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Table of Contents
A. DIRECT HIRING ........................................................ 23 B. REGULATIONS AND ENFORCEMENT .................... 23
I. FUNDAMENTAL PRINCIPLE AND POLICIES ................... 1
B.1. SUSPENSION OR CANCELLATION OF LICENSE OR AUTHORITY ........................................................ 23
A. CONSTITUTIONAL PROVISIONS ............................... 1 A.1 ARTICLE II, SECS 9,10,11,13,14,18,20 .................... 1
B.2. REGULATORY AND VISITORIAL POWERS OF THE DOLE SECRETARY............................................ 23
A.2 ARTICLE III, SECS 1, 4, 7, 8, 10, 16, 18(2) ..............2
B.3. REMITTANCE OF FOREIGN EXCHANGE EARNINGS ................................................................ 24
A.3 ARTICLE XIII, SECS1, 2, 3, 13, 14 ........................... 3 B. CIVIL CODE..................................................................6
B.4. PROHIBITED ACTIVITIES .................................. 24
B.1 ARTICLE 19.............................................................6
III. LABOR STANDARDS .................................................. 27
B.2 ARTICLE 1700 .......................................................6
A. COVERAGE ............................................................... 27
B.3. ARTICLE 1702 .......................................................6
A.1. GOVERNMENT EMPLOYEES............................. 27
C. LABOR CODE .............................................................. 7
A.2. MANAGERIAL EMPLOYEES ............................. 27
C.1 ARTICLE 3 .............................................................. 7
A.3. FIELD PERSONNEL ........................................... 28
C.2 ARTICLE 4 ............................................................. 7
A.4. DEPENDENT FAMILY MEMBERS ..................... 28
C.3 ARTICLE 166 (NOW ARTICLE 172) ........................8
A.5. DOMESTIC HELPERS ........................................ 28
C.4 ARTICLE 211 (NOW ARTICLE 217) ........................8 C.5 ARTICLE 212 (NOW ARTICLE 218) .......................8
A.6. PERSONS IN PERSONAL SERVICE OF ANOTHER ................................................................. 29
C.6 ARTICLE 255 (NOW ARTICLE 261) .................... 10
A.7. WORKERS PAID BY RESULT ............................ 29
C.7 ARTICLE 277 (NOW ARTICLE 283) ..................... 10
B. HOURS OF WORK .................................................... 29
II. RECRUITMENT AND PLACEMENT .............................. 12
B.2. NORMAL HOURS OF WORK ............................ 29
A. RECRUITMENT OF LOCAL AND MIGRANT WORKERS .................................................... 12
B.3. MEAL BREAK ..................................................... 34 B.4. WAITING TIME ................................................... 36
A.1. ILLEGAL RECRUITMENT .................................... 12
B.5. OVERTIME WORK, OVERTIME PAY ................. 36
B. ESSENTIAL ELEMENTS OF ILLEGAL RECRUITMENT .............................................. 13
B.6. NIGHT WORK, NIGHT SHIFT DIFFERENTIAL .. 38
C. SIMPLE ILLEGAL RECRUITMENT ............................ 14
B.7. PART-TIME WORK ............................................ 39
C.1. ILLEGAL RECRUITMENT FOR LOCAL WORKERS (GOVERNED BY THE LABOR CODE) ........................ 14
B.8. CONTRACT FOR PIECE OF WORK ................... 39 C. WAGES ...................................................................... 39
C.2. ILLEGAL RECRUITMENT FOR MIGRANT WORKERS ................................................................. 15
C.1. WAGE VS. SALARY ............................................40 C.2. MINIMUM WAGE ...............................................40
D. ILLEGAL RECRUITMENT IN LARGE SCALE ............ 18
C.3. MINIMUM WAGE OF WORKERS PAID BY RESULTS ................................................................... 42
E. ILLEGAL RECRUITMENT AS ECONOMIC SABOTAGE ............................................... 18
C.4. COMMISSIONS .................................................. 42
E.1 OFFENSE INVOLVING ECONOMIC SABOTAGE (LARGE-SCALE OR BY A SYNDICATE)..................... 18
C.5. DEDUCTIONS FROM WAGES ........................... 43
E.2 OFFENSE INVOLVING ECONOMIC SABOTAGE (LARGE-SCALE OR BY A SYNDICATE)..................... 19
C.6. NON-DIMINUTION OF BENEFITS .................... 44
F. ILLEGAL RECRUITMENT VS. ESTAFA ..................... 19
C.8. WAGE DISTORTION/RECTIFICATION ............. 45
G. LIABILITIES ............................................................... 19
C.9. DIVISOR TO DETERMINE DAILY RATE ............ 46
G.1 LOCAL RECRUITMENT AGENCY ........................ 19
D. REST DAY ................................................................. 47
C.7. FACILITIES VS SUPPLEMENTS ......................... 44
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D.1. WEEKLY REST DAY ............................................ 47
A.1. FOUR-FOLD TEST...............................................91
D.2. EMERGENCY REST DAY WORK ....................... 47
A.2. KINDS OF EMPLOYMENT ................................. 92
E. HOLIDAY PAY/PREMIUM PAY ................................. 47
I. PROBATIONARY .................................................... 92
E.1. COVERAGE......................................................... 48
II. REGULAR .............................................................. 94
E.2. TEACHERS, PIECE WORKERS, SEAFARERS, SEASONAL WORKERS, ETC. .................................... 51
III. PROJECT EMPLOYMENT .................................... 96 IV. SEASONAL........................................................... 98
F. LEAVES ......................................................................53
V. CASUAL................................................................. 98
F.1. SERVICE INCENTIVE LEAVE PAY .......................53
VI. FIXED-TERM ........................................................ 99
F.2. MATERNITY LEAVE........................................... 54
A.3. JOB CONTRACTING ........................................ 100
F.3. PATERNITY LEAVE............................................ 55
B. DISMISSAL FROM EMPLOYMENT ........................ 105
F.4. PARENTAL LEAVE ............................................ 56
B.1. JUST CAUSE ..................................................... 109
F.5. LEAVES FOR VICTIMS OF VIOLENCE AGAINST WOMEN .................................................... 57
B.2. AUTHORIZED CAUSE ...................................... 114
F.6. SPECIAL LEAVE BENEFITS (SLB) FOR WOMEN59 G. SERVICE CHARGES .................................................. 61
B.3 OTHER CAUSES ................................................ 118 B.4 DUE PROCESS .................................................. 119 I. TWIN-NOTICE REQUIREMENT ........................... 120
I. SEPARATION PAY ..................................................... 64
II. HEARING; MEANING OF OPPORTUNITY TO BE HEARD .................................................................... 120
J. RETIREMENT PAY .................................................... 66 J.1. ELIGIBILITY ......................................................... 66
C. RELIEFS FOR ILLEGAL DISMISSAL ........................122
J.2. AMOUNT OF RETIREMENT PAY........................ 67
C.1. REINSTATEMENT .............................................122
J.3. RETIREMENT BENEFITS OF WORKERS WHO ARE PAID BY RESULTS ........................................... 68
C.2. BACKWAGES ....................................................124 D. PREVENTIVE SUSPENSION ...................................125
J.4. RETIREMENT BENEFIT OF PART-TIME WORKERS ................................................................ 68
E. CONSTRUCTIVE DISMISSAL ..................................126
J.5. TAXABILITY ........................................................ 68 K. WOMEN WORKERS ................................................. 69 V. MANAGEMENT PREROGATIVE ................................. 126 K.1. PROVISIONS AGAINST DISCRIMINATION....... 69
A. DISCIPLINE ..............................................................126
K.2. STIPULATION AGAINST MARRIAGE ................70
B. TRANSFER OF EMPLOYEES ................................... 127
K.3. PROHIBITED ACTS ............................................70
C. PRODUCTIVITY STANDARD ...................................128
K.4. ANTI-SEXUAL HARASSMENT ...........................71
D. GRANT OF BONUS .................................................128
L. MINOR WORKERS .................................................... 73
E. CHANGE OF WORKING HOURS .............................128
M. EMPLOYMENT OF HOUSEHELPERS ...................... 75
F. RULES ON MARRIAGE BETWEEN EMPLOYEES OF COMPETITOR-EMPLOYERS .......................................129
N. EMPLOYMENT OF HOMEWORKERS ......................78
G. POST-EMPLOYMENT BAN .....................................129
O. APPRENTICES AND LEARNERS ............................. 79
VI. SOCIAL WELFARE LEGISLATION ............................. 129
O.1. APPRENTICES .................................................... 79
A. SSS LAW ................................................................. 130
O.2. LEARNERS........................................................ 82
A.1. COVERAGE ....................................................... 130
P. HANDICAPPED WORKERS – DIFFERENTLY-ABLED WORKERS .................................................................... 84
A.2. EXCLUSIONS FROM COVERAGE ................... 130
IV. TERMINATION OF EMPLOYMENT ............................. 89
A.3. BENEFITS...........................................................131
A. EMPLOYER-EMPLOYEE RELATIONSHIP ............... 90
I. MONTHLY PENSION [SEC.12] ...............................131 ii
II. DEPENDENTS’ PENSION [SEC. 12-A].................. 131
D.3. WHEN COMPENSABLE .................................. 140
III. RETIREMENT BENEFITS [SEC. 12-B] .................. 131 VII. LABOR RELATIONS ................................................. 141 IV. PERMANENT DISABILITY BENEFITS [SEC. 13-A]132 V. DEATH BENEFITS [SEC. 13] ................................ 132
A. RIGHT TO SELF-ORGANIZATION........................... 141 A.1. WHO MAY UNIONIZE FOR PURPOSES OF COLLECTIVE BARGAINING? ...................................142
VI. FUNERAL BENEFITS [13-B] ............................... 132
I. WHO CANNOT FORM, JOIN OR ASSIST LABOR ORGANIZATIONS ....................................................143
VII. LOAN ................................................................. 132 VIII. SICKNESS BENEFITS [SEC. 14] ........................ 133
A.2. BARGAINING UNIT ......................................... 145
IX. MATERNITY LEAVE BENEFITS [SEC. 14-A]....... 133 A.4. BENEFICIARIES ............................................... 134
I. TEST TO DETERMINE THE CONSTITUENCY OF AN APPROPRIATE BARGAINING UNIT ....................... 146
1. PRIMARY .............................................................. 134
II. VOLUNTARY RECOGNITION ............................. 148
2. SECONDARY ....................................................... 134
III. CERTIFICATION ELECTION ............................... 148
3. OTHERS ............................................................... 134
IV. RUN-OFF ELECTION ......................................... 155
B. GSIS [RA 8291] ........................................................ 134
V. RE-RUN ELECTION ............................................ 156
B.1. COVERAGE ....................................................... 134
VI. CONSENT ELECTION ........................................ 156
B.2. EXCLUSIONS FROM COVERAGE.................... 134
VI. AFFILIATION AND DISAFFILIATION OF THE LOCAL UNION FROM THE MOTHER UNION ........ 156
B.3. BENEFITS ......................................................... 134
VIII. UNION DUES AND SPECIAL ASSESSMENTS 158
I. MONTHLY PENSION [SEC. 9] .............................. 134
IX. AGENCY FEES.................................................... 159
II. RETIREMENT BENEFITS [SEC. 13] ...................... 134
B. RIGHT TO COLLECTIVE BARGAINING .................. 159
III. PERMANENT DISABILITY BENEFITS ................ 135
B.1 DUTY TO BARGAIN COLLECTIVELY ................ 159
IV. DEATH BENEFITS [SEC. 21] ............................... 135
I. WHEN THERE IS ABSENCE OF A CBA ................ 161
V. FUNERAL BENEFITS [SEC. 23] ........................... 136
II. WHEN THERE IS A CBA ....................................... 161
VI. LOAN .................................................................. 136
B.2 COLLECTIVE BARGAINING AGREEMENT (CBA)161
VII. TEMPORARY DISABILITY BENEFITS ............... 136
I. MANDATORY PROVISIONS OF CBA .................. 164
VIII. SEPARATION BENEFITS ................................. 136
II. DURATION OF COLLECTIVE BARGAINING AGREEMENT .............. 167
IX. UNEMPLOYMENT BENEFITS [SEC. 11] .............. 136 X. SURVIVORSHIP BENEFITS ................................. 136
B.3. UNION SECURITY ........................................... 169
XI. LIFE INSURANCE BENEFITS ..............................137 I. PRIMARY ...............................................................137
I. UNION SECURITY CLAUSES; CLOSED SHOP, UNION SHOP, MAINTENANCE OF MEMBERSHIP SHOP, ETC. ............................................................. 169
II. SECONDARY ........................................................137
II.CHECK-OFF, UNION DUES, AGENCY FEES ........170
C. LIMITED PORTABILITY LAW [RA 7699]................. 140
B.4 UNFAIR LABOR PRACTICE IN COLLECTIVE BARGAINING ................................170
B.4. BENEFICIARIES ................................................137
C.1 COVERAGE ........................................................ 140
I. BARGAINING IN BAD FAITH ................................170
C.2. PROCESS ......................................................... 140
II. REFUSAL TO BARGAIN ........................................171
D. EMPLOYEE’S COMPENSATION – COVERAGE AND WHEN COMPENSABLE............................................... 140
III. INDIVIDUAL BARGAINING ..................................171
D.1 COVERAGE ........................................................ 140
IV. BLUE SKY BARGAINING .....................................171
D.2. EFFECTIVITY .................................................... 140
V. SURFACE BARGAINING.......................................171 B.5 UNFAIR LABOR PRACTICE (ULP) .....................171 iii
I. NATURE OF ULP .................................................. 172
C. BUREAU OF LABOR RELATIONS – MED-ARBITERS193
II. ULP OF EMPLOYERS .......................................... 172
C.1 JURISDICTION (ORIGINAL AND APPELLATE) .193
III. ULP OF LABOR ORGANIZATIONS .................... 174
D. NATIONAL CONCILIATION AND MEDIATION BOARD ........................................................................ 194 D.1 NATURE OF PROCEEDINGS ............................ 194
C. RIGHT TO PEACEFUL CONCERTED ACTIVITIES... 175
D.2 CONCILIATION VS. MEDIATION ..................... 194
C.1. FORMS OF CONCERTED ACTIVITIES .............. 175
D.3 PREVENTIVE MEDIATION ............................... 194
C.2 WHO MAY DECLARE A STRIKE OR LOCKOUT? .. 177
E. DOLE REGIONAL DIRECTORS .............................. 194
C.3 REQUISITES FOR A VALID STRIKE ....................... 177
E.1 JURISDICTION ................................................... 194
C.4 REQUISITES FOR A VALID LOCKOUT ................. 179
F. DOLE SECRETARY.................................................. 195
C.5 REQUISITES FOR LAWFUL PICKETING ............... 181
F.1 VISITORIAL AND ENFORCEMENT POWERS ... 195
C.6 ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY OR CERTIFICATION OF THE LABOR DISPUTE TO THE NLRC FOR COMPULSORY ARBITRATION ............................................................. 182
F.2 POWER TO SUSPEND/EFFECTS OF TERMINATION ........................................................ 196 F.3 ASSUMPTION OF JURISDICTION .................... 196
C.7 NATURE OF ASSUMPTION ORDER OR CERTIFICATION ORDER ............................................. 182
F.4 APPELLATE JURISDICTION ............................. 196 F.5 VOLUNTARY ARBITRATION POWERS ........... 196
C.8 EFFECT OF DEFIANCE OF ASSUMPTION OR CERTIFICATION ORDERS ........................................... 183
G. GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION ............................................................. 196
C.9 ILLEGAL STRIKE ................................................... 184
G.1 SUBJECT MATTER OF GRIEVANCE ................. 196
I. LIABILITY OF UNION OFFICERS ......................... 185
G.2 VOLUNTARY ARBITRATOR............................. 196
II. LIABILITY OF ORDINARY WORKERS ................. 186
I. JURISDICTION ..................................................... 196
III. LIABILITY OF EMPLOYER .................................. 186
II. PROCEDURE ........................................................ 197
IV. WAIVER OF ILLEGALITY OF STRIKE ................. 186
III. REMEDIES .......................................................... 198
C.10 INJUNCTIONS...................................................... 186
H. COURT OF APPEALS ............................................. 198
I. REQUISITES FOR LABOR INJUNCTIONS ........... 187
H.1 RULE 65, RULES OF COURT............................ 198
II. “INNOCENT BYSTANDER RULE”....................... 188
I. SUPREME COURT ................................................... 198
VIII. PROCEDURE AND JURISDICTION .......................... 189
I.1 RULE 45, RULES OF COURT ............................. 199
A. LABOR ARBITER..................................................... 189
J. PRESCRIPTION OF ACTIONS ................................. 199
A.1 JURISDICTION ................................................... 189 I. VERSUS REGIONAL DIRECTOR..................... 189 A.2 REINSTATEMENT PENDING APPEAL ............. 190 A.3 REQUIREMENTS TO PERFECT APPEAL TO NLRC ........................................................................ 190 B. NATIONAL LABOR RELATIONS COMMISSION (NLRC) ......................................................................... 190 B.1 JURISDICTION ................................................... 190 B.2 EFFECT OF NLRC REVERSAL OF LABOR ARBITER’S ORDER OF REINSTATEMENT .............. 191 B.3 REMEDIES .......................................................... 191 B.4 CERTIFIED CASES ............................................ 192 iv
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I. Fundamental Principle and Policies
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[Article II, Section 13.] The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social wellbeing. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs.
A. CONSTITUTIONAL PROVISIONS A.1 ARTICLE II, SECS 9,10,11,13,14,18,20 [Article II, Section 9.] The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all.
[Article II, Section 14.] The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men. [Article II, Section 18.] The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.
[Article II, Section 10.] The State shall promote social justice in all phases of national development.
[Article II, Section 20.] The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments.
General definition of Social Justice Social Justice is neither communism, nor despotism, nor atomism, nor anarchy, but the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. [Calalang vs. Williams (1940)]
Limits of Social Justice Social justice should be used only to correct an injustice. It must be founded on the recognition of the necessity of interdependence among diverse units of a society, and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life. As partners in nationbuilding, labor and management need each other to foster productivity and economic growth; hence, the need to weigh and balance the rights and welfare of both the employee and employer. [Agabon vs. NLRC (2004)]
Welfare State The welfare state concept is found in the constitutional clause on the promotion of social justice to ensure the well-being and economic security of all the people, and in the pledge of protection to labor with specific authority to regulate the relations between landowners and tenants and between labor and capital. [Alalayan vs. National Power Corporation (1968)]
The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice
[Article II, Section 11.] The State values the dignity of every human person and guarantees full respect for human rights.
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cannot be permitted to be a refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character. [Tirazona vs. Philippine EDS TechnoService Inc. (2009)]
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Due Process Due process requirements are two-fold – substantive (dismissal should be for a valid and authorized cause as provided by law) and procedural (due notice and hearing). [Salaw vs. NLRC (1991)] To constitute valid dismissal from employment, two requisites must concur: (1) the dismissal must be for a just or authorized cause; and (2) the employee must be afforded an opportunity to be heard and to defend himself. [Jeffrey Nacague vs. Sulpicio Lines, Inc. (2010)]
Liberty of Contract/Laissez Faire The prohibition to impair the obligation of contracts is not absolute and unqualified. In spite of the constitutional prohibition and the fact that both parties are of full age and competent to contract, it does not necessarily deprive the State of the power to interfere where the parties do not stand upon an equality, or where the public health demands that one party to the contract shall be protected against himself. [Leyte Land Transportation Co. vs. Leyte Farmers & Workers Union (1948)]
Labor as Property Right One’s employment is a property right, and the wrongful interference therewith is an actionable wrong. [Sibal vs. Notre Dame of Greater Manila (1990)]
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[Article III, Section 4.] No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances. The Right to Assemble The right of peaceable assembly is a right cognate to those of free speech and free press and is equally fundamental. [de Jonge vs. Oregon, (1937)]
The Constitution is primarily a document of social justice, and although it has recognized the importance of the private sector, it has not embraced fully the concept of laissez-faire or relied on pure market forces to govern the economy. [Employees Confederation of the Philippines vs. NWPC (1991)]
In a case where employees were dismissed for serious misconduct or willful disobedience, the SC ruled that the element of willfulness characterized by a perverse mental attitude in disobeying the employer’s order as to warrant the ultimate penalty of dismissal was lacking. It said that wearing armbands and putting up placards to express one’s views without violating the rights of third parties, are legal per se and even constitutionally protected. [Bascon v CA, G.R. No. 144899, February 5, 2004]
A.2 ARTICLE III, SECS 1, 4, 7, 8, 10, 16, 18(2) [Article III, Section 1.] No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.
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equality, or where the public health demands that one party to the contract shall be protected against himself. [Leyte Land Transportation Co. vs. Leyte Farmers & Workers Union (1948)]
[Article III, Section 7.] The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law.
[Article III, Section 16.] All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-judicial, or administrative bodies.
[Article III, Section 8.] The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged.
[Article III, Section 18(2).] No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have been duly convicted.
A.3 ARTICLE XIII, SECS1, 2, 3, 13, 14 The Right to Form Associations The right to form associations shall not be impaired except through a valid exercise of police power. [Bernas, The 1987 Philippine Constitution: a Comprehensive Reviewer]
[Article XIII, Section 1.] The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good.
[Article III, Section 10.] No law impairing the obligation of contracts shall be passed.
To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments.
Non-impairment of Contracts A law which changes the terms of a legal contract between parties, either in the time or mode or performance, or imposes new conditions, or dispenses with those expressed, or authorizes for its satisfaction something different from that provided in its terms, is a law which impairs the obligation of a contract and is null and void. [Clemens vs. Nolting (1922)]
[Article XIII, Section 2.] The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance. [Article XIII, Section 3.] The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.
Compare with Liberty of Contract: The prohibition to impair the obligation of contracts is not absolute and unqualified. In spite of the constitutional prohibition and the fact that both parties are of full age and competent to contract, it does not necessarily deprive the State of the power to interfere where the parties do not stand upon an
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with 3
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the employer. [Phil. Geothermal Inc. vs. NLRC (1994)]
law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law.
This Court held that the employer’s right to conduct the affairs of his business according to its own discretion and judgment, is wellrecognized. An employer has a free reign and enjoys wide latitude of discretion to regulate all aspects of employment. This is a management prerogative, where the free will of management to conduct its own affairs to achieve its purpose takes form. [Torreda vs. Toshiba (2007)]
The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.
Under the doctrine of management prerogative, every employer has the inherent right to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, the time, place and manner of work, work supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of employees. The only limitations to the exercise of this prerogative are those imposed by labor laws and the principles of equity and substantial justice. [Peckson v Robinson’s Supermarket Corporation, G.R. No. 198534, July 3, 2013]
Participation in Decision-Making Process Verily, a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of the employees. In treating the latter, management should see to it that its employees are at least properly informed of its decisions or modes action. Indeed, industrial peace cannot be achieved if the employees are denied their just participation in the discussion of matters affecting their rights. [Phil. Airlines Inc. vs. NLRC (1993); also cited in Manila Electric Co. vs. Sec. of Labor Quisumbing (2000)]
Limits to Management Prerogative (1) Good faith - So long as a company’s management prerogatives are exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold them…Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. [Ernesto G. Ymbong vs. ABS-CBN Broadcasting Corp. (2012)]
Management and the Constitution: Management Function/Prerogative The law in protecting the rights of the employees authorizes neither oppression nor self-destruction of the employer. It should be made clear that when the law tilts the scale of justice in favor of labor, it is but a recognition of the inherent economic inequality between labor and management. Never should the scale be so tilted if the result is an injustice to
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(2) Without grave abuse of discretion - But, like other rights, there are limits thereto. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which the right is exercised. [Tinio vs. CA (2007)]
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express policy of the law. [Goya, Inc. v. Goya, Inc., Employees Union-FFW (2013)] (5) Equity and/or Substantial Justice – The Court recognized the inherent right of the employer to discipline its employees but it should still ensure that the employer exercises the prerogative to discipline humanely and considerately, and that the sanction imposed is commensurate to the offense involved and to the degree of the infraction. The discipline exacted by the employer should further consider the employee’s length of service and the number of infractions during his employment. [Dongon v. Rapid Movers and Forwarders Co., Inc. (2013)]
(3) Law – In one case, a pharmaceutical company defended its termination of rank and file employees during a bargaining deadlock, as an exercise of management prerogative. This was after the Labor Secretary had assumed jurisdiction over the dispute and enjoined the parties from “any acts which might exacerbate the situation.”
Assumption of jurisdiction by the Secretary of Labor This Court declared that it recognizes the exercise of management prerogatives and it often declines to interfere with the legitimate business decisions of the employer…However, as expressed in PAL vs. NLRC, the privilege is not absolute, but subject to exceptions. One of these exceptions is when the Secretary of Labor assumes jurisdiction over labor disputes involving industries indispensable to the national interest under Article 263(g) of the Labor Code. [University of Immaculate Concepcion Inc. vs. Sec. of Labor (2005)]
The Court disagreed with the company’s defense, stating that the privilege is not absolute but subject to limitations imposed by law. In this case, it is limited by Sec. 236(g), which gives the Secretary the power to assume jurisdiction and resolve labor disputes involving industries indispensable to national interest. The company’s management prerogatives are not being unjustly curtailed but duly tempered by the limitations set by law, taking into account its special character and the particular circumstances in the case at bench. [Metrolab Industries, Inc. v. Roldan-Confesor (2013)]
[Article XIII, Section 13.] The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social wellbeing. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. [Article XIII, Section 14.] The State shall protect working women by providing safe and healthful working conditions, taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation.
(4) Collective Bargaining – The CBA provisions agreed upon by the Company and the Union delimit the free exercise of management prerogative. The parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the 5
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relationships from the impact of labor laws and regulations by simply contracting with each other. Moreover, in case of doubt, the terms of a contract should be construed in favor of labor. [Innodata Philippines, Inc. vs. Quejada-Lopez (2006)]
B. CIVIL CODE B.1 ARTICLE 19 [Article 19.] Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.
Liberal Construction While the terms and conditions of a CBA constitute the law between the parties, it is not however, an ordinary contract to which is applied the principles of law governing ordinary contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital, is not merely contractual in nature but impressed with public interest, thus, it must yield to the common good. As such, it must be construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve. [Cirtek Employees Labor Union-FFW v Cirtek Electronics, 2010]
B.2 ARTICLE 1700 [Article 1700.] The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.
B.3. ARTICLE 1702 [Article 1702.] In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. Contracts Under the Civil Code, contracts of labor are explicitly subject to the police power of the state because they are not ordinary contracts but are impressed with public interest. Inasmuch as in this particular instance the contract in question would have been deemed in violation of pertinent labor laws, the provisions of said laws would prevail over the terms of the contract, and private respondent would still be entitled to overtime pay. [PAL Employees Savings and Loan Assn., Inc. vs. NLRC (1996)]
When there is doubt between the evidence submitted by the employer and that submitted by the employee, the scales of justice must be tilted in favor of the employee. This is consistent with the rule that an employer’s cause could only succeed on the strength of its own evidence and not on the weakness of the employee’s evidence. [Misamis Oriental II Electric Service Cooperative vs. Virgilio Cagalawan (2012)]
Indeed, a contract of employment is impressed with public interest. For this reason, provisions of applicable statutes are deemed written into the contract. Hence, the parties are not at liberty to insulate themselves and their 6
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Fair treatment The right of an employer to dismiss an employee differs from and should not be confused with the manner in which such right is exercised. It must not be oppressive and abusive since it affects one's person and property. [General Bank and Trust Co. vs. CA (1985)]
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C. LABOR CODE 7
C.1 ARTICLE 3 LC, Art. 3. Declaration of basic policy. The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work.
Mutual obligation The employer's obligation to give his workers just compensation and treatment carries with it the corollary right to expect from the workers adequate work, diligence and good conduct. [Firestone Tire and Rubber Co. vs. Lariosa (1987)]
C.2 ARTICLE 4 [LC, Art. 4.] Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor
Compliance with law It is also important to emphasize that the return-to-work order not so much confers a right as it imposes a duty; and while as a right it may be waived, it must be discharged as a duty even against the worker's will. [Sarmiento vs. Tuico (1988)]
Liberality in Application of Rules [Article 221.] Technical rules not binding and prior resort to amicable settlement. – In any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process. xxx
Employee's compliance and obedience to employer's orders The lack of a written or formal designation should not be an excuse to disclaim any responsibility for any damage suffered by the employer due to his negligence. The measure of the responsibility of an employee is that if he performed his assigned task efficiently and according to the usual standards, then he may not be held personally liable for any damage arising therefrom. Failing in this, the employee must suffer the consequences of his negligence if not lack of due care in the performance of his duties. [PCIB vs. Jacinto (1991)]
We stress at this point that it is the spirit and intention of labor legislation that the NLRC and the labor arbiters shall use every reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, provided due process is duly observed. The application of technical rules of procedure in labor cases may be relaxed to serve the 7
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demands of substantial justice. [Manila Electric Co. vs. Jan Carlo Gala (2012)]
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(d) To promote the enlightenment of workers concerning their rights and obligations as union members and as employees; (e) To provide an adequate administrative machinery for the expeditious settlement of labor or industrial disputes; (f) To ensure a stable but dynamic and just industrial peace; and (g) To ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare.
It is settled that subsequent and substantial compliance may call for the relaxation of the rules of procedure…The Court has time and again relaxed the rigid application of the rules to offer full opportunity for parties to ventilate their causes and defenses in order to promote rather than frustrate the ends of justice. [Ma. Ligaya Santos vs. Litton Mills (2011)]
C.3 ARTICLE 166 (NOW ARTICLE 172)
B. To encourage a truly democratic method of regulating the relations between the employers and employees by means of agreements freely entered into through collective bargaining, no court or administrative agency or official shall have the power to set or fix wages, rates of pay, hours of work or other terms and conditions of employment, except as otherwise provided under this Code.
[Article 166.] Policy. - The State shall promote and develop a tax-exempt employees’ compensation program whereby employees and their dependents, in the event of workconnected disability or death, may promptly secure adequate income benefit and medical related benefits. Workmen’s Compensation Program This is the general and comprehensive term applied to those laws providing for compensation for loss resulting from the injury, disablement, or death of workmen through industrial accident, casualty, or disease. [Azucena, The Labor Code with Comments and Cases]
C.5 ARTICLE 212 (NOW ARTICLE 218) Article 212.Definitions. – (a) “Commission” means the National Labor Relations Commission or any of its divisions, as the case may be, as provided under this Code. (b) “Bureau” means the Bureau of Labor Relations and/or the Labor Relations Divisions in the regional offices established under Presidential Decree No. 1, in the Department of Labor. (c) “Board” means the National Conciliation and Mediation Board established under Executive Order No. 126. (d) “Council” means the Tripartite Voluntary Arbitration Advisory Council established under Executive Order No. 126, as amended. (e) “Employer” includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer. (f) “Employee” includes any person in the employ of an employer. The term shall not be limited to the employees of a particular
C.4 ARTICLE 211 (NOW ARTICLE 217) [Article 211.] Declaration of Policy. – A. It is the policy of the State: (a) To promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes; (b) To promote free trade unionism as an instrument for the enhancement of democracy and the promotion of social justice and development; (c) To foster the free and voluntary organization of a strong and united labor movement; 8
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employer, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment. (g) “Labor organization” means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment. (h) “Legitimate labor organization” means any labor organization duly registered with the Department of Labor and Employment, and includes any branch or local thereof. (i) “Company union” means any labor organization whose formation, function or administration has been assisted by any act defined as unfair labor practice by this Code. (j) “Bargaining representative” means a legitimate labor organization whether or not employed by the employer. (k) “Unfair labor practice” means any unfair labor practice as expressly defined by the Code. (l) “Labor dispute” includes any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee. (m) “Managerial employee” is one who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book.
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(n) “Voluntary Arbitrator” means any person accredited by the Board as such or any person named or designated in the Collective Bargaining Agreement by the parties to act as their Voluntary Arbitrator, or one chosen with or without the assistance of the National Conciliation and Mediation Board, pursuant to a selection procedure agreed upon in the Collective Bargaining Agreement, or any official that may be authorized by the Secretary of Labor and Employment to act as Voluntary Arbitrator upon the written request and agreement of the parties to a labor dispute. (o) “Strike” means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. (p) “Lockout” means any temporary refusal of an employer to furnish work as a result of an industrial or labor dispute. (q) “Internal union dispute” includes all disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by laws of a union, including any violation of the rights and conditions of union membership provided for in this Code. (r) “Strike-breaker” means any person who obstructs, impedes, or interferes with by force, violence, coercion, threats, or intimidation any peaceful picketing affecting wages, hours or conditions of work or in the exercise of the right of selforganization or collective bargaining. (s) “Strike area” means the establishment, warehouses, depots, plants or offices, including the sites or premises used as runaway shops, of the employer struck against, as well as the immediate vicinity actually used by picketing strikers in moving to and fro before all points of entrance to and exit from said establishment.
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C.6 ARTICLE 255 (NOW ARTICLE 261)
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worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. The Secretary of the Department of Labor and Employment may suspend the effects of the termination pending resolution of the dispute in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom such dispute is pending that the termination may cause a serious labor dispute or is in implementation of a mass lay-off.
Article 255.Exclusive bargaining representation and workers’ participation in policy and decision making. - The labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit shall be the exclusive representative of the employees in such unit for the purpose of collective bargaining. However, an individual employee or group of employees shall have the right at any time to present grievances to their employer. Any provision of law to the contrary notwithstanding, workers shall have the right, subject to such rules and regulations as the Secretary of Labor and Employment may promulgate, to participate in policy and decision-making processes of the establishment where they are employed insofar as said processes will directly affect their rights, benefits and welfare. For this purpose, workers and employers may form labor-management councils: Provided, That the representatives of the workers in such labor-management councils shall be elected by at least the majority of all employees in said establishment.
(c) Any employee, whether employed for a definite period or not, shall, beginning on his first day of service, be considered as an employee for purposes of membership in any labor union.
C.7 ARTICLE 277 (NOW ARTICLE 283) Article 277.Miscellaneous provisions. – (a) All unions are authorized to collect reasonable membership fees, union dues, assessments and fines and other contributions for labor education and research, mutual death and hospitalization benefits, welfare fund, strike fund and credit and cooperative undertakings.
(d) No docket fee shall be assessed in labor standards disputes. In all other disputes, docket fees may be assessed against the filing party, provided that in bargaining deadlock, such fees shall be shared equally by the negotiating parties.
(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the
(e) The Minister of Labor and Employment and the Minister of the Budget shall cause to be created or reclassified in accordance with law such positions as may be necessary to carry out the objectives of this Code and cause the 10
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upgrading of the salaries of the personnel involved in the Labor Relations System of the Ministry. Funds needed for this purpose shall be provided out of the Special Activities Fund appropriated by Batas Pambansa Blg. 80 and from annual appropriations thereafter.
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(h) In establishments where no legitimate labor organization exists, labor-management committees may be formed voluntarily by workers and employers for the purpose of promoting industrial peace. The Department of Labor and Employment shall endeavor to enlighten and educate the workers and employers on their rights and responsibilities through labor education with emphasis on the policy thrusts of this Code.
(f) A special Voluntary Arbitration Fund is hereby established in the Board to subsidize the cost of voluntary arbitration in cases involving the interpretation and implementation of the Collective Bargaining Agreement, including the Arbitrator’s fees, and for such other related purposes to promote and develop voluntary arbitration. The Board shall administer the Special Voluntary Arbitration Fund in accordance with the guidelines it may adopt upon the recommendation of the Council, which guidelines shall be subject to the approval of the Secretary of Labor and Employment. Continuing funds needed for this purpose in the initial yearly amount of fifteen million pesos (P15,000,000.00) shall be provided in the 1989 annual general appropriations acts.
(i) To ensure speedy labor justice, the periods provided in this Code within which decisions or resolutions of labor relations cases or matters should be rendered shall be mandatory. For this purpose, a case or matter shall be deemed submitted for decision or resolution upon the filing of the last pleading or memorandum required by the rules of the Commission or by the Commission itself, or the Labor Arbiter, or the Director of the Bureau of Labor Relations or Med-Arbiter, or the Regional Director. Upon expiration of the corresponding period, a certification stating why a decision or resolution has not been rendered within the said period shall be issued forthwith by the Chairman of the Commission, the Executive Labor Arbiter, or the Director of the Bureau of Labor Relations or Med-Arbiter, or the Regional Director, as the case may be, and a copy thereof served upon the parties.
