document the repayment arrangement. If the employee does not agree, the employer should evaluate whether it has a separate legally enforceable claim rather than using payroll deductions to recover the amount.
At the same time, the employer should remember that the injunction does not permanently cancel Wage Order No. NCR-27. Its implementation is presently restrained, but the underlying legal controversy remains unresolved. The employer should therefore preserve sufficient payroll records to address whatever treatment is ultimately required.
For businesses with a substantial minimum-wage workforce, this may require more administrative work in the short term. It is nevertheless preferable to creating a second labor dispute through an improper wage deduction while the first dispute is still being litigated.
Kristoffer Monico S. Ng is a Philippine lawyer whose practice focuses on labor and employment, corporate and commercial law, tax, energy law, and civil and criminal litigation. He advises businesses and individuals on legal risk, regulatory compliance, taxation, dispute resolution, and complex commercial matters, representing clients before courts, quasi-judicial agencies, and administrative bodies, while also providing strategic legal advice outside the courtroom. He also regularly writes on developments in Philippine jurisprudence and regulation, providing practical insights on legal issues affecting businesses and individuals.
If you require legal advice concerning labor and employment, wage and compensation compliance, or any other legal matter within these practice areas, you may reach him through e-mail at nico@nlaw.ph to discuss your particular circumstances.
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