Wage Theft: An Ethical Challenge in BPO Companies in the Philippines

 JENNYVIEVE ABUCAY

Divine Word College of Laoag

Abstract

Business Process Outsourcing (BPO) is one of the major contributors to the economy and is considered the largest employer in the Philippines. In this industry, the issue of ethical challenges is still current and is linked to the topic of wage theft. As employees, it is expected that they receive their due compensation for their work; not only that, they should receive it on top form—and unfortunately, not all receive these on time. The ethical issues involving unpaid overtime, wage discrimination, misclassification, and unpaid wages continue to be faced, even with the expansion of the industry. This article will provide a discussion and the Impact of wage theft and labor law violations, an overview of the Philippine laws and policies with regard to the matter, and a discussion for the solutions for each issue. This is to ensure fair compensation for employees and for their well-being, and ethical business practices.

Keywords: wage theft, BPO industry, ethical challenge, labor ethics, labor law, Philippines laws and policies

Introduction

In the Philippines, BPO is considered the key factor for economic development as it provides job opportunities for customer service agents, IT professionals, financial staff, and back-office personnel to various clients around the world. However, despite these opportunities, BPO still experiences issues associated with labor standards, particularly with respect to wage thefts. This is a form of non-compliance with laws, apart from moral dilemmas arising from employee financial security, welfare, and employee trust and confidence in the management.

 “Wage theft” is a general term that encompasses a variety of illegal activities by employers aimed at denying employees their fair wages or earnings. It encompasses payment of less than the set minimum wage rates, failure to pay employees for their services, fringe benefit deductions not authorized or mandated by the laws of the land or country for services such as the provision of uniforms, tools, or equipment. Additionally, failure to pay employees for working over the usual eight hours a day or on rest days/holidays, and treating usual employees as contractual or “independent contractors” (Respicio, 2025).

Ethical Challenges of Wage Theft in BPO Companies

 

Unpaid or Underpaid Overtime and Night Differential. BPO workers usually go beyond their eight-hour work schedule due to international clients’ time constraints. Based on the PH Labor Law, an additional 25% rate is applicable for OT, while night differentials require a 10% premium (LaborLaw.ph, 2023; RespiCio, 2023a). Against this legal provision, many claim unpaid OT, off-clock work, or improper documentation (Delapena, 2021).

Misclassification and Contractual Exploitation. Some workers are also misclassified as contractual or non-standard employees to bypass legal protections. Misclassification covers benefits such as SSS, PhilHealth, and Pag-IBIG contributions, putting workers at risk (RespiCio, 2023b).

Low Base Pay and Heavy Reliance on Incentives. Entry-level jobs usually have a low base pay, and thus, many employees must rely on incentives to provide for their needs. However, if an incentive is cut or delayed, workers face instability in paying their bills on time and are treated as receiving unfair pay. (Philstar, 2023).

Lack of Worker Awareness or understanding of working rights. There is a likelihood that the worker does not understand the concept of overtime pay or night differential pay. This creates a challenge for the worker because they cannot claim the benefits accordingly (Delapena, 2021).

Job Insecurity and Weak Unionization. There is a lack of job security, contract ambiguity, and possibilities of unionization among BPO employees. The lack of union representation among BPO employees affects their ability to resist unfair practices (Philstar, 2023).

Psychological and Social Impacts. Poor compensation and wage theft result in stress, anxiety, burnout, and low worker morale. This makes employees feel taken advantage of or underappreciated at work (RespiCio, 2023c).

Impacts of Wage Theft

Wage theft may have implications for the mental state of the workforce. It may lead to stress and anxiety among the workforce. Secondly, the financial condition may result in instability in finances. Lack of finances may lead to expenditure on debts. Furthermore, the sector in which it will hit may experience a lack of trust and a lack of loyalty.

Addressing Wage Theft in BPO Companies

Wage theft remedy and inequalities in the BPO industry will need a different strategy that can end with the enforcement of the law, companies taking responsibility, employee empowerment, and a holistic approach for the industry.

Strengthening Legal Enforcement

More regular and surprise checks should be carried out by the Department of Labor and Employment (DOLE) to ensure that BPO companies are conforming with Labor Laws, specifically those related to overtime, night differential premium, and minimum wage requirements (RespiCio, 2023c). Furthermore, what can strengthen the preventive measures against Wage Theft is if Congress passes and implements its Wage Theft Prevention Act (Senate Bill No. 81), that will hold violators criminally liable (Senate of the Philippines, 2023). Aside from that, it should simplify its complaint process in which it should set up complaint mechanisms where employees can file their complaints anonymously.