The amount of subsidy in appropriate cases shall be determined by the Board in accordance with established guidelines issued by it upon the recommendation of the Council. The Fund shall also be utilized for the operation of the Council, the training and education of Voluntary Arbitrators, and the Voluntary Arbitration Program.
Despite the expiration of the applicable mandatory period, the aforesaid officials shall, without prejudice to any liability which may have been incurred as a consequence thereof, see to it that the case or matter shall be decided or resolved without any further delay.
(g) The Ministry shall help promote and gradually develop, with the agreement of labor organizations and employers, labormanagement cooperation programs at appropriate levels of the enterprise based on the shared responsibility and mutual respect in order to ensure industrial peace and improvement in productivity, working conditions and the quality of working life. 11
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II. Recruitment and Placement
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Provided, That the receiving country is taking positive, concrete measures to protect the rights of migrant workers in furtherance of any of the guarantees under subparagraphs (a), (b) and (c) hereof. [Sec. 3, RA 8042, as amended]
A. RECRUITMENT OF LOCAL AND MIGRANT WORKERS
A.1. ILLEGAL RECRUITMENT Worker Refers to “any member of the labor force, whether employed or unemployed.” [Art.13(a), LC)
[Sec. 5, R.A. No. 10022] i. License and Authority A license is a document issued by the Department of Labor and Employment (DOLE) authorizing a person or entity to operate a private employment agency, while an authority is a document issued by the DOLE authorizing a person or association to engage in recruitment and placement activities as a private recruitment agency. [Art. 13(d) and (f), LC]
Overseas Filipino Worker Refers to “a person who is to be engaged, is engaged or has been engaged in a remunerated activity in a state of which he or she is not a citizen or on board a vessel navigating the foreign seas other than a government ship used for military or noncommercial purposes or on an installation located offshore or on the high seas; to be used interchangeably with migrant worker.” [Sec. 2(a), RA 8042, as amended] Policy of Selective Deployment The State shall allow the deployment of overseas Filipino workers only in countries where the rights of Filipino migrant workers are protected. The government recognizes any of the following as a guarantee on the part of the receiving country for the protection of the rights of overseas Filipino workers: (a) It has existing labor and social laws protecting the rights of workers, including migrant workers; (b) It is a signatory to and/or a ratifier of multilateral conventions, declarations or resolutions relating to the protection of workers, including migrant workers; and (c) It has concluded a bilateral agreement or arrangement with the government on the protection of the rights of overseas Filipino Workers:
License
Authority
Authorize an entity to operate as a private employment agency When a license is given, one is also authorized to collect fees
Authorize an entity to operate as a private recruitment entity Does not entitle a private recruitment entity to collect fees.
Private employment agency (PEA) v. Private recruitment entity (PRE)
Type
Definition
Private Any person or employment entity engaged in agency recruitment and placement of workers for a fee Any person or Private recruitment association engaged in the entity recruitment and placement of workers, locally or overseas, without charging, directly or indirectly, any fee 12
Requires License
Authority
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Entities disqualified from being issued a license (1) Travel agencies and sales agencies of airline companies. [Art. 26] (2) Officers or members of the Board of any corporation or members in partnership engaged in the business of a travel agency. (3) Corporations and partnerships, when any of its officers, members of the board or partners, is also an officer, member of the board of partner of a corporation or partnership engaged in the business of a travel agency. (4) Persons, partnerships or corporations which have derogatory records. (5) Any official or employee of the DOLE, POEA, OWWA, DFA and other government agencies directly involved in the implementation of R.A. 8042 as amended and/or any of his/her relatives within the 4th civil degree of consanguinity and affinity. [POEA Rules of 2002]
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Enforceability of the license Licensed agencies are prohibited from conducting any recruitment activities of any form outside of the address stated in the license, acknowledged branch or extension office, without securing prior authority from the POEA. [People vs. Buli-e (2003)] Duration of Validity 4 years [POEA Rules of 2002] Citizenship requirement (1) Only Filipino citizens or (2) Corporations, partnerships or entities at least seventy-five percent (75%) of the authorized and voting capital stock of which is owned and controlled by Filipino citizens shall be permitted to participate in the recruitment and placement of workers, locally or overseas. [Art. 27, LC] SEE: POEA Rules, Part II, Rule I, Sec. 1(a) Capitalization requirement All applicants for authority to hire or renewal of license to recruit are required to have such substantial capitalization as determined by the Secretary of Labor. [Art. 28, LC)]
Non-transferability of license or authority (1) No license or authority shall be used directly or indirectly by any person other than the one in whose favor it was issued or at any place other than that stated in the license or authority, (2) Nor may such license or authority be transferred, conveyed, or assigned to any other person or entity.
Based on POEA Rules the following are the substantial capital requirements: (1) Single proprietorships or partnerships with minimum capitalization of P2,000,000. (2) Corporations with minimum paid-up capital of P2,000,000.
Any transfer of business address, appointment or designation of any agent or representative including the establishment of additional offices anywhere shall be subject to the prior approval of the Department of Labor. [Art. 29, LC]
B. ESSENTIAL ELEMENTS ILLEGAL RECRUITMENT
OF
“Recruitment and placement" refers to any act of (C-E-C-T-U-H) (a) Canvassing, (b) Enlisting, (c) Contracting, (d) Transporting, (e) Utilizing, or (f) Hiring procuring workers,
[SEE: POEA Rules Part II, Rule II, Sec. 7, 8, and 9.]
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And also includes (a) Referrals, (b) Contract services, (c) Promising, or (d) Advertising for employment, locally or abroad, whether for profit or not
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Promising employment Promising employment as factory workers and receiving money allegedly for processing papers without authorization or license is engaging into unlawful recruitment and placement activities. The absence of the necessary license or authority renders all of accused-appellant’s recruitment activities criminal. [People vs. Saulo (2000)]
Provided, That any person or entity which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement. [Art. 13 (b), LC] Any of the acts mentioned above constitutes recruitment and placement. The proviso provides for a presumption that a person or entity so described engages in recruitment and placement [People v. Panis (1988)]
C. SIMPLE ILLEGAL RECRUITMENT C.1. ILLEGAL RECRUITMENT FOR LOCAL WORKERS (GOVERNED BY THE LABOR CODE) Simple Illegal Recruitment (local) Elements: (1) The person charged with the crime must have undertaken recruitment activities defined under Art. 13(b) or prohibited activities defined under Art. 34; and (2) The said person does not have a license or authority to do so. [Art. 38, LC]
What constitutes recruitment? The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of workers. Any of the acts mentioned in Article 13(b) will constitute recruitment and placement even if only one prospective worker is involved. The proviso merely lays down a rule of evidence that where a fee is collected in consideration of a promise or offer of employment to two or more prospective workers, the individual or entity dealing with them shall be presumed to be engaged in the act of recruitment and placement. [People v. Panis, 1988]
Profit or lack thereof is immaterial The act of recruitment may be "for profit or not." Notably, it is the lack of the necessary license or authority, not the fact of payment that renders the recruitment activity of LCL unlawful. [C.F. Sharp vs. Espanol (2007)] Accused must give the impression of ability to send complainant abroad It is well-settled that to prove illegal recruitment, it must be shown that appellant gave complainants the distinct impression that she had the power or ability to send complainants abroad for work such that the latter were convinced to part with their money in order to be employed. [People v. Ochoa (2011)]
Acts of referral The act of referral, which is included in recruitment, is "the act of passing along or forwarding of an applicant for employment after an initial interview of a selected applicant for employment to a selected employer, placement officer or bureau." [Rodolfo vs. People (2006)]
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Contract Substitution amounts to Illegal Recruitment The reduced salaries and employment period in the new employment contract contradicted the POEA-approved employment contract. By this act of contract substitution, respondents committed a prohibited practice and engaged in illegal recruitment as defined in Art. 34(i), LC. [PERT/CPM Manpower Exponent Co. v. Vinuya (2012)]
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(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized representatives; (h) To fail to file reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor. (i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor; (j) To become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of a travel agency; and (k) To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under this Code and its implementing rules and regulations. [Art. 34, LC]
Prohibited practices It shall be unlawful for any individual, entity, licensee, or holder of authority: (a) To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay any amount greater than that actually received by him as a loan or advance; (b) To furnish or publish any false notice or information or document in relation to recruitment or employment; (c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under this Code. (d) To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment; (e) To influence or to attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency; (f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines;
C.2. ILLEGAL RECRUITMENT MIGRANT WORKERS
FOR
[Governed by R.A. 8042, as amended by, R.A. 10022] Simple Illegal Recruitment 1st type: (1) Person charged undertakes any recruitment activity as defined in Art.13 (b) of the Labor Code; and (2) Said person does not have a license or authority to do so.
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2nd type: (1) Person charged commits any of the enumerated acts under Sec. 6 of R.A. 8042, as amended by, R.A. 10022. (2) It is immaterial whether he is a holder or not of any license or authority Illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by non-licensee or nonholder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines
(d)
(e)
Provided, That any such non-licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. [Sec. 6, RA 8042 as amended]
(f)
(g) Other prohibited acts It shall likewise include the following acts, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority: (a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay or acknowledge any amount greater than that actually received by him as a loan or advance; (b) To furnish or publish any false notice or information or document in relation to recruitment or employment; (c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under the
(h)
(i)
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Labor Code, or for the purpose of documenting hired workers with the POEA, which include the act of reprocessing workers through a job order that pertains to nonexistent work, work different from the actual overseas work, or work with a different employer whether registered or not with the POEA; To include or attempt to induce a worker already employed to quit his employment in order to offer him another unless the transfer is designed to liberate a worker from oppressive terms and conditions of employment; To influence or attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency or who has formed, joined or supported, or has contacted or is supported by any union or workers' organization; To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines; To fail to submit reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor and Employment; To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment; For an officer or agent of a recruitment or placement agency to become an officer or member of the Board of any corporation engaged in travel agency or to be engaged
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directly or indirectly in the management of travel agency; (j) To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations, or for any other reasons, other than those authorized under the Labor Code and its implementing rules and regulations; (k) Failure to actually deploy a contracted worker without valid reason as determined by the Department of Labor and Employment; (l) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage; and (m) To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency.
(4)
(5)
(6)
(7)
In addition to the acts enumerated above, it shall also be unlawful for any person or entity to commit the following prohibited acts: (1) Grant a loan to an overseas Filipino worker with interest exceeding eight percent (8%) per annum, which will be used for payment of legal and allowable placement fees and make the migrant worker issue, either personally or through a guarantor or accommodation party, postdated checks in relation to the said loan; (2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to avail of a loan only from specifically designated institutions, entities or persons; (3) Refuse to condone or renegotiate a loan incurred by an overseas Filipino worker after the latter's employment contract has
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been prematurely terminated through no fault of his or her own; Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo health examinations only from specifically designated medical clinics, institutions, entities or persons, except in the case of a seafarer whose medical examination cost is shouldered by the principal/shipowner; Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo training, seminar, instruction or schooling of any kind only from specifically designated institutions, entities or persons, except for recommendatory trainings mandated by principals/shipowners where the latter shoulder the cost of such trainings; For a suspended recruitment/manning agency to engage in any kind of recruitment activity including the processing of pending workers' applications; and For a recruitment/manning agency or a foreign principal/employer to pass on the overseas Filipino worker or deduct from his or her salary the payment of the cost of insurance fees, premium or other insurance related charges, as provided under the compulsory worker's insurance coverage. [Sec. 6, RA 8042 as amended]
Migrant Workers’ Act (MWA) expands the definition of illegal recruitment The amendments to the Labor Code introduced by Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, broadened the concept of illegal recruitment and provided stiffer penalties, especially for those that constitute economic sabotage. [People v. Ocden (2011)]
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Law Labor Code
Applicabili ty Local Workers
LABOR STANDARDS Acts Punishabl e Art. 13(b) Art. 34
RA Migrant 8042 Workers as amend ed by RA 10022
Art. 13(b) Labor Code Enumerat ed prohibite d acts in Section 6
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and Employment, particularly with respect to the securing of license or an authority to recruit and deploy workers, either locally or overseas; and (3) The accused commits the unlawful acts against three or more persons individually or as a group.
Who can be punished Nonlicensee Nonlicensee Nonlicensee
Three or more complainants must be in a single case When the Labor Code speaks of illegal recruitment "committed against three (3) or more persons individually or as a group," it must be understood as referring to the number of complainants in each case who are complainants therein, otherwise, prosecutions for single crimes of illegal recruitment can be cumulated to make out a case of large scale illegal recruitment.
Licensee/ Nonlicensee
D. ILLEGAL RECRUITMENT IN LARGE SCALE Illegal recruitment by a syndicate (1) The offender undertakes either any activity within the meaning of "recruitment and placement" defined under Article 13(b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code; (2) He has no valid license or authority required by law to enable one to lawfully engage in recruitment and placement of workers; AND (3) The illegal recruitment is committed by a group of three (3) or more persons conspiring or confederating with one another. [People v. Gallo (2010)]
In other words, a conviction for large scale illegal recruitment must be based on a finding in each case of illegal recruitment of three or more persons whether individually or as a group. [People vs. Reyes (1995)]
E. ILLEGAL RECRUITMENT AS ECONOMIC SABOTAGE E.1 OFFENSE INVOLVING ECONOMIC SABOTAGE (LARGE-SCALE OR BY A SYNDICATE) Illegal recruitment is considered economic sabotage when the commission thereof is attended by the ff. qualifying circumstances: (1) By a syndicate - if carried out by a group of 3 or more persons conspiring and confederating with one another; In large scale - if committed against 3 or more persons individually or as a group. [Art. 38(b), LC]
Illegal recruitment in large scale The acts committed by the accused constituted illegal recruitment in large scale, whose essential elements are the following: (1) The accused engages in acts of recruitment and placement of workers defined under Article 13(b) of the Labor Code or in any prohibited activities under Article 43 of the Labor Code; (2) The accused has not complied with the guidelines issued by the Secretary of Labor 18
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E.2 OFFENSE INVOLVING ECONOMIC SABOTAGE (LARGE-SCALE OR BY A SYNDICATE)
by other laws. Conversely, conviction for estafa under par. 2(a) of Art. 315 of the Revised Penal Code does not bar a conviction for illegal recruitment under the Labor Code. It follows that one's acquittal of the crime of estafa will not necessarily result in his acquittal of the crime of illegal recruitment in large scale, and vice versa.” [People v. Ochoa (2011); People v. Ocden (2011)]
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or as a group.
F. ILLEGAL ESTAFA
RECRUITMENT
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G. LIABILITIES
VS.
G.1 LOCAL RECRUITMENT AGENCY
Illegal recruitment and estafa are entirely different offenses and neither one necessarily includes or is necessarily included in the other. A person who is convicted of illegal recruitment may, in addition, be convicted of estafa by false pretenses or fraudulent acts under Article 315, paragraph 2(a) of the Revised Penal Code. In the same manner, a person acquitted of illegal recruitment may be held liable for estafa. Double jeopardy will not set in because illegal recruitment is malum prohibitum, in which there is no necessity to prove criminal intent, whereas estafa is malum in se, in the prosecution of which, proof of criminal intent is necessary. [Rosita Sy vs. People (2010)]
1.I. ILLEGAL RECRUITMENT INVOLVING LOCAL WORKERS [ART. 39, LC] Act Illegal recruitment constituting economic sabotage Licensee or holder or authority violating or causing another to violate Title I, Book I, LC Violating or causing another to violate Title I, Book I, LC
One convicted for illegal recruitment may still be convicted of estafa In People v. Cortez the Court explained that: “In this jurisdiction, it is settled that a person who commits illegal recruitment may be charged and convicted separately of illegal recruitment under the Labor Code and estafa under par. 2(a) of Art. 315 of the Revised Penal Code. The offense of illegal recruitment is malum prohibitum where the criminal intent of the accused is not necessary for conviction, while estafa is malum in se where the criminal intent of the accused is crucial for conviction. Conviction for offenses under the Labor Code does not bar conviction for offenses punishable
Penalty Life imprisonment AND Fine: P100,000.00 2 years ≤ Imprisonment ≤ 5 years OR P10,000 ≤ Fine ≤ P50,000 OR both 4 years ≤ Imprisonment ≤ 8 years OR P20,000 ≤ Fine ≤ P100,000 OR both
If the offender is a corporation, partnership, association or entity, the penalty shall be imposed upon the officer or officers of the corporation, partnership, association or entity responsible for violation. If such officer is an alien, he shall, in addition to the penalties herein prescribed, be deported without further proceedings. In every case, conviction shall cause and carry the automatic revocation of the license or 19
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authority and all the permits and privileges granted to such person or entity under this Title, and the forfeiture of the cash and surety bonds in favor of the Overseas Employment Development Board or the National Seamen Board, as the case may be, both of which are authorized to use the same exclusively to promote their objectives.
E.g. In this case the appellant was both the APSC Vice-President-Treasurer and the Assistant General Manager. She was a high corporate officer who had direct participation in the management, administration, direction and control of the business of the corporation, and is thus liable under Sec. 6 of RA 8042. The terms “control, management or direction” broadly cover all phases of business operation, including the aspects of administration, marketing and finances, among others. [People vs. Sagayaga (2004)]
II. ILLEGAL RECRUITMENT INVOLVING MIGRANT WORKERS [Sec. 7, RA 8042 as amended by RA 10022]
Act Illegal recruitment
Illegal recruitment constituting economic sabotage
Prohibited Act/s
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Penalty
(2) Local Employment Agency is solidarily liable with foreign principal. Severance of relations between local agent and foreign principal does not affect liability of local recruiter. Private employment agencies are held jointly and severally liable with the foreignbased employer for any violation of the recruitment agreement or contract of employment. This joint and solidary liability imposed by law against recruitment agencies and foreign employers is meant to assure the aggrieved worker of immediate and sufficient payment of what is due him. [Becmen Service Exporter and Promotion, Inc. v. Spouses Cuaresma, G.R. 182978-79, April 7, 2009]
12 years and 1 day ≤ Imprisonment ≤ 20 years AND P1M ≤ Fine ≤ P2M Life imprisonment AND P2M ≤ Fine ≤ P5M Maximum penalty: 1. illegally recruited person below 18 years old OR 2. Without license/authority 6 years and 1 day ≤ Imprisonment ≤ 12 years AND P500k ≤ Fine ≤ P1M
If the offender is an alien, he or she shall, in addition to the penalties herein prescribed, be deported without further proceedings.
(3) If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. [Becmen Service Exporter and Promotion, Inc. v. Spouses Cuaresma, G.R. 182978-79, April 7, 2009]
In every case, conviction shall cause and carry the automatic revocation of the license or registration of the recruitment/manning agency, lending institutions, training school or medical clinic. Common Rules on Liability (1) Employees of a company corporation engaged in illegal recruitment may be held liable as principal, together with his employer, if it is shown that he actively and consciously participated in illegal recruitment.
(4) Foreign employer shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the 20
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contract, including but not limited to payment of wages, death and disability compensation and repatriation
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Consequently, notice to the former of any violation thereof is notice to the latter. It may be good to note the case of Sunace International Management Services Inc v NLRC, GR No. 161757, January 25, 2006 where the theory of imputed knowledge was mentioned because it was used to try and make an agency liable. The SC said that the argument made was a misapplication of the theory of imputed knowledge: “The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal, employer Xiong, not the other way around. The knowledge of the principal-foreign employer cannot, therefore, be imputed to its agent Sunace.”
Common Rules on Illegal Recruitment (Local or Overseas) Venue A criminal action arising from illegal recruitment shall be filed with the RTC of the province or city: (1) where the offense was committed or (2) where the offended party actually resides at the time of the commission of the offense. [Sec. 9, R.A. 8042 [this part was not amended by R.A. 10022]]. Prescriptive Periods (1) Simple Illegal Recruitment – 5 years (2) Illegal Recruitment involving Economic Sabotage – 20 years. (Sec. 12, R.A. 8042 [this part was not amended by R.A, 10022]).
Solidary Liability Solidary Liability of Agent and Principal The written application for a license to operate a private employment or manning agency shall be submitted with, among others, a VERIFIED UNDERTAKING stating that the applicant:
Foreign Employer Foreign employer shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the contract, including but not limited to payment of wages, death and disability compensation and repatriation
(1) Shall assume full and complete responsibility for all claims and liabilities which may arise in connection with the use of license; all acts of its officials, employees and representatives done in connection with recruitment and placement;
Theory of imputed knowledge This is a doctrine in agency which states that the principal is chargeable with and bound by the knowledge of or notice to his agent received while the agent was acting as such. Simply put, notice to the agent is notice to the principal.
(2) Shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the contract, including but not limited to payment of wages, death and disability compensation and repatriation;
Since the local employment agency is considered the agent of the foreign employer, the principal, knowledge of the former of existing labor and social legislation in the Philippines is binding on the latter.
(3) Shall guarantee compliance with the existing labor and social legislations of the Philippines and of the country of employment of recruited workers [POEA Rules, Book II, Rule II, Sec. 1 (f) (2-5)] 21
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Purpose of Solidary Liability The fact that the manning agency and its principal have already terminated their agency agreement does not relieve the former of its liability. The agency agreement with the principal even if ended as between them, still extends up to and until the expiration of, the employment contracts of the employees recruited and employed pursuant to the said recruitment agreement. Otherwise, this will render nugatory the very purpose for which the law governing the employment of workers for foreign jobs abroad was enacted, that is, to assure aggrieved workers of immediate and sufficient payment of what is due them. [OSM Shipping Phil, Inc. v. NLRC (2003)]
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Serrano ruling: invalidated the 3-month salary cap The issue in this case is the constitutionality of the last clause of Sec.10 of RA 8042: Sec. 10. Money Claims. - x xx In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. The Court held that said clause is unconstitutional for being an invalid classification, in violation of the equal protection clause. (Serrano v. Gallant Maritime Services, Inc., G.R. No. 167614, March 24, 2009)
Pre-Termination of Contract of Migrant Worker [Sec. 10, R.A. 8042, as amended by R.A. 10022] In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, or any unauthorized deductions from the migrant worker's salary
In the case of Yap v. Thenamaris Ship’s Management and Intermare Maritime Agencies, Inc. (G.R. No. 179532, May 30, 2011), RA 8042 was declared unconstitutional while the case was pending in the SC. The Court affirmed the Serrano ruling, but did not apply the Operative Fact doctrine: “As an exception to the general rule, the doctrine applies only as a matter of equity and fair play.”
The worker shall be entitled to the full reimbursement of: (1) his placement fee and the deductions made with interest at twelve percent (12%) per annum (2) plus his salaries for the unexpired portion of his employment contract OR for three (3) months for every year of the unexpired term, whichever is less.
In view of the reenactment of the section in RA 8042 which was declared unconstitutional in Serrano, it would be good to note the case of Sameer Overseas Placement Agency v Cabiles (G.R. No. 170139, August 05, 2014) where the SC ruled:
Rule before Serrano: 3-month salary rule applies The employment contract involved in the instant case covers a two-year period but the overseas contract worker actually worked for only 26 days prior to his illegal dismissal. Thus, the three months’ salary rule applies [Flourish Maritime Shipping v. Almanzor, G.R. No. 177948, March 14, 2008]
“We reiterate our finding in Serrano v. Gallant Maritime that limiting wages that should be recovered by an illegally dismissed overseas worker to three months is both a violation of due process and the equal protection clauses of the Constitution.”
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Who can suspend or cancel the license? (1) DOLE Secretary (2) POEA Administrator
A. DIRECT HIRING General Rule: No employer may hire a Filipino worker for overseas employment except through the Boards and entities authorized by the Secretary of Labor. (Art. 18, LC)
The power to suspend or cancel any license or authority to recruit employees for overseas employment is concurrently vested with the POEA and the Secretary of Labor. [People v. Diaz, 259 SCRA 441 (1996)]
Exceptions: (1) Members of the diplomatic corps; (2) International organizations; (3) Such other employees as may be allowed by the Sec. of Labor; (4) Name hirees – those individuals who are able to secure contracts for overseas employment on their own efforts and representation without the assistance or participation of any agency. Their hiring, nonetheless, has to be processed through the POEA. (Part III, Rule III of the POEA Rules Governing Overseas Employment as amended in 2002)
B.2. REGULATORY AND VISITORIAL POWERS OF THE DOLE SECRETARY Regulatory powers [Art. 36, LC] The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this Title and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of this Title. Visitorial powers [Art. 37, LC] The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of accounts and records of any person or entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on violations of any provisions of this Title.
B. REGULATIONS AND ENFORCEMENT B.1. SUSPENSION OR CANCELLATION OF LICENSE OR AUTHORITY The Secretary of Labor shall have the power to suspend or cancel any license or authority to recruit employees for overseas employment for violation of rules and regulations issued by the Department of Labor, the Overseas Employment Development Board, and the National Seamen Board violation of the provisions of this and other applicable laws, General Orders and Letters of Instructions. (Article 35, LC)
Note the old case of Salazar v Achacoso, G.R. No. 81510 March 14, 1990 which declared that Article 38 of the LC is unconstitutional and that the Secretary of Labor and Employment cannot issue a warrant of arrest.
The acts prohibited under Article 34 are grounds for suspension or cancellation of license. Note that they likewise constitute illegal recruitment under R.A. 8042 as amended by R.A. 10022.
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B.3. REMITTANCE OF EXCHANGE EARNINGS
LABOR STANDARDS
FOREIGN
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B.4. PROHIBITED ACTIVITIES Prohibited practices It shall be unlawful for any individual, entity, licensee, or holder of authority: (a) To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay any amount greater than that actually received by him as a loan or advance; (b) To furnish or publish any false notice or information or document in relation to recruitment or employment; (c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under this Code. (d) To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment; (e) To influence or to attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency; (f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines; (g) To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized representatives; (h) To fail to file reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor. (i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time of
It shall be mandatory for all Filipino workers abroad to remit a portion of their foreign earnings to their families, dependents, and/or beneficiaries in the country (Art. 22, LC) Amount required to be remitted [Executive Order No. 857] The amount of one’s salary required to be remitted depends on the type or nature of work performed by the employee. The following are the percentages of foreign exchange remittance required from various kinds of migrant workers: (1) Seaman or mariner – 80% of their basic salary (2) Workers for Filipino contractors and construction companies – 70% (3) Doctors, engineers, teachers, nurses and other professional workers whose contract provide for free board and lodging – 70% (4) All other professional workers whose employment contracts do not provide for free board and lodging facilities – 50% (5) Domestic and other service workers – 50% (6) All other workers not falling under the aforementioned categories – 50% (7) Performing artists – 50% Individuals exempted from the mandatory remittance requirement: (1) The immediate family members, dependents or beneficiaries of migrant workers residing with the latter abroad; (2) Filipino servicemen working within US military installations; (3) Immigrants and Filipino professionals working with the United Nations and its agencies or other specialized bodies.
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actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor; (j) To become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of a travel agency; and To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under this Code and its implementing rules and regulations. (Art. 34, LC)
(e)
(f)
(g) Other prohibited acts It shall likewise include the following acts, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority: (a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay or acknowledge any amount greater than that actually received by him as a loan or advance; (b) To furnish or publish any false notice or information or document in relation to recruitment or employment; (c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under the Labor Code, or for the purpose of documenting hired workers with the POEA, which include the act of reprocessing workers through a job order that pertains to nonexistent work, work different from the actual overseas work, or work with a different employer whether registered or not with the POEA; (d) To include or attempt to induce a worker already employed to quit his employment
(h)
(i)
(j)
(k)
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in order to offer him another unless the transfer is designed to liberate a worker from oppressive terms and conditions of employment; To influence or attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency or who has formed, joined or supported, or has contacted or is supported by any union or workers' organization; To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines; To fail to submit reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor and Employment; To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment; For an officer or agent of a recruitment or placement agency to become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of travel agency; To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations, or for any other reasons, other than those authorized under the Labor Code and its implementing rules and regulations; Failure to actually deploy a contracted worker without valid reason as determined
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by the Department of Labor and Employment; (l) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage; and (m) To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency.
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(5) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo training, seminar, instruction or schooling of any kind only from specifically designated institutions, entities or persons, except for recommendatory trainings mandated by principals/shipowners where the latter shoulder the cost of such trainings; (6) For a suspended recruitment/manning agency to engage in any kind of recruitment activity including the processing of pending workers' applications; and (7) For a recruitment/manning agency or a foreign principal/employer to pass on the overseas Filipino worker or deduct from his or her salary the payment of the cost of insurance fees, premium or other insurance related charges, as provided under the compulsory worker's insurance coverage. (Sec. 6, RA 8042 as amended)
In addition to the acts enumerated above, it shall also be unlawful for any person or entity to commit the following prohibited acts: (1) Grant a loan to an overseas Filipino worker with interest exceeding eight percent (8%) per annum, which will be used for payment of legal and allowable placement fees and make the migrant worker issue, either personally or through a guarantor or accommodation party, postdated checks in relation to the said loan; (2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to avail of a loan only from specifically designated institutions, entities or persons; (3) Refuse to condone or renegotiate a loan incurred by an overseas Filipino worker after the latter's employment contract has been prematurely terminated through no fault of his or her own; (4) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo health examinations only from specifically designated medical clinics, institutions, entities or persons, except in the case of a seafarer whose medical examination cost is shouldered by the principal/shipowner; 26
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III. Labor Standards
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A.2. MANAGERIAL EMPLOYEES Two definitions of “managerial employees” in the Labor Code:
A. COVERAGE [Art. 82, Labor Code]
[Art. 82, LC] Those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof and to other officers or members of the managerial staff.
General rule: Shall apply to employees in all establishments and undertakings whether for profit or not. (Art. 82, LC) Exceptions (NOT Covered): (1) Government employees (Art. 82; Art. 76) (2) Managerial Employees including members of the managerial staff (Art. 82) (3) Field Personnel (Art. 82) (4) Members of the family of the employer who are dependent on him for support (Art. 82); (5) Domestic helpers and persons in personal service of another (Art. 141, RA 10361) (6) Workers who are paid by result as determined by DOLE regulation (Art. 82)
[Art. 212 (m), LC] One who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank and file employees for purposes of this Book.
A.1. GOVERNMENT EMPLOYEES The terms and conditions of employment of all government employees, including employees of GOCCs, are governed by the Civil Service rules and regulations, not by the Labor Code (Art. 282).
The definition in Art. 82 covers more people than that in Article 212 (m) as Article 82 also includes managerial staff. In effect, managerial employees in Article 82 includes supervisors, but Article 212(m) does not.
However, not all GOCCs are governed by the Civil Service Rules; only those created by original charter:
It follows that under Book V, supervisors are allowed to form, join or assist a labor union. Supervisors are not, however, entitled to the benefits under Book III Articles 83 through 96, being part of the exemption of managerial employees as defined in Article 82. (Azucena)
Following Sec. 2(i) Art. IX-B of 1987 Phil. Constitution, the test in determining whether a government owned corporation is subject to the Labor Code or the Civil Service law is finding out what created it – if its created by a special charter, then, Civil Service Law applies, if it is created by the General Corporation Law, then the Labor Code applies. [PNOC Energy Development Corp. v. NLRC (1991)]
Characteristics of managerial employees [Book 3, Rule 1, Sec. 2(b), IRR] Managerial employees are exempted from the coverage of Book III Articles 83 through 96 if they meet all of the following conditions: (1) Their primary duty consists of the management of the establishment in
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A.3. FIELD PERSONNEL
which they are employed or of a department or sub-division thereof. (2) They customarily and regularly direct the work of two or more employees therein. (3) They have the authority to hire or fire employees of lower rank; or their suggestions and recommendations as to hiring and firing and as to the promotion or any other change of status of other employees, are given particular weight.
Non-agricultural employees: (1) Who regularly perform their duties away from the principal place of business or branch office of the employer AND (2) Whose actual hours of work in the field cannot be determined with reasonable certainty. (Art. 82, LC) Legal Test: Control and Supervision of ER Although the fishermen perform nonagricultural work away from petitioner’s business offices, the fact remains that throughout the duration of their work they are under the effective control and supervision of petitioner through the vessel’s patron or master. Hence, the fishermen are not “field personnel”. [Mercidar Fishing Corporation v. NLRC (1998)]
Managerial Staff also included as they are considered managerial employees as well [Book 3, Rule 1, Sec. 2(c), IRR] Officers or members of a managerial staff are also exempted if they perform the following duties and responsibilities: (1) Their primary duty consists of the performance of work directly related to management policies of their employer; (2) Customarily and regularly exercise discretion and independent judgment; (3) (a) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; OR (b) Execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; OR (c) Execute, under general supervision, special assignments and tasks; (4) Who do not devote more than 20% of their hours worked in a work week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2) and (3) above.
In order to determine whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee’s time and performance are constantly supervised by the employer. [Far East Agricultural Supply v. Lebatique [2007)]
A.4. DEPENDENT FAMILY MEMBERS Workers who are family members of the employer, and who are dependent on him for their support, are outside the coverage of this Title on working conditions and rest periods.
A.5. DOMESTIC HELPERS [Art. 141, LC.] "Domestic or household service" shall mean service in the employer’s home which is usually necessary or desirable for the maintenance and enjoyment thereof and includes ministering to the personal comfort and convenience of the members of the employer’s household including services of family drivers. 28
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Note: The Kasambahay Law (RA 10361) has redefined “domestic worker” or “kasambahay”:
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Associates, OP Decision No. 0183, cited by Azucena]
[RA 10361 Art. 1, Sec. 4 (d).] Domestic worker or “Kasambahay” refers to any person engaged in domestic work within an employment relationship such as but not limited to the following: general househelp, nursemaid or “yaya”, cook, gardener or laundry person but shall exclude any person who performs domestic work only occasionally or sporadically and not on an occupational basis.
A.7. WORKERS PAID BY RESULT [Book 3, Rule 1, Sec. 2 (e), IRR.] Workers who are paid by results, including those who are paid on piece work, “takay,” “pakiao” or task basis, and other nontime work if their output rates are in accordance with the standards prescribed under Section 8, Rule VII, Book Three of these regulations, or where such rates have been fixed by the Secretary of Labor and Employment in accordance with the aforesaid Section.
A.6. PERSONS IN PERSONAL SERVICE OF ANOTHER
Workers under piece-rate employment have no fixed salaries and their compensation is computed on the basis of accomplished tasks. That their work output might have been affected by the change in their specific work assignments does not necessarily imply that any resulting reduction in pay is tantamount to constructive dismissal. It is the prerogative of the management to change their assignments or to transfer them. [Best Wear Garments v. De Lemos and Ocubillo (2012)]
[Book 3, Rule 1, Sec. 2 (d), IRR] Domestic servants and persons in the personal service of another if they perform such services in the employer’s home which are usually necessary or desirable for the maintenance and enjoyment thereof or minister to the personal comfort convenience or safety of the employer as well as the members of his employer’s household.
Exclusivity of function required Note that the definition contemplates a domestic servant who is employed in the employer’s home to minister exclusively to the personal comfort and enjoyment of the employer’s family. [Azucena]
B. HOURS OF WORK B.1. COVERAGE/EXCLUSIONS See previous section (A. Coverage) which deals with the general rules of coverage and exclusions for the applicability of the Conditions of Employment provisions in Book III of the Labor Code.
Thus, it has been held that the following personnel are NOT domestic employees: (1) House personnel hired by a ranking company official but paid by the company itself to maintain a staff house provided for the official. [Cadiz v. Philippine Sinter Corp, NLRC Case No. 71729, cited by Azucena] (2) A family cook, who is later assigned to work as a watcher and cleaner of the employer’s business establishment, becomes an industrial worker entitled to receive the wages and benefits flowing from such status. [Villa v. Zaragosa and
B.2. NORMAL HOURS OF WORK General Rule: 8-Hour Labor Law The normal hours of work of any employee shall not exceed eight (8) hours a day. [Art. 83, LC] Note: Article 83 of the Labor Code only set a maximum of number of hours as "normal hours of work" but did not prohibit work of less 29
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than eight hours [Legend Hotel v. Realuyo (2012)]
LABOR LAW
General principles in determining if time is considered as hours worked [Book III, Rule 1, Sec. 4, IRR] (1) All hours are hours worked which the employee is required to give his employer, regardless of whether or not such hours are spent in productive labor or involve physical or mental exertion. (2) An employee need not leave the premises of the work place in order that his rest period shall not be counted, it being enough that he stops working, may rest completely and may leave his work place to go elsewhere, whether within or outside the premises of his work place. (3) If the work performed was necessary, or it benefited the employer, or the employee could not abandon his work at the end of his normal working hours because he had no replacement, all time spent for such work shall be considered as hours worked, if the work was with the knowledge of his employer or immediate supervisor. (4) The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be considered working time either: (a) If the imminence of the resumption of work requires the employee’s presence at the place of work, or (b) If the interval is too brief to be utilized effectively and gainfully in the employee’s own interest.
