A bill has been introduced in the Philippine parliament to curb the practice of private and public sector employers delaying salary payments without justification, in a bid to tackle high levels of personal debt in the country.

Philippine congressman Manuel Luis T Lopez submitted House Bill 6537 on 3 October, citing the 2016 Manulife Investor Sentiment Index that suggested many citizens are saddled with serious personal debts – from US$613.50 on average for under-35s, to almost $3,000 among the over-50s. These debts are large given the World Bank’s cited national income per capita of $3,580 in 2016.

If passed, the bill would see payroll masters fined PHP100,000 ($1,933) if they did not pay salaries when funds have been made available for the purpose. The fine would be doubled if the payroll master failed to inform the employer of the absence of funds.

The employer would be liable, along with the payroll master, for failure to pay wages without any justifiable reason and would be fined PHP500,000. For the first offence, business operations would be suspended for 30 days.

For the second offence, the employer would be required to pay PHP1 million and the business would be suspended for 90 days. For the third offence, the fine would be PHP3 million and would result in permanent closure of the business.

House Bill 6537 comes six months after immigration officers across the Philippines wore red armbands in protest at delayed salaries and non-payment of overtime pay from January 2017.

Filipino internet forums carry countless complaints by public school teachers who claim that delayed salaries have made them regular clients of loan sharks, with their ATM cards used as instant collateral for various loans.

The Philippines’ large overseas workforce is also suffering. The worst of such cases have been reported in Middle Eastern and Asian countries, where employees have waited up to six months for employers to pay, and in some cases were not paid at all.

“Late wage payment, and in some cases outright wage theft, is a problem in many countries in Asia, resulting primarily from an imbalance of power between employee and employer in favour of the latter,” sais Kishan Golyan, market intelligence specialist, Asia Pacific at The Adecco Group, in an interview with People Management.

“In Singapore, for example, many cases are reported in the construction sector that has a large population of migrant workers, but sometimes the issue also persists due to a lack of appropriate HR practices,” he added.

Golyan believes the problem can be eradicated if employers adopt the right HR tools and processes, such as effective payroll software, and an ethical management mindset.

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