Transparent and Fair Compensation Structures

BPO firms must apply clear salary scales in must develop transparent compensation structures. These structures shall define the base salary, bonus, allowance, and overtime compensation. The compensation statement shall break down all compensation components. Moreover, it is necessary to keep an accurate timekeeping system, and there is a need to invest in good timekeeping technology to track their time, including night shifts, to avoid off-the-clock work.

Employee Education and Empowerment

BPO firms must implement awareness programs. Organized workshops and orientations should be done to promote awareness among employees about their rights to work, calculation of pay, overtime hours, night differentials, and legal entitlements (Delapena, 2021). Likewise, unionization and collective bargaining must be emphasized to support the establishment of employee unions or employee councils to represent them collectively to compensate for the lack of equal representation between employees and firm administrators (Philstar, 2023). Lastly, legal support should be made available to work with organizations championing employee rights to assist employees during the filing of complaints or claims.

Corporate Social Responsibility and Ethical Practices

Organizations should embrace humane values and include fairness in compensation packages, timely payment of salaries, and respect for the rights of employees. Finally, feedback mechanisms for employees are also valuable, where regular forums or surveys enable management to discern any possible injustices that exist within the compensation packages. This should be complemented by well-structured reward packages that do not financially exploit employees.

Industry-wide Reforms

BPO organizations and the government can set minimum pay rates or be required to adhere to minimum pay guidelines. Additionally, organizations will be required to make annual reports showing their commitment to labor laws. This will be feasible by ensuring the technology is implemented in organizations, which involves software that monitors payroll management systems to reduce wage theft. This will ensure organizations do not engage in wage theft. The solution will be technology-based.

Employee Support and Wellbeing Programs

Conducting Financial Literacy Workshops is also highly necessary since educating employees on budgeting and managing their benefits not only helps them become aware of pay gaps but also ensures that they plan for their financial stability. Furthermore, mental health services also need to be required to tackle mental concerns with counseling sessions for dealing with work-related stress of pay gaps and wage theft.

Relevant Policies and Republic Acts for Wage Protection

·         Labor Code of the Philippines (Presidential Decree No. 442) – Governs minimum wage, overtime, night differential, and prohibits unauthorized deductions (International Labour Organization, 2022).

·         Republic Act 6727 – Wage Rationalization Act – Establishes regional minimum wages (LawPhil, 1989).

·         Republic Act No. 8188 – Imposes fines and double indemnity for non-compliance with wage laws (LawPhil, 1996).

·         Senate Bill No. 81 – Wage Theft Prevention Act – Proposed legislation criminalizing wage theft (Senate of the Philippines, 2023).

·         DOLE Enforcement – Conducts inspections and imposes penalties for non-compliance with wage laws (RespiCio, 2023c).

Conclusion:

Wage theft and salary inequality are issues that raise both ethical and practical concerns for the BPO industry in the Philippines. These issues affect the issues of financial and psychological stability and trust in the work setting. These issues can be dealt with by implementing policies and procedures for payments and following proper business practices while also implementing policies and procedures for employee rights and well-being.

In addition to that, having a positive attitude and mindset with a willingness to learn and adapt will enable an individual to be a part of a comfortable and healthy work setting and also a part of an ethical and sustainable business setting.

References:

Delapena, E. (2021). The invisible overtime: Investigating workplace abuse in Davao call centers. Medium. https://medium.com/@esldelapena/the-invisible-overtime-investigating-workplace-abuse-in-davao-call-centers-3b63acb75335

International Labour Organization. (2022). Labor Code of the Philippines (P.D. No. 442). https://natlex.ilo.org/dyn/natlex2/natlex2/files/download/15242/PHL15242%202022.pdf

LaborLaw.ph. (2023). Night shift differential pay. https://laborlaw.ph/night-shift-differential-pay/ LaborLaw.ph. (2023). Overtime pay. https://laborlaw.ph/overtime-pay/

LawPhil. (1989). Republic Act No. 6727 – Wage Rationalization Act. https://lawphil.net/statutes/repacts/ra1989/ra_6727_1989.html

LawPhil. (1996). Republic Act No. 8188 – Double indemnity & penalties for wage violations. https://lawphil.net/statutes/repacts/ra1996/ra_8188_1996.html