Exception to the 8-Hour Law: Work Hours of Health Personnel Health personnel in: (1) Cities and municipalities with a population of at least one million (1,000,000) OR (2) Hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case, they shall be entitled to an additional compensation of at least thirty percent (30%) of their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall include resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. [Art. 83, LC] Medical secretaries are also considered clinic personnel. [Azucena] Compensable Hours of Work (Art. 84, LC) Hours worked shall include: (1) All time during which an employee is required to be on duty or to be at a prescribed workplace; AND (2) All time during which an employee is suffered or permitted to work.
Rest period – short duration or “coffee break” Rest periods of short duration during working hours shall be counted as hours worked. [Art. 84, par. 2, LC] Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time. [Book III, Rule 1, Sec. 7, par. 2, IRR]
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premises; or the employees can use the time effectively for their own interest. In this case, the employer may extend the working hours beyond the regular schedule on that day to compensate for the loss of productive manhours without being liable for overtime pay. [Policy Instruction No. 36, May 22, 1978]
[Book 3, Rule 1, Sec. 4 (b), IRR.] An employee need not leave the premises of the work place in order that his rest period shall not be counted it being enough that he stops working may rest completely and may leave his work place to go elsewhere whether within or outside the premises of his work place.
Note: The time during which an employee is inactive by reason of work interruptions beyond his control is considered working time, either if the imminence of the resumption of work requires the employee’s presence at the place of work or if the interval is too brief to be utilized effectively and gainfully in the employee’s own interest. [Book III, Rule 1 Sec. 4-c OR]
On call An employee who is: (1) Required to remain on call in the employer’s premises or so close thereto (2) That he cannot use the time effectively and gainfully for his own purpose shall be considered as working while on call. Book III, Rule 1, Sec. 5(b), IRR. An employee who is not required to leave word at his home or with company officials where he may be reached is NOT working while on call.
Necessary Work After Normal Hours If the work performed was necessary, or it benefited the employer, or the employee could not abandon his work at the end of his normal working hours because he had no replacement, all the time spent for such work shall be considered as hours worked if the work was with the knowledge of his employer or immediate supervisor. [Book III, Rule 1, Sec. 4(c), IRR]
Inactive due to work interruptions The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be considered working time either: (1) If the imminence of the resumption of work requires the employee's presence at the place of work OR (2) If the interval is too brief to be utilized effectively and gainfully in the employee's own interest. [Book III, Rule 1, Sec. 4(d), IRR] Work interruption due to brownouts Brownouts of short duration, but not exceeding 20 minutes, shall be treated as hours worked, whether used productively by the employees or not.
Lectures, meetings, trainings Attendance at lectures, meetings, training programs, and other similar activities shall not be counted as working time if ALL of the following conditions are met: (1) Attendance is outside of the employee’s regular working hours; (2) Attendance is in fact voluntary; and (3) The employee does not perform any productive work during such attendance. [IRR, Book III, Rule 1, Sec. 6]
If they last more than 20 minutes, the time may not be treated as hours worked if the employees can leave their workplace or go elsewhere whether within or without the work
Note: (1) Attendance in lectures, meetings, and training periods sanctioned by the employer are considered hours worked. 31
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(2) Attendance in CBA negotiations or grievance meeting is compensable hours worked. (3) Attendance in hearings in cases filed by the employee is NOT compensable hours worked.
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Idle time The idle time that an employee may spend for resting and dining which he may leave the spot or place of work though not the premises of his employer, is not counted as working time only where the work is broken or is not continuous. [National Development Co. v. CIR (1962)]
(2) Travel that is all in the day’s work – Time spent by an employee in travel from jobsite to jobsite during the workday, must be counted as hours worked. Where an employee is required to report at a meeting place to receive instructions or to perform other work there, the travel from the designated place to the workplace is part of the day’s work. (3) Travel away from home - Travel that keeps an employee away from home overnight is travel away from home. Travel away from home is worktime when it cuts across the employee’s workday. The time is hours worked not only on regular working hours but also during the corresponding hours on non-working days.
A laborer need not leave the premises of the factory, shop or boat in order that his period of rest shall not be counted, it being enough that he "cease to work", may rest completely and leave or may leave at his will the spot where he actually stays while working, to go somewhere else, whether within or outside the premises of said factory, shop or boat. If these requisites are complied with, the period of such rest shall not be counted. [Luzon Stevedoring Co. v. Luzon Marine Department Union (1957)]
Semestral Break of Private School Teachers Regular full-time teachers are entitled to salary during semestral breaks. These semestral breaks are in the nature of work interruptions beyond the employees’ control. As such, these breaks cannot be considered as absences within the meaning of the law for which deductions may be made from monthly allowances. [University of the Pangasinan Faculty Union v. University of Pangasinan (1984)]
Travel time [Department of Labor Manual] (1) Travel from home to work – An employee who travels from home before his regular workday and returns to his home at the end of the workday is engaged in ordinary home-to-work travel which is NOT worktime, except: (a) When called to travel during emergency; (b) When travel is done through a conveyance furnished by the employer; (c) Travel is done under vexing and dangerous circumstances; (d) Travel is done under the supervision and control of the employer.
Work Hours of Seamen Seamen are required to stay on board of their vessels by the very nature of their duties, and it is for this reason that, in addition to their regular compensation, they are given free living quarters to be on board. It could not have been the purpose of the law to require their employers to pay them overtime pay even when they are not actually working. The correct criterion in determining whether or not sailors are entitled to overtime pay is not, therefore, whether they are on board and cannot leave ship beyond the regular eight working number of hours, but whether they actually rendered service in excess of said
Participation in strikes is NOT compensable working time.
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number of hours. [Cagampan, et. al. v. NLR (1991)]
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Forced Leave Employees are required to go on leave for several days or weeks utilizing their leave credits of there are any.
Proof of Hours worked Entitlement to overtime pay must first be established by proof that said overtime work was actually performed, before an employee may avail of said benefit. [Lagatic v. NLRC (1998)]
Broken-time Schedule The works schedule is not continuous but the work hours within the day or week remain. Flexi-holidays The employees agree to avail the holidays at some other days provided there is no diminution of existing benefits as a result of such arrangement.
Burden of Proof: When an employer alleges that his employee works less than the normal hours of employment as provided for in the law, he bears the burden of proving his allegation with clear and satisfactory evidence. [Prangan v. NLRC, et. al., G.R. No. 126529, April 15 (1998)]
Compressed Work Week (CWW) [DOLE Advisory No. 02, Series of 2004] Under the CWW scheme, the normal workday goes beyond eight hours without the corresponding overtime premium.
2.I FLEXIBLE WORK ARRANGEMENTS [DOLE Advisory No. 02, Series of 2004] These are alternative arrangements or schedules other than the standard work hours, workdays, and workweek. Their effectivity and implementation shall be temporary in nature.
The total hours of work, however, shall not exceed 12 hours a day or 48 hours a week, or the employer is obliged to pay the worker the overtime premium in excess of said work hours.
Prior to implementation, the employer shall notify the Department through the Regional Office which has jurisdiction over the workplace, of the adoption of any of the flexible work arrangements.
Conditions for CWW (1) The CWW scheme is undertaken as a result of an express and voluntary agreement of majority of the covered employees or their duly authorized representatives. This agreement may be expressed through collective bargaining or other legitimate workplace mechanisms of participation such as labor management councils, employee assemblies or referenda. (2) In firms using substances, chemicals and processes or operating under conditions where there are airborne contaminants, human carcinogens or noise prolonged exposure to which may pose hazards to employees’ health and safety, there must be a certification from an accredited health and safety organization or practitioner from the firm’s safety committee that work
Under the following work arrangements, the employers and employees are encouraged to explore alternative schemes under any agreement and company policy or practice to cushion and mitigate the effect of the loss of income of the employees. Reduction of Workdays The normal workdays per week are reduced but should not last for more than 6 months. Rotation of Workers The employees are rotated or alternately provided work within the workweek 33
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beyond eight hours is within threshold limits or tolerable levels of exposure, as set in the OSHS. (3) The employer shall notify DOLE, through the Regional Office having jurisdiction over the workplace, of the adoption of the CWW scheme. The notice shall be in DOLE CWW Report Form attached to this Advisory. (DOLE Advisory No. 02-04)
LABOR LAW
to save on energy costs, promote greater work efficiency and lower the rate of employee absenteeism, among others. Workers favor the scheme considering that it would mean savings on the increasing cost of transportation fares for at least one (1) day a week; savings on meal and snack expenses; longer weekends, or an additional 52 off-days a year, that can be devoted to rest, leisure, family responsibilities, studies and other personal matters, and that it will spare them for at least another day in a week from certain inconveniences that are the normal incidents of employment, such as commuting to and from the workplace, travel time spent, exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5) days but prolonging the working hours from Monday to Friday without the employer being obliged for pay overtime premium compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits above cited that will accrue to the employees. [Bisig Manggagawa sa Tryco v. NLRC, et al. (2008)]
Effects of CWW (1) Unless there is a more favorable practice existing in the firm, work beyond eight hours will not be compensable by overtime premium provided the total number of hours worked per day shall not exceed twelve (12) hours. In any case, any work performed beyond 12 hours a day or 48 hours a week shall be subject to overtime premium. (2) Consistent with Art. 85 of the LC, employees under a CWW scheme are entitled to meal periods of not less than 60 minutes. There shall be no impairment of the right of the employees to rest days as well as to holiday pay, rest day pay or leaves in accordance with law or applicable collective bargaining agreement or company practice. (3) Adoption of the CWW scheme shall in no case result in diminution of existing benefits. Reversion to the normal eighthour workday shall not constitute a diminution of benefits.
B.3. MEAL BREAK General Rule: Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals (Art. 85, LC) Exception: Employees may be given a meal period of not less than twenty (20) minutes provided that such shorter meal period is credited as compensable hours worked of the employee: (1) Where the work is non-manual work in nature or does not involve strenuous physical exertion; (2) Where the establishment regularly operates not less than sixteen (16) hours a day;
Rationale Although the right to overtime pay cannot be waived as per Cruz v. Yee Sing (1959), D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the employees will derive from the adoption of a compressed workweek scheme, thus: The compressed workweek scheme was originally conceived for establishments wishing 34
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(3) In case of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or installations to avoid serious loss which the employer would otherwise suffer; and (4) Where the work is necessary to prevent serious loss of perishable goods [Book 3, Rule 1, Sec. 7 par 1, IRR]
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The employees themselves may request that the meal period be shortened so that they can leave work earlier than the previously established schedule. [Drilon: Letter to Kodak Philippines, Nov. 27, 1989; also Cilindro: BWCWHSD Opinion No. 197, s. 1998] Conditions for shortened meal breaks upon employee’s request. (1) The employees voluntarily agree in writing to a shortened meal period of 30 minutes and are willing to waive the overtime pay for such shortened meal period; (2) There will be no diminution whatsoever in the salary and other fringe benefits of the employees existing before the effectivity of the shortened meal period; (3) The work of the employees does not involve strenuous physical exertion and they are provided with adequate “coffee breaks” in the morning and afternoon. (4) The value of the benefits derived by the employees from the proposed work arrangement is equal to or commensurate with the compensation due them for the shortened meal period as well as the overtime pay for 30 minutes as determined by the employees concerned; (5) The overtime pay of the employees will become due and demandable if ever they are permitted or made beyond 4:30pm; and (6) The effectivity of the proposed working time arrangement shall be of temporary duration as determined by the Secretary of Labor.
Employees are not prohibited from going out of the premises as long as they return to their posts on time. Nowhere in the law may it be inferred that employees must take their meals within the company premises. [Philippine Airlines v. NLRC (1999)] Synthesis of the Rules General Rule: Meal periods are NOT compensable. Exception: It becomes compensable: (1) Where the lunch period or meal time is predominantly spent for the employer’s benefit. [Azucena citing 31 Am. Jur. 881; Duka, Labor Laws and Social Legislation] (2) Meal periods of 1 hour is deemed compensable when the employee is on continuous shift. (National Development Co. v. CIR, G.R. No. L-15422, Nov. 30, 1962) (3) Shortened meal period of less than 1 hour (say, 30 minutes) must be compensable. (Sec. 7, Rule I, Book III, IRR) Note: To shorten meal time to less than 20 minutes is not allowed. If the so-called meal time is less than 20 minutes, it becomes only a REST PERIOD and is considered working time. Exception to the Exception: Shortened meal breaks upon the employees’ request – NOT compensable.
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B.4. WAITING TIME
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regular wage plus at least twenty five percent (25%) thereof.
[Book III, Rule I Sec. 5(a), IRR] Waiting time spent by an employee shall be considered as working time if waiting is an integral part of his work or the employee is required or engaged by the employer to wait.
Overtime work on holiday or rest day Art. 87, LC. Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent (30%) thereof.
[Book 3, Rule 1, Sec. 5(b), IRR] An employee who is required to remain on call in the employer’s premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose shall be considered as working while on call.
Computation of additional compensation Art. 90, LC. For purposes of computing overtime and other additional remuneration as required by this Chapter the "regular wage" of an employee shall include the cash wage only without deduction on account of facilities provided by the employer.
Legal test: Whether waiting time constitutes working time depends upon the circumstances of each particular case. The facts may show that the employer was engaged or was waiting to be engaged. The controlling factor is whether waiting time spent in idleness is so spent predominantly for the employer’s benefit or for the employee’s. [Azucena citing Armour v. Wantock]
Base of Computation: Regular wage – means regular base pay; it excludes money received in different concepts such as Christmas bonus and other fringe benefits. [Bisig ng Manggagawa ng Philippine Refining Co. v. Philippine Refining Co (1981)]
B.5. OVERTIME WORK, OVERTIME PAY
BUT when the overtime work was performed on the employee’s rest day or on special days or regular holidays (Art. 93 and 94), the premium pay, must be included in the computation of the overtime pay. [SEE: p. 19 of Handbook on Workers’ Statutory Monetary Benefits, issued by the Bureau of Working Conditions, 2006]
Overtime compensation is additional pay for service or work rendered or performed in excess of eight hours a day by employees or laborers covered by the Eight-hour Labor Law. [National Shipyard and Steel Corp. v. CIR (1961)] Rationale There can be no other reason than that he is made to work longer than what is commensurate with his agreed compensation for the statutorily fixed or voluntary agreed hours of labor he is supposed to do. [PNB v. PEMA (1982)]
Emergency overtime [Art. 89, LC] Any employee may be required by the employer to perform overtime work in any of the following cases: (1) When the country is at war or when any other national or local emergency has been declared by the National Assembly or the Chief Executive; (2) When it is necessary to prevent loss of life or property or in case of imminent danger to public safety due to an actual or
Overtime on ordinary working day Art. 87, LC. Work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime work, an additional compensation equivalent to his 36
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impending emergency in the locality caused by serious accidents, fire, flood, typhoon, earthquake, epidemic, or other disaster or calamity; (3) When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer or some other cause of similar nature; (4) When the work is necessary to prevent loss or damage to perishable goods; and (5) Where the completion or continuation of the work started before the eighth hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer.
LABOR LAW no substitute ready to take his place. [Manila Railroad Co. v. CIR (1952)]
Note: However, the Court has also ruled that a claim for overtime pay is NOT justified in the absence of a written authority to render overtime after office hours during Sundays and holidays. [Global Incorporated v. Atienza (1986)] (3) Compensation for work rendered in excess of the eight (8) normal working hours in a day. (a) For ordinary days, additional 25% of the basic hourly rate. (b) For rest day/special day/holiday, additional 30% of the basic hourly rate. (4) A given day is considered an ordinary day, unless it is a rest day. (5) Undertime does NOT offset overtime Undertime work on any particular day shall not be offset by overtime work on any other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required in this Chapter. [Art. 88, LC]
Overtime pay does not preclude night differential pay When the tour of duty of a laborer falls at nighttime [between 10:00pm and 6:00am], the receipt of overtime pay will not preclude the right to night differential pay. The latter is payment for work done during the night while the other is payment for the excess of the regular eight-hour work. [Naric v. Naric Workers Union (1959)] Synthesis of Rules (1) An employer cannot compel an employee to work overtime Exception: Emergency overtime work as provided for in Art. 89 (2) Additional compensation is demandable only if the employer had knowledge and consented to the overtime work rendered by the employee. Exception: Express approval by a superior NOT a requisite to make overtime compensable: (a) If the work performed is necessary, or that it benefited the company; or (b) That the employee could not abandon his work at the end of his eight-hour work because there was
No Waiver of Overtime Pay The right to overtime pay cannot be waived. The Labor Code (Art. 87) requires that an employee be paid all overtime compensation notwithstanding any agreement to work for a lesser wage. Consequently, such an agreement or "waiver" will not prevent an employee from recovering the difference between the wages paid the employee and the overtime compensation he or she is entitled to receive. [Cruz v. Yee Sing (1959)] Exception: When the waiver of overtime pay is in consideration of benefits and privileges which may be more than what will accrue to 37
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them in overtime pay, the waiver MAY be permitted. [Meralco Workers Union v. MERALCO (1959)]
to provide safe and healthful working conditions and adequate or reasonable facilities such as sleeping or resting quarters in the establishment and transportation from the work premises to the nearest point of their residence subject to exceptions and guidelines to be provided by the DOLE. [Art. 156, RA 10151]
Composite or Package Pay NOT per se illegal Composite or “package pay” or “all-inclusive salary” is an arrangement where the employee’s salary includes the overtime pay. In other words, the overtime pay is built-in.
Transfer Night workers who are certified as unfit for night work, due to health reasons, shall be transferred to a similar job for which they are fit to work. If such is not practicable, they shall be granted the same benefits as other workers who are unable to work, or to secure employment during such period. [Art. 157, RA 1015]
The conditions for validity of the arrangement are: (1) There is a clear written agreement knowingly and freely entered by the employee; and (2) The mathematical result shows that the agreed legal wage rate and the overtime pay, computed separately, are equal to or higher than the separate amounts legally due. [Damasco v. NLRC (2000)]
B.6. NIGHT WORK, DIFFERENTIAL
NIGHT
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Women Night Workers [Art. 158, RA 10151] Measures shall be taken to ensure that an alternative to night work is available to women workers who would otherwise be called upon to perform such work: (1) Before and after childbirth, for a period of at least sixteen (16) weeks, which shall be divided between the time before and after childbirth; (2) For additional periods, in respect of which a medical certificate is produced stating that said additional periods are necessary for the health of the mother or child: (a) During pregnancy; (b) During a specified time beyond the period, after childbirth is fixed pursuant to subparagraph (1) above, the length of which shall be determined by the DOLE after consulting the labor organizations and employers.
SHIFT
Night worker Any employed person whose work requires performance of a substantial number of hours of night work which exceed a specified limit. This limit shall be fixed by the Sec of Labor after consulting the workers’ representatives/labor organizations and employers. [Art. 154, RA 10151] Health Assessment At the worker’s request, they shall have the right to undergo a health assessment without charge and to receive advice on how to reduce or avoid health problems associated with their work. [Art. 155, RA 10151] Mandatory Facilities Suitable first-aid facilities shall be made available for workers, including arrangements where they, when necessary, can be taken immediately to a place for appropriate treatment. The employers are likewise required
Night shift differential [Art. 86, LC] The additional compensation of 10% of an employee’s regular wage for each hour of work performed between 10pm and 6am. 38
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Coverage [Book 3, Rule 2, Sec. 1, IRR] All employees, except: (1) Those of the government and any of its political subdivisions, including government-owned and/or controlled corporations; (2) Those of retail and service establishments regularly employing not more than five (5) workers; (3) Domestic helpers and persons in the personal service of another; (4) Managerial employees as defined in Book Three of this Code; (5) Field personnel and other employees whose time and performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.
establishment. Organization)
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Labor
This excludes those forms of employment which, although referred to as part-time work, are in particular, irregular, temporary or intermittent employment, or in cases where hours of work have been temporarily reduced for economic, technical or structural reasons. The wage and benefits of part-time worker are in proportion to the number of hours worked.
B.8. CONTRACT FOR PIECE OF WORK [Art. 1467, CC.] A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale BUT if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work.
Rest days (night-off) Night shift employees are entitled to a weekly night-off (usually Saturday evening) or a weekly rest period of 24 hours beginning at the start of the night shift.
C. WAGES Definition (a) It is the remuneration or earnings, however designated, capable of being expressed in terms of money, (b) Whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, (c) Which is payable by an employer to an employee (d) Under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and (e) Includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of board, lodging, or other facilities customarily furnished by the employer to the employee
Work on special days Night shift employees are also entitled to the premium pay on special days and holidays. These days are reckoned as calendar days which start at midnight and end at the following midnight. The premium pay for the night shift also starts or ends at midnight. However, the employment contract, company policy or CBA may provide that in the case of night shift workers, days—including special days and regular holidays—shall begin on the night before a calendar day.
B.7. PART-TIME WORK A single, regular or voluntary form of employment with hours of work substantially shorter than those considered as normal in the 39
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Fair and reasonable value - shall not include any profit to the employer, or to any person affiliated with the employer. [Art. 97(f), LC]
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Note: Workers in registered barangay micro business enterprise are only exempted from the Minimum Wage Law, not from the Title on Wages (RA 9178).
“No work no pay” principle General Rule: the age old rule governing the relation between labor and capital or management and employee is that a "fair day's wage for a fair day's labor." [Sugue v. Triumph International (2009)]
C.1. WAGE VS. SALARY Wages and salary are in essence synonymous. [Songco v. NLRC (1990)] There are slight differences: Wage
Salary
Paid for skilled or Paid to white collar unskilled manual labor workers and denote a higher grade of employment
Exception: When the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed, or otherwise illegally prevented from working. [Sugue v Triumph International, supra]
Not subject to execution, garnishment or attachment except for debts related to necessities [Art. 1708]
“Equal Work for Equal Pay” Principle Employees working in the Philippines, if they are performing similar functions and responsibilities under similar working conditions should be paid equally. If an employer accords employees the same position and rank, the presumption is that these employees perform equal work. [International School Alliance of Educators v. Hon. Quisumbing (2000)]
Not exempt from execution, garnishment or attachment [Gaa vs. CA, 1985]
C.2. MINIMUM WAGE See also: DOLE Bureau of Working Condition’s Handbook on Worker’s Statutory Monetary Benefits and Wage Order No. NCR-19 Definition Statutory minimum wage is the lowest wage rate fixed by law that an ER can pay his workers. [IRR, RA 6727, (o)]
Coverage/Exclusions [Art. 98 and Book 3, Rule VII, Sec 3, IRR] The Labor Code Title on wages shall not apply to the following: (1) Farm tenancy or leasehold; (2) Household or domestic helpers, including family drivers and other persons in the personal service of another; (3) Homeworkers engaged in needlework; (4) Workers in registered cottage industries who actually work at home; (5) Workers in registered cooperatives when so recommended by the Bureau of Cooperative Development upon approval of the Secretary of Labor;
Coverage General Rule: The wage increases prescribed under Wage Orders apply to all private sector workers and employees receiving the daily minimum wage rates or those receiving up to a certain daily wage ceiling, where applicable, regardless of their position, designation, or status, and irrespective of the method by which their wages are paid. Exceptions:
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(1) Domestic Helpers/kasambahay are covered by RA 10361 (2) Workers of registered barangay micro business enterprise with Certificates of Authority issued by the Office of the Municipal or City Treasurer. [RA 9178] (3) Learners [RA 602] (4) Apprentices [RA 602] (5) Handicapped Worker [RA 602]
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(3) Cost of living and changes or increases therein; (4) The needs of workers and their families; (5) The need to induce industries to invest in the countryside; (6) Improvements in standards of living; (7) Prevailing wage levels; (8) Fair return of the capital invested and capacity to pay of employers; (9) Effects in employment generation and family income; and (10) Equitable distribution of income and wealth along the imperatives of economic and social development. [Art. 124, LC]
Exemptions upon Approval Upon application with and as determined by the Regional Tripartite Wages and Productivity Board, based on documentation and other requirements in accordance with applicable rules and regulations issued by the NWPC, the following may be exempted from the applicability of this Order: (1) Distressed establishments; (2) Retail/Service establishments regularly employing not more than 10 workers; (3) Establishments adversely affected by natural calamities. [Sec. 8, Wage Order No. 19, 2014]
Procedure for Wage Fixing by Regional Board (Art. 123, LC) (1) Investigate and study pertinent facts, based on criteria set in Art. 124 (2) Conduct public hearings or consultations with notice to employer and employee groups, provinces, city, municipal officials and other interested parties (3) Decide to ISSUE or NOT TO ISSUE a wage order Frequency: Wage orders issued may not be disturbed for 12 months from effective date; this serves as a bar for petitions for wage hikes as well Except: when Congress passes a new law affecting wages or other supervening circumstances Effectivity: If it decides to ISSUE a wage order, the wage order takes effect after 15 days from complete publication in at least 1 newspaper of general circulation in the region (4) Appeal wage order to Commission within 10 calendar days; mandatory for the Commission to decide within 60 calendar days from filing
Basis The basis of the minimum wage rates prescribed by law shall be the normal working hours of 8 hours a day. [Sec 7, IRR of RA 6727] Freedom to bargain Despite the minimum wage order, employees are not prevented from bargaining for higher wages with their employers. Note: Daily minimum wage in NCR applicable from Apr. 4, 2015 is now P481 [Wage Order No. NCR-19] Factors/Criteria in determining regional minimum wages: (1) Demand for living wages; (2) Wage adjustment the consumer price index;
Note: Filing of an appeal DOES NOT STAY order unless appellant files an undertaking with a surety, to guarantee payment of 41
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employees if the wage order is affirmed (as amended by RA 6727)
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Note: Learners employed in piece or incentiverate jobs during the training period shall be paid in full for the work done. [Art. 76, LC]
C.3. MINIMUM WAGE OF WORKERS PAID BY RESULTS
The Secretary of Labor and Employment may authorize the hiring of apprentices without compensation whose training on the job is required by the school or training program curriculum or as requisite for graduation or board examination. [Art. 72, LC]
C.3.I. WORKERS PAID BY RESULTS All workers paid by result, including those who are paid on piecework, takay, pakyaw or task basis, shall receive not less than the prescribed wage rates per eight (8) hours of work a day, or a proportion thereof for working less than eight (8) hours. [Art. 124, LC]
C.3.III. MINIMUM WAGE OF PERSONS WITH DISABILITY A qualified disabled employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits or allowances as a qualified able-bodied persons. [Sec 5, RA 7277, The Magna Carta for Disabled Persons]
The wage rates of workers who are paid by results shall continue to be established in accordance with Art. 101 of the LC, as amended, and its IRR. This will be done through: (1) Time and motion studies. (2) Consultation with representatives of ERs’ and workers’ organizations in a tripartite conference called by the DOLE Sec.
C.4. COMMISSIONS Commissions have been defined as the recompense, compensation or reward of an agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal. [Philippine Duplicator’s, Inc. v. NLRC (1993)]
Request for the conduct of time and motion studies, to determine whether the non-time employees in an enterprise are being paid fair and reasonable wage rates, may be filed with the proper Regional Office.
Commissions as part of minimum wage The Court held that the definition of “wage” under Art. 97 (f) of the LC explicitly includes commissions as part of wages. While commissions are, indeed, incentives or forms of encouragement to inspire employees to put a little more industry on the jobs particularly assigned to them, still these commissions are direct remunerations for services rendered.
Where the output rates established by the employer do not conform to the standards set under the foregoing methods for establishing output rates, the employee shall be entitled to the difference between the amount he/she is entitled to receive and the amount paid by the employer.
C.3.II MINIMUM WAGE OF APPRENTICES AND LEARNERS
Likewise, there is no law mandating that commissions be paid only after the minimum wage has been paid to the employee. Verily, the establishment of a minimum wage only sets a floor below which an employee’s
Wages of apprentices and learners shall in no case be less than 75% of the applicable minimum wage rates. [Art. 61 & 75, LC] 42
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remuneration cannot fall, not that commissions are excluded from wages in determining compliance with the minimum wage law. [Iran v. NLRC (1998)]
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employment or retention in employment. [Art. 117, LC] or to retaliate against the employee who filed a complaint. [Art. 118, LC] With Employee’s consent in Writing
C.5. DEDUCTIONS FROM WAGES General Rule: No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees. (Art. 113, LC)
Without Employee’s consent
(1) SSS Payments (1) (2) PHILHEALTH payments (3) Contributions to PAG-IBIG Fund (2) (4) Value of meals and other facilities (5) Payments to third persons with employee’s consent (3) (6) Deduction of absences (7) Union dues, where check-off is not provided in the CBA.
Exceptions: (1) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (2) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and (3) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment (Art. 113, LC), such as: (a) Employee debt to employer is due and demandable (Art. 1706, CC); (b) Attachment or execution in cases of debts incurred for necessities: food, shelter, clothing, medical attendance (Art. 1708, CC); (c) Withholding tax; (d) Deductions of a legally established cooperative; (e) Payment to 3rd parties upon written authority by employee; (f) Deductions for loss or damage; (g) SSS, Medicare, Pag-IBIG premiums; (h) Deduction for value meals and other facilities.
Worker’s insurance acquired by the employer Union dues, where the right to check-off is recognized by the employer (provided in the CBA) Debts of the employee to the employer that have become due and demandable
Prohibition seeks to protect the employee against unwarranted practices that would diminish his compensation without his knowledge and consent. [Radio Communication of the Phil., Inc. v. Sec. of Labor (1989)] Note: Persons earning minimum wage are exempted from income tax “That minimum wage earners as defined in Section 22(HH) of this Code shall be exempt from the payment of income tax on their taxable income: Provided, further, That the holiday pay, overtime pay, night shift differential pay and hazard pay received by such minimum wage earners shall likewise be exempt from income tax.” [RA 9504, Sec. 2 redefining sec. 24(A) of RA 8424]
It shall be unlawful to make any deduction from the wages of any employee for the benefit of the employer as consideration of a promise of 43
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C.6. NON-DIMINUTION OF BENEFITS
C.7. FACILITIES VS SUPPLEMENTS
General Rule: There is a prohibition against elimination or diminution of benefits [Art. 100]
The distinction between facilities and supplement is relevant because the former is wage-deductible while the latter is not. Simply put, a wage includes facilities. [Art. 97, LC)
No wage order issued by any regional board shall provide for wage rates lower than the statutory minimum wage rates prescribed by Congress. [Art. 127, as amended by Republic Act No. 6727, June 9, 1989]
The IRR definition [IRR Book III Rule 7-A Sec. 5] has 2 components: (1) Facilities are articles or services for the benefit of the employee or his family. This 1st part defines facilities. (2) Facilities shall not include tools of the trade or articles or service primarily for the benefit of the employer or necessary to the conduct of the employer’s business. This 2nd part is essentially defines what a supplement is.
Requisites If the following are met, then the employer cannot remove or reduce benefits: (1) Ripened company policy: Benefit is founded on a policy which has ripened into a practice over a long period [Prubankers Assn. vs. Prudential Bank and Co., 1999] (2) Practice is consistent and deliberate and (3) Not due to error in the construction or application of a doubtful or difficult question of law. [Globe Mackay Cable vs. NLRC, 1988] (4) The diminution or discontinuance is done unilaterally by the employer.
Criterion: In determining whether a privilege is a facility, the criterion is not so much its kind but it’s PURPOSE [Millares v NLRC & PICOP, 1999] Facilities are items of expense necessary for the laborer’s and his family’s existence and subsistence. [States Marine Corp. v. Cebu Seamen's Assoc., Inc., 1963]
When not applicable: At least one of the requisites is absent. (1) Mistake in the application of the law [Globe Mackay Cable v. NLRC, June 29, 1988] (2) Negotiated benefits [Azucena] (3) Reclassification of Positions – e.g. loss of some benefits by promotion. (4) Contingent or Conditional Benefits – the rule does not apply to a benefit whose grant depends on the existence of certain conditions, so that the benefit is not demandable if those preconditions are absent.
Comparison Supplements
between
Facilities
Facilities
and
Supplements What it is
Articles services/items expense
or Extra remuneration or of special benefits / articles or services / tools of the trade Who Benefits
For the benefit of the For the benefit or employee and his convenience of the family; for their employer existence and subsistence
Benefits initiated through negotiation between Employee and Employer, e.g. CBA, can only be eliminated or diminished bilaterally. 44
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Facilities
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Supplements
Deductible from Wage YES - Part of wage so NO - Independent of it is deductible the Wage so not deductible
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The existence of the distortion in the same region of the country. [Prubankers Assn. v. Prudential Bank and Co. (1999)]
How to Resolve [LC Art. 124] Organized Establishment (1) Employer and the union shall negotiate to correct the distortions. (2) Disputes shall be resolved through the grievance procedure. (3) If still unresolved, voluntary arbitration.
Requirements for deducting value of facilities Mere availment is not sufficient to allow deductions from employees’ wages. Before the value of facilities can be deducted from the employees’ wages, the following requisites must all be attendant: (1) Proof must be shown that such facilities are customarily furnished by the trade; (2) The provision of deductible facilities must be voluntarily accepted in writing by the employee; and (3) Facilities must be charged at reasonable value. [SLL International Cable Specialists v. NLRC, 2011]
Grievance Procedure (under the CBA) if unresolved, VOLUNTARY arbitration Unorganized Establishment (1) ERs and Employees shall endeavor to correct such distortions. (2) Disputes shall be settled through the National Conciliation and Mediation Board. (3) If still unresolved after 10 calendar days of conciliation, it shall be referred to the appropriate branch of the NLRC – compulsory arbitration Both the employer and employee cannot use economic weapons. (4) Employer cannot declare a lock-out; Employee cannot declare a strike because the law has provided for a procedure for settling (5) The salary or wage differential does not need to be maintained. [National Federation of Labor v. NLRC, 1994]
C.8. WAGE DISTORTION/RECTIFICATION A situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation [Art. 124, LC]
National Conciliation and Mediation Board if unresolved, COMPULSORY arbitration by the NLRC
4 Elements of wage distortion (a) Existing hierarchy of positions with corresponding salary rates; (b) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; (c) The elimination of the distinction between the two levels; and
CBA vis-à-vis Wage Orders – CBA creditability In determining an employee’s regular wage, the pertinent stipulations in the CBA are controlling, provided the result is not less than
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the statutory requirement (Philippine National Bank vs. PEMA, 1982)
case of workers paid on daily basis. (Wellington Investment Inc. v. Trajano, 1995)
Note: The manner of resolving wage distortion are largely based on the applicable wage order. The current one, for NCR, WO 19, refers to the procedure in Art. 124
For daily-paid EEs Daily-paid employees are those who are paid on the days actually worked and on unworked regular holidays.
C.9. DIVISOR TO DETERMINE DAILY RATE
(1) For those who are required to work every day including Sundays or rest days, special days and regular holidays:
Suggested formula for computing the Estimated Equivalent Monthly Rate (EEMR)
394.1 days/year 296 days ordinary working 20 days 10 regular holidays x 200% 52 rest days x 130 % 67.60 days 7 special days x 130%
EEMR = (Applicable Daily Rate (ADR) x days/year) ÷ 12 For monthly-paid EEs Monthly-paid employees are those who are paid every day of the month, including unworked rest days, special days, and regular holidays.
