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Coping with Metro Manila’s Minimum Wage: What Wage Order No. NCR-28 Means for MSMEs 

10/01/2026

For business owners in the National Capital Region (NCR), the regulatory landscape has turned into a complex legal chess match. Wage Order No. NCR-28 took effect on September 26, 2026 which mandates the immediate implementation of the ₱60 daily minimum wage increase for private sector workers. While the intention of Wage Order No. NCR-28 was to provide urgent financial relief  to employees fighting inflation, the abrupt introduction of the said wage order left micro, small, and medium enterprises (MSMEs) under unprecedented operational and financial pressure, as its predecessor, Wage Order No. NCR-27, hangs in limbo. 

Wage Order No. NCR-28 vs. The Pending Tranche of NCR-27 

Why have we gotten into this kind of scenario? Why would government issue another order when the current one is yet to be implemented? 

  • The Interruption of NCR-27: Originally, Wage Order No. NCR-27 sought to implement a larger ₱85 total wage hike. However, aggressive legal pushback from major business coalitions and construction firms resulted in Temporary Restraining Orders (TROs) issued by the Pasig and Navotas Regional Trial Courts. 
  • The Birth of NCR-28: Because workers could not afford to wait for prolonged court litigation to conclude, the Department of Labor and Employment (DOLE) bypassed the standstill by issuing Wage Order No. NCR-28 as an independent, immediate ₱60 stopgap. 
  • The Looming ₱25 Shadow: However, Labor Secretary Francis Tolentino explicitly clarified that NCR-28 does not nullify NCR-27. If the government wins the ongoing court battles, the remaining ₱25 second tranche from NCR-27 (originally slated for January 2027) could still be legally enforced on top of the current rates. 

 

This leaves MSMEs in a precarious position: complying with a ₱60 hike today, while bracing for a potential ₱25 secondary hike tomorrow. 


The Direct Impact on MSMEs 

MSMEs operate on extremely thin margins, whereas multimillion-dollar conglomerates have the cash reserves to withstand abrupt wage spikes. Actually, the effects of NCR-28 extend beyond basic daily rates: 

  • The Wage Distortion and Multiplier Effect: A ₱60 increase to the baseline daily wage means non-agricultural workers must now receive ₱755 daily, and agricultural/service workers must receive ₱718. But the impact of the wage increase automatically inflates the indirect liabilities such as Overtime Pay, Night Shift Differentials, 13th-Month Pay, and the employer’s share of SSS, PhilHealth, and Pag-IBIG contributions. 

  • Severe Cash Flow Strains: Small retail stores, neighborhood restaurants, and family-run service providers run the risk of pricing themselves out of local markets if they raise prices too quickly, in contrast to larger businesses that can immediately pass costs onto customers. 

What SMEs Could Do 

MSME owners should implement a proactive, defensive business strategy in order to weather the current wage transition and protect their operations from a potential ₱25 secondary tranche: 

1. File for Official Exemptions Within the 75-Day Window 

For distressed and small-scale businesses, the law offers a legal safety net. Retail and service establishments with ten or fewer employees, as well as companies significantly affected by natural or man-made disasters, are eligible to apply for a temporary exemption from the wage increase under current DOLE regulations. This application must be filed with the Regional Tripartite Wages and Productivity Board (RTWPB) within 75 days from September 26, 2026. 

2. Model a Worst-Case Scenario Payroll Forecast 

Do not just budget for the current ₱755/718 parameters but also consider the ₱25 tranche not yet included in NCR-28. It is better to be prepared for the worst-case scenario in case the ₱25 tranche will be implemented. Knowing your precise financial threshold under a ₱85 total increase will enable you to make data-driven decisions about inventory, expansion, and overhead. 

3. Eliminate Operational Overhead, Not Headcount 

Instead of laying off trained staff which will hurt productivity and long-term viability, it would be better to take a look at your workflows to maximize efficiency: 

  • Minimize Unauthorized Overtime: Tighten scheduling and set strict, realistic daily output goals to ensure core business functions are completed within standard 8-hour blocks. 
  • Implement Flexible Work Arrangements: If your business model permits, transitioning administrative roles to hybrid or remote setups can drastically cut down on utility expenses (electricity, water, internet) to offset the rising cost of manual labor. 

 

4. Shift to Performance-Linked Incentives 

 

Avoid committing to long-term, fixed allowance increases outside of mandated minimums. Moving forward, revenue-generating milestones should be directly linked to structural compensation growth. You can make sure that every extra peso that leaves the company payroll is essentially funded by a corresponding spike in business revenue by introducing micro-bonuses that are linked to store sales, volume targets, or individual productivity metrics. 

For clarifications, suggestions, recommendations, comments, etc., please feel free to reach out to Hothouse Management Consultancy at inquiry@hothousemanagement.com or hothousemgtconsultancy@gmail.com or through viber/telegram +63 9178563548.  

References 

  • Wage Compliance and HR Adaptation: Detailed analysis of HR system adjustments required for handling overlapping wage orders in Metro Manila. Purple Bug Connected HR Insights.