Philstar. (2023, May 21). A bill seeking fair labor practices, job security for BPO workers was filed. https://www.philstar.com/headlines/2023/05/21/2267487/bill-seeking-fair-labor-practices-job-security-bpo-workers-filed/amp/

RespiCio. (2023a). Legality of mandatory overtime and sanctions in BPO companies in the Philippines.

https://www.respicio.ph/commentaries/legality-of-mandatory-overtime-and-sanctions-in-bpo-companies-in-the-philippines

RespiCio. (2023b). Addressing non-payment of statutory benefits and employee misclassification in the BPO industry. https://www.respicio.ph/commentaries/addressing-non-payment-of-statutory-benefits-and-employee-misclassification-in-the-bpo-industry

RespiCio. (2023c). Penalties for employers' failure to pay wages. https://www.respicio.ph/commentaries/penalties-for-employers-failure-to-pay-wages

Senate of the Philippines. (2023). Senate Bill No. 81 – Wage Theft Prevention Act. https://web.senate.gov.ph/lisdata/4655542559%21.pdf

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Is it okay to unplug? Work-life balance and setting boundaries taking work calls during planned vacation leave

 KEVIN ASLEY M. LAGMAY

DIVINE WORD COLLEGE OF LAOAG

 Abstract

 

The central theme of this article is to give insights of whether employees should disconnect from work-related communications when they are going on scheduled leave. This article also suggests work-life balance frameworks that will help individuals and organizations in prioritizing well-being together with productivity. The article will also cite laws and regulations that were adopted by the other nation, such as “The Right to Disconnect” by the French Government and “The Worker's Rest Law” proposed by Sen. Francis Tolentino to the Senate of the Philippines, which protects the rights of workers to personal time and promotes their welfare 

Keywords

Work-Life Balance, Vacation leave, boundaries, work calls, The Worker's Rest Law, The Right to Disconnect, Utilitarian Ethics, Deontological Ethics, Virtue Ethics, Resilience Framework, The Work-Life Harmony Framework, Employee Value Proposition Framework.

Introduction 

Due to the advances of technology, employees are always ready at the beck and call of the employer. The overreach of the control of power exercised by the employer is seen in the use of the phone and email. The distinction between working hours and personal hours has become more evident, especially in the era of the pandemic until now (Sen.Tolentino, 2022). The ethical question of whether employees should unplug from work-related communication during vacation leave reflects a deeper tension between organizational efficiency and respect for employee autonomy and well-being.

The Role of Utilitarian, Deontological, and Virtue Ethics on Work-Life Balance

Advances in digital communication technologies have blurred temporal boundaries, transforming constant responsiveness into an implicit workplace norm rather than an explicit requirement (Mazmanian, Orlikowski, & Yates, 2013). However, vacation leave is ethically significant, as it is intended to facilitate psychological recovery, preserve work–life balance, and prevent burnout. Research in organizational behavior indicates that uninterrupted periods of rest are essential for cognitive functioning, emotional regulation, and sustained productivity (Sonnentag & Fritz, 2007). From a utilitarian perspective, respecting vacation boundaries maximizes long-term collective benefit by maintaining a healthier, more engaged workforce, even if short-term responsiveness is occasionally sacrificed.

From a deontological standpoint, ethical concerns arise when organizations violate the moral duty of honoring formally approved leave. Once vacation leave is approved, employees have fulfilled their professional obligations within the agreed contractual framework, and employers are correspondingly obligated to respect that boundary (Kant, 1785/1993). Expecting availability during leave—whether explicitly or implicitly—constitutes a breach of fairness and undermines trust.

Moreover, virtue ethics emphasizes the character of organizations and leaders, highlighting values such as respect, moderation, and empathy. Ethical leadership requires modeling appropriate boundary-setting behavior, as managerial actions often shape organizational norms more powerfully than written policies (Brown & Treviño, 2006). Cultures that reward constant availability risk normalizing overwork and eroding moral responsibility toward employee well-being.

Silent Pressures Experienced by Junior Staff

The ethical complexity of unplugging is further intensified by organizational power asymmetries. Employees, particularly those in junior roles, may experience silent pressure to remain reachable due to fears of negative evaluations, reduced career prospects, or job insecurity, even in the absence of explicit instructions (Pfeffer, 2018).  Silent pressure when on leave involves fear of career impact (sign of incompetence), workload anxiety, and cultural norms that discourage taking true breaks. Such conditions undermine genuine autonomy, rendering “voluntary” availability ethically problematic. While certain roles may legitimately require limited availability during emergencies, ethical justification depends on transparent expectations, clearly defined exceptions, equitable distribution of on-call responsibilities, and appropriate compensation or recovery time.