9.1 days (2) For those who do not work and are not considered paid on Sundays or rest days:
365 days/year 296 days 52 days 10 days 7 days
313 days/year 296 days 12 days 5 days
ordinary working days rest days regular holidays special days
Note: This monthly salary shall serve as compensation "for all days in the month whether worked or not," and "irrespective of the number of working days therein." In the event of the declaration of any special holiday, or any fortuitous cause precluding work on any particular day or days the employee is entitled to the salary for the entire month and the employer has no right to deduct the proportionate amount corresponding to the days when no work was done. The monthly compensation is evidently intended precisely to avoid computations and adjustments resulting from the contingencies just mentioned which are routinely made in the
ordinary working regular holidays special days (if considered paid; if actually worked, this is equivalent to 6.5 days)
(3) For those who do not work and are not considered paid on Saturdays and Sundays or rest days: 278 days/year 261 days ordinary working days 10 days regular holidays 7 days special days (if considered paid; if actually worked, this is equivalent to 6.5 days) [Sec. 6, Rules Implementing RA 6727, 1989] Note: Under Proclamation No. 831 signed by Pres. Benigno Aquino on Jul. 17, 2014, there are 10 regular holidays and 7 special days. 46
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(6) Under other circumstances analogous or similar to the foregoing as determined by the Secretary of Labor and Employment. [Art. 92, LC]
D. REST DAY D.1. WEEKLY REST DAY It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest period of not less than twenty-four (24) consecutive hours after every six (6) consecutive normal work days. [Art. 91 (a)]
Synthesis of the Rules (1) Rest day of not less than 24 consecutive hours after 6 consecutive days of work. (2) No work, no pay principle applies (3) If an employee works on his designated rest day, he is entitled to a premium pay. (4) Premium pay is additional 30% of the basic pay. (5) Employer selects the rest day of his employees (6) However, employer must consider the religious reasons for the choice of a rest day. (7) When the choice of the employee as to his rest day based on religious grounds will inevitably result in serious prejudice or obstruction to the operations and the employer cannot normally be expected to resort to other measures, the employer may so schedule the weekly rest day of his choice for at least two days in a month. [IRR, Book Three, Rule III, Sec. 4]
Preference of the employee The employer shall determine and schedule the weekly rest day of his employees subject to collective bargaining agreement and to such rules and regulations as the Secretary of Labor and Employment may provide. However, the employer shall respect the preference of employees as to their weekly rest day when such preference is based on religious grounds. [Art. 94 (b)]
D.2. EMERGENCY REST DAY WORK The employer may require his employees to work on any day: (1) In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic or other disaster or calamity to prevent loss of life and property, or imminent danger to public safety; (2) In cases of urgent work to be performed on the machinery, equipment, or installation, to avoid serious loss which the employer would otherwise suffer; (3) In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be expected to resort to other measures; (4) To prevent loss or damage to perishable goods; (5) Where the nature of the work requires continuous operations and the stoppage of work may result in irreparable injury or loss to the employer; and
E. HOLIDAY PAY/PREMIUM PAY Holiday pay is a one-day pay given by law to an employee even if he does not work on a regular holiday. This gift of a day’s pay is limited to each of the 12 regular holidays. Note: Art. 94 (c), LC was superseded by E.O. 203, which was subsequently amended by RA 9177, 9256, 9492, and Proclamation No. 459.
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E.1. COVERAGE
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(6) Independence Day – June 12 (7) National Heroes Day – Aug. 31 (8) Bonifacio Day – Nov. 30 (9) Christmas Day – Dec. 25 (10) Rizal Day – Dec. 30 (11) Id-ul-Fitr – 1st day of 10th lunar month of Shawwal (12) Id-ul Adha – 10th day of the 12th lunar month of Dhu’l-Hijja
General Rule: All employees Exceptions: (1) Those of the government and any of the political subdivision, including government-owned and controlled corporation; (2) Those of retail and service establishments regularly employing less than 10 workers; (3) Domestic helpers and persons in the personal service of another; (4) Managerial employees as defined in Book III (5) Field personnel and other employees whose time and performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. [Sec. 1, Rule IV of the IRR]
Special (Non-Working Days) (1) Chinese New Year – Feb. 19 (2) Black Saturday – Apr. 4 (3) Ninoy Aquino Day – Aug. 21 (4) All Saints Day – Nov. 1 (5) Additional special (Non-working) days (a) Jan. 2 (b) Dec. 24 (6) Last Day of the Year – Dec. 31 Special Holiday (for all schools) EDSA Revolution Anniv – Feb. 25 P.D. 1083 (Code of Muslim Personal Laws) SEE: Arts. 169-173
Retail Establishment is one principally engaged in the sale of goods to end-users for personal or household use;
Specifically for the Muslim Areas, P.D. 1083, in its Book V, Title, recognizes five (5) Muslim Holidays, namely: (1) Amun Jadid (New Year) which falls on the first (1st) day of the lunar month of Muharram; (2) Mauli-un-Nabi (Birthday of the Prophet Muhammad) which falls on the twelfth (12th) day of the third (3rd) lunar month of Rabi-ul-Awwal; (3) Lailatul Isra Wal Mi Rai (Nocturnal Journey and Ascencion of the Prophet Muhammand) which falls on the twentyseventh (27th) day of the seventh (7th) lunar month of Rajab; (4) Id-ul-Fitr (Hari Raja Pausa) which falls on the first (1st) day of the tenth (10th) lunar month of Shawwal commemorating the end of the fasting season; and
Service Establishment is one principally engaged in the sale of service to individuals for their own or household use and is generally recognized as such. [RA 6727/The Wage Rationalization Act, IRR] Regular holidays Proclamation No. 831 signed by President Aquino on 17 July 2014, provides for the observance of the regular holidays and special (non-working) days for the year 2015 on the following dates: (1) New year’s Day – Jan. 1 (2) Maundy Thursday – Apr. 2 (3) Good Friday – Apr. 3 (4) Araw ng Kagitingan – Apr. 9 (5) Labor Day – May 1 48
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(5) Id-ul-Adha (Hari Raha Haji) which falls on the tenth (10th) day of the twelfth (12th) lunar month of Dhu’l-Hijja.
scheduled rest day, if it regular daily wage exceeds 8 plus 30% of such hours/overtime amount) + 30% of hourly rate on said day.
Note: Id-ul-Fitr (Eid’l Fitr) and Id-ul-Adha (Eid’l Adha) have been added to the list of national legal holidays.
Work on special Regular daily wage + holiday not exceeding 30% thereof 8 hours
Note: There should be no distinction between Muslims & non-Muslims as regards to the payment of benefits for Muslim holidays. Wages & other emoluments granted bylaw to the workingman are determined on the basis of the criteria laid down by laws & not on worker’s faith. Art. 3(3), PD 1083 states that nothing herein shall be construed to operate to the prejudice of a non-Muslim. [San Miguel Corp vs. CA (2002)]
Work on holiday
special Regular daily wage + 50% thereof
According to DOLE Memo Circular 1-04, a “special holiday”/”special day” includes the National Special Days, and declared special days such as Special Non-working Holiday, Special Public Holiday and Special National Holiday. Such days are entitled to the rates prescribed above. These days are not the same as a special working holiday.
Holiday pay computation (Art. 94 Labor Code, Book III, Rule IV of IRR, RA 9424 and DOLE Memorandum Circular 1 Series of 2004)
A special working holiday is considered an ordinary working day, so there is no premium pay.
General Rule: An employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate. [Art. 94(b)]
Double holiday pay According to “DOLE Explanatory Bulletin on Worker’s Entitlement to Holiday Pay on 9 April 1993,” if two holidays fall on the same day: (1) If unworked, 200% of basic wage. (2) If worked, 300% of basic wage. [Azucena]
According to the LC, IRR and Memo:
Work on any regular holiday, not exceeding 8 hours
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Computation
Work on any regular 200% of regular daily holiday, if it exceeds 8 wage (for the 1st 8 hours/overtime hours) + 30% of hourly rate on said day
Double Holiday Rule for Monthly-paid employees For covered employees whose monthly salaries are computed based on 365 days and for those other employees who are paid using factor 314, or 262, or any other factor which already considers the payment for the 11 regular holidays, NO additional payment is due them. [BWC-WHSD Opinion No. 053, s. 1998]
Work on any regular 200% of regular daily holiday which falls on wage + 30% of such the scheduled rest day, amount not exceeding 8 hours Work on any regular Regular holiday-onholiday which falls on rest day rate (200% of
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Successive holiday pay According to IRR, Rule IV, Sec. 10, an employee is entitled to holiday pay for both days, IF: (1) He is present on day immediately preceding first holiday; or (2) He works on first holiday, which entitles him to pay on second holiday.
proscription against non-diminution of benefits under Sec. 100 of the labor code, the “287” divisor should only be used for computations which would be advantageous to the employer (i.e. deduction for absences) and not for computations which would diminish the existing benefits of the employees (i.e., overtime pay, holiday pay and leave conversions).[Trans Asia Phils. v. NLRC (1999)]
Divisors The divisor assumes an important role in determining whether or not holiday pay is already computed. (1) Monthly paid employees are not entitled to the holiday pay if their total annual income is divided by 365 days resulting in a wage which is beyond the minimum wage per day because they are considered paid everyday of the year including holidays, rest days, and other non-working days. The 365 days are as follows: (a) (b) (c) (d)
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Sundays (1) When a holiday falls on a Sunday, the following Monday will not be considered a holiday unless a proclamation says so. (2) Furthermore as stated in the Wellington case (see below), a legal holiday falling on a Sunday does not create a legal obligation to pay extra, aside from the usual holiday pay, to monthly-paid employees. [Azucena citing Letter of Instruction No. 1087] No provision of law requires any employer to make adjustments in the monthly salary rate set by him to take account of legal holidays falling on Sundays in a given year, otherwise to reckon a year at more than 365 days. [Wellington Investment and Manufacturing Corporation vs. Trajano (1995)]
296 days – ordinary days 52 days – rest days 10 days – regular holidays 7 days – special holidays
(2) As a general rule, for a company with a 6-day working schedule, the divisor 313 already means that the legal holidays are included in the monthly pay of the employee. The divisor is arrived at by subtracting all Sundays from the total number of calendar days in a year. (3) As a general rule for a company with a 5day working schedule, the divisor 287 means that the holiday pay is already included in the monthly salary of the employee.
Non-working/scheduled rest day Where the day immediately preceding the holiday is a non-working day in the establishment or the scheduled rest day of the employee, he shall not be deemed to be on leave of absence on that day, in which case he shall be entitled to the holiday pay if he worked on the day immediately preceding the nonworking day or rest day. [Book III, Rule V, Sec 6 (c), IRR]
Where the employer had a standing practice of using 286 days as a divisor and following the correct computation and taking into account that one of the holidays always falls on a Sunday, therefore increasing the divisor to “287”, but increase would in some instances prejudice the employees, in violation of the
Example: If a holiday falls on Monday, and Sunday is a non-working day in the establishment or is the scheduled rest day of the employee, the employee shall be entitled to holiday pay if he 50
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worked on Saturday (which is the day immediately preceding Sunday, the nonworking day or rest day).
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cases of temporary shutdowns or cessation of work, when: (1) An annual inventory; or (2) Repair or cleaning of machineries and equipment is undertaken.
Right to holiday pay In case of absences All covered employees shall be entitled to the benefit provided herein when they are on leave of absence with pay.
The employer may not pay his employees for the regular holidays during the suspension of work if: the cessation of operation is due to business reverses, and is authorized by the Secretary of Labor.
Employees who are on leave of absence without pay on the day immediately preceding a regular holiday may not be paid the required holiday pay if he has not worked on such regular holiday. [Book III, Rule IV, Sec 6(a), IRR]
E.2. TEACHERS, PIECE SEAFARERS, SEASONAL ETC.
WORKERS, WORKERS,
(1) Private school teachers, including faculty members of colleges and universities, may not be paid for the regular holidays during semestral vacations. They shall, however, be paid for the regular holidays during Christmas vacation; (2) Where a covered employee, is paid by results or output, such as payment on piece work, his holiday pay shall not be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday; Provided, However, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate. (3) Seasonal workers may not be paid the required holiday pay during off-season when they are not at work (4) Workers who have no regular working days shall be entitled to the benefits provided in this Rule. [Book III, Rule IV, Sec. 8, IRR]
Note: (1) If an employee is on leave of absence with pay on the day immediately preceding a regular holiday, he is entitled to holiday pay. (2) If an employee is on leave of absence without pay on the day immediately preceding a regular holiday, he is not entitled to holiday pay unless he works on such regular holiday. In case of temporary cessation of work (1) In cases of temporary or periodic shutdown and temporary cessation of work of an establishment, as when a yearly inventory or when the repair or cleaning of machineries and equipment is undertaken, the regular holidays falling within the periods shall be compensated in accordance with this Rule. (2) The regular holiday during the cessation of operation of an enterprise due to business reverses as authorized by the Secretary of Labor may not be paid by the employer. [Book III, Rule IV, Sec 7, IRR]
Holiday Pay of Hourly-Paid Faculty Members (1) They are not entitled to payment of holiday pay because they are paid only for work actually done. Since regular holidays are known to both the school and faculty members as “no class day”;
An employee is entitled to holiday pay for the regular holidays falling within the period in 51
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(2)
(3)
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certainly the latter do not expect payment for said unworked holidays. They are entitled to their hourly rate on days declared as special holidays. Be it noted that when a special public holiday is declared, the faculty member paid by the hour is deprived of expected income, and it does not matter that the school calendar is extended in view of the days or hours lost, for their income that could be earned from other sources is lost during the extended days. Similarly, when classes are called off or shortened on account of typhoons, floods, rallies, and the like, these faculty members must likewise be paid, whether or not extensions are ordered. [Jose Rizal College v. NLRC, (1987)]
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Premium Pay Premium pay refers to the additional compensation for work performed within 8 hours on non-work days, such as rest days and special days. Coverage [Book 3, Rule 3, Sec. 7, IRR] General Rule: All employees Exceptions: (1) Those of the government and any of the political subdivision, including government-owned and controlled corporations; (2) Managerial employees as defined in Book III; (3) Househelpers and persons in the personal service of another; (4) Workers who are paid by results, including those who are paid on piece rate, takay, pakyaw, or task basis, and other noontime work, if their output rates are in accordance with the standards prescribed in the regulations, or where such rates have been fixed by the Secretary of Labor and Employment; (5) Field personnel, if they regularly perform their duties away from the principal or branch office or place of business of the ER and whose actual hours of work in the filed cannot be determined with reasonable certainty.
Piece workers Philosophy underlying the exclusion of piece workers from the 8-hour law is that said workers are paid depending upon the work they do irrespective of the amount of time employed in doing said work. [Red v. Coconut Products Ltd., v. CIR (1966)] Seafarers Any hours of work or duty including hours of watch-keeping performed by the seafarer on designated rest days and holidays shall be paid rest day or holiday pay. (Section 11.C, Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels) Seasonal workers Seasonal workers who do not work during offseason are not entitled to pay for the regular holidays occurring during their off-season. Workers assigned to “skeleton crews” that work during the off-season have the right to be paid on regular holidays falling in that duration.
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Premium pay rates [DOLE Memorandum Circular 1, Series of 2004]
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F. LEAVES F.1. SERVICE INCENTIVE LEAVE PAY
When Work Performed
[Art. 95(a), LC.] Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.
Premium Pay
On scheduled rest day 30% of regular wage On Sunday ONLY IF 30% of regular wage ESTABLISHED rest day
Service Incentive Leave DOES NOT apply to the following employees: (1) Those of the government and any of its political subdivisions, including GOCCs; (2) Domestic helpers and persons in the personal service of another; (3) Managerial employees as defined in Book 3 of this Code; (4) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof; (5) Those who are already enjoying the benefit herein provided; (6) Those enjoying vacation leave with pay of at least 5 days; (7) Those employed in establishments regularly employing less than 10 employees. [Book 3, Rule 5, Sec. 1, IRR]
No regular work and 30% of regular wage rest days for work performed on Sundays and holidays On any special 30% of regular wage holiday/special day On any special holiday 50% of regular wage /special day falling on scheduled rest day 50% of regular wage
230% of regular wage
[Art. 93 (d), LC.] Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a higher premium pay than that prescribed under this Article, the employer shall pay such higher rate. [Book III, Rule III, Sec. 8, IRR]. Nothing in this Rule shall justify an employer in reducing the compensation of his employees for the unworked Sundays, holidays, or other rest days which are considered paid off days or holidays by agreement or practice subsisting upon the effectivity of the Code.
Employer may require employee to work [Art. 95(b), LC.] The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate
[Book III, Rule II, Sec. 9, IRR.] Nothing herein shall prevent the employer and his employees or their representatives in entering into any agreement with terms more favorable to the employees than those provided herein or be used to diminish any benefit granted to the employees under existing laws agreements and voluntary employer practices.
Jurisprudence: (1) Teachers of private school on contract basis are entitled to service incentive leave. [Cebu Institute of Technology v. Ople (1987)] (2) In the case of Makati Haberdashery v. NLRC the Court ruled that piece-rate employees are not entitled to service 53
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incentive leave. [Makati Haberdashery v. NLRC, (1989)] (3) However, in the case of Labor Congress of the Philippines v. NLRC the Court held that petitioners are entitled to service incentive leave. The Court looked at several factors which led them to conclude that petitioners, although compensated on a per piece basis, were regular employees of private respondents. [Labor Congress of the Philippines v. NLRC, (1998)]
separation from employment. [Auto Bus Transport vs. NLRC (2005)]
Meaning of “1 year of service” [Book III, Rule V, Sec. 3, IRR.] The term "at least one year service" shall mean service for not less than 12 months, whether continuous or broken, reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contract is less than 12 months, in which case said period shall be considered as one year.
Coverage Every pregnant woman in the private sector, whether married or unmarried, is entitled to the maternity leave benefits.
Commutable nature of benefit The service incentive leave shall be commutable to its money equivalent if not used or exhausted at the end of the year.
F.2. MATERNITY LEAVE [Sec. 14-A of RA 1161 (Social Security Law) as amended by RA 7322 and RA 8282]
This is applicable to both childbirth and miscarriage. Requisites (1) Employment: A female employee employed at the time of delivery, miscarriage or abortion (2) Contribution: who has paid at least 3 monthly contributions in the 12-month period immediately preceding the semester of her childbirth, or miscarriage. (3) Notice: employee notified employer of her pregnancy and the probable date of her childbirth, which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide.
Entitlement [Art. 95 (c), LC.] The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any court or administrative action. The cause of action of an entitled employee to claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its commutation (into money). Accordingly, if the employee wishes to accumulate his leave credits and opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or
Benefit received A daily maternity benefit equivalent to 100% of her average daily salary credit for: (1) 60 days for normal delivery (2) 78 days for caesarean delivery Note: This benefit shall NOT be included in the computation of 13th month pay as it is granted to an employee in lieu of wages which is the basis for computing 13th month.
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Only 4 maternity leaves available The maternity benefits provided under the Social Security Law shall be paid only for the first four (4) deliveries or miscarriages
basis). The purpose of this benefit is to allow the husband to lend support to his wife during her period of recovery and/or in nursing her newborn child. [Sec. 3, RA 8187]
SSS pays for the maternity leave The employer advances the benefit to the employee but the SSS shall immediately reimburse the employer of one hundred percent (100%) of the amount upon receipt of satisfactory proof of such payment and legality thereof
Benefit It shall apply to the first 4 deliveries of the employee’s lawful wife with whom he is cohabiting. It shall be for 7 calendar days, with full pay, consisting of basic salary and mandatory allowances fixed by the Regional Wage Board, if any, provided that his pay shall not be less than the mandated minimum wage. [Sec. 2, RA 8187]
Other conditions (1) Employer shall advance the payment subject to reimbursement by the SSS within 30 days from filing of leave application. (2) Availment shall be a bar to the recovery of sickness benefits provided by this Act for the same period for which daily maternity benefits have been received. (3) Employee may only avail of benefit for the first four (4) deliveries or miscarriages. (4) Sanction: That if an employee should give birth or suffer miscarriage (a) Without the required contributions having been remitted for her by her ER to the SSS, or (b) Without the latter having been previously notified by the ER of time of the pregnancy, then the employer shall pay to the SSS damages equivalent to the benefits which said employee member would otherwise have been entitled to.
Cohabiting means the obligation of the husband and wife to live together. If the spouses are not physically living together because of the workstation or occupation, the male employee is still entitled to the paternity leave benefit. [Sec. 1, IRR, RA 8187] Usage of the benefit Usage of the leave shall be after the delivery, without prejudice to an employer’s policy of allowing the employee to avail of the benefit before or during the delivery, provided that the total number of days shall not be more than 7 days for each covered delivery. (Sec. 5, IRR, RA 8187) Conditions for entitlement [Sec. 3, IRR, RA 8187] (1) He is married; (2) He is an employee at the time of the delivery of his child; (3) He is cohabiting with his spouse at the time that she gives birth or suffers a miscarriage; (4) He has applied for paternity leave with his ER within a reasonable period of time from the expected date of delivery by his pregnant spouse, or within such period as
F.3. PATERNITY LEAVE [RA 8187 (Paternity Leave Act of 1996)] Coverage and purpose Paternity leave is granted to all married male employees in the private and public sectors, regardless of their employment status (e.g. probationary, regular, contractual, project 55
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may be provided by company rules and regulations, or by CBA; and, (5) His wife has given birth or suffered a miscarriage.
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Any solo parent or individual who is left alone with the responsibility of parenthood due to: (1) Giving birth as a result of rape or and other crimes against chastity even without a final conviction of the offender: Provided, That the mother keeps and raises the child; (2) Death of spouse; (3) Spouse is detained or is serving sentence for a criminal conviction for at least one (1) year; (4) Physical and/or mental incapacity of spouse as certified by a public medical practitioner; (5) Legal separation or de facto separation from spouse for at least one (1) year: Provided, that he/she is entrusted with the custody of the children; (6) Declaration of nullity or annulment of marriage as decreed by a court or by a church: Provided, that he/she is entrusted with the custody of the children; (7) Abandonment of spouse for at least one (1) year; (8) Unmarried father/mother who has preferred to keep and rear his/her child/children, instead of having others care for them or give them up to a welfare institution; (9) Any other person who solely provides parental care and support to a child or children: Provided, that he/she is duly licensed as a foster parent by the Department of Social Welfare and Development (DSWD) or duly appointed legal guardian by the court; and (10) Any family member who assumes the responsibility of head of family as a result of the death, abandonment, disappearance, or prolonged absence of the parents or solo parent for at least one (1) year. [Sec. 3 (a), RA 8972]
Application for paternity leave See number 4 under conditions for entitlement. In case of miscarriage, prior application for paternity leave shall not be required. [Sec. 4, IRR, RA 8187] Non-conversion to cash In the event that the paternity leave is not availed of, it shall not be convertible to cash and shall not be cumulative. [Sec. 7, IRR, RA 8187] Crediting of existing benefits (1) If the existing paternity leave benefit under the CBA, contract, or company policy is greater than 7 calendar days as provided for in RA 8187, the greater benefit shall prevail. (2) If the existing paternity leave benefit is less than that provided in RA 8187, the ER shall adjust the existing benefit to cover the difference. Where a company policy, contract, or CBA provides for an emergency or contingency leave without specific provisions on paternity leave, the ER shall grant to the employee 7 calendar days of paternity leave. [Sec. 9, IRR, RA 8187]
F.4. PARENTAL LEAVE [RA 8972 (Solo Parents’ Welfare Act of 2000)] Leave benefits granted to a solo parent to enable him/her to perform parental duties and responsibilities where physical presence is required. [Sec. 3 (d), RA 8972]
Conditions for entitlement A solo parent employee shall be entitled to the parental leave under the following conditions:
Coverage
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F.5. LEAVES FOR VICTIMS OF VIOLENCE AGAINST WOMEN
(1) He/she has rendered at least one (1) year of service, whether continuous or broken; (2) He/she has notified his/her employer that he/she will avail himself/herself of it, within a reasonable period of time; and (3) He/she has presented to his/her employer a Solo Parent Identification Card, which may be obtained from the DSWD office of the city or municipality where he/she resides. [Sec 19, Art. V, IRR, RA 8972]
[RA 9262 (Anti-Violence against Women and Their Children Act of 2004)] Coverage and purpose VAWC leave is granted to women employees who are victims of violence, as defined in RA 9262. The leave benefit covers the days that the women employee has to attend to medical or legal concerns.
Availment The parental leave is in addition to leave privileges under existing laws with full pay, consisting of basic salary and mandatory allowances. It shall not be more than seven (7) working days every year. [Sec. 8, RA 8972]
Definition of Terms Violence against women and their children – refers to any act or a series of acts committed by any person against a woman who is his wife, former wife, or against a woman with whom the person has or had a sexual or dating relationship, or with whom he has a common child, or against her child whether legitimate or illegitimate, within or without the family abode, which result in or is likely to result in physical, sexual, psychological harm or suffering, or economic abuse including threats of such acts, battery, assault, coercion, harassment or arbitrary deprivation of liberty.
Grant of flexible work schedule The employer shall provide for a flexible working schedule for solo parents: Provided, That the same shall not affect individual and company productivity: Provided, further, That any employer may request exemption from the above requirements from the DOLE on certain meritorious grounds. [Sec. 6, RA 8972] Protection against work discrimination No employer shall discriminate against any solo parent employee with respect to terms and conditions of employment on account of his/her status. [Sec. 7, RA 8972]
VAWC includes, but is not limited to, the following acts: (1) “Physical Violence" refers to acts that include bodily or physical harm; (2) "Sexual violence" refers to an act which is sexual in nature, committed against a woman or her child. It includes, but is not limited to: (a) Rape, sexual harassment, acts of lasciviousness, treating a woman or her child as a sex object, making demeaning and sexually suggestive remarks, physically attacking the sexual parts of the victim's body, forcing her/him to watch obscene publications and indecent shows or forcing the woman or her child to do indecent acts and/or make films
Termination of the benefit A change in the status or circumstance of the parent claiming the benefit under the law, such that he/she is no longer left alone with the responsibility of parenthood, shall terminate his/her eligibility for these benefits. [Sec. 3 (a), RA 8972]
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thereof, forcing the wife and mistress/lover to live in the conjugal home or sleep together in the same room with the abuser; (b) Acts causing or attempting to cause the victim to engage in any sexual activity by force, threat of force, physical or other harm or threat of physical or other harm or coercion; (c) Prostituting the woman or child. (3) "Psychological violence" refers to acts or omissions causing or likely to cause mental or emotional suffering of the victim such as but not limited to intimidation, harassment, stalking, damage to property, public ridicule or humiliation, repeated verbal abuse and mental infidelity. It includes causing or allowing the victim to witness the physical, sexual or psychological abuse of a member of the family to which the victim belongs, or to witness pornography in any form or to witness abusive injury to pets or to unlawful or unwanted deprivation of the right to custody and/or visitation of common children. (4) "Economic abuse" refers to acts that make or attempt to make a woman financially dependent which includes, but is not limited to the following: (a) Withdrawal of financial support or preventing the victim from engaging in any legitimate profession, occupation, business or activity, except in cases wherein the other spouse/partner objects on valid, serious and moral grounds as defined in Article 73 of the Family Code; (b) Deprivation or threat of deprivation of financial resources and the right to the use and enjoyment of the conjugal, community or property owned in common; (c) Destroying household property;
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(d) Controlling the victims' own money or properties or solely controlling the conjugal money or properties. [Sec.3, RA 9262] Requirement for entitlement To be entitled to the leave benefit, the only requirement is for the victim-employee to present to her employer a certification from the barangay chairman or barangay councilor or prosecutor or the Clerk of Court, as the case may be, that an action relative to the matter is pending. Benefit In addition to other paid leaves under existing labor laws, company policies, and/or CBA, the qualified victim-employee shall be entitled to a leave of up to 10 days with full pay, consisting of basic salary and mandatory allowances fixed by the Regional Wage Board, if any. Usage of the benefit The usage of the 10-day leave shall be at the option of the woman employee. In the event that the leave benefit is not availed of, it shall not be convertible into cash and shall not be cumulative. A victim of VAWC who is employed shall be entitled to a paid leave of up to ten (10) days in addition to other paid leaves under the Labor Code and Civil Service Rules and Regulations and other existing laws and company policies: (1) At any time during the application of any protection order, investigation, prosecution and/or trial of the criminal case, extendible when the necessity arises as specified in the protection order. (2) Upon the issuance of the Punong Barangay/kagawad or prosecutor or the Clerk of Court, as the case may be, of a certification (at no cost) to the woman that such an action is pending, and this is all
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that is required for the employer to comply with the 10- day paid leave. (3) For government employees, in addition to the aforementioned certification, the employee concerned must file an application for leave citing as basis R.A. 9262. [Sec. 42, IRR, RA 8972]
within the said 12-month period is sufficient to entitle her to avail of the special leave benefit.
F.6. SPECIAL LEAVE BENEFITS (SLB) FOR WOMEN
Competent physician A medical doctor preferably specializing in gynecological disorders or is in the position to determine the period of recuperation of the woman employee. [Sec. 1, DO 112, as amended]
Employment service Includes absences with pay such as use of other mandated leaves, company-granted leaves and maternity leaves
[RA 9710 (The Magna Carta of Women), DOLE DO No. 112, Series of 2011 as amended by DO No. 112-A Series of 2012]
Conditions for entitlement of special leave Any female employee, regardless of age and civil status, shall be entitled to a special leave benefit, provided she has complied with the following conditions: (1) She has rendered at least 6 months continuous aggregate employment service for the last 12 months prior to surgery; (2) She has filed an application for special leave (3) She has undergone surgery due to gynecological disorders as certified by a competent physician. [Sec. 2, DO 112]
Special leave benefit for women A female employee’s leave entitlement of two (2) months with full pay from her employer based on her gross monthly compensation following surgery caused by gynecological disorders, provided that she has rendered continuous aggregate employment service of at least six (6) months for the last 12 months. Gynecological disorders Disorders that would require surgical procedures such as, but not limited to, dilatation and curettage and those involving female reproductive organs such as the vagina, cervix, uterus, fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified by a competent physician. It shall also include hysterectomy, ovariectomy, and mastectomy.
Application for special leave Application before surgery The employee shall file her application for leave with her employer within a reasonable period of time from the expected date of surgery, or within such period as may be provided by company rules and regulations or by CBA.
Gross monthly compensation The monthly basic pay plus mandatory allowances fixed by the regional wage boards. [Sec. 7, Rule II, IRR, RA 9710]
Application after surgery Prior application for leave shall not be necessary in cases requiring emergency surgical procedure, provided that the employer shall be notified verbally or in written form within a reasonable period of time and provided further that after the surgery or appropriate recuperating period, the female
At least six months continuous aggregate employment service for the last 12 months prior to surgery The woman employee should have been with the company for 12 months prior to surgery. An aggregate service of at least six (6) months
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employee shall immediately file her application using the prescribed form. [Sec. 3, DO 112]
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victims of VAWC, Parental leave for solo parents). The grant of SLB under the law is in recognition of the fact that patients with gynecological disorder needing surgery require a longer period of recovery. The benefit is considered an addition to the leave benefits granted under existing laws and should be added on top of said statutory leave entitlements.
Period of entitlement The 2 months special leave is the maximum period of leave with pay that a woman employee may avail of under RA 9710. For purposes of determining the period of leave with pay that will be allowed to a female employee, the certification of a competent physician as to the required period of recuperation shall be controlling. [Sec. 4, DO 112, as amended]
If the SLB has already been exhausted, the company leave and other mandated leave benefits may be availed of by the woman employee. [Sec. 8, DO 112, as amended] Special leave benefit vis-à-vis maternity leave benefit Where the woman employee had undergone surgery due to gynecological disorder during her maternity leave, she is entitled only to the difference between the SLB and maternity leave benefit. [Sec. 9, DO 112, as amended]
Availment The special leave shall be granted to the qualified employee after she has undergone surgery. [Sec. 5, DO 112, as amended] Frequency of availment A woman employee can avail of the SLB for every instance of surgery due to gynecological disorder for a maximum total period of 2 months per year. [Sec. 6, DO 112, as amended]
Crediting of existing or similar benefits If there are existing or similar benefits under a company policy, practice or CBA providing similar or equal benefits to what is mandated by law, the same shall be considered as compliance, unless the company policy, practice or CBA provides otherwise.
Special leave benefit vis-à-vis SSS sickness benefit The SLB is different from the SSS sickness benefit. The former is granted by the employer in accordance with RA 9710.
In the event the company policy, practice or CBA provides lesser benefits, the company shall grant the difference.
It is granted to a woman employee who has undergone surgery due to gynecological disorder. The SSS sickness benefit, on the other hand, is administered and given by the SSS in accordance with RA 1161 as amended by RA 8282. [Sec. 7, DO 112, as amended]
More liberal existing or similar benefits cannot be withdrawn or reduced by reason of the mandate of RA 9710. The term “similar or equal benefits” refers to leave benefits which are of the same nature and purpose as that of the SLB. [Sec. 10, DO 112, as amended]
Special leave benefit vis-à-vis existing statutory leaves The SLB cannot be taken from existing statutory leaves (i.e. 5-day SIL, leave for 60
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Mode of payment The SLB is a leave privilege. The woman employee shall not report for work for the duration of the leave but she will still receive her salary covering said period. The employer, in its discretion, may allow said employee to receive her pay for the period covered by the approved leave before or during the surgery. The computation of her “pay” shall be based on her prevailing salary at the time of the surgery. [Sec. 11, DO 112, as amended]
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employees not falling within this definition shall be considered rank-and-file employees. (Sec 2, Rule VI, Book 3, IRR) Distribution Service charges are distributed in accordance with the following percentage of sharing: Eighty-five percent (85%) for the employees to be distributed equally among them; Fifteen percent (15%) for the management to answer for losses and breakages and, at the discretion of the management, distribution to managerial employees. (Sec 3, Rule VI, Book 3, IRR)
Non-commutation of the benefit The SLB shall be non-cumulative and nonconvertible to cash unless otherwise provided by a CBA [Sec. 12, DO 112, as amended]
The shares shall be distributed to employees not less than once every 2 weeks or twice a month at intervals not exceeding 16 days. (Sec 4, Rule VI, Book 3, IRR)
G. SERVICE CHARGES Coverage Employers (Sec 1, Rule VI, Book 3, IRR) This rule shall apply only to establishments which collect service charges such as: (1) Hotels, restaurants, lodging houses, night clubs, cocktail lounge, massage clinics, bars, casinos and gambling houses and similar enterprises (2) Including those entities operating primarily as private subsidiaries of the Government
Note: The P2,000.00 salary ceiling for entitlement thereto is no longer applicable. Integration In case service charge is abolished, the shares of covered employees shall be considered integrated in their wages. (Art 96, LC) The basis of the amount to be integrated shall be the average monthly share of each employee for the past twelve (12) months immediately preceding the abolition of withdrawal of such charges. (Sec. 5, Rule VI, Book 3, IRR)
Employees Shall apply to ALL employees of covered employers (1) Regardless of their positions, designations, or employment status, (2) Irrespective of the method by which their wages are paid.
Synthesis of the Rules Service charges must be pooled; Where a restaurant or similar establishment does not collect service charges but has a practice or policy of monitoring and pooling tips given voluntarily by its customers to its employees, the pooled tips should be monitored, accounted for and distributed
Exceptions Managerial employees – or one who is vested with powers or prerogatives to lay down and execute managerial policies and/or hire, transfer, suspend, layoff, recall, discharge, assign or discipline employees or to effectively recommend such managerial actions. All 61
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in the same manner as the services charges. (DOLE Handbook on Workers’ Statutory Monetary Benefits, 2014ed.) The amount collected is divided between the company (15%) and employees (85%); It shall be given twice a month with intervals of not more than 15 days; If discontinued, removed, or stopped, the average share of the employees of their service charge or tips shall be integrated with their basic wage.
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(2) Employers already paying their employees a 13th month pay or more in a calendar year or its equivalent at the time of this issuance; and (3) Employers of those who are paid on purely commission, boundary or task basis and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof (except those workers who are paid on piece-rate basis, in which case their employer shall grant them 13th month pay).
H. THIRTEENTH (13TH) MONTH PAY AND OTHER BONUSES
Note: “Equivalent” includes: (1) Christmas bonus, mid-year bonus, cash bonuses (2) and other payments amounting to not less than 1/12 of the basic salary (3) but shall NOT INCLUDE cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employee as well a nonmonetary benefits.
(PD 851 (The 13th-Month Pay Law) and the Revised Guidelines on the Implementation of the 13th Month Pay Law) Rationale To further protect the level of real wages from the ravage of world-wide inflation; There has been no increase in the legal minimum wage rates since 1970; The Christmas season is an opportune time for society to show its concern for the plight of the working masses so they may properly celebrate Christmas and New Year.
Workers paid on a piece-rate basis Those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same.
Coverage General Rule: ALL EMPLOYERS are hereby required to pay all their rank and file employees a 13th month pay not later than Dec 24 of every year, Provided that they have worked for at least one (1) month during a calendar year.
