Benito is the owner of an eponymous clothing brand that is a top seller. He employs a number of male and female models who wear Benito’s clothes in promotional shoots and videos. His deal with the models is that Benito will pay them with 3 sets of free clothes per week. Is this arrangement allowed? (2%)
Suggested answer only. Not an official answer and not legal advice.
No, the arrangement is not allowed.
Under Article 102 of the Labor Code, no employer shall pay the wages of an employee by means of promissory notes, vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even when expressly requested by the employee.
Here, the models are Benito's employees. Paying them with three sets of free clothes per week constitutes payment in kind rather than in legal tender, which is prohibited under the law regardless of the value of the clothes or any agreement between the parties.
Therefore, Benito's payment scheme is illegal, as employee wages must be paid strictly in legal tender.
This is not an official scoring system and carries no weight with the Supreme Court or any bar review provider. It measures how much of the suggested answer's wording your response covers, not whether your reasoning is correct. For practice only.
Quick check
Under Article 102 of the Labor Code, how must an employer pay the wages of an employee?
Article 102 of the Labor Code mandates that employee wages must be paid strictly in legal tender.
Is an agreement to pay employee wages in clothing or merchandise legally valid if the employee consents?
The requirement to pay wages in legal tender is mandatory and cannot be waived by agreement or employee consent.
Which of the following forms of wage payment is explicitly prohibited under Article 102 of the Labor Code?
Article 102 explicitly prohibits paying wages through tokens, chits, vouchers, or non-cash merchandise.
What is the underlying public policy behind requiring employers to pay wages strictly in legal tender?
The legal tender rule protects workers by ensuring they receive negotiable currency for their living needs.
What is the legal status of a contract where models agree to receive free clothes instead of monetary wages?
Stipulations substituting legal tender wages with physical goods are void for violating public policy and labor standards.
Learn more about these topics
1. Legal Tender Requirement
Under Article 102 of the Labor Code, employers are strictly mandated to pay employee wages in legal tender. The law explicitly prohibits paying wages by means of promissory notes, vouchers, coupons, tokens, tickets, chits, or any object other than legal tender. This statutory requirement is absolute and applies even if the employee expressly requests or consents to alternative arrangements. The primary purpose of this mandate is to protect workers from exploitation and ensure that they receive negotiable legal currency that can be freely used for their daily subsistence and living expenses.
2. Payment in Kind
Payment of basic wages in the form of goods, clothes, merchandise, or company products constitutes illegal payment in kind under Philippine labor law. While an employer may provide certain facilities or supplements under specific statutory conditions, such provisions cannot entirely replace the payment of minimum wages in legal tender. Agreement between an employer and employees to substitute cash wages with physical goods is null and void for violating mandatory labor standards. Employers who distribute products in lieu of monetary wages commit a direct violation of statutory wage protection provisions.
3. Wage Protection Policy
Statutory provisions governing the payment of wages are imbued with public interest and reflect fundamental social justice policy. Wage protection laws ensure that workers receive their full earned compensation directly in cash, preventing employers from forcing employees to accept unwanted commodities or company inventory. Any contract, agreement, or workplace practice that attempts to bypass the legal tender requirement is contrary to law and public policy. Labor tribunals will invalidate non-cash wage arrangements regardless of the financial value or retail price of the goods provided to the employees.