Addressing Issues on Work-Life Balance

Work-life balance frameworks help individuals and organizations focus on prioritizing well-being together with productivity. Typical methods and strategies highlight boundaries, flexibility, and resilience to maintain harmony between work-related and personal demands.

The Resilience Framework

The Resilience Framework groups behaviors/ tasks/ responsibilities into energy and life-enhancing (e.g., decision-making power, recognition, meaningful work) or energy and life-depleting (e.g., excessive workload, conflict, toxic interactions). Although each individual faces their own challenges with respect to work-life balance, the bottom-line secret for better work-life balance is that it is important to give higher weight and influence to enhancers and lower weight and influence to the depleters (Ahuja, Chudoba, Kacmar, McKnight, & George, 2007).

The Work-life Harmony Framework

Work-life harmony identifies the interrelationship between professional and personal interests. Instead of balance, it offers a quality in the interactions between work and life. It means that responsibilities and activities are aligned in support of each other, generating a rhythm that flows with changing daily demands. For instance, a person may attend a family function in the day and work at night-that could be harmony because both spheres have been attended to in a manner that is natural and fulfilling (The School of Positive Psychology, 2025).

Effective harmony embraces flexible boundaries that protect what matters most-undisturbed family time or focused work hours-while allowing fluid transitions if priorities shift. Work-life harmony is not about erasing all boundaries between work and personal life; rather, it is about crafting boundaries that adapt to individual needs and align with the unique interplay of responsibilities and values (The School of Positive Psychology, 2025).

Employee Value Proposition (EVP)Framework

Employee value proposition refers to the unique value that an employer brings to the market of your employees in exchange for their skills, experience, and loyalty to your company. It encompasses aspects of remuneration packages, rewards programs, and career growth opportunities in terms of work-life balance, in addition to organizational values (Verlinden).

Laws and Regulations Promoting Work-Life Balance

Emerging global norms, including the “right to disconnect” regulations adopted in several jurisdictions, reflect growing recognition that unchecked connectivity is neither humane nor sustainable (Eurofound, 2020). Ultimately, respecting employees’ right to unplug during vacation leave affirms human dignity, reinforces ethical integrity, and supports sustainable organizational performance.

In the Philippines, A bill seeking to make it illegal for an employer to require employees to report for work purposes during employees’ rest hours has been filed in the Senate. Senator Francis Tolentino also submitted Senate Bill No. 2475, also known as the proposed Workers' Rest Law, whose aim is to safeguard the rest hours of workers and likewise impose penalties on erring employers.

If it becomes law, employers will be prohibited from:

●      requiring the employee to work.

●      requiring the employee to be on duty, to travel, or be at a prescribed place for work or work-related activities, such as attending seminars, meetings, team-building, and other similar activities.

●      contacting the employee for work and work-related purposes through phone, e-mail, message, and other means of communication, unless it is for the purpose of notifying the employee of the necessity of rendering emergency or urgent work as provided under Article 89 and Article 92 of the Labor Code of the Philippines. Employees are not be penalized for not opening or answering communications received during rest hours.

Conclusion

The expectation that employees remain accessible during vacation leave reflects a systemic tension between managerial control and the statutory right of workers to rest. In the Philippine context, this issue must be viewed not only as an ethical concern but also as a matter of compliance with labor standards designed to protect employee welfare. Vacation leave and rest periods are not discretionary privileges; they are mechanisms intended to safeguard workers’ physical, mental, and social well-being. When employers intrude upon these periods through work-related communications, they effectively undermine the purpose of approved leave and weaken the protections afforded under labor policy.

Ethically, such practices are difficult to justify. From a utilitarian standpoint, short-term operational convenience gained by contacting employees on leave is outweighed by the long-term consequences of fatigue, disengagement, and reduced productivity. From a deontological perspective, once leave has been formally approved, employers have a corresponding duty to respect that agreement. Implicit expectations of availability, particularly in hierarchical organizational settings, amount to unfair labor practice by exploiting power asymmetries and eroding the employee’s ability to exercise genuine choice. Virtue ethics further challenges managers to demonstrate prudence, respect, and accountability by upholding boundaries that promote humane working conditions.