Minimum Amount: 1/12 of the total basic salary earned by an employee within a calendar year BASE AMOUNT, which is the basic salary shall include: (1) Cost of living allowances (COLA) integrated into the basic salary of a covered employee pursuant to EO 178. (2) All remunerations or earnings paid by this employer for services rendered. (3) But not the allowances and monetary benefits which are not considered or
Exempted Employers: (1) Government, its political subdivisions, including GOCCs except those operating essentially as private subsidiaries of the Government;
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integrated as part of the regular or basic salary, such as the cash equivalent of: (a) Unused vacation and sick leave credits, (b) Overtime, (c) Premium, (d) Night differential, (e) Holiday pay and, and (f) Cost-of-living allowances.
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from all their private Employers regardless of their total earnings from each or all their employers. (Revised Guidelines) (4) Private School Teachers: Private school teachers, including faculty members of universities and colleges, are entitled to the required 13th month pay, regardless of the number of months they teach or are paid within a year, if they have rendered service for at least one (1) month within a year. (Revised Guidelines)
Time of payment General Rule: paid not later than Dec 24 of each year.
Overload pay is NOT included in the computation for 13th month pay; overload is not overtime as it is additional work done within the normal shift [Letran Calamba Faculty vs NLRC, (2008)] (1) Resigned or Separated Employee: An Employee who has resigned or whose services were terminated at any time before the time for payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year up to the time of his resignation or termination from service. [Revised Guidelines] (2) Wage Difference: The difference between the minimum wage and the actual salary received by the Employee cannot be deemed as his 13th month pay as such difference is not equivalent to or of the same import as the said benefit contemplated by law. [JPL Marketing Promotions vs CA, 2005] (3) Terminated Employees: The payment of the 13th month pay may be demanded by the employee upon the cessation of employeremployee relationship. [Archilles Manufacturing Corp. vs NLRC, 1995]
Exception: ER may give to his employees half (½) of the required 13th Month Pay before the opening of the regular school year and the other half on or before the 24th of December every year. The frequency of payment of this monetary benefit may be the subject of agreement between the employer and the recognized CBA of the employees. 13th Month Pay in Special Cases (1) Paid by Results: Employees who are paid on piece work basis are, by law, entitled to the 13th Month Pay. (Revised Guidelines on the Implementation of the 13th Month Pay Law) (2) Fixed or Guaranteed Wage: Employees who are paid a fixed or guaranteed wage plus commission are entitled to 13th month pay (not purely commission); the basis for computation shall be both their fixed or guaranteed wage and commission. (Revised Guidelines) (3) Those with Multiple Employers: Government Employees working part time in a private enterprise, including private educational institutions, as well as Employees working in two or more private firms, whether on full or part time bases, are entitled to the required 13th Month Pay 63
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Additional Rules: (1) Commissions: If the commissions may be properly considered part of the basic salary, then they should be INCLUDED. If they are not an integral part of the basic salary, then they should be EXCLUDED. [Phil. Duplicators Inc. vs NLRC (1995)] (2) Substitute Payment not allowed: Benefits in the form of food or free electricity, assuming they were given, were not a proper substitute for the 13th month pay required by law. Neither may year-end rewards for loyalty and service be considered in lieu of 13th month pay. [Framanlis Farms, Inc. vs MOLE (1989)] (3) 14th Month Pay is not mandated: Employers already paying their employees a 13th month pay or its equivalent are not covered by this Decree.[Kamaya Point Hotel vs NLRC (1989)]
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the other. The two cases present quite different factual situations (although the same word “commissions” was used or invoked) the legal characterizations of which must accordingly differ. In the instant case, there is no question that the sales commission earned by the salesmen who make or close a sale of duplicating machines constitute part of the compensation or remuneration paid to salesmen for serving as salesmen, and hence as part of the “wage” or salary of petitioner’s salesmen. It appears that petitioner pays its salesmen a small fixed or guaranteed wage; the greater part of the salesmen’s wages or salaries being composed of the sales or incentive commissions earned on actual sales closed by them. The sales commissions were an integral part of the basic salary structure. They are not overtime payments, or profit sharing payments or any other fringe benefit. [Phil. Duplicators vs NLRC (1995)]
Commissions vis-à-vis 13th month pay The Rule on Productivity Bonuses. The socalled commissions “paid to or received by medical representatives of Boie-Takada Chemicals or by the rank-and-file employees of Philippine Fuji Xerox Co., were excluded from the term “basic salary” because these were paid to the medical representatives and rank-and-file employees as “productivity bonuses.” These have no clear direct or necessary relation to the amount of work actually done by each individual employee. More generally, a bonus is an amount granted and paid ex gratia to an employee. If an employer cannot be compelled to pay a productivity bonus to its employees, it should follow that such productivity bonus, when given, should not be deemed to fall within the “basic salary” of employees when the time comes to compute their 13th month pay [BoieTakeda vs de la Serna (1993)]
CBA vis-à-vis 13th month pay The Presidential Decree is specific and mandatory. However, if the employers actually grant such for the 13th month pay in the monetary benefits provided for in the CBA, they could be exempted from the operation of the decree. To be exempted, there must be actual payment. [Marcopper Mining Corp. vs. Ople (1981)]
I. SEPARATION PAY [(Art. 283 & 284, LC, DOLE Handbook on Worker’s Statutory Monetary Benefits, 2014) Separation pay is defined as the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during the period that he is looking for another employment. [A’ Prime Security Services vs NLRC (1993)]
The decision in Boie-Takeda and the doctrine enunciated in this case in fact co-exist with 64
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General rule: The rule embodied in the Labor Code is that a person dismissed for cause as defined therein (see Art. 282, LC) is not entitled to separation pay. [PLDT vs NLRC (1988)]
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Handbook on Workers’ Statutory Monetary Benefits, 2014 ed.) One-Month Pay per Year of Service An employee is entitled to separation pay equivalent to his/her one-month pay for every year of service, a fraction of at least 6 months being considered as one whole year, if his/her separation from service is due to any of the following: (1) Installation by employer of labor-saving devices; (2) Redundancy, as when the position of the employee has been found to be excessive or unnecessary in the operation of the enterprise; (3) Impossible reinstatement of the employee to his/her former position or to a substantially equivalent position for reasons not attributable to the fault of the employer, as when the reinstatement ordered by a competent authority cannot be implemented due to closure of cessation of operations of the establishment/employer, or the position to which he/she is to be reinstated no longer exists and there is no substantially equivalent position in the establishment to which he/she can be assigned. [Gaco vs NLRC (1994)]
Exceptions: Considerations of equity as in the cases of Filipro, Inc. v. NLRC, Metro Drug Corp. v. NLRC, Engineering Equipment, Inc. v. NLRC, San Miguel Corp v. NLRC. [PLDT vs NLRC (1988)] An employee who voluntarily resigns is not entitled to separation pay unless stipulated in the employment contract, or the collective bargaining agreement, or is sanctioned by established practice or policy of the employer. [Phimco Industries vs NLRC (1997); Hinatuan Mining Corp vs NLRC (1997) cited in JPL Marketing Promotions v. CA (2005)] Amount One-Half (1/2) Month Pay per Year of Service An employee is entitled to receive separation pay equivalent to ½ month pay for every year of service, a fraction of at least six (6) months being considered as one whole year, if his/her separation from the service is due to any of the following authorized causes: (1) Retrenchment to prevent losses (i.e. reduction of personnel effected by management to prevent losses); (2) Closure or cessation of operation of an establishment not due to serious losses or financial reverses; and, (3) When the EE is suffering from a disease not curable within a period of six (6) months and his/her continued employment is prejudicial to his/her health or to the health of his/her co-employees In no case will an employee get less than one (1) month separation pay if the separation is due to the above stated causes and he/she has served for at least six (6) months. (DOLE
Notice of Termination The employer may terminate the employment of any employee due to the above-mentioned authorized causes by serving a written notice on the employee and the DOLE through its regional office having jurisdiction over the place of business at least 1 month before the intended date thereof. Basis of Separation Pay The computation of separation pay of an employee shall be based on his/her latest salary rate. [DOLE Handbook on Workers’ Statutory Monetary Benefits, 2014 ed.] 65
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Inclusion of Regular Allowance in the Computation In the computation of separation pay, it would be error not to integrate the allowance with the basic salary. The salary base properly used in computing the separation pay should include not just the basic salary but also the regular allowances that an employee has been receiving. [Planters’ Products, Inc. vs NLRC (1989)]
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Retirement - the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age agrees to sever his or her employment with the former ... an employer is free to impose a retirement age less than 65 for as long as it has the employees’ consent… having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her, respondent was guilty of illegal dismissal [Jaculbe vs Silliman University, 2007]
J. RETIREMENT PAY [RA 7641 - The Retirement Pay Law]
J.1. ELIGIBILITY General Rule: All employees in the private sector, regardless of their position, designation, or status, and irrespective of the method by which their wages are paid [Sec. 1, IRR, RA 7641]
Rationale RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer can respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor. There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time said employment contracts have started. [Enriquez Security Services, Inc. v. Cabotaje, 2006] Pursuant thereto, this Court imposed two (2) essential requisites in order that R.A. 7641 may be given retroactive effect: (1) the claimant for retirement benefits was still in the employ of the employer at the time the statute took effect; and (2) the claimant had complied with the requirements for eligibility for such retirement benefits under the statute. [Universal Robina Sugar Milling Corp. vs Caballeda, 2008]
Exceptions: (1) employees covered by the Civil Service Law; (2) domestic helpers and persons in the personal service of another, and (3) employees in retail, service and agricultural establishments or operations regularly employing not more than ten employees [Sec. 2, IRR, RA 7641] Exclusions from coverage R.A. No. 7641, otherwise known as "The Retirement Pay Law," only applies in a situation where: (1) there is no collective bargaining agreement or other applicable employment contract providing for retirement benefits for an employee; OR (2) there is a collective bargaining agreement or other applicable employment contract providing for retirement benefits for an employee, but it is below the requirements set for by law. The reason for the first situation is to prevent the absurd situation where an employee, who 66
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is otherwise deserving, is denied retirement benefits by the nefarious scheme of employers in not providing for retirement benefits for their employees. The reason for the second situation is expressed in the Latin maxim pacta private juri public derogare non possunt. Private contracts cannot derogate from the public law. [Oxales vs Unilab, 2008]
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(2) Cash equivalent of five (5) days of service incentive leave; (3) One-twelfth (1/12) of the 13th month pay. (1/12 x 365/12 = .083 x 30.41 = 2.52) Thus, “one-half month salary” is equivalent to 22.5 days. [Capitol Wireless, Inc. vs Sec. Confessor, 1996; Reyes v NLRC, 2007] Other benefits may be included in the computation of the retirement pay upon agreement of the ER and the EE or if provided in the CBA.
Age of retirement In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age (and have served the establishment for at least 5 years). [Sec. 1, IRR, RA 7641]
Retirement pay under RA 7641 vis-à-vis retirement benefits under SSS and GSIS laws RA 7641 mandates payment of retirement benefits. All private sector employees regardless of their position, designation or status and irrespective of the method by which their wages are paid are entitled to retirement benefits upon compulsory retirement at the age of sixty-five (65) or upon optional retirement at sixty (60) or more but not 65. The minimum retirement pay due covered employees shall be equivalent to one-half month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. The benefits under this law are other than those granted by the SSS or the GSIS.
Optional retirement – in the absence of a retirement plan or other applicable agreement providing for retirement benefits of EEs in an establishment, an EE may retire upon reaching the age of 60 or more if he has served for at least 5 years in said establishment. Compulsory retirement – in the absence of a retirement plan or other applicable agreement providing for retirement benefits of EEs in an establishment, an EE shall be retired at the age of 65 years. [Sec. 4, IRR, RA 7641]
Retirement Benefits under a CBA or Applicable Contract Any EE may retire or be retired by his/her ER upon reaching the age established in the CBA or other applicable agreement/contract and shall receive the retirement benefits granted therein; provided, however, that such retirement benefits shall not be less than the retirement pay required under RA 7641, and provided further that if such retirement benefits under the agreement are less, the ER shall pay the difference.
J.2. AMOUNT OF RETIREMENT PAY The minimum retirement pay shall be equivalent to one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. For the purpose of computing retirement pay, “one-half month salary” shall include all of the following: (1) Fifteen (15) days salary based on the latest salary rate; 67
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J.5. TAXABILITY
Where both the ER and the EE contribute to a retirement fund pursuant to the applicable agreement, the ER’s total contributions and the accrued interest thereof should not be less than the total retirement benefits to which the EE would have been entitled had there been no such retirement benefits’ fund. If such total portion from the ER is less, the ER shall pay the deficiency.
Any provision of law to the contrary notwithstanding, the retirement benefits received by officials and employees of private firms, whether individual or corporate , in accordance with a reasonable private benefit plan maintained by the employer shall be exempt from all taxes and shall not be liable to attachment, garnishment, levy or seizure by or under any legal or equitable process whatsoever except to pay a debt of the official or employee concerned to the private benefit plan or that arising from liability imposed in a criminal action: Provided, That the retiring official or employee has been in the service for at least ten (10) years and is not less than fifty years of age at the time of his retirement: Provided, further, That the benefits granted under this Act shall be availed of by an official or employee only once; Provided, finally, That in case of separation of an official or employee from the service of the employer due to death, sickness, or other physical disability or for any cause beyond the control of the said official or employee, any amount received by him or by his heirs from the employer as a consequence of such separation shall likewise be exempt as hereinabove provided.
J.3. RETIREMENT BENEFITS OF WORKERS WHO ARE PAID BY RESULTS For covered workers who are paid by result and do not have a fixed monthly salary rate, the basis for the determination of the salary for 15 days shall be their average daily salary (ADS). The ADS is derived by dividing the total salary or earning for the last 12 months reckoned from the date of retirement by the number of actual working days in that particular period, provided that the determination of rates of payment by results are in accordance with established regulations.
J.4. RETIREMENT BENEFIT OF PARTTIME WORKERS Part-time workers are also entitled to retirement pay of “one-month salary” for every year of service under RA 7641 after satisfying the following conditions precedent for optional retirement: (a) There’s no retirement plan between the ER and the EE; and, (b) The EE should have reached the age of 60 years, and should have rendered at least 5 years of service with the ER.
As used in this Act, the term "reasonable private benefit plan" means a pension, gratuity, stock bonus or profit sharing plan maintained by an employer for the benefit of some or all of his officials and employees, wherein contributions are made by such employer or officials and employees, or both, for the purpose of distributing to such officials and employees the earnings and principal of the fund thus accumulated, and wherein it is provided in said plan that at no time shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose other than for the exclusive benefit of the said officials and employees.[Sec. 1, RA 4917]
Applying the foregoing principle, the components of retirement benefit of part-time workers may likewise be computed at least in proportion to the salary and related benefits due them. [DOLE Handbook on Workers’ Statutory Monetary Benefits, 2014 ed.]
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Any provision of law to the contrary notwithstanding, the retirement benefits received by officials and employees of private firms, whether individual or corporate, in accordance with a reasonable private benefit plan maintained by the employer (1) shall be exempt from all taxes and (2) shall not be liable to attachment, garnishment, levy or seizure by or under any legal or equitable process whatsoever [Intercontinental Broadcasting Corp. v Amorilla, 2006]
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and employees the earnings and principal of the fund thus accumulated, and wherein it is provided in said plan that at no time shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose other than for the exclusive benefit of the said officials and employees.
K. WOMEN WORKERS The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men.[Consti Art II Sec 14]
Exception Except to pay a debt of the official or employee concerned to the private benefit plan or that arising from liability imposed in a criminal action:
The State shall protect working women by providing safe and healthful working conditions, taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation.[Consti Art XIII Sec 14]
Additional conditions (a) That the retiring official or employee has been in the service of the same employer for at least ten (10) years and is not less than fifty years of age at the time of his retirement; (b) That the retirement benefits shall be availed of by an official or employee only once; and, (c) That in case of separation of an official or employee from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee, any amount received by him or by his heirs from the employer as a consequence of such separation shall likewise be exempt as hereinabove provided.
General Statement on Coverage. – This Rule shall apply to all employers, whether operating for profit or not, including educational, religious and charitable institutions, except to the Government and to government-owned or controlled corporations and to employers of household helpers and persons in their personal service insofar as such workers are concerned.[Omnibus Rules Bk III Rule XII Sec 1]
K.1. PROVISIONS DISCRIMINATION
AGAINST
It shall be unlawful for any employer to discriminate against any woman employee with respect to terms and conditions of employment solely on account of her sex. The following are acts of discrimination: (1) Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a female employees as against a male employee, for work of equal value; and
Reasonable private benefit plan - means a pension, gratuity, stock bonus or profit sharing plan maintained by an employer for the benefit of some or all of his officials and employees, wherein contributions are made by such employer or officials and employees, or both, for the purpose of distributing to such officials 69
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K.3. PROHIBITED ACTS
(2) Favoring a male employee over a female employee with respect to promotion, training opportunities, study and scholarship grants solely on account of their sexes. [Art.133, Labor Code]
[Art. 135] Note: Nightwork/ Exception (Art 130-131) – No more nightwork prohibition under R.A. 10151 (An Act Allowing the Employment of Night Workers, thereby Repealing Articles 130 and 131 of PD 442, as amended, otherwise known as the Labor Code of the Philippines)
K.2. STIPULATION AGAINST MARRIAGE It shall be unlawful for an employer to: (1) require as a condition of employment or continuation of employment that a woman employee shall not get married, or (2) stipulate expressly or tacitly that upon getting married a woman employee shall be deemed resigned or separated or (3) actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage. [Art. 134, Labor Code][Duncan Assoc of Detailman – PTGWO v Glaxo Wellcome, 2004]
Coverage. - This chapter shall apply to all persons, who shall be employed or permitted or suffered to work at night, except those employed in agriculture, stock raising, fishing, maritime transport and inland navigation, during a period of not less than seven (7) consecutive hours, including the interval from midnight to five o'clock in the morning, to be determined by the Secretary of Labor and Employment, after consulting the workers' representatives/labor organizations and employers. Night worker means any employed person whose work requires performance of a substantial number of hours of night work which exceeds a specified limit. This limit shall be fixed by the Secretary of Labor after consulting the workers' representatives/labor organizations and employers. [Article 154, RA 10151]
Bona fide occupational qualification exception When the employer can prove that the reasonable demands of the business require a distinction based on marital status and there is no better available or acceptable policy which would better accomplish the business purpose, an ER may discriminate against an EE based in the identity of the EE’s spouse. [Star Paper Corp. vs. Simbol, 2006] The Court sustained the validity of employer policy prohibiting an employee from having a personal or marital relationship with an employee of a competitor. The prohibition was reasonable under the circumstances because relationships of such nature might compromise the interests of the company. [Duncan Association of Detailmen vs. Glaxo Wellcome, 2004]
Women Night Workers. - Measures shall be taken to ensure that an alternative to night work is available to women workers who would otherwise be called upon to perform such work: (a) Before and after childbirth, for a period of at least sixteen (16) weeks, which shall be divided between the time before and after childbirth; (b) For additional periods, in respect of winch a medical certificate IS produced stating that said additional periods are necessary for the health of the mother or child: (1) During pregnancy; 70
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(2) During a specified time beyond the period, after childbirth is fixed pursuant to subparagraph (a) above, the length of which shall be determined by the DOLE after consulting the labor organizations and employers.
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Discharge to prevent enjoyment of benefits To deny any woman employee the benefits provided for in this Chapter or to discharge any woman employed by him for the purpose of preventing her from enjoying any of the benefits provided under this Code. [Art. 135 (1)] Discharge on account of pregnancy To discharge such woman on account of her pregnancy, while on leave or in confinement due to her pregnancy. [Art. 135 (2)]
During the periods referred to in this article: (i) A woman worker shall not be dismissed or given notice of dismissal, except for just or authorized causes provided for in this Code that are not connected with pregnancy, childbirth and childcare responsibilities. (ii) A woman worker shall not lose the benefits regarding her status, seniority, and access to promotion which may attach to her regular night work position.
Discharge on account of testimony To discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant. [Art. 137 (3)] It shall be unlawful for any employer: …to discharge any woman or child or any other employee for having filed a complaint or having testified or being about to testify under the Code [Book III, Rule XII, Sec 13(d), IRR]
Pregnant women and nursing mothers may be allowed to work at night only if a competent physician, other than the company physician, shall certify their fitness to render night work, and specify, in the case of pregnant employees, the period of the pregnancy that they can safely work. The measures referred to in this article may include transfer to day work where this is possible, the provision of social security benefits or an extension of maternity leave.
Expulsion of Women faculty/ female student due to pregnancy outside of marriage Expulsion and non-readmission of women faculty due to pregnancy outside of marriage shall be outlawed. No school shall turn out or refuse admission to a female student solely on the account of her having contracted pregnancy outside of marriage during her term in school. [Sec. 13(c), RA 9710]
The measures referred to in this article may include transfer to day work where this is possible, the provision of social security benefits or an extension of maternity leave.
K.4. ANTI-SEXUAL HARASSMENT [RA 7877 - Anti-Sexual Harassment Act of 1995] Forms of Sexual Harassment (1) Employment or Work Related (a) The sexual favor is made as a condition (i) in the hiring or in the employment, re-employment or continued employment of said individual or (ii) in granting said individual favorable compensation, terms, conditions, promotions, or privileges, or
The provisions of this article shall not leave the effect of reducing the protection and benefits connected with maternity leave under existing laws.[Article 158, RA 10151] Discrimination [Art 133, RA 9710] See previous section Stipulation against marriage [Art 134] See previous section 71
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(iii) in the refusal to grant the sexual favor results in limiting, segregating or classifying the EE which in any way would discriminate, deprive or diminish employment opportunities or otherwise adversely affect said employee; (b) The above acts would either: (i) impair the employee’s rights or privileges under existing labor laws; or (ii) result in an intimidating, hostile, or offensive environment for the employee.
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(2) Any person who directs or induces another to commit any act of sexual harassment as herein defined. OR (3) Any person who cooperates in the commission by another without which it would NOT have been committed, shall also be held liable under this Act [Sec. 3, RA 7877] Role of the employer or Head of Office The Employer or Head of Office shall have the duty: (1) to prevent the commission of such acts and (2) to lay down the procedure for the resolution, settlement or prosecution of committed acts. [Sec. 4, RA 7877]
(2) Education or Training environment. In an education or training environment, sexual harassment is committed: (a) Against one who is under the care, custody or supervision of the offender (b) Against one whose education, training, apprenticeship or tutorship is entrusted to the offender; (c) When the sexual favor is made a condition to the giving of a passing grade, or the granting of honors and scholarships, or the payment of a stipend, allowance or other benefits, privileges, or considerations; or (d) When the sexual advances result in an intimidating, hostile or offensive environment for the result, trainee or apprentice.
He shall be solidarily liable for damages: (1) if he is informed of such acts by the offended party and (2) no immediate action is taken thereon. [Sec. 5, RA 7877] Independent Action for Damages The victim of work, education or trainingrelated sexual harassment can institute a separate and independent action for damages and other affirmative relief. [Sec. 6, RA 7877] Sanctions Criminal: imprisonment of 1 month to mos. Or fine of P10k to P20k or both Prescription of such action is in 3 years.
Persons who may be liable (1) Any employer, employee, manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainer or any other person, regardless of whether the demand, request for requirement for submission is accepted by the object of said act having authority, influence or moral ascendancy over another in a work or training or education environment, who demands, requests or otherwise requires any sexual favor from another,
Termination As a managerial employee, petitioner is bound by more exacting work ethics. When such moral perversity is perpetuated against his subordinate, he provides a justifiable ground for his dismissal for lack of trust and confidence. It is the right, nay the duty of every employer to protect its employees from oversexed superiors. [Sec. 7, RA 7877] [Libres vs NLRC, 1999] 72
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General Rule: Children below 15 shall NOT be employed
The gravamen of the offense in sexual harassment is not the violation of the employee's sexuality but the abuse of power by the employer. Any employee, male or female, may rightfully cry "foul" provided the claim is well substantiated. Strictly speaking, there is no time period within which he or she is expected to complain through the proper channels. The time to do so may vary depending upon the needs, circumstances, and more importantly, the emotional threshold of the employee.
Employment of Children - Children below fifteen (15) years of age shall not be employed except: (1) When a child works directly under the sole responsibility of his/her parents or legal guardian and where only members of his/her family are employed: Provided, however, That his/her employment neither endangers his/her life, safety, health, and morals, nor impairs his/her normal development: Provided, further, That the parent or legal guardian shall provide the said child with the prescribed primary and/or secondary education; or (2) Where a child's employment or participation in public entertainment or information through cinema, theater, radio, television or other forms of media is essential: Provided, That the employment contract is concluded by the child's parents or legal guardian, with the express agreement of the child concerned, if possible, and the approval of the Department of Labor and Employment: Provided, further, That the following requirements in all instances are strictly complied with: (a) The employer shall ensure the protection, health, safety, morals and normal development of the child; (b) The employer shall institute measures to prevent the child's exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time; and (c) The employer shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skills acquisition of the child.
Not many women are made of the stuff that can endure the agony and trauma of a public, even corporate, scandal. If petitionercorporation had not issued the third memorandum that terminated the services of private respondent, we could only speculate how much longer she would keep her silence. Perhaps, to private respondent's mind, for as long as she could outwit her employer's ploys she would continue on her job and consider them as mere occupational hazards. [Phil. Aelous Automotive United Corp. vs NLRC, 2000]
L. MINOR WORKERS Relevant Laws: RA 7610 (Special Protection of Children Against Abuse, Exploitation and Discrimination Act), RA 9231 (Special Protection of Children Against Child Abuse, Exploitation and Discrimination Act), Art. 137(a) Constitutional basis: The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social wellbeing. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs.[Art II, Sec. 13 of the 1987 Constitution]
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In the above-exceptional cases where any such child may be employed, the employer shall first secure, before engaging such child, a work permit from the Department of Labor and Employment which shall ensure observance of the above requirements.
(2) child’s employment or participation in public entertainment or information through cinema, theater, radio or television is essential, provided that [Sec. 12 of RA 7610 as amended by RA 7658]: (a) employment does NOT involve ads or commercials promoting alcohol, tobacco and its by-products or violence [Sec. 14, RA 7610] (b) the employment contract is concluded by the child’s parents or guardian, and approved by DOLE (c) The ER shall ensure the protection, health, safety and morals of the child (d) The ER shall institute measures to prevent the child’s exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time (e) The ER shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skills acquisition of the child. [Sec. 12 of RA 7610 as amended by RA 7658]
For purposes of this Article, the term "child" shall apply to all persons under eighteen (18) years of age.[Sec 2, RA 9231] Child - refers to any person under 18 years of age Child labor - refers to any work or economic activity performed by a child that subjects him/her to any form of exploitation or is harmful to his/her health and safety or physical, mental or psychosocial development Working child - refers to any child engaged as follows: (1) when the child is below eighteen (18) years of age, in work or economic activity that is not child labor as defined in the immediately preceding subparagraph; and (2) when the child is below fifteen (15) years of age, in work where he/she is directly under the responsibility of his/her parents or legal guardian and where only members of the child‘s family are employed; or in public entertainment or information. [SEC 3, DO 65-04]
Employment of Children from 15 to 18 Employment is allowed but restricted to nonhazardous work.
Exceptions (1) Child works directly under the sole responsibility of his parents or legal guardian and where only members of the ER’s family are employed, provided: (a) his employment does NOT endanger his life, safety, health and morals, (b) nor impairs his normal development, and (c) the parent or legal guardian shall provide the said minor child with the
Non-hazardous work shall mean any work or activity in which the EE is not exposed to any risk which constitutes an imminent danger to his safety and health. [Sec. 3, Rule XII, Book III, IRR of LC] The Secretary of Labor shall from time to time publish a list of hazardous work and activities in which persons 18 years of age and below 74
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cannot be employed [Sec. 3, Rule XII, Book III, IRR of LC]
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nursemaid or “yaya”, cook, gardener, or laundry person. [Sec 4(D). RA 10361] The term domestic worker or “kasambahay” excludes any person who performs domestic work only occasionally or sporadically and not on an occupational basis. [Sec.4(D), RA 10361]
The following are HAZARDOUS workplaces: (1) Nature of the work exposes the workers to dangerous environmental elements, contaminants or working conditions; (2) construction work, logging, fire-fighting, mining, quarrying, blasting, stevedoring, dock work, deep sea fishing, and mechanized farming; (3) manufacture or handling of explosives and other pyrotechnic products; (4) exposure to or use of heavy power-driven machinery or equipment; (5) exposure to or use of power-driven tools
Rights and Privileges (a) Minimum wage The minimum wage of domestic workers shall not be less than the following: i. P2,500 a month for those employed in NCR ii. P2,000 a month for those employed in chartered cities and first class municipalities iii. P1,500 a month for those employed in other municipalities Within one year from the effectivity of the Act, and periodically thereafter, the Regional Tripartite and Productivity Wage Boards shall review, and if proper, determine and adjust the minimum wage rates of domestic workers. [Sec. 24, RA 10361]
Working Hours of a Child Quantity Age Bracket Daily Max Weekly Max Below 15 y 4 hrs 20 hrs 15 to below 18 8hrs. 40 hrs Night work prohibition Age Bracket Prohibited Hours Below 15 y 8 pm to 6 am (10 hrs.) 15 to below 18 10 pm to 6 am (8 hrs.)
SECTION 1. Subparagraphs (1), (2) and (3), Article 143 of Presidential Decree No. 442, as amended, otherwise known as the "Labor Code of the Philippines" are hereby amended to read as follows:
M. EMPLOYMENT OF HOUSEHELPERS
ART. 143. Minimum wage. — (a) Househelpers shall be paid the following minimum wage rates; (1) Eight hundred pesos (P800.00) a month for househelpers in Manila, Quezon, Pasay and Caloocan cities and municipalities of Makati, San Juan, Mandaluyong, Muntinlupa, Navotas, Malabon, Parañaque, Las Piñas, Pasig, Marikina, Valenzuela, Taguig and Pateros in Metro Manila and in highly urbanized cities; (6) Six hundred fifty pesos (P650.00) a month for those in other chartered cities and first class municipalities;
Relevant Law: RA 10361 (Batas Kasambahay or Domestic Worker’s Act) Note: RA 10361 has expressly repealed Chapter III, “Employment of Househelpers”, Title III of Book III of the Labor Code Domestic work - This refers to work performed in or for a household or households. [Sec 4(C). RA 10361] Domestic worker or “Kasambahay” - Refers to any person engaged in domestic work within an employment relationship such as, but not limited to, the following: general househelp, 75
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access to communication shall be granted even during work time. [Sec. 8, RA 10361]
and (7) Five hundred fifty pesos (P550.00) a month for those in other municipalities; Provided, that the employees shall review the employment contracts of their househelpers every three (3) years with the end in view of improving the terms and conditions thereof. Provided, further, that those househelpers who are receiving at least One thousand pesos (P1,000.00) shall be covered by the Social Security System (SSS) and be entitled to all the benefits provided thereunder."
(f) Education and Training The employer shall afford the domestic worker the opportunity to finish basic education and may allow access to alternative learning systems and, as far as practicable, higher education or technical and vocational training. [Sec. 9, RA 10361] (g) Social and Other Benefits A domestic worker who has rendered at least one (1) month of service shall be covered by the Social Security System (SSS), the Philippine Health Insurance Corporation (PhilHealth), and the Home Development Mutual Fund or PagIBIG, and shall be entitled to all the benefits in accordance with the pertinent provisions provided by law.
(b) Standard of Treatment The employer or any member of the household shall not subject a domestic worker or “kasambahay” to any kind of abuse nor inflict any form of physical violence or harassment or any act tending to degrade the dignity of a domestic worker. [Sec. 5, RA 10361]
(h) Leave Benefits A domestic worker who has rendered at least one (1) year of service shall be entitled to an annual service incentive leave of five (5) days with pay [Sec. 29, RA 10361]
(c) Board, Lodging and Medical Attendance The employer shall provide for the basic necessities of the domestic worker to include at least three (3) adequate meals a day and humane sleeping arrangements that ensure safety and shall provide appropriate rest and assistance to the domestic worker in case of illnesses and injuries sustained during service without loss of benefits. [Sec. 6, RA 10361]
Pre-Employment Requirement Prior to the execution of the employment contract, the employer may require the following from the domestic worker: (1) Medical certificate or a health certificate issued by a local government health officer; (2) Barangay and police clearance; (3) National Bureau of Investigation (NBI) clearance; and (4) Duly authenticated birth certificate or if not available, any other document showing the age of the domestic worker such as voter’s identification card, baptismal record or passport. However, Section 12(a), (b), (c) and (d) shall be standard requirements when the employment of the domestic worker is facilitated through the PEA.
(d) Privacy Respect for the privacy of the domestic worker shall be guaranteed at all times and shall extend to all forms of communication and personal effects [Sec. 7, RA 10361] (e) Access to Outside Communication The employer shall grant the domestic worker access to outside communication during free time: Provided, That in case of emergency, 76
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The cost of the foregoing shall be borne by the prospective employer or agency, as the case may be. [Sec. 12, RA 10361]
(c)
Time and Manner of Payment: Payment of wages shall be made on time directly to the domestic worker in cash at least once a month and unless allowed by the domestic worker through a written consent, employer shall make no deductions from the wages other than that which is mandated by law. [Sec. 25, RA 10361]
(d)
(e) (f)
Right against assignment to non-household work at a wage rate lower than that mandated for agricultural or non-agricultural enterprises depending on the case. [Sec. 22, RA 10361]
LABOR LAW employer or any member of the household; Commission of a crime or offense against the domestic worker by the employer or any member of the household; Violation by the employer of the terms and conditions of the employment contract and other standards set forth under this law; Any disease prejudicial to the health of the domestic worker, the employer, or member/s of the household; and Other causes analogous to the foregoing. [Sec. 33, RA 10361]
(2) Initiated by the employer An employer may terminate the services of the domestic worker at any time before the expiration of the contract, for any of the following causes: (a) Misconduct or willful disobedience by the domestic worker of the lawful order of the employer in connection with the former’s work; (b) Gross or habitual neglect or inefficiency by the domestic worker in the performance of duties; (c) Fraud or willful breach of the trust reposed by the employer on the domestic worker; (d) Commission of a crime or offense by the domestic worker against the person of the employer or any immediate member of the employer’s family; (e) Violation by the domestic worker of the terms and conditions of the employment contract and other standards set forth under this law; (f) Any disease prejudicial to the health of the domestic worker, the employer, or member/s of the household; and (g) Other causes analogous to the foregoing. [Sec. 34, RA 10361]
Employment Age of Domestic Workers: Unlawful to employ any person below fifteen (15) years of age as a domestic worker [Sec. 16, RA 10361] Persons between 15-18 years old should only be employed in non-hazardous work. [DO 4-99 Sec. 4] Daily Rest Period: Aggregate of eight (8) hours per day. [Sec. 20, RA 10361] Employment Certification: ER shall give the househelper a written statement of the nature and duration of the service and his or her work performance as househelper upon severance. [Sec. 35, RA 10361] Termination (1) Initiated by the domestic worker The domestic worker may terminate the employment relationship at any time before the expiration of the employment contract for any of the following causes: (a) Verbal or emotional abuse of the domestic worker by the employer or any member of the household; (b) Inhuman treatment including physical abuse of the domestic worker by the
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Unjust dismissal Neither the domestic worker nor the employer may terminate the contract before the expiration of the term except for grounds provided in Sec. 33 and 34 of RA 10361.
(2) Materials may or may not be furnished by the ER or contractor. (3) Decentralized form of production, where there is ordinarily very little supervision or regulation of methods of work. (Sec. 2(a), Rule XIV, Book III, IRR)
If the domestic worker is unjustly dismissed, the domestic worker shall be paid the compensation already earned plus the equivalent of 15 days work by way of indemnity.
Industrial Homeworker - a worker who is engaged in industrial homework Employer means any person who (1) Acts as a contractor – delivers or causes to be delivered any goods, articles, or materials to be processed or fabricated in or about a home and thereafter to be returned or to be disposed of or distributed in accordance with ER’s direction; OR (2) Sells any goods, articles, or materials to be processed or fabricated in or about a home and then rebuys them after. [Art. 153, LC]
Leaving without justifiable reason by the domestic worker (a) any unpaid salary due not exceeding the equivalent 15 days work shall be forfeited AND (b) the employer may recover from the domestic worker the costs incurred related to the deployment expenses, if any: Provided, that the service has been terminated within 6 months from the domestic worker’s employment.
