Minimum wage exemption offered to selected MSMEs in the Philippines

Only micro and sole proprietorship businesses in the Philippines that meet certain criteria can be exempted from implementing the minimum wage.
By: | April 20, 2023

The Department of Labour and Employment (DOLE) in the Philippines has clarified that not all micro, small, and medium enterprises (MSMEs) are exempted from implementing the minimum wage.

For instance, in Negros Oriental, a province in the Philippines, there are approximately 9,000 registered MSMEs, with about 90% classified as small enterprises and with the Barangay Micro Business Establishment (BMBE) certification. According to Ma. Teresa Tanquiamco, Provincial Director of DOLE-Negros Oriental, s132 requests for assistance in settling the underpayment of wages and non-payment of benefits have been received.

Jade Bato, Public Information Officer of the Department of Trade and Industry (DTI)-Negros Oriental, explained that MSMEs are classified into three categories, namely micro-enterprise, small enterprise, and medium enterprise, based on their assets. She added that MSMEs must have the BMBE certification from the DTI and another certification for income tax exemption from the Bureau of Internal Revenue to qualify for exemption from the minimum wage.

MSMEs considered by the DTI must have up to PHP100 million (US$1.77 million) in assets.

READ: Labour groups in the Philippines petition for wage hike

In addition, Bato clarified that micro-businesses or sole proprietorships are those with assets below PHP3 million (US$53,184). On the other hand, small businesses are those with assets not exceeding PHP50 million (US$886,407), while medium businesses are those with up to PHP100 million (US$1.77 million) in assets. Only businesses classified as micro or sole proprietorship qualified under BMBE are excluded from the minimum wage, she stressed.

The BMBE certification is valid for two years, and upon expiry, an inspection or validation will be conducted to determine if the business still qualifies for renewal, especially if the business has expanded its assets, reported PNA.