Payroll reinstatement meaning

There is payroll reinstatement when the employer, instead of physically reinstating the employee to his former or substantially equivalent position, chooses to reinstate the employee in the payroll only by paying him wages and other benefits without however allowing or requiring him to actually report for work.

Instances when payroll reinstatement may be allowed

There are two instances when the employer may exercise the option of payroll reinstatement:

1. In case of preventive suspension pending termination/disciplinary proceeding under Sections 9, Department Order No. 9, Series of 1997.

Section 9. Period of suspension. No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may extend the period of suspension provided that during the period of extension, he pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the extension if the employer decides, after completion of the hearing, to dismiss the worker.

2. Another instance of payroll reinstatement is found in Article 223 of the Labor Code, after the Labor Arbiter ordered the reinstatement of the employee pending appeal to NLRC, employer has the option to reinstate the employee concerned only on payroll. The provision states:

Article 223. Appeal.

x x x

“In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein.”

x x x

Instances when payroll reinstatement is not allowed

In assumption or certification cases under Article 263 (g), Labor Code, the employer is not given the option to reinstate the employee in the payroll only. Actual reinstatement is required.

Article 263 (g). When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. x x x

Under the said provision, all workers must immediately return to work and all employers must readmit all of them under the same terms and conditions prevailing before the strike or lockout. See Manila Diamond Hotel case [1], compare with University of Santo Tomas case[2].

Effect of failure of employer to exercise the option

Under Article 223, the option whether to actually reinstate the employee, or to reinstate him only in the payroll belongs to the employer. Thus, the employer may either re-admit the employee to work under the same terms and conditions prevailing prior to their dismissal, or to reinstate him in the payroll. Failing to exercise the options in the alternative, employer must pay the employee’s salaries.

Refund/reimbursement of salary paid

In payroll reinstatement pending termination/disciplinary proceedings against employee, the rule is explicit that the employee is not bound to reimbursed the salary already paid to him by reason of the exercise by employer of the option. The salary paid to the employee during the period of suspension serves as the price that employer must pay for opting for payroll reinstatement instead of actual reinstatement.

The same thing may be said in payroll reinstatement under Article 223, although the article does not expressly so states.

However, there was an authority supporting the opposite view that the employee may be required to refund the employer for salary paid. This view was articulated in Genuino v. National Labor Relations Commission[3] as follows:

If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries s/he received while the case was pending appeal, or it can be deducted from the accrued benefits that the dismissed employee was entitled to receive from his/her employer under existing laws, collective bargaining agreement provisions, and company practices. However, if the employee was reinstated to work during the pendency of the appeal, then the employee is entitled to the compensation received for actual services rendered without need of refund.

The above view, however, does not appear to be the prevailing principle on the matter, and was played down as a mere stray posture in a subsequent case (See Garcia vs. Philippine Airlines[4]).


  1. Manila Diamond Hotel vs. Court of Appeals, G.R. No. 140518, December 16, 2004.
  2. University of Santo Tomas (UST) vs. NLRC, G.R. No. 89920, October 18, 1990.
  3. Genuino v. NLRC, G.R. Nos. 142732-33, December 4, 2007.
  4. Garcia vs. Philippine Airlines, G.R. No. 164856, January 20, 2009.

Last Edited: Friday, August 19, 2011

Caveat: Subsequent court and administrative rulings, or changes to, or repeal of, laws, rules and regulations may have rendered the whole or part of this article inaccurate or obsolete.
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1 comment

  1. Tanya Louise Llanes Comment:
    March 11th, 2013 at 10:18 am

    Bago pa man po ako magbuntis, pinagsabihan na po ako ng Head ko na bawal daw po akong magbuntis kasi maaapektuhan ang performance ko. regular na po ako nun. Ngunit nagbuntis po ako at maselan, naka-leave po ako nun ng one week and then po nung magreport ako sa opisina nagulat na lang po ako na marami na pong issues sa akin ang HRD na paninira ko daw sa mga kasamahan ko sa trabaho. Halos pinagtulungan po nila ako ng Department ko kasi HR Supervisor din po ako, pinagtulungan po na ibig sabihin yung mga paninira ko daw sa mga kasamahan ko ay pinanindigan ng mga kasamahan ko din. Ikinulong po nila ako sa kwarto at inimbestigahan ng walang prior notice sakin. Yung araw din po na yun ay di pa po ako officially reporting for work kasi po last day po yun ng SSS Sickness leave ko, nagreport po ako sa opisina upang isumite po ang SSS Sickness form ko.

    Madami po silang ibinato saking paninira ko daw. Dinuduro po ako ng consultant namin at pingasabihan na ang pinapalamon ko daw po sa pamilya ko ay galing sa konpanya. pinagsabihan din po ako na magatago na ako kasi lahat daw po ng access nila sa NBI ay gagamitin nila laban sa akin para kasuhan ako ukol doon sa mga paninira ko. Iyon daw po ay kung mangyaring may dumating na sulat sa kanila galing DOLE, BIR at SSS. Ito po ay sa dahilang madami po silang illegal na ginagawa. Pinagsabihan din po ako na puwede pa din naman daw po ako magtrabaho sa kanila pero di ko na daw po magagamit ang aking pwesto, ang aking lamesa at upuan, bahala daw po ako kung saan ako pupwedeng pumwesto. Sinabihan din po ng consultant ang Head ko na wag daw i-approve ang mga leave ko kasama na ang SSS ko. Sa ganitong dahilan, nag-alanganin na rin po akong pumasok. Ngunit po after po ng araw na iyon, ako po ay kumunsulta sa aking OB at ako po ay pinayuhan na mag leave po ulit ng 2 weeks dahil maselan nga po ang pagbubuntis ko po. Nagsumite pa rin po ako ng SSS Sickness ko ngunit di po nila ito ipinile sa SSS.
    Yung unang 7 days leave ko po ay nai-file nila sa SSS at nakuha na daw po sa SSS ang check as per SSS ngunit di po nila ibinigay sakin.

    Nagpadala po sila ng NTE at sinagot ko naman po ngunit diretso po sa may-ari ng kompanya. Nagpatawag po sila ng admin hearing ngunit di po ako pumunta kasi yung date po ng admin hearing ay pasok pa po sa leave ko at may medical certificate po ako. Nagpadala po ako ng Resignation Letter effective after po ng leave ko ngunit after a week pindalhan pa rin po ako ng Notice of Admin Hearing. Di po ako pumunta kasi di naman po nila ako ininform na di po nila tinatanggap ang Resignation letter ko po hanggang isang araw, makalipas ang isang linggo, nakatanggap po ako ng Notice of Termination.

    Ang tanong ko po:

    1. May makukuha pa po ba ako sa kompanya?
    2. May karapatan po ba akong mgafile ng kaso sa NLRC:
    2.1. Actual illegal dismissal
    2.2. Discrimination – dahil po pinagbawalan ako magbuntis
    2.3. Non-payment of salaries and wages and other benefits.
    2.4. Moral damages – dahil ginawan po nila ako ng issues na paninira na di ko naman po ginawa.


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  1. […] reinstate him in the payroll (Article 223, Labor Code). This is called payroll reinstatement. (Read Payroll Reinstatement.) Effect of Reversal on Appeal. Even if the order of reinstatement of the Labor Arbiter is reversed […]