Note: Sec 2(d), Rule XIV, Book III is substantially similar to the above. Rights and benefits accorded homeworkers (1) Right to form, join or assist organizations
Notice to end the working relationship If the duration of the domestic service is not determined either in stipulation or by the nature of the service, the employer or the domestic worker may give notice to end the working relationship five (5) days before the intended termination of the service. The domestic worker and the employer may mutually agree upon written notice to preterminate the contract of employment to end the employment relationship. [Sec. 32, RA 10361]
[Sec 3, Rule XIV, Book III, IRR] (2) Right to acquire legal personality and the rights and privileges granted by law to legitimate labor organizations upon issuance of the certification of registration
[Sec 4, Rule XIV, Book III, IRR] (3) Immediate payment upon ER’s receipt of finished goods or articles [Sec 6, Rule XIV,
Book III, IRR] (4) SSS, MEDICARE and ECC
premium contributions shall be deducted from their pay and shall be remitted by ER/contractor/subcontractor to the SSS
N. EMPLOYMENT OF HOMEWORKERS
[Sec 6, Rule XIV, Book III, IRR]
Note: DO 5, DOLE (February 4, 1992), is now Rule XIV, Book III of the IRR. Industrial homework (1) Is a system of production under which work for an ER or contractor is carried out by a homeworker at his/her home.
Liability of Employer (1) ER may require homeworker to redo work improperly executed without additional pay [Sec 9a, Rule XIV, Book III, IRR] (2) ER need not pay homeworker for any work done on goods or articles not returned due to homeworker’s fault [Sec 9b, Rule XIV, 78
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Book III, IRR]
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O. APPRENTICES AND LEARNERS
(3) If subcontractor/contractor fails to pay homeworker, ER is jointly and severally liable with the former to the homeworker for his/her wage [Sec 11, Rule XIV, Book III,
Relevant Law: RA 7796 (Technical Education and Skills Development Act of 1994 or TESDA Act of 1994) Statement of objectives. - This Title aims: (1) To help meet the demand of the economy for trained manpower; (2) To establish a national apprenticeship program through the participation of employers, workers and government and non-government agencies; and (3) To establish apprenticeship standards for the protection of apprentices.[Art 57, RA
IRR] (4) ER shall assist the homeworkers in the maintenance of basic safe and healthful working conditions at the (5) homeworkers’ place of work. [Sec 11, Rule
XIV, Book III, IRR of LC] Regional Office shall provide technical assistance to registered homeworkers’ organizations [Sec 14, Rule XIV, Book III, IRR of
7796]
LC]
O.1. APPRENTICES
Prohibited Homework Homework is prohibited in the ff: (1) explosives, fireworks and articles of like character; (2) drugs and poisons; and (3) other articles, the processing of which requires exposure to toxic substances. [Sec
Note: Art. 58 has been superseded by Section 4 (j), (k), (l), (m) of RA 7796 quoted below: (j) "Apprenticeship" training within employment with compulsory related theoretical instruction involving a contract between an apprentice and an employer on an approved apprenticeable occupation. (k) “Apprentice" is a person undergoing training for an approved apprenticeable occupation during an apprenticeship agreement. [Art 58(b) Labor Code; Sec 4
13, Rule XIV, Book III, IRR] Conditions for deduction from homeworker’s earnings No deduction from the homeworker’s earnings for the value of materials lost, destroyed or damaged unless: (1) Homeworker is clearly shown to be responsible for loss or damage (2) Reasonable opportunity to be heard (3) Amount of deduction is fair and reasonable, and does not exceed actual loss or damage (4) Deduction does not exceed 20% of homeworker’s weekly earnings [Sec. 8,
(k), RA 7796] (l) "Apprenticeship Agreement" is a contract wherein a prospective employer binds himself to train the apprentice who in turn accepts the terms of training for a recognized apprenticeable occupation emphasizing the rights, duties and responsibilities of each party. (m) “Apprenticeable Occupation” is an occupation officially endorsed by a tripartite body and approved to be apprenticeable by the authority. [Sec. 4,
Rule XIV, Book III, IRR]
RA 7796] The act of filing the proposed apprenticeship program with the DOLE is a preliminary step towards its final approval, and does not 79
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instantaneously give rise to an employerapprentice relationship. It must be duly approved by the Minister of Labor and Employment. Hence, since the apprenticeship agreement between petitioner and respondent has no force and effect, respondent's assertion that he was hired not as an apprentice but as a delivery boy deserves credence. (Nitto
LABOR LAW
The employer shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skills acquisition of the child. In the above exceptional cases where any such child may be employed, the employer shall first secure, before engaging child, a work permit from the Department of Labor and Employment which shall ensure observance of the above requirements. The Department of Labor and Employment shall promulgate rules and regulations necessary for the effective implementation of this Section. [RA 7160, Sec. 12 as amended by
Enterprises vs. NLRC, 1995) Conditions under which children below 15 may be employed Children below fifteen (15) years of age shall not be employed except: (1) When a child works directly under the sole responsibility of his parents or legal guardian and where only members of the employer's family are employed: Provided, however, That his employment neither endangers his life, safety, health and morals, nor impairs his normal development: Provided, further, That the parent or legal guardian shall provide the said minor child with the prescribed primary and/or secondary education; or (2) Where a child's employment or participation in public entertainment or information through cinema, theater, radio or television is essential: Provided, The employment contract is concluded by the child's parents or legal guardian, with the express agreement of the child concerned, if possible, and approval of the Department of Labor and Employment: and Provided, That the following requirements in all instances are strictly complied with: The employer shall ensure the protection, health, safety, morals and normal development of the child; The employer institute measures to prevent the child's exploitation or discrimination taking into account the system and level of remuneration and the duration and arrangement of working time; and
RA 7658, Sec. 1] Qualifications of apprentice (a) Be at least 14 years of age; (b) Possess vocational aptitude and capacity for appropriate tests; and (c) Possess the ability to comprehend and follow oral and written instructions. Trade and industry associations may recommend to the Secretary of Labor appropriate educational requirements for different occupations. [Art. 59, LC] Integrating both the abovementioned provisions then the qualifications of an apprentice are as follows: (1) At least 15 years of age [as amended by R.A. 7610], provided that if he is below 18 years, he shall not be eligible for hazardous occupation; (2) Possess vocational aptitude and capacity for appropriate tests; (3) Possess the ability to comprehend and follow oral and written instructions. [Art.
59 of the LC, as amended by R.A. 7610] (4) Physically fit for occupation Allowed employment SEE: RA 7769, Sec. 4 (m) above
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Employment of Apprentices When applicable: (1) Only employers in highly technical industries may employ apprentices; and (2) Only in apprenticeable occupations approved by the Secretary of Labor. [Art.
LABOR LAW
Appeal to the Secretary of Labor and Employment. - The decision of the authorized agency of the Department of Labor and Employment may be appealed by any aggrieved person to the Secretary of Labor and Employment within five (5) days from receipt of the decision. The decision of the Secretary of Labor and Employment shall be final and executory. [Art.66, Labor Code]
60, Labor Code] Terms and conditions Apprenticeship agreements, including the wage rates of apprentices, shall conform to the rules issued by the Secretary of Labor and Employment. The period of apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below the legal minimum wage, which in no case shall start below 75 percent of the applicable minimum wage, may be entered into only in accordance with apprenticeship programs duly approved by the Secretary of Labor and Employment. [Art. 61, Labor Code]
Exhaustion of administrative remedies. No person shall institute any action for the enforcement of any apprenticeship agreement or damages for breach of any such agreement, unless he has exhausted all available administrative remedies. [Art. 67, Labor Code]
The Secretary of Labor and Employment may authorize the hiring of apprentices without compensation whose training on the job is required by the school or training program curriculum or as requisite for graduation or board examination. [Art. 72, Labor Code] The wages of apprentices and learners shall in no case be less than seventy-five percent (75%) of the applicable minimum wage rates. [Sec. 7,
Incentives for employers An additional deduction from taxable income of one-half (1/2) of the value of labor training expenses incurred for developing the productivity and efficiency of apprentices shall be granted to the person or enterprise organizing an apprenticeship program: Provided, That such program is duly recognized by the Department of Labor and Employment: Provided, further, That such deduction shall not exceed ten (10%) percent of direct labor wage: and Provided, finally, That the person or enterprise who wishes to avail himself or itself of this incentive should pay his apprentices the minimum wage. [Art.
Wage Order No. NCR-19]
71, Labor Code]
Enforcement Investigation of violation of apprenticeship agreement. - Upon complaint of any interested person or upon its own initiative, the appropriate agency of the Department of Labor and Employment or its authorized representative shall investigate any violation of an apprenticeship agreement pursuant to such rules and regulations as may be prescribed by the Secretary of Labor and Employment. [Art.
Requisites of the deduction: a. Apprenticeship program must be duly approved by the DOLE; b. Deduction shall NOT exceed 10% of direct labor wage; c. Employer must pay his apprentices the minimum wage.
65, Labor Code] 81
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Sec 4(n), RA 7796]
Summary of Rules: (1) The apprentice must be paid not less than 75% of the prescribed minimum salary [Art. 61, Labor Code]; HOWEVER, the employer MAY NOT pay any wage if the apprenticeship training is: a. part of the school curriculum, b. a requirement for graduation, or c. a requirement for board examination
When may learners be hired (1) No experienced workers are available; (2) The employment of learners being necessary to prevent the curtailment of employment opportunities; and (3) The employment will neither create unfair competition in terms of labor costs nor impair working standards. [Art. 74, Labor
[Art. 72]
Code]
(2) The apprenticeship agreement must be approved by the DOLE Secretary (without such one shall be deemed a regular employee) [Nitto Enterprises v. NLRC, Sept. 29, 1995]; (3) The employer is not compelled to continue one’s employment upon termination of apprenticeship; (4) One-half (1/2) of the value of labor training expenses incurred for developing the productivity and efficiency of apprentices of the training cost is deducted from the employer’s income tax but it shall not exceed 10% of direct labor wage [Art. 71]
Terms and conditions of employment Any employer desiring to employ learners shall enter into a learnership agreement with them, which agreement shall include: (1) The names and addresses of the learners; (2) The duration of the learnership period, which shall not exceed three (3) months; (3) The wages or salary rates of the learners which shall begin at not less than seventyfive percent (75%) of the applicable minimum wage; and (4) A commitment to employ the learners if they so desire, as regular employees upon completion of the learnership. All learners who have been allowed or suffered to work during the first two (2) months shall be deemed regular employees if training is terminated by the employer before the end of the stipulated period through no fault of the learners.
Working scholars – there is no employeremployee relationship between students on one hand, and schools, colleges or universities on the other, where there is written agreement between them under which the former agree to work for the latter in exchange for the privilege to study free of charge, provided, the students are given real opportunities, including such facilities as may be reasonable and necessary to finish their chosen courses under such agreement. [Sec. 14, Rule X, IRR]
The learnership agreement shall be subject to inspection by the Secretary of Labor and Employment or his duly authorized representative. [Art. 75, LC]
O.2. LEARNERS
Learners employed in piece or incentive-rate jobs during the training period shall be paid in full for the work done. [Art. 76, LC]
Learners - persons hired as trainees in semiskilled and other industrial occupations which are non-apprenticeable and which may be learned through practical training on the job in a relatively short period of time which shall not exceed three (3) months [Art 73, Labor Code, 82
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Summary of Rules (1) The duration of learnership shall not exceed 3 months [Art. 73, LC]; (2) If the learnership of 3 months is completed, the employer may be compelled to continue with the services of the learner as a regular employee; (3) There is a commitment from the employer to employ the learners if they so desire, as regular employees upon completion of the learnership; (4) If the learner is dismissed from service without just and valid cause and without due process after 2 months of service, he will be deemed as regular employee; and
are at least 15 years of age but less than 18 may be eligible for apprenticeship only in nonhazardous occupation; 2.The person is physically fit for the occupation in which he desires to be trained; 3. The person possesses vocational aptitude and capacity for the particular occupation as established through appropriate tests; and 4.The person is able to comprehend and follow oral and written instructions. Wage rate shall begin at not less than 75% of the minimum wage
[Art. 75(d)] (5) The wages or salary rates of the learners which shall begin at not less than 75% of the applicable minimum wage. [Art. 75(c)] Distinctions between Apprenticeship
Apprenticeship Highly industries
technical
Practical training supplemented by related theoretical instruction Apprenticeable occupations approved by the SOLE Written apprentice agreement ratified by the appropriate committees More than 3 months, shall not exceed 6 months 1. The person is at least 15 years of age, provided those who
Learnership
and
Learnership Semi-skilled industrial occupations Practical training whether or not such practical training is supplemented by theoretical instructions
available; 2. The employment of learners is necessary to prevent curtailment of employment opportunities; and 3. The employment does not create unfair competition in terms of labor costs or impair or lower working standards.
Wage rate shall begin at not less than 75% of the minimum wage
No compensation if Learners in piecework SOLE authorizes, as shall be paid in full OJT is required by the for the work done school A commitment to employ the learners if they so desire, as regular employees upon completion of the learnership.
Non-apprenticeable occupations Learnership agreement Shall not exceed 3 months 1. When experienced workers
LABOR LAW
All learners who have been allowed or suffered to work during the first 2 months shall be
no are 83
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(c) being regarded as having impairment [Sec 4(c), RA 7277]
deemed regular employees if training is terminated by the employer before the end of the stipulated period through no fault of the learners.
such
an
Handicap refers to a disadvantage for a given individual, resulting from an impairment or a disability that limits or prevents the function, or activity that is considered normal given the age and sex of the individual. [Sec 4(d), RA 7277]
Deductibility of ½ of training costs incurred, provided: Program is duly recognized by DOLE Deduction shall not exceed 10% of direct labor wage Payment of minimum wage to apprenticeship
Declaration of Policy. The grant of the rights and privileges for disabled persons shall be guided by the following principles: (a) Disabled persons are part of the Philippine society, thus the Senate shall give full support to the improvement of the total well-being of disabled persons and their integration into the mainstream of society. Toward this end, the State shall adopt policies ensuring the rehabilitation, selfdevelopment and self-reliance of disabled persons. It shall develop their skills and potentials to enable them to compete favorably for available opportunities. (b) Disabled persons have the same rights as other people to take their proper place in society. They should be able to live freely and as independently as possible. This must be the concern of everyone the family, community and all government and non-government organizations. Disabled person’s rights must never be perceived as welfare services by the Government. (c) The rehabilitation of the disabled persons shall be the concern of the Government in order to foster their capability to attain a more meaningful, productive and satisfying life. To reach out to a greater number of disabled persons, the rehabilitation services and benefits shall be expanded beyond the traditional urbanbased centers to community based programs, that will ensure full participation of different sectors as supported by national and local
P. HANDICAPPED WORKERS – DIFFERENTLY-ABLED WORKERS [RA 7277 - Magna Carta for Disabled Persons, as amended by RA 9442] Disabled Persons are those suffering from restriction or different abilities, as a result of a mental, physical or sensory impairment, to perform an activity in the manner or within the range considered normal for a human being [Sec. 4 (a), RA 7277] Impairment is any loss, diminution or aberration of psychological, physiological, or anatomical structure or function [Sec. 4(b), RA 7277] Disability shall mean: (a) physical or mental impairment that substantially limits one or more psychological, physiological or anatomical function of an individual or activities of such individual; OR (b) a record of such an impairment; OR 84
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government agencies (d) The State also recognizes the role of the private sector in promoting the welfare of disabled persons and shall encourage partnership in programs that address their needs and concerns (e) To facilitate integration of disabled persons into the mainstream of society, the State shall advocate for and encourage respect for disabled persons. The State shall exert all efforts to remove all social, cultural, economic, environmental and attitudinal barriers that are prejudicial to disabled persons.
LABOR LAW
(3) Sheltered employment Sheltered Employment refers to the provision of productive work for disabled persons through workshop providing special facilities, income producing projects or homework schemes with a view to given them the opportunity to earn a living thus enabling them to acquire a working capacity required in open industry. [Sec 4(i), RA 7277] If suitable employment for disabled persons cannot be found through open employment, the State shall endeavor to provide it by means of sheltered employment.
[Sec 2, RA 7277] In the placement of disabled persons in sheltered employment, it shall accord due regard to the individual qualities, vocational goals and inclinations to ensure a good working atmosphere and efficient production.
Coverage. This Act shall covers all disabled persons and, to the extend herein provided, departments, offices and agencies of the National Government or non-government organization involved in the attainment of the objectives of this Act. [Sec 2, RA 7277]
[Sec 6, RA 7277]
Rights of disabled workers (1) Equal opportunity for employment No disabled person shall be denied access to opportunities for suitable employment. A qualified disabled EE shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able-bodied person. [Sec. 5 (par. 1),
Apprenticeship Opportunities. Disabled persons shall be eligible as apprentices or learners: Provided, that their handicap is NOT as much as to effectively impede the performance of job operations in the particular occupation for which they are hired; provided, further, That after the lapse of the period of apprenticeship, if found satisfactory in the job performance, they shall be eligible for employment. [Art. 81 Labor Code; Sec. 7, RA
RA 7277]
7277][Bernardo v NLRC & FEBTC, 1999]
(2) Reserved contractual positions 5% of all casual, emergency and contractual positions in the DSWD; DOH, DepEd; and other government agencies, offices or corporations engaged in social development shall be reserved for disabled persons. [Sec 5 (par. 2),
(4) Full minimum wage All qualified handicapped workers shall receive the full amount of the minimum wage rate prescribed herein. [Sec 7, Wage Order No.
RA 7277]
In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled EE should be given the same terms and conditions of employment as a qualified able-bodied person. Since the Magna Carta accords them
NCR-19]
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the rights of qualified able-bodied persons, they are thus covered by Article 280 of the Labor Code. In the present case, the handicap of petitioners (deaf-mutes) is NOT a hindrance to their work. The eloquent proof of this statement is the repeated renewal of their employment contracts. (Bernardo v. NLRC,
LABOR LAW
(f) At least 20% discount on fare for domestic air and sea travel for the exclusive use or enjoyment of persons with disability; (g) At least 20% discount in public railways, skyways, and bus fare for the exclusive use and enjoyment of persons with disability. (h) Educational assistance to persons with disability, for them to pursue primary, secondary, tertiary, post tertiary, as well as vocational or technical education, in both public and private schools, through the provision of scholarships, grants, financial aids, subsidies and other incentives to qualified persons with disability, including support for books, learning materials and uniform allowance to the extent feasible; Provided, That persons with disability shall meet minimum admission requirements; (i) To the extent practicable and feasible, the continuance of the same benefits and privileges given by the GSIS, SSS, and PAG-IBIG, as the case may be, as are enjoyed by those in actual service; (j) To the extent possible, the government may grant special discounts in special programs for persons with disability on purchase of basic commodities, subject to guidelines to be issued for the purpose by the DTI and the DA; and (k) Provision of express lanes for persons with disability in all commercial and government establishments; in the absence thereof, priority shall be given to them. [Sec 32, RA 7277, as amended by RA 9442]
1999) Discounts and other privileges Persons with disability shall be entitled to the following: (a) At least 20% discount from all establishments relative to the utilization of all services in hotels and similar lodging establishments; restaurants and recreation centers for the exclusive use or enjoyment of persons with disability; (b) A minimum of 20% discount on admission fees charged by theaters, cinema houses, concert halls, circuses, carnivals and other places of culture, leisure and amusement for the exclusive use or enjoyment of persons with disability; (c) At least 20% discount for the purchase of medicines in all drugstores for the exclusive use or enjoyment of persons with disability; (d) At least 20% discount on medical and dental services including diagnostic and laboratory fees such as, but not limited to, x-rays, computerized tomography scans and blood tests, in all government facilities, subject to guidelines to be issued by the DOH in coordination with the PHILHEALTH. (e) At least 20% discount on medical and dental services including diagnostic and laboratory fees and professional fees of attending doctors in all private hospitals and medical facilities, in accordance with the rules and regulations to be issued by the DOH, in coordination with PHILHEALTH;
Conditions for entitlement (1) Persons with disability who are Filipino citizens upon submission of any of the following as proof of his/her entitlement thereto: (a) An identification card issued by the city or municipal mayor or the barangay captain of the place where the persons with disability reside; 86
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(b) The passport of the persons with disability concerned; or (c) Transportation discount fare ID issued by the National Council for the Welfare of Disabled Persons (NCWDP). (2) The privileges may not be claimed if the persons with disability claim a higher discount as may be granted by the commercial establishment and/or under other existing laws or in combination with other discount program/s. [Sec 32, RA
LABOR LAW
qualified disabled employee, by reason of his disability, than the amount to which a non-disabled person performing the same work is entitled; (e) Favoring a non-disabled employee over a qualified disabled employee with respect to promotion, training opportunities, study and scholarship grants, solely on account of the latter's disability; (f) Re-assigning or transferring a disabled employee to a job or position he cannot perform by reason of his disability; (g) Dismissing or terminating the services of a disabled employee by reason of his disability unless the employer can prove that he impairs the satisfactory performance of the work involved to the prejudice of the business entity; Provided, however, That the employer first sought to provide reasonable accommodations for the disabled persons; (h) Failing to select or administer in the most effective manner employment tests which accurately reflect the skills, aptitude or other factor of the disabled applicant or employee that such test purports to measure, rather than the impaired sensory, manual or speaking skills of such applicant or employee, if any; and (i) Excluding disabled persons from membership in labor unions or similar organizations. [Sec. 32, RA 7277 as amended by RA 9442]
7277, as amended by RA 9442] Other Provisions Against Discrimination (1) Discrimination of Employment No entity, whether public or private shall discriminate against a qualified disabled person by reason of disability in regard to job application procedures, the hiring, promotion, or discharge of employees compensation, job training and other terms, conditions and privileges of employment. The following constitute acts of discrimination: (a) Limiting, segregating or classifying a disabled job applicant in such a manner that adversely affects his work opportunities (b) Using qualification standards, employment tests or other selection criteria that screen out or tend to screen out a disabled person unless such standards, tests or other selection criteria are shown to be related for the position in question and are consistent with business necessity; (c) Utilizing standards, criteria, or methods of administration that: (i) have the effect of discrimination on the basis of disability; or (ii) perpetuate the discrimination of others who are the subject to common administrative control. (d) Providing less compensation, such as salary, wage or other forms of remuneration and fringe benefits, to
(2) Employment Entrance Examination Upon an offer of employment, a disabled applicant may be subjected to medical examinations, on the following occasions: (a) all entering employees are subjected to such an examination regardless of disability;
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(b) Information obtained during the medical condition or history of the applicant is collected and maintained on separate forms and in separate medical files and is treated as a confidential medical record; Provided, however, That: (i) supervisors and managers may be informed regarding necessary restrictions on the work or duties of the employees and necessary accommodations: (ii) first aid and safety personnel may be informed, when appropriate, if the disability might require emergency treatment; (iii) government officials investigating compliance with this Act shall be provided relevant information on request; and (iv) the results of such examination are used only in accordance with this Act. (Sec. 35, RA 7277 as amended by RA 9442)
Public Ridicule - The act of making fun of or contemptuous imitating or making mockery of persons with disability whether in writing, or in words, or in action due to their impairments.
(3) Prohibition on Verbal, Non-Verbal Ridicule and Vilification Against Persons with Disability (a) No individual, group or community shall execute any of these acts of ridicule against persons with disability in any time and place which could intimidate or result in loss of self-esteem of the latter. [Sec. 40, RA 7277, as amended by RA 9442] (c) Any individual, group or community is hereby prohibited from vilifying any person with disability which could result into loss of self-esteem of the latter. [Sec. 42, RA 7277, as amended by RA 9442]
(2) For construction of disabled-friendly facilities - additional deduction from their net taxable income, equivalent to 50% of the direct costs of the improvements or modifications (a) Private entities (b) That improve or modify their physical facilities in order to provide reasonable accommodation for disabled persons (c) Does NOT apply to improvements or modifications or facilities required under BP 344. [Sec. 8 (c), RA 7277]
[Sec. 33, RA 7277, as amended by RA 9442] Vilification includes: (1) The utterance of slanderous and abusive statements against a person with disability; and/or, (2) An activity in public which incites hatred towards, serious contempt for, or severe ridicule of persons with disability. [Sec. 41, RA 7277, as amended by RA 9442] Tax Incentives for Employers/Establishments (1) For employment of disabled persons additional deduction, from their gross income, equivalent to 25% of the total amount paid as salaries and wages to disabled persons (a) Private entities (b) Employ disabled persons either as regular EEs, apprentice or learner (c) Provided such entities present proof as certified by the DOLE and the DOH [Sec. 8[b], RA 7277]
(3) For establishments giving discounts – may claim such discounts as tax deductions based on the net cost of the goods sold or services rendered
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(a) The cost of the discount shall be allowed as deduction from gross income for the same taxable year that the discount is granted (d) The total amount of the claimed tax deduction net of VAT if applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to proper documentation and to the provisions of the National Internal Revenue Code, as amended. [Sec. 32, RA 7277, as amended by RA 9442]
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(c) making facilities readily accessible to and usable by individuals with disabilities.
[Sec 45, RA 7277] Penal Clause (a) Any person who violates any provision of this Act shall suffer the following penalties: (i) for the first violation, a fine of not less than Fifty thousand pesos (P 50,000.00) but not exceeding One hundred thousand pesos (P100,000.00) or imprisonment of not less than six (6) months but not more than two (2) years, or both at the discretion of the court; and (ii) for any subsequent violation, a fine of not less than One hundred thousand pesos (P100,000.00) but not exceeding Two hundred thousand pesos (P 200,000.00) or imprisonment for less than two (2) years but not more than six (6) years, or both at the discretion of the court. (b) Any person who abuses the privileges granted herein shall be punished with imprisonment of not less than six (6) months or a fine of not less than Five thousand pesos (P 5,000.00) but not more than Fifty thousand pesos (P 50,000.00), or both, at the discretion of the court. (c) If the violator is a corporation, organization or any similar entity, the officials thereof directly involved shall be liable therefor. (d). If the violator is an alien or a foreigner, he shall be deported immediately after service of sentence without further deportation proceedings. [Sec 46, RA
Enforcement Enforcement by the Secretary of Justice (a) Denial of Right Duty to Investigate. The Secretary of Justice shall investigate alleged violations of this Act, and shall undertake periodic reviews of compliance of covered entities under this Act. (b) Potential Violations The Secretary of Justice may commence a legal action in any appropriate court if the Secretary has reasonable cause to believe that (1) any person or group of persons is engaged in a pattern of practice of discrimination under this Act; or (2) any person or group of persons has been discriminated against under this Act and such discrimination raises and issue of general public importance. [Sec 44, RA 7277] Authority of Court. The court may grant any equitable relief that such court considers to be appropriate, including, to the extent required by this Act: (a) granting temporary, preliminary or permanent relief; (b) providing an auxiliary aid or service, modification of policy, practice or procedure, or alternative method; and
7277]
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IV. Termination of Employment
(h) "Person" means any individual, partnership, firm, association, trust, corporation or legal representative thereof.
Art. 218, LC: Definitions.
A. EMPLOYER-EMPLOYEE RELATIONSHIP
(e) "Employer" includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer.
Art. 97, LC: As used in this Title: (a) "Person" means an individual, partnership, association, corporation, business trust, legal representatives, or any organized group of persons.
(f) "Employee" includes any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment.
(b) "Employer" includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the government and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions, as well as nonprofit private institutions, or organizations. (c) "Employee" includes employed by an employer.
any
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The existence or absence of ER-EE relationship is a question of law and a question of fact, each in its defined sense.
individual
The recognition of the existence of ER-EE relationship is not dependent upon the agreement of the parties. The characterization of the law prevails over that in the contract. In this sense, the existence of an EE-ER relationship is a matter of law. (Tabas et.al. v.
Art. 173, LC. As used in this Title, unless the context indicates otherwise: (f) "Employer" means any person, natural or juridical, employing the services of the employee.
California Manufacturing Co., et. al., G.R. No. 80680, January 26, 1989).
(g) "Employee" means any person compulsorily covered by the GSIS under Commonwealth Act Numbered One hundred eighty-six, as amended, including the members of the Armed Forces of the Philippines, and any person employed as casual, emergency, temporary, substitute or contractual, or any person compulsorily covered by the SSS under Republic Act Numbered Eleven hundred sixtyone, as amended.
The conclusion that an EE-ER relationship depends upon the facts of each case. In this sense, it is a question of fact. (SSS v. CA, G.R.
No. 100388, Dec. 14, 2000).
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A.1. FOUR-FOLD TEST
Economic Dependence Test
TEST OF EMPLOYER-EMPLOYEE RELATIONSHIP (a) Selection and engagement of the employee; (b) Payment of wages; (c) Power of dismissal; and (d) Employer’s power to control the employee’s conduct with respect to the means and methods by which the work is to be accomplished (Brotherhood Labor
Two-tiered approach.
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(1) First Tier: Control Test (refer to the FourFold Test) (2) Second Tier: The underlying economic realities of the activity or relationship.
(Sevilla v. Court of Appeals, G.R. Nos. L41182-3, Apr. 15, 1988). The economic realities prevailing within the activity or between the parties are examined, taking into consideration the totality of circumstances surrounding the true nature of the relationship between the parties.
Unity Movement of the Philippines et. al. v. Zamora, G.R. No. 48645, Jan. 7, 1987). The most important element is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.
The benchmark of economic reality in analyzing possible employment relationships for purposes of applying the Labor Code ought to be the economic dependence of the worker on his employer.
(Lirio v. Genovia, G.R. No. 169757, Nov. 23, 2011). The control test calls merely for the “existence” of the right to control and not the “actual exercise” of the right. (Zanotte Shoes v.
The standard of “economic dependence” is whether the worker is dependent on the alleged employer for his continued employment in that line of business. (Orozco v.
NLRC, G.R. No. 100665, Feb. 13, 1995). Not every form of control will have the effect of establishing ER-EE relationship. The line should be drawn between:
CA, GR No. 155207, Aug. 13 2008). Evidence of employee status No particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. For, if only documentary evidence would be required to show that relationship, no scheming employer would ever be brought before the bar of justice, as no employer would wish to come out with any trace of the illegality he has authored considering that it should take much weightier proof to invalidate a written instrument. (Tenazas, et al., v. R. Villegas Taxi
(1) Rules that merely serve as guidelines towards the achievement of mutually desired results without dictating the means or methods to be employed in attaining it. These aim only to promote the result. In such case, NO EE-ER relationship exists. (2) Rules that control or fix the methodology and bind or restrict the party hired to the use of such means. These address both the result and the means used to achieve it and hence, EE-ER relationship exists.
Transport, G.R. No. 192998, Apr. 2, 2014).
(Insurance Life Assurance Co, LTD v. NLRC, G.R. No. 84484, Nov. 15, 1989).
The onus probandi rests on the employer to prove that its dismissal was for a valid cause. However, before a case for illegal dismissal can 91
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prosper, an employer-employee relationship must first be established. It is incumbent upon the employee to prove the employer-employee relationship by substantial evidence. (Javier v.
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Exceptions: (1) When it is covered by an apprenticeship agreement stipulating a longer period (Art. 287, LC); (2) When the parties to an agreement contract otherwise, such as when established by company policy or required by the nature of the work performed by the employee
Fly Ace Corporation, G.R. No. 192558, Feb. 15, 2012).
A.2. KINDS OF EMPLOYMENT I. PROBATIONARY Art. 287, LC: Probationary employment shall
(San Miguel Corp, v. del Rosario, G.R. Nos. 168194 & 168603, December 13, 2005, citing Buiser v. Leogardo, G.R. No. L63316, July 31, 1984); or
not exceed 6 months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.
(3) When it involves the 3 year probationary period of teachers (Mercado v. AMA
Computer College, G.R. No. 183572, April 13, 2010). Purposes (1) Observance Period – for employer to determine if employee is qualified and for employee to demonstrate to the ER his skills (2) Restrictive - As long as the termination was made before the expiration of the sixmonth probationary period, the employer has a right to sever the employer-employee relationship
Book VI, Rule 1, Sec. 6(d), IRR: In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as regular employee at the time of his engagement. Where no standards are made known to the employee at the time of engagement, he shall be deemed a regular employee.
Indeed, the employer has the right or is at liberty to choose as to who will be hired and who will be declined. It is within the exercise of this right to select his employees that the employer may set or fix a probationary period within which the latter may test and observe the conduct of the former before hiring him permanently. (Grand Motors Corp. v. MOLE,
Definition A probationary employee is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment (Robinson’s Galleria
1984)
et al. v. Ranchez, G.R. No. 177937, Jan. 19, 2011)
Standards to qualify as a regular employee REQUIREMENTS: (a) The employer must communicate the regularization standards to the probationary employee; and
Duration General Rule: Probationary employment shall not exceed six (6) months from the date the employee started working.
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(Bernardo v. NLRC, G.R. No. 122917, July 12, 1999)
(b) The employer must make such communication at the time of the probationary employee’s engagement.
Double probation There is no basis for subjecting an employee to a new probationary or temporary employment where he had already become a regular employee when he was absorbed by a sister company. (A Prime Security Services, Inc. v.
If the employer fails to comply with either, the employee is deemed as a regular and not a probationary employee. An employer is deemed to have made known the standards that would qualify a probationary employee to be a regular employee when it has exerted reasonable efforts to apprise the employee of what he is expected to do or accomplish during the trial period of probation. This goes without saying that the employee is sufficiently made aware of his probationary status as well as the length of time of the probation.
NLRC, G.R. No. 107023, Jan. 19, 2000)
Absorbed employees not probationary The private respondents could not be considered probationary employees because they were already well-trained in their respective functions. As stressed by the Solicitor General, while private respondents were still with the CCAS they were already clerks. Respondent Gelig had been a clerk for CCAS for more than ten (10) years, while respondent Quijano had slightly less than ten (10) years of service. They were, therefore, not novices in their jobs but experienced workers.
The exception to the foregoing is when the job is self-descriptive in nature, for instance, in the case of maids, cooks, drivers, or messengers.
(Abbott Laboratories Phil. et al. v. Alcaraz, G.R. No. 192571, July 23, 2013)
[Cebu Stevedoring Co., Inc. v. Regional Director, G.R. No. L-54285, Dec. 8, 1988]
In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular employee. Conversely, an employer is deemed to substantially comply with the rule on notification of standards if he apprises the employee that he will be subjected to a performance evaluation on a particular date after his hiring. (Alcira v. NLRC,
Private school teachers Questions respecting a private school teacher’s entitlement to security of tenure are governed by the Manual of Regulations for Private Schools and not the Labor Code. [Aklan
College v. Guarino, G.R. No. 152949, Aug. 14, 2007] The legal requisites, therefore, for acquisition by a teacher of permanent employment, of security of tenure are: (a) A full time teacher; (b) Must have rendered three consecutive years of service; and (c) Service must have been satisfactory. (La
G.R. No. 149859, June 9, 2004) Regular status after probation When the bank renewed the contract after the lapse of the six-month probationary period, the employees thereby became regular employees. No employer is allowed to determine indefinitely the fitness of its employees.
Salette of Santiago v. NLRC, G.R. No. 82918, Mar. 11, 1991)
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Mere completion of the three-year probation, even with an above-average performance, does not guarantee that the employee will automatically acquire a permanent employment status. The probationer can only qualify upon fulfillment of the reasonable standards set for permanent employment as a member of the teaching personnel. (Herrera-
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(3) Failure to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of engagement.
(Robinson’s Galleria et al. v Ranchez, G.R. No. 177937, Jan. 19, 2011) The probationary employee is entitled to substantial and procedural due process before termination.
Manaois v. St. Scholastica’s College, G.R. No. 188914, Dec. 11, 2013) These standards should be made known to the teachers on probationary status at the start of their probationary period, or at the very least under the circumstances of the present case, at the start of the semester or the trimester during which the probationary standards are to be applied. Of critical importance in invoking a failure to meet the probationary standards, is that the school should show – as a matter of due process – how these standards have been applied. (Colegio del Santisimo Rosario v.
