A wage distortion happens when a wage order increasing the rates of wages removes or significantly reduces the

pay advantage of one position of employees over another. This change has to be corrected. The following are the
essential elements of a wage distortion:

1.) The company has a hierarchy of positions with corresponding salary rates

2.) A wage order significantly changes or increases the salaries of the employees in the lower level but doesn't have a
corresponding increase for the salaries of the employees in the higher level

3.) The distinction between the positions/groups of employees is eliminated

4.) The distortion exists in the same region of the country

Correction of a wage distortion must first be done in the company's grievance machinery provided for in the CBA. If
the distortion isn't resolved there, the next step is voluntary arbitration. In case the company has no CBA or
recognized labor union, the employers and workers have to reach an agreement to correct the distortion. If they can't
agree, they have to bring the problem to the NCMB. If after 10 days in the NCMB there isn't any correction the next
place to go is the NLRC.

Wage distortions can't be the cause of a strike or lockout (Ilaw ng Manggagawa vs. NLRC, 198 SCRA 586.) The
correction of a wage distortion should be done by negotiation or arbitration.

Wage distortions, furthermore, are dangerous; an uncorrected one can lead to insubordination and weakening of
productivity.