Work–life balance frameworks reinforce these ethical obligations. The Resilience Framework clearly identifies uninterrupted rest as an energy-enhancing factor essential to sustained performance, while work intrusion during leave constitutes an energy-depleting practice that increases burnout risk. Similarly, the Work–Life Harmony Framework emphasizes that flexibility must operate within protective boundaries; harmony cannot exist when employees feel compelled to remain responsive during legally recognized rest periods. From an Employee Value Proposition perspective, respect for vacation leave strengthens employee trust, retention, and organizational credibility, whereas persistent intrusion signals disregard for worker welfare. 

The growing recognition of these concerns is evident in emerging legal standards. International “right to disconnect” regulations and the proposed Workers’ Rest Law in the Philippines affirm that constant connectivity is incompatible with decent work. Senate Bill No. 2475 explicitly prohibits employers from requiring employees to engage in work-related communication during rest hours, except in narrowly defined emergency situations under the Labor Code. Significantly, the bill also protects employees from penalties arising from non-responsiveness during rest periods, directly addressing the silent pressure that often compels workers to remain available despite formal leave approval.

Given these ethical and legal developments, managerial responsibility is clear. Employers must establish explicit policies defining rest hours, vacation leave boundaries, and emergency exceptions, ensuring these are consistent with labor regulations. Operational planning should minimize dependency on employees who are on leave through proper delegation, role coverage, and contingency systems. Managers and senior leaders must model compliance by refraining from unnecessary contact and by reinforcing a culture where rest is recognized as a legitimate and necessary component of productive work. Where certain positions require on-call availability, such arrangements must be transparent, justified, equitably assigned, and accompanied by appropriate compensation or compensatory rest.

Ultimately, respecting employees’ right to unplug during vacation leave is not merely a matter of organizational discretion but a reflection of ethical leadership and legal responsibility. Upholding these boundaries affirms human dignity, promotes fair labor practices, and contributes to sustainable organizational performance. In the Philippine labor landscape, ethical management and legal compliance must converge to ensure that technological connectivity does not come at the cost of workers’ fundamental right to rest.

 

References

 

Brown, M. E., & Treviño, L. K. (2006). Ethical leadership: A review and future directions. The Leadership Quarterly, 17(6), 595–616.

Eurofound. (2020). Right to disconnect in the 27 EU Member States. https://cooperante.uni.lodz.pl

Kant, I. (1993). Groundwork of the Metaphysics of Morals (J. Ellington, Trans.). Hackett. (Original work published 1785)

Gonzalez, G. (2020). Telework and the French “Right to Disconnect” https://blogs.loc.gov/law/2020/08/telework-and-the-french-right-to-disconnect/#:~:text=In%202016%2C%20the%20French%20government,latter' 's%20work%20and%20personal%20lives.

Marques, V., & Berry, G. (2021).Enhancing work-life balance using a resilience framework. Business and Society Review,126 (3), 263-281. https://doi.org/10.1111/basr.12237

Mazmanian, M., Orlikowski, W. J., & Yates, J. (2013). The autonomy paradox: The implications of mobile email devices for knowledge professionals. Organization Science, 24(5), 1337–1357. 

Pfeffer, J. (2018). Dying for a paycheck. Harper Business. 

Sonnentag, S., & Fritz, C. (2007). The recovery experience questionnaire: Development and validation. Journal of Occupational Health Psychology, 12(3), 204–221. 

Ramos, C. (2022). The Senate bill seeks to penalize employers who require employees to work during rest hours.  https://newsinfo.inquirer.net/1542634/senate-bill-penalizes-employers-requiring-employees-to-work-during-rest-hours

Rey, A. (2022). Tolentino files bill protecting workers’ rest hours.https://www.rappler.com/philippines/senator-francis-tolentino-files-bill-protecting-workers-rest-hours/

S. No. 2475, An Act promoting the welfare of employees by defining rest hours, providing penalties for any violation, and for other purposes. 5-6. http://legacy.senate.gov.ph/lisdata/3691033287!.pdf

The School of Positive Psychology (2025). Work-Life Harmony: A fresh look at work-life balance.https://www.positivepsych.edu.sg/work-life-harmony/

Verlinden, N. Employee Value Proposition (EVP): All You Need to Know in 2026. https://www.aihr.com/blog/employee-value-proposition-evp/

 

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