Limits to termination (1) It must be exercised in accordance with the specific requirements of the contract (2) If a particular time is prescribed, the termination must be within such time and if formal notice is required, then that form must be used; (3) The employer’s dissatisfaction must be real and in good faith, not feigned so as to circumvent the contract or the law; (4) There must be no unlawful discrimination in the dismissal. (Manila Hotel Corporation
Rojo, G.R. No. 170388, Sept. 4, 2013)
v. NLRC, G.R. No. 53453, January 22, 1986) Termination A probationary employee enjoys only a temporary employment status. This means that he is terminable at any time, permanent employment not having been attained in the meantime. The employer could well decide he no longer needed the probationary employee’s services or his performance fell short of expectations, etc. As long as the termination was made before the termination of the sixmonth probationary period, the employer was well within his rights to sever the employeremployee relationship. A contrary interpretation would defect the clear meaning of the term “probationary.” (De la Cruz, Jr. v.
In order to invoke “failure to meet the probationary standards” as a justification for dismissal, the employer must show how these standards have been applied to the subject employee. (Univac Development, Inc. v.
Soriano, G.R. No. 182072, June 29, 2013).
II. REGULAR Art. 286, LC: The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee
NLRC, G.R. No. 145417. Dec. 11, 2003) A probationary employee terminated for: (1) Just causes; (2) Authorized causes; or
can
only
be
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Art. 287, Last sentence, LC: An employee who
between the particular activity performed by the employee in relation to the business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. If the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability of that activity to the business of the employer. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists. (Forever Richons Trading
is allowed to work after a probationary period shall be considered a regular employee.
Corp. v. Molina, G.R. No. 206061, Sept. 16, 2013).
Regular employment is not synonymous with permanent employment, because there is no such thing as a permanent employment. Any employee may be terminated for just cause.
Art. 286: When applicable Art. 286 is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure; it does not apply where the existence of an employment relationship is in dispute. (Atok Big Wedge Co., Inc. v. Gison,
or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.
A regular employee is one who is engaged to perform activities which are necessary and desirable in the usual business or trade of the employer as against those which are undertaken for a specific project or are seasonal.
G.R. No. 169510, Aug. 8, 2011) Art 286 provides two kinds of regular employees: (1) Those engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) casual employees who have rendered at least 1 year of service, whether continuous or broken, with respect to the activity in which they are employed. (Romares v.
Hiring for an extended period Where the employment of project employees is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and considered regular employees. (Audion Electric
Co., Inc. v. NLRC, G.R. No. 106648, June 17, 1999)
NLRC, G.R. No. 122327. Aug. 19, 1998) While length of time may not be a controlling test for project employment, it can be a strong factor in determining whether the employee was hired for a specific undertaking or in fact tasked to perform functions which are vital,
Primary standard to determine regular employment: reasonable connection rule The primary standard to determine a regular employment is the reasonable connection 95
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necessary and indispensable to the usual business or trade of the employer. (Tomas Lao
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Whether or not the project has a direct relation to the business of the employer is not important, BUT: (1) Employee must be informed of the nature and duration of project (2) Project and principal business of ER are two separate things (3) No attempt to deny security of tenure to the worker
Const. v. NLRC, G.R. No. 116781. Sept. 5, 1997) Repeated renewal of contract While the Court has recognized the validity of contractual stipulations as to the duration of employment, this cannot apply where the contract-to-contract arrangement was but an artifice to prevent her from acquiring security of tenure and to frustrate constitutional decrees. (Beta Electric Corp. v. NLRC, G.R. No.
Rationale for project employment If a project has already been completed, it would be unjust to require the employer to maintain them in the payroll while they are doing absolutely nothing except waiting until another project is begun, if at all. In effect, these stand-by workers would be enjoying the status of privileged retainers, collecting payment for work not done, to be disbursed by the employer from profits not earned. (De
86408, Feb. 15, 1990) Length of time involved Length of time is not controlling, merely serves as a badge of regular employment.
(Maraguinot v. NLRC, G.R. No. 120969. Jan. 22, 1998)
III. PROJECT EMPLOYMENT Art. 286, 1st par, LC: The provisions of written
Ocampo, Jr. v. NLRC, G.R. No. 81077, June 6, 1990)
agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.
Two Kinds of Project Employee (1) For a particular job or undertaking that is WITHIN the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company (i.e. construction) (2) For a particular job or undertaking that is NOT within the regular business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer (Villa
v. NLRC, G.R. No. 117043, Jan. 14, 1988)
A project employee is one who is hired for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of which has been determined and made known to the employees at the time of employment. (Hanjin Heavy Industries &
Test of project employment The litmus test to determine whether an individual is a project employee lies in setting a fixed period of employment involving a specific undertaking the completion or termination of
Const. Co. v. Ibañez, G.R. No. 170181, June 26, 2008) 96
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which has been determined at the time of the particular employee's engagement.
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the prescribed form on employees’ terminations /dismissals/suspensions; (7) An undertaking in the employment contract by the employer to pay completion bonus to the project employee as practiced by most construction companies. (Samson v. NLRC, G.R. No.
The decisive factor in the term employment is the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be that which must necessarily come, although it may not be known when.
11366, Feb. 1, 1996).
(Caasi v. Kanlungan Centre Foundation, Inc., G.R. No. 199769, Sept. 11, 2013)
Length of time not applicable in construction industry Generally, length of service provides a fair yardstick for determining when an employee initially hired on a temporary basis becomes a permanent one, entitled to the security and benefits of regularization. But this standard will not be fair, if applied to the construction industry, simply because construction firms cannot guarantee work and funding for its payrolls beyond the life of each project. And getting projects is not a matter of course. (William Uy Construction Corp. v.
The repeated and successive rehiring of project employees do not qualify them as regular employees, as length of service is not the controlling determinant of the employment tenure of a project employee, but whether the employment has been fixed for a specific project or undertaking, its completion has been determined at the time of the engagement of the employee. (William Uy Construction Corp.
v. Trinidad, G.R. No. 183250, Mar. 10, 2010)
Trinidad, G.R. No. 183250, March 12, 2010 Indicators of project employment (1) The duration of the specific/identified undertaking for which the worker is engaged is reasonably determinable; (2) Such duration, as well as the specific work/service to be performed, is defined in an employment (3) agreement and is made clear to the employee at the time of the hiring; (4) The work/service to be performed by the employee is in connection with the particular project/undertaking for which he is engaged; (5) The employee, while not employed and awaiting engagement, is free to offer his services to any other employer; (6) The termination of his employment in the particular project/undertaking is reported to the DOLE Regional Office having jurisdiction over the workplace following the date of his separation from work, using
See also: Policy Instructions No. 20 of 1997 and D.O. 19 of 1993 Work pool employee A project employee or a member of a work pool may acquire the status of a regular employee when the following concur: (1) There is a continuous rehiring of project employees even after cessation of a project; and (2) The tasks performed by the alleged “project employee” are vital, necessary, and indispensable to the usual business or trade of the employer. However, the length of time during which the employee was continuously rehired is not controlling, but merely serves as a badge of regular employment. A work pool may exist although the workers in the pool do not receive salaries and are free to 97
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seek other employment during temporary breaks in the business, provided, that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. (Maraguinot v. NLRC, G.R. No.
IV. SEASONAL
120969. Jan. 22, 1998)
“Regular Seasonal” Employees After One Season Seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but are merely considered on leave until reemployed
Seasonal employees are those whose work or services to be performed are seasonal in nature, employment is for the duration of the season. There is no continuing need for the worker.
Members of a work pool from which a construction company draws its project employees, if considered employees of the construction company while in the work pool, are non-project employees or employees for an indefinite period. If they are employed in a particular project, the completion of the project or any phase thereof will not mean severance of the employer-employee relationship. (J. & D.O. Aguilar Corp. v. NLRC,
The nature of their relationship . . . is such that during off season they are temporarily laid off but during summer season they are reemployed, or when their services may be needed. They are not strictly speaking separated from the service but are merely considered as on leave of absence without pay until they are re-employed. (Philippine
G.R. No. 116352, Mar. 13, 1997) Rule on reportorial requirement A report of termination to the nearest public employment office every time their employment was terminated due to completion of each construction project. Failure of the employer to file termination reports after every project completion proves that the employees are not project employees. (Pasos v. Philippine
Tobacco Flue-Curing &Redrying Corp. v. NLRC, G.R. No. 127395, Dec. 10, 1998)
V. CASUAL Art. 286, 2nd par. LC: An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.
National Construction Corp., G.R. No. 192394, July 3, 2013) Repeated renewal of contract When an employer renews a contract of employment after the lapse of the six-month probationary period, the employee thereby becomes a regular employee. No employer is allowed to determine indefinitely the fitness of its employees. (Malicdem v. Marulas Industrial
Book VI, Rule 1, Sec. 5 (b), IRR: Casual employment. There is casual employment where an employee is engaged to perform a job, work or service which is merely incidental to the business of the employer, and such job, work or service is for a definite period made known to the employee at the time of
Corp., G.R. No. 204406, Feb. 26, 2014)
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VI. FIXED-TERM
engagement: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or not, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.
Art. 286 has no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. (Brent School v.
A casual employee is engaged to perform a job, work or service which is merely incidental to the business of the employer, and such job, work or service is for a definite period made known to the employee at the time of engagement.
Zamora, G.R. No. L-48494, Feb. 5, 1990) Conditions for the validity of fixed contract agreement between employer and employee (1) Fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure or any other circumstances vitiating his consent; or (2) The employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter.
Someone who is not a regular, project or seasonal employee. Requirements to become regular employee: (1) One (1) year service, continuous or broken with respect to activity employed (2) Employment shall continue while such activity exists Nature of work What determines regularity or casualness is not the employment contract, written or otherwise, but the nature of the job. If the job is usually necessary or desirable to the main business of the employer, then employment is regular. (A. M. Oreta and Co., Inc. v. NLRC,
Project employment and Fixed-term employment distinguished A project employee is assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employee is engaged for the project
G.R. No. 74004, Aug. 10, 1989) One-year service As held in Philippine Bank of Communications v. NLRC, a temporary or casual employee, under Article 281 of the Labor Code, becomes regular after service of one year, unless he has been contracted for a specific project. (Tabas v.
The duration of a fixed-term employment agreed upon by the parties may be any day certain, which is understood to be "that which must necessarily come although it may not be known when." The decisive determinant in fixed-term employment is not the activity that the employee is called upon to perform but the day certain agreed upon by the parties for the commencement and termination of the employment relationship. (GMA Network, Inc.
California Marketing Co., Inc., G.R. No. L80680, Jan. 26, 1989).
v. Pabriga, G.R. No. 176419, November 27, 2013) 99
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No implied renewal of employment contract It is a settled rule that seafarers are considered contractual employees. Their employment is governed by the contracts they sign everytime they are rehired and their employment is terminated when the contract expires. Their employment is contractually fixed for a certain period of time. Thus, when a contract ends, the employment is deemed automatically terminated, there being no mutually-agreed renewal or extension of the expired contract.
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The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code.
(Unica v. Anscor Swire Ship Management Corp., G.R. No. 184318, Feb. 12, 2014) As long as the Brent School v. Zamora guidelines are satisfied, the court will recognize the validity of the fixed-term contract, especially if they were informed of that their engagement was for a specific period. The Brent doctrine is only applicable in a few special cases wherein the employer and employee are on more or less in equal footing in entering into the contract (Fuji Television
There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.
Network Inc v. Espiritu, G.R. No. 204944-45, December 03, 2014).
A.3. JOB CONTRACTING I. ARTICLES 106 – 109 Art. 106, LC: Contractor or subcontractor.
Art. 107, LC: Indirect employer. The provisions
Whenever an employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code.
of the immediately preceding article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.
Art. 108, LC: Posting of bond. An employer or indirect employer may require the contractor or subcontractor to furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due the employees should the contractor or subcontractor, as the case may be, fail to pay the same.
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Art. 109, LC: Solidary liability. The provisions of
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organization, cooperative or any entity, supplies workers to an employer, with or without any monetary or other consideration, whether in the capacity of an agent of the employer or as an ostensible independent contractor.
existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers.
Legitimate contracting or subcontracting Contracting or subcontracting shall be legitimate if all the following circumstances occur: (1) The contractor must be registered in accordance with these rules and carries a distinct and independent business (2) The contractor undertakes to perform the job, work or service on its own responsibility, according to its own manner and method, and free from control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; (3) The contractor has substantial capital and/or investment; and (4) The Service Agreement ensures compliance with all the rights and benefits under Labor laws.
II. D.O. NO. 18-A-11: RULES IMPLEMENTING ARTICLES 106 TO 109 OF THE LC, AS AMENDED Coverage This shall apply to: (1) all parties of contracting and subcontracting arrangements where EREE relationships exist (2) cooperatives engaging in contracting or subcontracting arrangements Contractors and subcontractors referred to in these rules are prohibited from engaging in recruitment and placement activities as defined in Art. 13(b) of the LC whether for local or overseas employment. Contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with a contractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal.
Rights of contractor’s employees All contractor’s employees, whether deployed or assigned as reliever, seasonal, week-ender, temporary, or promo jobbers, shall be entitled to all the rights and privileges as provided for in the LC, as amended. Security of tenure of contractor’s employees It is understood that all contractor’s employees enjoy security of tenure regardless of whether the contract of employment is co-terminus with the service agreement, or for a specific job, work, or service, or phase thereof.
Service agreement refers to the contract between the principal and contractor containing the terms and conditions governing the performance or completion of a specific job, work or service being farmed out for a definite or predetermined period. Cabo refers to a person or group of persons or a labor groups which, in the guise of a labor 101
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Effect of termination of employment
ELEMENTS OF LABOR-ONLY CONTRACTING: (a.1) The contractor does not have substantial capital or investments in the form of tools, equipment, machineries, work premises, among others, and (a.2) The employees recruited and places are performing activities which are usually necessary or desirable to the operation of the company, or directly related to the main business of the principal within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal; or (b) The contractor does not exercise the right to control the performance of the work of the employee.
[Sec. 13, D.O. 18-A-11] Cause
Effect
Prior to the Governed by Art. 284 – 292 expiration of the of LC Service Agreement Prior to expiration of the Service Agreement and not due to authorized causes
Due to expiration of Service Agreement, or from the completion of the phase of the job, work or service for which the employee is engaged
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The right of the contractor employee to unpaid wages and other unpaid benefits including unremitted legal mandatory contributions, e.g., SSS, PhilHealth, Pagibig, ECC, shall be borne by the party at fault, without prejudice to the solidary liability of the parties to the Service Agreement.
Substantial capital – refers to paid-up capital stocks/shares of at least P3,000,000 in the case of corporations, partnerships and cooperatives; in case of single proprietorship, a net worth of at least P3,000,000.
Employee may opt for payment of separation benefits as may be provided by law or the Service Agreement, without prejudice to his/her entitlement to the completion bonuses or other emoluments, including retirement benefits whenever applicable
Other prohibitions (1) Contracting out of jobs, works or services when not done in good faith and not justified by the exigencies of the business such as the following: (a) Contracting out of jobs, works or services when the same results in the termination or reduction of regular EEs and reduction of work hours or reduction or splitting of the bargaining unit. (b) Contracting out of work with a Cabo (c) Taking undue advantage of the economic situation or lack of bargaining strength of the contractor’s EEs, or undermining their security of tenure or basic rights, or circumventing the provisions of regular employment in any of the following instances: (i) Requiring them to perform functions which are currently being
Prohibition against labor-only contracting Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. (Polyfoam-RGC
International Corp. v. Concepcion, G.R. No. 172349, June 13, 2012)
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(d) (e)
(f)
(g)
(h)
(i)
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performed by the regular employees of the principal; and (ii) requiring them to sign, as a precondition to employment or continued employment, an antedated resignation letter; a blank payroll; a waiver of labor standards including minimum wages and social or welfare benefits; or a quitclaim releasing the principal, contractor or from any liability as to payment of future claims. Contracting out of a job, work or service through an in-house agency. Contracting out of a job, work or service that is necessary or desirable or directly related to the business or operation of the principal by reason of a strike or lockout whether actual or imminent. Contracting out of a job, work or service being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to selforganization as provided in Art. 248(c) of the LC, as amended. Repeated hiring of EEs under an employment contract of short duration or under a Service Agreement of short duration with the same or different contractors, which circumvents the LC provisions on Security of Tenure. Requiring EEs under a subcontracting arrangement to sign a contract fixing the period of employment to a term shorter than the term of the Service Agreement, unless the contract is divisible into phases for which substantially different skills are required and this is made known to the EE at the time of the engagements. Refusal to provide a copy of the Service Agreement and the employment
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contracts between the contractor and the EEs deployed to work in the bargaining unit of the principal’s certified bargaining agent to the sole and exclusive bargaining agents. (j) Engaging or maintaining by the principal of subcontracted EEs in excess of those provided in the applicable CBA or as set by the Industry Tripartite Council. (2) Contracting out of jobs, works, or services analogous to the above when not done in good faith and not justified by the exigencies of the business. (Sec. 7, D.O. 18-
A-11) Mandatory registration It shall be mandatory for all persons or entities, including cooperative, acting as contractors, to register with the Regional Office of the DOLE where it principally operates. Failure to register shall give rise to the presumption that the contractor is engaged in labor-only contracting. Accordingly, the registration system governing contracting arrangements and implemented by the Regional Offices of the DOLE is hereby established, with the Bureau of Working Conditions (BWC) as the central registry. (Sec. 14, D.O. 18-A-11) Solidary Liability of Indirect/Direct Employer There exists a solidary liability on the part of the principal and the contractor for purposes of enforcing the provisions of the LC and other social legislation to the extent of the work performed under employment contract. The principal shall be deemed a direct employer of the contractor’s employee in cases where there is a finding by a competent authority of labor-only contracting, or commission of prohibited activities provided in Section 7 or a violation of either Sections 8 or 9. 103
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III. DEPARTMENT CIRCULAR NO. 01-12
IV. EFFECTS CONTRACTING
Applicability of D.O. 18-A-11 to BPO DO 18-A speaks of a trilateral relationship that characterizes the covered contracting/subcontracting arrangement. Thus, vendor-vendee relationship for entire business processes covered by the applicable provisions of the Civil Code on Contracts is excluded.
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OF
LABOR-ONLY
Employees become regular employees Where an entity is declared to be a labor-only contractor, the employees supplied by said contractor to the principal employer become regular employees of the latter. Having gained regular status, the employees are entitled to security of tenure and can only be dismissed for just or authorized causes and after they had been afforded due process. (Norkis Trading v.
DO 18-A contemplates generic or focused singular activity in one contract between the principal and the contractor (for example, janitorial, security, merchandising, specific production work) and does not contemplate information technology-enabled services involving an entire process (for example, BPO, KPO, legal process outsourcing, hardware and/or software support, medical transcription, animation services, back office operations/support). These companies engaged in BPOs may hire employees in accordance with applicable laws, and maintain these EEs based on business requirements, which may or may not be for different clients of the BPOs at different periods of the EE’s employment.
Buenavista, G.R. No. 182018. Oct. 10, 2012) Contractor solidarily liable with principal A finding by competent authority of labor-only contracting shall render the principal jointly and severally liable with the contractor to the latter's employees, in the same manner and extent that the principal is liable to employees directly hired by him/her, as provided in Article 106 of the Labor Code, as amended. A finding of commission of any of the prohibited activities in Sec. 7, or violation of either Secs. 8 or 9 hereof shall render the principal the direct employer of the employees of the contractor or subcontractor, pursuant to Article 109 of the Labor Code, as amended.
Applicability of D.O. 18-A-11 to the Construction Industry Licensing and the exercise of regulatory powers over the construction industry is lodged with PCAB which is under the Construction Industry Authority of the Philippines and not with the DOLE or any of its regional offices. Thus, the DOLE, through its regional offices shall not require contractors licensed by PCAB in the Construction Industry to register under DO 18-A. Moreover, findings of violation/s on labor standards and occupational health and safety standards shall be coordinated with PCAB for its appropriate action, including the possible cancellation/suspension of the contractor’s license.
(Sec. 27, D.O 18-A-11)
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V. TRILATERAL RELATIONSHIP IN JOB CONTRACTING
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(2) A contractual relationship between the principal and the contractor as governed by the provisions of the Civil Code. (Sec. 5,
par. 1, D.O. 18-A-11)
Principal
B. DISMISSAL FROM EMPLOYMENT
Contractor
er-ee
Coverage: General rule: All establishments (Art. 284, LC) Exception: Government, and its political subdivisions, including GOCCs without original charter. (Book VI, Rule 1, Sec. 1. IRR)
Contractor's Employee
Security of Tenure
Art. 285, LC: Security of Tenure. In case of There are three parties involved: (1) Principal refers to any employer, whether a person or entity, including government agencies and GOCCs, who/which puts out or farms out a job, service or work to a contractor. (2) Contractor refers to any person or entity, including a cooperative, engaged in a legitimate contracting or subcontracting arrangement providing either services, skilled worker, temporary workers or a combination of services to a principal under a Service Agreement. (3) Contractor’s employee includes one employed by a contractor to perform or complete a job, work, or service pursuant to a Service Agreement with a principal It shall also refer to regular employees of the contractor whose functions are not dependent on the performance or completion of a specific job, work or service within a definite period of time i.e. administrative staff.
regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Tile. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.
Relationships that exist in a legitimate contracting or subcontracting: (1) An employer-employee relationship between the contractor and the employees it engaged to perform the specific job, work or service being contracted; and
Limited extent; secured during the period their respective contracts of employment remain in effect. (Labajo v. Alejandro, G.R. No. L-80383,
Security of Tenure Right not be removed from one’s job without valid cause and valid procedure. (Kiamco v.
NLRC, G.R. No. 129449, June 29, 1999) While probationary employees do not enjoy permanent status, nonetheless, they were still entitled to the constitutional protection of security of tenure. (Espina v. Court of Appeals,
G.R. No. 164582, March 28, 2007) Contract Employees
September 26, 1988)
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Probationary Employees
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Nature It is a constitutionally protected right (Art. XIII Sec. 3, 1987 Constitution); it cannot be blotted out by an employment contract.
Limited extent; additional limitations on power of employer to terminate: must be exercised in accordance with the specific requirements of the contract; dissatisfaction of the employer must be real and in good faith, not feigned so as to circumvent the contract or the law
Termination of employment is not anymore a mere cessation or severance of contractual relationship but an economic phenomenon affecting members of the family. This is the reason why under the broad principles of social justice the dismissal of employees is adequately protected by the laws of the state.
A probationary employee can only be terminated for: (1) Just causes; (2) Authorized causes; or (3) Failure to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of engagement.
(Alhambra Industries, Inc. v. NLRC, G.R. No. 106771, November 18, 1994) Management Prerogatives and Security of Tenure An employer may not be compelled to continue in its employ a person whose continuance in the service would patently be inimical to its interests. (Baguio Central
(Robinson’s Galleria et al. v Ranchez, G.R. No. 177937, Jan. 19, 2011) Project/seasonal Employees Limited extent; secured for the duration of the limited period of their employment
University v. Gallente, G.R. No. 188267, December 2, 2013)
Managerial Employees Entitled to security of tenure; They may be dismissed upon loss of confidence (Maglutac v.
Management prerogative must be exercised in good faith and with due regard to the rights of the workers in the spirit of fairness and with justice in mind. (Philbag Industrial
NLRC, G.R. No. 78345, 78637, September 21, 1990)
Manufacturing Corp. v. Philbag Workers Union-Lakas at Gabay ng Manggagawang Nagkakaisa, G.R. No. 182486, June 20, 2012)
Fixed-period Employees / Term Employment This arrangement does NOT circumvent security of tenure when: (1) Fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure or any other circumstances vitiating his consent; or (2) The employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter (Brent School v.
Requisites for the validity of management prerogative affecting security of tenure (a) Exercised in good faith for the advancement of the Employer's interest, and (b) not for the purpose of defeating or circumventing the rights of the Employees under special laws or under valid agreements. (San Miguel Brewery Sales
Zamora, G.R. No. L-48494, Feb. 5, 1990)
Force Union v. Ople, G.R. No. 53515, February 8, 1989)
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presented by them. (Functional, Inc. v. Granfil,
Guide in disposition of labor disputes Bare and vague allegations as to the manner of service and the circumstances surrounding the same would not suffice. A mere copy of the notice of termination allegedly sent by respondent to petitioner, without proof of receipt, or in the very least, actual service thereof upon petitioner, does not constitute substantial evidence. (Mansion Printing Center
G.R. No. 176377, November 16, 2011) Employee must first establish the fact of dismissal Before the employer must bear the burden of proving that the dismissal was legal, the employee must first establish by substantial evidence the fact of his dismissal from service. If there is no dismissal, then there can be no question as to the legality or illegality thereof.
v. Bitara, Jr., G.R. No. 168120, January 25, 2012)
(MZR Industries v. Colambot, G.R. No. 179001, August 28, 2013)
Procedural vis-à-vis substantive issues A labor case whose substantive issues must be addressed, more than anything else. Besides, the nature of the alleged procedural infirmity cannot prod the Court to dismiss the Petition outright without first considering its merits.
an illegal dismissal case, the onus probandi rests on the employer to prove that In
its dismissal of an employee was for a valid cause. However, before a case for illegal dismissal can prosper, an employer-employee relationship must first be established by the employee (Javier v. Fly Ace Corp., G.R. No.
(Ang v. San Joaquin, Jr., G.R. No. 185549, August 7, 2013)
192558, February 15, 2012)
Employer’s Burden of Proof
Art. 283 (b), 3rd sentence: The burden of
The burden is on the employer to prove that the termination was for valid cause. Unsubstantiated accusations or baseless conclusions of the employer are insufficient legal justifications to dismiss an employee. (Garza v. Coca-Cola Bottlers
Measure of Penalty While an employer enjoys a wide latitude of discretion in the promulgation of policies, rules and regulations on work-related activities of the employees, those directives, however, must always be fair and reasonable, and the corresponding penalties, when prescribed, must be commensurate to the offense involved and to the degree of the infraction. (Moreno v.
Philippines, Inc., G.R. No. 180972, January 20, 2014)
San Sebastian College-Recoletos, G.R. No. 175283, March 28, 2008)
proving the termination was for a valid or authorized cause shall rest on the employer.
In illegal dismissal cases, the burden of proof is upon the employer to show that the employee's termination from service is for a just and valid cause. The employer's case succeeds or fails on the strength of its evidence and not the weakness of that adduced by the employee, in keeping with the principle that the scales of justice should be tilted in favor of the latter in case of doubt in the evidence
Termination of Employment by Employee
Resignation Art. 291, LC: Termination by Employee. (a) An employee may terminate without just cause the employer-employee relationship by serving a written notice on the employer at least one (1) month in advance. The employer upon whom no such notice was served may hold the employee liable for damages 107
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To constitute a resignation, it must be unconditional and with the intent to operate as such. There must be an intention to relinquish a portion of the term of office accompanied by an act of relinquishment
(b) An employee may put an end to the relationship without serving any notice on the employer for any of the following requirements: 1. Serious insult by the employer or his representative on the honor and person of the employee; 2. Inhuman and unbearable treatment accorded the employee by the employer or his representative; 3. Commission of a crime or offense by the employer or his representative against the person of the employee or any of the immediate members of his family; and 4. Other causes analogous to any of the foregoing.
(Azcor Manufacturing Inc. v. NLRC, G.R. No. 117963, Feb. 11, 1999) “Well-entrenched is the rule that resignation is inconsistent with the filing of a complaint for illegal dismissal.” (Blue Angel Manpower and
Security Services Inc. v Court of Appeals, GR No. 161196, July 28, 2008.) Mere allegations of threat or force do not constitute evidence to support a finding of forced resignation. In order for intimidation to vitiate consent, the following requisites must concur: (1) that the intimidation caused the consent to be given; (2) that the threatened act be unjust or unlawful; (3) that the threat be real or serious, there being evident disproportion between the evil and the resistance which all men can offer, leading to the choice of doing the act which is forced on the person to do as the lesser evil; and (4) that it produces a well-grounded fear from the fact that the person from whom it comes has the necessary means or ability to inflict the threatened injury to his person or property.
General rule: Written notice to resign submitted one (1) month in advance Exception: No notice required for any of the following: (1) Serious insult by the employer or his representative on the honor and person of the employee; (2) Inhuman and unbearable treatment accorded the employee by the employer or his representative; (3) Commission of a crime or offense by the employer or his representative against the person of the employee or any of the immediate members of his family; and (4) Other causes analogous to any of the foregoing.
(Mandapat v. Add Force Personnel Services, Inc., G.R. No. 180285, July 6, 2010) The rule requiring an employee to stay or complete the 30-day period prior to the effectivity of his resignation becomes discretionary on the part of management as an employee who intends to resign may be allowed a shorter period before his resignation becomes effective. (Hechanova Bugay Vilchez
Resignation is the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service, such that he has no other choice but to disassociate himself from his employment. (Cervantes v. PAL Maritime
Lawyers v. Matorre, G.R. No. 198261, Oct. 16, 2013)
Corp., G.R. No. 175209, January 16, 2013)
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Performance of Military or Civic Duty Art. 292, LC: When Employment Not Deemed Terminated: The bona fide suspension of the
confidence in him. (Yabut v. Meralco, G.R. No.
operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty
Employer’s right to dismiss vis-à-vis employee’s right to security of tenure The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. In particular, the employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. (Alert
190436, January 16, 2012)
B.1. JUST CAUSE Art. 288, LC: Termination by Employer. An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
Security and Investigation Agency, Inc. v. Pasawilan, G.R. No. 182397, September 14, 2011) The right of employers to shape their own work force is recognize; however, this management prerogative must not curtail the basic right of employees to security of tenure. There must be a valid and lawful reason for terminating the employment of a worker. Otherwise, it is illegal and would be dealt with by the courts accordingly. (Alert Security and Investigation
(b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
Agency, Inc. v. Pasawilan, G.R. No. 182397, September 14, 2011)
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and
Serious Misconduct ELEMENTS OF SERIOUS MISCONDUCT: a) There must be misconduct; b) The misconduct must be of such grave and aggravated character; c) It must relate to the performance of the employee’s duties; and d) There must be showing that the employee becomes unfit to continue working for the employer.
(e) Other causes analogous to the foregoing. Basis As a measure of self-protection against acts inimical to its interest, a company has the right to dismiss its erring employees. An employer cannot be compelled to continue employing an employee guilty of acts inimical to the employer's interest, justifying loss of 109
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Accusatory and inflammatory language used by an employee to the employer or superior can be a ground for dismissal or termination.
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management cannot serve basis as termination. The rule only applies when the violation is not tantamount to fraud or commission of illegal activities. One cannot evade liability based on obedience to the corporate chain of command (PNB v. Padao,
(Nissan Motors Phils. Inc. v. Angelo, G.R. No. 164181, September 14, 2011)
G.R. No. 180849, 187143, Nov. 6, 2011)
Willful Disobedience ELEMENTS OF WILLFUL DISOBEDIENCE: a) There must be disobedience or insubordination; b) The disobedience or insubordination must be willful or intentional characterized by a wrongful and perverse attitude; c) The order violated must be reasonable, lawful, and made known to the employee (Mirant Philippines Corp v.
On the principle of respondeat superior or command responsibility alone, a managerial employee may be held liable for negligence in the performance of her managerial duties.
(Jumuad v. Hi-Flyer Food, Inc., G.R. No. 187887, (September 7, 2011) Gross Negligence includes gross inefficiency Article 290 of the Labor Code provides that one of the just causes for terminating an employment is the employee's gross and habitual neglect of his duties. This cause includes gross inefficiency, negligence and carelessness (Century Iron Works, Inc. v.
Sario, G.R. no. 197598, November 21, 2012); and d) The order must pertain to the duties which he has been engaged to discharge.
Bañas, G.R. No. 184116, June 19, 2013) Gross and Habitual Neglect of Duties Gross negligence has been defined as the want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. In order to constitute just cause for an EE’s dismissal due to negligence, it must not only be gross, but also habitual. A single or an isolated act that cannot be categorized as habitual, hence, not a just cause for their dismissal. (National Bookstore v. CA, G.R. No.
Loss of Trust and Confidence The loss of trust and confidence must be based on willful breach of the trust reposed in the employee by his employer. Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. And, in order to constitute a just cause for dismissal, the act complained of must be workrelated and shows that the employee concerned is unfit to continue working for the employer. In addition, loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence or that the employee concerned is entrusted with confidence with respect to delicate matters, such as handling or case and protection of the property and assets of the employer. The betrayal of this
146741, Feb. 27, 2002) Gross negligence connotes want of care in the performance of one’s duties, while habitual neglect implies repeated failure to perform one’s duties for a period of time, depending on the circumstances. Estoppel by toleration of management: breach of rules and regulations which are tolerated by 110
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trust is the essence of the offense for which an employee is penalized. (Villanueva, Jr. v. NLRC,
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(d) The loss of trust and confidence should not be simulated; (e) It should not be used as a subterfuge for causes which are improper, illegal, or unjustified; and (f) It must be genuine and not a mere afterthought to justify an earlier action taken in bad faith (China City Restaurant Corp. v. NLRC, 217 SCRA 443; Midas Touch v. NLRC, G.R. No. 111639, 29 July 1996)
G.R. No. 176893, June 13, 2012) The loss of trust and confidence must be based not on ordinary breach by the employee of the trust reposed in him by the employer, but, in the language of Article 282 (c) of the Labor Code, on willful breach. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on substantial grounds and not on the employer's arbitrariness, whims, caprices or suspicion; otherwise, the employee would eternally remain at the mercy of the employer.
Loss of trust and confidence to be a valid cause for dismissal must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly established but proof beyond reasonable doubt is not necessary.
(Johansen World Group Corp. v. Gonzales III, G.R. No. 198733, October 10, 2012)
(Prudential Guarantee and Assurance Employee Labor Union v. NLRC, G.R. No. 185335, June 13, 2012)
Guidelines for the application of the doctrine of loss of confidence
Positions of trust and confidence:
(1) Loss of confidence should not be simulated; (2) It should not be used as a subterfuge for causes which are improper, illegal or unjustified; (3) It may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (4) It must be genuine, not a mere afterthought to justify earlier action taken in bad faith (Nokom v. NLRC, G.R. No.
(1) Managerial employees - those vested with the powers or prerogatives to lay down management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions. (2) Fiduciary Rank and file - those who in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. Examples are cashiers, auditors, property custodians, etc. (Prudential
140043, July 18, 2000)
Guarantee and Assurance Employee Labor Union v. NLRC, G.R. No. 185335, June 13, 2012)
ELEMENTS OF LOSS OF TRUST AND CONFIDENCE:
Managerial
(a) There must be an act, omission, or concealment (b) The act, omission or concealment justifies the loss of trust and confidence of the employer to the employee; (c) The employee concerned must be holding a position of trust and confidence;
Mere existence of a basis for the belief of employee’s guilt
Fiduciary rank-and-file
Proof of involvement in the alleged events in question required; (Grand Asian Shipping mere uncorroborated Lines, Inc. v. Galvez, assertions and G.R. No. 178184, accusations January 29, 2014) are not enough 111
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mutual loyalty and dedicated service. If an employer had treated his employee well, has accorded him fairness and adequate compensation as determined by law, it is only fair to expect a long-time employee to return such fairness with at least some respect and honesty. Thus, it may be said that betrayal by a long-time employee is more insulting and odious for a fair employer. (Moya v. First Solid
(Etcuban, Jr. v. Sulpicio Lines, Inc., G.R. No. 148410, January 17, 2005) Employment for a long time is counted against the employee
(Salvador v. Philippine Mining Service Corp., G.R. No. 148766, January 22, 2003)
Rubber Industries, Inc., G.R. No. 184011, September 18, 2013) Commission of a crime Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives (Art. 288 d,
Managerial Employees: Reason for the Rule The employer has broader discretion in dismissing managerial employees on the ground of loss of trust and confidence than those occupying ordinary ranks. While plain accusations are not sufficient to justify the dismissal of rank and file employees, the mere existence of a basis for believing that managerial employees have breached the trust reposed on them by their employer would suffice to justify their dismissal. (Grand Asian
LC)
Shipping Lines, Inc. v. Galvez, G.R. No. 178184, January 29, 2014)
The employer may validly dismiss for loss of trust and confidence an employee who commits an act of fraud prejudicial to the interest of the employer. Neither a criminal prosecution nor a conviction beyond reasonable doubt for the crime is a requisite for the validity of the dismissal (Concepcion v
Acquittal in Criminal Case arising from Misconduct
Minex Import Corporation /Minerama Corporation, G.R. No. 153569, January 24, 2012).
Notwithstanding petitioner’s acquittal in the criminal case for qualified theft, the company had adequately established the basis for the company’s loss of confidence as a just cause to terminate. As opposed to the "proof beyond reasonable doubt" standard of evidence required in criminal cases, labor suits require only substantial evidence to prove the validity of the dismissal (Paulino v. NLRC, G.R. No.
Other Analogous Causes One is analogous to another if it is susceptible of comparison with the latter either in general or in some specific detail; or has a close relationship with the latter.
Other Causes (1) (2) (3) (4) (5) (6) (7) (8)
176184, June 13, 2012) Betrayal by a long-time employee Length of service is not a bargaining chip that can simply be stacked against the employer. After all, an employer-employee relationship is symbiotic where both parties benefit from 112
Abandonment Courtesy Resignation Change of Ownership Habitual Absenteeism/Tardiness Past Offenses Habitual Infractions Immorality Conviction/Commission of a Crime
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Abandonment
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Bank, Inc. v. De Guzman, G.R. No. 184517, 186641, October 8, 2013)
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It constitutes neglect of duty and is a just cause for termination of employment under paragraph (b) of Article 282 of the Labor Code. To constitute abandonment, however, there must be a clear and deliberate intent to discontinue one's employment without any intention of returning. (Tan Brothers Corp. of
Habitual Absenteeism/ Tardiness Habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and discipline to come to work on time everyday exhibit the employee's deportment towards work. Habitual and excessive tardiness is inimical to the general productivity and business of the employer. This is especially true when the tardiness and/or absenteeism occurred frequently and repeatedly within an extensive period of time. (R.B. Michael Press v. Galit,
Basilan City v. Escudero, G.R. No. 188711, July 3, 2013) ELEMENTS OF ABANDONMENT: (a) Failure to report for work or absence without valid or justifiable reason, (b) A clear intention to sever the employeremployee relationship, with the second element as the more determinative factor and being manifested by some overt acts.
G.R. No. 153510, February 13, 2008) However, there are cases when absenteeism is not sufficient to justify termination. In the case of, Cavite Apparel v Michelle Marquez, GR No. 172044, February 6, 2013, the SC held: “Michelle might have been guilty of violating company rules on leaves of absence and employee discipline, still we find the penalty of dismissal imposed on her unjustified under the circumstances. As earlier mentioned, Michelle had been in Cavite Apparel’s employ for six years, with no derogatory record other than the four absences without official leave in question, not to mention that she had already been penalized for the first three absences, the most serious penalty being a six-day suspension for her third absence on April 27, 2000.”
Absence must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to work anymore. It has been ruled that the employer has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without any intention of returning. (Tan Brothers Corp. of Basilan
City v. Escudero, G.R. No. 188711, July 3, 2013) Courtesy Resignation Resignation per se means voluntary relinquishment of a position or office. Adding the word "courtesy" did not change the essence of resignation. (Batongbacal v. Associated Bank,
Past Offenses Previous offense may be used as valid justification for dismissal from work only if the infractions are related to the subsequent offense upon which the basis of termination is decreed. (Century Canning Corporation v.
G.R. No. 72977, December 21, 1988) Change of Ownership
Ramil, G.R. No. 171630, August 9, 2010)
A mere change in the equity composition of a corporation is neither a just nor an authorized cause that would legally permit the dismissal of the corporation's employees en masse. (SME
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Habitual Infractions
employment by the employer (Alilem Credit
Series of irregularities when put together may constitute serious misconduct, which under Article 282 of the Labor Code, as amended, is a just cause for dismissal (Gustilo v. Wyeth Phil.
cooperative v. Bandiola, Jr. G.R. No. 173489, February 25, 2013).
Inc., G.R. No. 149629, October 4, 2004)
The charge of drug abuse within the company’s premises and during work hours constitutes serious misconduct which is one of the just causes for termination. (Bughaw, Jr. v.
Conviction/Commission of a Crime
Totality of infractions doctrine The totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring employee. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct and ability separate and independent of each other. While it may be true that petitioner was penalized for his previous infractions, this does not and should not mean that his employment record would be wiped clean of his infractions. After all, the record of an employee is a relevant consideration in determining the penalty that should be meted out since an employee's past misconduct and present behavior must be taken together in determining the proper imposable penalty.
Treasure Island Industrial, G.R. No. 173151, Mar. 28, 2008)
B.2. AUTHORIZED CAUSE (1) (2) (3) (4)
Installation of labor saving device Retrenchment to prevent losses Redundancy Closure of Business
[Art. 289, LC] Basis Employment is the lifeblood upon which the worker and his family owe their survival. (Flight
Attendants and Stewards Ass'n of the Philippines v. PAL, Inc., G.R. No. 178083, October 2, 2009)
(Merin v. NLRC, G.R. No. 171790, October 17, 2008)
Installation of Labor-Saving Device This refers to the installation of machinery to effect economy and efficiency in the employer’s method of production (Edge Apparel, Inc. v.
Immorality DECS Order No. 92 provides that disgraceful or immoral conduct can be used as a basis for termination of employment (Santos, Jr. v.
NLRC, G.R. No. 121314, Feb. 12, 1998)
NLRC, G.R. No. 115795, March 6, 1998)
Requirements for termination installation of labor-saving device
The act of engaging in extramarital affairs was specifically provided for by the cooperative’s Personnel Policy as one of the grounds for termination of employment and said act raised concerns to the cooperative as the Board received numerous complaints and petitions from the cooperative members themselves asking for the removal of Bandiola because of his immoral conduct, hence, immorality (extramarital affair) justified terminating the
(1) The employer exercises its prerogative to install the labor-saving device in good faith for the advancement of its interest and not to defeat or circumvent the employee’s right to security of tenure; (2) The employer served a written notice both to the employees and to the DOLE at least 30 days prior to the intended date of termination; and (3) The employer pays the employees separation pay equivalent to one-month 114
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pay or at least one-half (1/2) month pay for every year of service, whichever is higher, a fraction of at least six months being considered as one whole year (Samson,
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(2) The losses are actual or reasonably imminent; (3) The retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and (4) The alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient and convincing evidence (Sanoh Fulton Phils.,
2004) Retrenchment ELEMENTS OF RETRENCHMENT: (a) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer; (b) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (c) The employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher; (d) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees' right to security of tenure; and, (e) That the employer uses fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.
Inc. v. Bernardo, G.R. No. 187214, August 14, 2013) Redundancy Redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business enterprise. A position is redundant when it is superfluous, and superfluity of a position or positions could be the result of a number of factors, such as the overhiring of workers, a decrease in the volume of business or the dropping of a particular line or service previously manufactured or undertaken by the enterprise. (Morales v. Metrobank, G.R. No.
182475, November 21, 2012) For the implementation of a redundancy program to be valid, however, the employer must comply with the following requisites: (a) Written notice served on both the employees and the DOLE at least one month prior to the intended date of termination of employment; (b) Payment of separation pay equivalent to at least one month pay for every year of service; (c) Good faith in abolishing the redundant positions; and (d) Fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. (Morales v. Metrobank, G.R. No.
(Flight Attendants and Stewards Ass'n of the Philippines v. PAL, Inc., G.R. No. 178083, October 2, 2009) Standards for losses
182475, November 21, 2012)
(1) The losses incurred are substantial and not de minimis;
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To exhibit its good faith and that there was a fair and reasonable criteria in ascertaining redundant positions, a company claiming to be over manned must produce adequate proof of the same. Such proof includes but is not limited to the new staffing pattern, feasibility studies/proposals on the viability of the newly created positions, job description and the approval by the management of the restructuring. (General Milling Corporation v Violeta L. Viajar, G.R. No. 181738, January 30, 2013)
allegation in order to avoid the payment of separation pay. Otherwise, the affected employees are entitled to separation pay. (5) The burden of proving compliance with all the above-stated falls upon the employer.
Closure of Business
Cebu City Hotel v. Jimenez, G.R. No. 174214, June 13, 2012)
(Manila Polo Club Employees' Union v. Manila Polo Club, Inc., G.R. No. 172846, July 24, 2013) Closure of Department The closure of a department or division of a company constitutes retrenchment by, and not closure of, the company itself. (Waterfront
Guidelines in Closure (1) Closure or cessation of operations of establishment or undertaking may either be partial or total (2) Closure or cessation of operations of establishment or undertaking may or may not be due to serious business losses or financial servicereverses. However, in both instances, proof must be shown that: (a) it was done in good faith to advance the employer's interest and not for the purpose of defeating or circumventing the rights of employees under the law or a valid agreement; and (b) Written notice on the affected employees and the DOLE is served at least one month before the intended date of termination of employment. (3) The employer can lawfully close shop even if not due to serious business losses or financial reverses but separation pay, which is equivalent to at least one month pay as provided for by Article 289 of the Labor Code, as amended, must be given to all the affected employees. (4) If the closure or cessation of operations of establishment or undertaking is due to serious business losses or financial reverses, the employer must prove such
Corporate acquisitions Asset Sales
Stock Sales Sale
Corporate entity sells all or substantially all of its assets to another entity.
In stock sales, the individual or corporate shareholders sell a controlling block of stock to new or existing shareholders.
Obligation of Seller Seller in good faith is authorized to dismiss the affected employees, but is liable for the payment of separation pay under the law.
A shift in the composition of its shareholders will not affect its existence and continuity. Notwithstanding the stock sale, the corporation continues to be the employer of its people and continues to be liable for the payment of their just claims.
Obligation of Buyer The buyer in good 116
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Asset Sales faith, on the other hand, is not obliged to absorb the employees affected by the sale, nor is it liable for the payment of their claims. The most that it may do, for reasons of public policy and social justice, is to give preference to the qualified separated personnel of the selling firm.
Stock Sales new majority shareholders are not entitled to lawfully dismiss corporate employees absent a just or authorized cause.
(SME Bank, Inc. v. De Guzman, G.R. No. 184517, 186641, [October 8, 2013])
Procedural steps required At least 1 month before the intended date of termination, Employer is to serve written notice to: (1) Affected employees; (2) DOLE (Art. 289, LC) Criteria in selecting employees for dismissal: Fair and reasonable criteria in ascertaining who will be affected: (1) Preferred status (e.g. temporary, casual or regular Employees), (2) Efficiency, (3) Physical fitness, (4) Age, (5) Financial hardship, or (6) Seniority. (Asian Alcohol Corp. v. NLRC,
Reduction of personnel usually due to poor financial returns so as to cut down on costs of
The service of an Employee is in excess of what is required by an enterprise
operations in terms of salaries and wages
operations and/or actual locking-up of the doors of the establishment, usually due to financial losses
Resorted to To save primarily to production avoid or costs minimize business losses
Aims to prevent further financial drain upon the Employer
Employee is entitled to separation pay of 1 month pay or 1/2 month pay per year of service, whichever is higher
In case of closure of business not due to serious business losses, the employer pays the employees terminated separation pay of 1 month pay or 1/2 month pay per year of service, whichever is higher
Employee is entitled to separation pay of 1 month pay or 1/2 month pay per year of service, whichever is higher
Temporary Closure / Bona fide suspension of Operations
Art. 292, LC: When Employment Not Deemed Terminated: The bona fide suspension of the
G.R. No. 131108, March 25, 1999) Retrenchment Redundancy
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operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty
Closure The reversal of the fortune of the employer whereby there is a complete cessation of business
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greater, a fraction of at least six (6) months being considered as one (1) whole year.
Under Art. 286 of the Labor Code, a bona fide suspension of business operations for not more than six (6) months does not terminate employment. After six (6) months, the employee may be recalled to work or be permanently laid off. In this case, more than six (6) months have elapsed from the time the Club ceased to operate. Hence, respondents' termination became permanent. (SKM Art
Requisites (1) The employee must be suffering from a disease which cannot be cured within six months; (2) His continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees; and (3) A certification to that effect must be issued by a competent public health authority. [Crayons Processing, Inc. v. Pula, G.R. No. 167727, July 30, 2007]
Craft Corp. v. Bauca, G.R. Nos. 171282, 183484, November 27, 2013) An employer may validly suspend operations for at most 6 months. Not accepting the workers back to work after the 6 month period is equivalent to termination which should be for cause and with proper procedure (Manila
The burden falls upon the employer to establish these requisites, and in the absence of such certification, the dismissal must necessarily be declared illegal.
Mining Corp v Amor, GR No 182800, April 20, 2015).
It is only where there is a prior certification from a competent public authority that the disease afflicting the employee sought to be dismissed is of such nature or at such stage that it cannot be cured within six (6) months even with proper medical treatment that the latter could be validly terminated from his job. [Crayons Processing, Inc. v. Pula]
B.3 OTHER CAUSES (1) Disease incurable in 6 months [Art. 290, LC] (2) Enforcement of union security clause in the CBA (3) Dismissal of union officers for the conduct of an illegal strike [Art. 270 (a), LC] (4) Dismissal of union members for participating in the commission of illegal acts [Art. 270 (a), LC] (5) Termination in conformity with existing statute/ qualification requirements
II. ENFORCEMENT OF UNION SECURITY CLAUSE IN CBA In terminating the employment of an employee by enforcing the union security clause, the employer needs only to determine and prove that: (1) The union security clause is applicable; (2) The union is requesting for the enforcement of the union security provision in the CBA; and (3) There is sufficient evidence to support the union's decision to expel the employee from the union or company [Inguillo v. First
I. DISEASE Art. 290, LC: Disease as Ground for Termination: An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is
Philippine Scales, Inc., G.R. No. 165407, June 5, 2009]
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III. DISMISSAL OF UNION OFFICERS FOR THE CONDUCT OF AN ILLEGAL STRIKE / DISMISSAL OF UNION MEMBERS FOR PARTICIPATING IN THE COMMISSION OF ILLEGAL ACTS Art. 270, a, 3rd par., 2nd sen., LC: Any union
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guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.
officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status.
Requisites for Valid Dismissal (1) Substantive due process: The dismissal must be for any of the causes provided for in Article 288 – 290 of the Labor Code; and (2) Procedural due process: The employee must be afforded an opportunity to be heard and defend himself. [Fujitsu Computer Products Corporation of the Phil. v. Court of Appeals, G.R. No. 158232, March 31, 2005]
IV. TERMINATION IN CONFORMITY WITH EXISTING STATUTE / QUALIFICATION REQUIREMENTS While the right of workers to security of tenure is guaranteed by the Constitution, its exercise may be reasonably regulated pursuant to the police power of the State to safeguard health, morals, peace, education, order, safety, and the general welfare of the people. Consequently, persons who desire to engage in the learned professions requiring scientific or technical knowledge may be required to take an examination as a prerequisite to engaging in their chosen careers. [St. Lukes’s Medical
Employer may not substitute the required prior notice & opportunity to be heard with the mere payment of 30 days' salary. [PNB v. Cabansag, G.R. No. 157010, [June 21, 2005] Right to Counsel The right to counsel, a very basic requirement of substantive due process, has to be observed. Indeed, the rights to counsel and to due process of law are two of the fundamental rights guaranteed by the 1987 Constitution to any person under investigation, be the proceeding administrative, civil, or criminal. [Salaw v. NLRC, G.R. No. 90786, September 27, 1991]
Center Employees Ass'n-AFW v. NLRC, G.R. No. 162053, March 7, 2007]
B.4 DUE PROCESS Art. 283 (b), LC: Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to
Burden of Proof In illegal dismissal cases, the onus of proving that the employee was not dismissed or, if dismissed, that the dismissal was not illegal, rests on the employer, failure to discharge which would mean that the dismissal is not justified and, therefore, illegal. [Macasero v.
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Southern Industrial Gases Philippines, G.R. No. 178524, January 30, 2009] Degree of Proof In labor cases, as in other administrative proceedings, substantial evidence is required and it is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion [Andrada v. Agemar Manning Agency, Inc., G.R. No. 194758, October 24, 2012]
Second Notice
LABOR LAW employees. [United Tourist Promotions v. Kemplin, G.R. No. 205453, February 5, 2014] (1) Indicate all circumstances involving the charge against the employees considered; and (2) Indicate grounds established to justify the severance of their employment (United Tourist Promotions v. Kemplin, G.R. No. 205453, February 5, 2014])
I. TWIN-NOTICE REQUIREMENT The employer has the burden of proving that a dismissed worker has been served two notices: (1) The first to inform the employee of the particular acts or omissions for which the employer seeks his dismissal, and (2) The second to inform the employee of his employer's decision to terminate him.
An employee may be dismissed only if the grounds mentioned in the pre-dismissal notice were the ones cited for the termination of employment. [Erector Advertising Sign Group, Inc. v. Cloma, G.R. No. 167218, July 2, 2010]
(1) Contain the specific causes or grounds for termination against them, and (2) Contain a directive that the employees are given the opportunity to submit their written explanation within a “reasonable period” or every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice (3) Contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. (4) Specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 288 is being charged against the
In employee dismissal cases, the essence of due process is simply an opportunity to be heard; it is the denial of this opportunity that constitutes violation of due process of law. [Technol Eight Philippines Corporation v. NLRC, G.R. No. 187605, April 13, 2010]
First Notice
II. HEARING; MEANING OPPORTUNITY TO BE HEARD
OF
While a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process. [Perez v. PT&T, G.R. No. 152048, April 7, 2009] Guiding principles in hearing requirement (1) "Ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way. (2) A formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company 120
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PROCEDURE TO BE TERMINATION CASES JUST CAUSE
rule or practice requires it, or when similar circumstances justify it. (3) The "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or conference" requirement in the implementing rules and regulations. [Perez v. PT&T, G.R. No. 152048, April 7, 2009]
OBSERVED IN
Notice specifying the grounds for which dismissal is sought Hearing or opportunity to be heard
Use of Position Paper It is the labor arbiter who is authorized to determine whether or not there is a necessity for conducting formal hearings in cases brought before them for adjudication even after the submission of the parties of their position papers or memoranda. A formal trialtype hearing is not at all times and in all instances essential to due process. It is enough that the parties are given a fair and reasonable opportunity to explain their respective sides of the controversy and to present supporting evidence on which a fair decision can be based. (Seastar Marine Services Inc. v. Bul-an, Jr., G.R. No. 142609, November 25, 2004)
Notice of the decision to dismiss
AUTHORIZED CAUSE Notice to: (1) Employee, and (2) DOLE at least 1 month prior to the effectivity of the separation Requisites (1) Notice not needed when Employee consented to the retrenchment or voluntarily applied for one. [International Hardware, Inc. v. NLRC, G.R. No. 80770, August 10, 1989] (2) Notice must be individual, not collective [Shoppers Gain Supermart v. NLRC, G.R. No. 110731, July 26, 1996] (3) Voluntary arbitration satisfies notice requirement for authorized causes [Revidad v. NLRC, G.R. No. 111105, June 27, 1995]
CONSEQUENCES FOR NON-COMPLIANCE OF PROCEDURAL DUE PROCESS Situation
Validity of Dismissal
Liability of ER
Just or Authorized Cause + Due Process
Valid
No liability. Separation pay only in authorized cause
No Just or Authorized Cause + Due Process
Invalid
Reinstatement or separation pay. If reinstatement not possible, + full backwages
No Just or Authorized Cause + No Due Process
Invalid
Reinstatement or separation pay. If reinstatement not possible, + full backwages
Just or Authorized Cause + No Due Process
Valid
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(10) When supervening facts have transpired which make execution on that score unjust or inequitable or, to an increasing extent (Emeritus Security & Maintenance Systems, Inc. v. Dailig, G.R. No. 204761, April 2, 2014)
C. RELIEFS FOR ILLEGAL DISMISSAL Art. 285, LC: Security of Tenure. In case of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.
Prescription Period An action for reinstatement by reason of illegal dismissal is one based on an injury which may be brought within 4 years from the time of dismissal. [Art. 1146, CC]
I. REINSTATEMENT PENDING APPEAL [Art. 229] Art. 229, par. 3 LC: 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, 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.
C.1. REINSTATEMENT Reinstatement means restoration to a state or condition from which one had been removed or separated. The person reinstated assumes the position he had occupied prior to his dismissal [Asian Terminals, Inc. v. Villanueva, G.R. No. 143219, November 28, 2006] General Rule: Reinstatement Exceptions: (1) Separation pay (2) Closure of business (Retuya v. Hon. Dumarpa, G.R. No. 148848, Aug. 5, 2003) (3) Economic business conditions (Union of Supervisors v. Secretary of Labor, G.R. No. L-39889, November 12, 1981) (4) Employee’s unsuitability (Divine Word High School v. NLRC, G.R. No. 72207, August 6, 1986) (5) Employee’s retirement/ overage (New Philippine Skylanders, Inc. v. Dakila, G.R. No. 199547, September 24, 2012) (6) Antipathy and antagonism (Wensha Spa Center v. Yung, G.R. No. 185122, Aug. 16, 2010) (7) Job with a totally different nature (DUP Sound Phils. v. CA, G.R. No. 168317m Nov. 21, 2011) (8) Long passage of time (9) Inimical to the employer's interest
If the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. The Labor Arbiter's order of reinstatement is immediately executory and the employer has to either re-admit them to work under the same terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the alternative, employer must pay the employee's salaries [Magana v. Medicard Philippines, Inc., G.R. No. 174833, December 15, 2010]
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No refund doctrine An employee cannot be compelled to reimburse the salaries and wages he received during the pendency of his appeal, notwithstanding the reversal by the NLRC of the LA's order of reinstatement. [College of the Immaculate Conception v. NLRC, G.R. No. 167563, March 22, 2010]
viable due to the strained relations between them; and (3) When the dismissed employee opted not to be reinstated, or the payment of separation benefits would be for the best interest of the parties involved. (Book VI, Rule 1, Section 4 (b), Rule I, IRR) Separation Pay and Reinstatement, Exclusive Remedies The payment of separation pay and reinstatement are exclusive remedies. The payment of separation pay replaces the legal consequences of reinstatement to an employee who was illegally dismissed. [Bani Rural Bank, Inc. v. De Guzman, G.R. No. 170904, November 13, 2013]
Note, however: Rule XI, Sec. 14 of the 2011 NLRC Rules of Procedure provide for restitution of amounts paid pursuant to execution of awards during pendency of the appeal. However, it expressly disallows restitution of wages paid due to reinstatement pending appeal. Section 14. Effect of Reversal of Executed Judgment. Where the executed judgment is totally or partially reversed or annulled by the Court of Appeals or the Supreme Court, the Labor Arbiter shall, on motion, issue such orders of restitution of the executed award, except wages paid during reinstatement pending appeal.
II. SEPARATION REINSTATEMENT
PAY
IN
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Doctrine of Strained Relations Where reinstatement is not feasible, expedient or practical, as where reinstatement would only exacerbate the tension and strained relations between the parties or where the relationship between the employer and employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement [Quijano v. Mercury Drug Corp., G.R. No. 126561, July 8, 1998]
OF
Kinds of separation pay (SP) (1) SP as a statutory requirement for authorized causes (2) SP as financial assistance found in the next section (3) SP in lieu of reinstatement where reinstatement is not feasible; and (4) SP as a benefit in the CBA or company policy
Computation SP as a statutory requirement is computed by integrating the basic salary with regular allowances employee has been receiving [Planters Products, Inc. v. NLRC, G.R. No. 78524, 78739, January 20, 1989]; allowances include transportation and emergency living allowances [Santos v. NLRC, G.R. No. 76721, September 21, 1987]
Instances when the award of separation pay, in lieu of reinstatement to an illegally dismissed employee, is proper: (1) When reinstatement is no longer possible, in cases where the dismissed employee's position is no longer available; (2) The continued relationship between the employer and the employee is no longer
Inasmuch as the words "wages", "pay" and "salary" have the same meaning, and 123
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commission is included in the definition of "wage", the logical conclusion, therefore, is, in the computation of the separation pay of petitioners, their salary base should include also their earned sales commissions. [Songco v. NLRC, G.R. Nos. 50999-51000, March 23, 1990]
I. COMPUTATION OF BACKWAGES
A dismissed employee who has accepted separation pay is not necessarily estopped from challenging the validity of his or her dismissal. Neither does it relieve the employer of legal obligations. [Anino v. NLRC, G.R. No. 123226, May 21, 1998]
Awards including salary differentials are not allowed [Insular Life Assurance Co. v. NLRC, 1987]
Full backwages means exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. [Bustamante v. NLRC, G.R. No. 111651, November 28, 1996]
The salary base properly used should be the basic salary rate at the time of dismissal plus the regular allowances; allowances include:
C.2. BACKWAGES Backwages are earnings lost by a worker due to his illegal dismissal; a form of relief that restores the income lost by reason of such unlawful dismissal; it is not private compensation or damages; nor is it a redress of a private right but, rather, in the nature of a command to the employer to make a public reparation for illegally dismissing an employee. [St. Theresa's School of Novaliches Foundation v. NLRC, G.R. No. 122955, April 15, 1998]
Emergency cost of living allowances (ECOLA), transportation allowances, 13th month pay [Paramount Vinyl Product Corp. v. NLRC, 1990]
Backwages and reinstatement are two reliefs that should be given to an illegally dismissed employee. They are separate and distinct from each other. An illegally dismissed employee is entitled to (1) either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and (2) backwages. Payment of backwages is specifically designed to restore an employee's income that was lost because of his unjust dismissal. [Aurora Land Projects Corp. v. NLRC, G.R. No. 114733, January 2, 1997]
II. LIMITED BACKWAGES
Also included are vacation leaves, service incentive leaves, and sick leaves The effects of extraordinary inflation are not to be applied without an official declaration thereof by competent authorities [Lantion v. NLRC, 1990]
General rule: An illegally dismissed employee is entitled to full backwages. Exceptions (1) The Court awarded limited backwages where the employee was illegally dismissed but the employer was found to be in good faith. [San Miguel Corporation v. Javate, Jr., 1992] (2) Delay of the EE in filing the case for illegal dismissal [Mercury Drug Co., Inc. v. CIR, 1974]
Effect of failure to order backwages A “plain error” which may be rectified, even if employee did not bring an appeal regarding the matter [Aurora Land Projects Corp. v. NLRC, G.R. No. 114733, January 2, 1997]
Rationale Feati University Club vs. Feati University (1974) adopted a consensus policy of pegging the 124
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amount of backwages to their total equivalent for three years (depending on the circumstances) without deduction or qualification. The rationale for the policy was stated in the following words:
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International Corp. (1972)] and attrition and protracted delay in satisfying such award on the part of unscrupulous employers who have seized upon the further proceedings to determine the actual earnings of the wrongfully dismissed or laid-off employees to hold unduly extended hearings for each and every employee awarded backwages and thereby render practically nugatory such award and compel the employees to agree to unconscionable settlements of their backwages award in order to satisfy their dire need. [See La Campana Food Products, Inc. vs. CIR, (1969) and Kaisahan ng Mga Manggagawa vs. La Campana Food Products, Inc., (1970)].
As has been noted, this formula of awarding reasonable net backwages without deduction or qualification relieves the employees from proving or disproving their earnings during their lay-off and the employers from submitting counterproofs, and obviates the twin evils of Idleness on the part of the employee who would "with folded arms, remain inactive in the expectation that a windfall would come to him" [Itogon Suyoc Mines, Inc. vs. Sangilo-Itogon Workers Union (1968), as cited in Diwa ng Pagkakaisa vs. Filtex Indemnity of Employer Period
Doctrine in effect
Validity of Dismissal
Liability of ER
Prior 1989
Pre-Wenphil
Illegal
Reinstatement + Backwages
Feb. 1989 – 1999
Wenphil
Valid
Dismiss now, indemnity pay later
Jan. 2000 – Oct. Serrano 2004
Ineffectual
Full backwages up to reinstatement/finality of decision
Nov. 2004 present
Valid
Nominal damages
– Agabon
during the time of preventive suspension. [Gatbonton v. NLRC, G.R. No. 146779, January 23, 2006]
D. PREVENTIVE SUSPENSION Preventive suspension is a disciplinary measure for the protection of the company's property pending investigation of any alleged malfeasance or misfeasance committed by the employee. The employer may place the worker concerned under preventive suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or of his co-workers. However, when it is determined that there is no sufficient basis to justify an employee's preventive suspension, the latter is entitled to the payment of salaries
Preventive suspension is justified where the employee's continued employment poses a serious and imminent threat to the life or property of the employer or of the employee's co-workers. Without this kind of threat, preventive suspension is not proper. [Artificio v. NLRC, G.R. No. 172988, July 26, 2010]
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this Court will uphold them…Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. [Ernesto G. Ymbong vs. ABS-CBN Broadcasting Corp., 2012]
E. CONSTRUCTIVE DISMISSAL Constructive dismissal is cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee.
A. DISCIPLINE
The test of constructive dismissal is whether a reasonable person in the employee's position would have felt compelled to give up his position under the circumstances.
The employer’s right to conduct the affairs of his business, according to its own discretion and judgment, includes the prerogative to instill discipline in its employees and to impose penalties, including dismissal, upon erring employees. This is a management prerogative where the free will of management to conduct its own affairs to achieve its purpose takes form. The only criterion to guide the exercise of its management prerogative is that the policies, rules and regulations on work-related activities of the employees must always be fair and reasonable and the corresponding penalties, when prescribed, commensurate to the offense involved and to the degree of the infraction. [Consolidated Food Corporation vs. NRLC, 1999] [St. Michael’s Institute vs. Santos, 2001]
The law recognizes and resolves this situation in favor of employees in order to protect their rights and interests from the coercive acts of the employer. In fact, the employee who is constructively dismissed may be allowed to keep on coming to work. [McMer Corp., Inc. v. NLRC, G.R. No. 193421, June 4, 2014]
V. Management Prerogative This Court held that the employer’s right to conduct the affairs of his business, according to its own discretion and judgment, is wellrecognized. An employer has a free reign and enjoys wide latitude of discretion to regulate all aspects of employment. This is a management prerogative, where the free will of management to conduct its own affairs to achieve its purpose takes form. [Torreda vs. Toshiba, 2007]
Right to dismiss or otherwise impose disciplinary sanctions upon an employee for just and valid cause, pertains in the first place to the employer, as well as the authority to determine the existence of said cause in accordance with the norms of due process. [Makati Haberdashery, Inc. v. NLRC, 1989]
So long as a company’s management prerogatives are exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements,
Management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations. [Jose P. Artificio vs. NLRC, 2010]
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It is obvious that the company overstepped the bounds of its management prerogative in the dismissal of Mauricio and Camacho. It lost sight of the Principle that management prerogative must be exercised in good faith and with due regard to the rights of the workers in the spirit of fairness and with justice in mind. [Philbag Industrial Manufacturing Corp. vs. Philbag Workers Union-Lakas at Gabay ng Manggagawang Nagkakaisa, 2012]
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the consequent transfer of Tryco’s personnel, assigned to the Production Department was well within the scope of its management prerogative. When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion in rank or diminution of salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal. [Bisig ng Manggagawa sa TRYCO v. NLRC, 2008]
Although we recognize the right of employers to shape their own work force, this management prerogative must not curtail the basic right of employees to security of tenure. [Alert Security & Investigation Agency, Inc. vs. Saidali Pasawilan, et. al., 2011]
It is management prerogative for employers to transfer employees on just and valid grounds such as genuine business necessity. [William Barroga vs. Data Center College of the Philippines, 2011]
B. TRANSFER OF EMPLOYEES
Even though transfers or reassignments per se are indeed valid and fall within the ambit of management prerogatives, the exercise of these rights must remain within the boundaries of justice and fair play. [Michelle T. Tuason vs. Bank of Commerce, 2012]
An Employee’s right to security of tenure does not give him such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he will be most useful. The Employer has the right to transfer or assign Employees from one area of operation to another, or one office to another or in pursuit of its legitimate business interest, Provided there is no demotion in rank or diminution of salary, benefits and other privileges and not motivated by discrimination or made in bad faith, or effected as a form of punishment or demotion without sufficient cause. [Westin Phil. Plaza Hotel v. NLRC, 1999]
Re-assignments made by management pending investigation of irregularities allegedly committed by an employee fall within the ambit of management prerogative. The purpose of reassignments is no different from that of preventive suspension which management could validly impose as a disciplinary measure for the protection of the company's property pending investigation of any alleged malfeasance or misfeasance committed by the employee. [Ruiz v Wendel Osaka Realty Corp., 2012]
This prerogative extends to the management’s right to regulate, according to its own discretion and judgment, all aspects of employment, including the freedom to transfer and reassign employees from one are to another in order to meet the requirements of the business is, therefore, not general constitutive of constructive dismissal. Thus,
In cases of a transfer of an employee, the rule is settled that the employer is charged with the burden of proving that its conduct and action are for valid and legitimate grounds such as genuine business necessity and that 127
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the transfer is not unreasonable, inconvenient or prejudicial to the employee. If the employer cannot overcome this burden of proof, the employee’s transfer shall be tantamount to unlawful constructive dismissal. [Jonathan Morales v. Harbor Centre Port Terminal Inc., 2012]
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D. GRANT OF BONUS A bonus is "a gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right" [Aragon vs. Cebu Portland Cement Co., 61 O.G. 4597]. "It is something given in addition to what is ordinarily received by or strictly due the recipient." The granting of a bonus is basically a management prerogative which cannot be forced upon the employer "who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee's basic salaries or wages" xxx [Kamaya Point Hotel vs. National Labor Relations Commission, Federation of Free Workers and Nemia Quiambao, G.R. No. 75289, August 31, 1989]. [Traders Royal Bank vs. NLRC, 1990]
C. PRODUCTIVITY STANDARD The employer has the right to demote and transfer an employee who has failed to observe proper diligence in his work and incurred habitual tardiness and absences and indolence in his assigned work. [Petrophil Corporation vs. NLRC, 1986] In the consolidated cases of Leonardo vs. NLRC [G. R. No. 125303, June 16, 2000] and Fuerte vs. Aquino [G. R. No. 126937, June 16, 2000], the employer claimed that the employee was demoted pursuant to a company policy intended to foster competition among its employees. Under this scheme, its employees are required to comply with a monthly sales quota. Should a supervisor such as the employee fail to meet his quota for several consecutive months, he will be demoted, whereupon his supervisor’s allowance will be withdrawn and be given to the individual who takes his place. When the employee concerned succeeds in meeting the quota again, he is reappointed supervisor and his allowance is restored. The Supreme Court held that this arrangement is an allowable exercise of company rights since an employer is entitled to impose productivity standards for its workers. In fact, non-compliance may be visited with a penalty even more severe than demotion.
With regard to the private respondents’ claim for the mid-year bonus, it is settled doctrine that a grant of a bonus is a prerogative, not an obligation of the employer. The matter of giving a bonus over and above the worker’s lawful salaries and allowances is entirely dependent on the financial capability of the employer to give it. [Kimberly-Clark Philippines, Inc. vs. Dimayuga, 2009]
E. CHANGE OF WORKING HOURS Further, management retains the prerogative, whenever exigencies of the service so require, to change the working hours of its employees. So long as such prerogative is exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold such exercise. [Sime Darby Pilipinas Inc. v. NLRC, 1998]
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F. RULES ON MARRIAGE BETWEEN EMPLOYEES OF COMPETITOREMPLOYERS In the recent case of Duncan Association of Detailman-PTGWO and Pedro Tecson v. Glaxo Wellcome Philippines, Inc., we passed on the validity of the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company. We held that Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors. We considered the prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s employees reasonable under the circumstances because relationships of that nature might compromise the interests of Glaxo. In laying down the assailed company policy, we recognized that Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. [Star Paper Corp. vs. Simbol, 2006]
G. POST-EMPLOYMENT BAN In cases where an employee assails a contract containing a provision prohibiting him or her from accepting competitive employment as against public policy, the employer has to adduce evidence to prove that the restriction is reasonable and not greater than necessary to protect the employer’s legitimate business interests. The restraint may not be unduly harsh or oppressive in curtailing the employee’s legitimate efforts to earn a livelihood and must be reasonable in light of sound public policy. [Rivera v Solidbank, 2006]
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VI. Social Welfare Legislation
LABOR LAW
The domestic worker shall be entitled to all other benefits under existing laws. [Sec. 30, Kasambahay Law [RA 10361]]
II. VOLUNTARY [SEC. 9]
A. SSS LAW [RA 8282]
(1) Spouses who devote full time to managing household and family affairs, unless they are also engaged in other vocation or employment [which is subject of compulsory coverage]; (2) OFWs recruited by foreign-based employers; (3) Employees [previously under compulsory coverage] already separated from employment or those self-employed [also under compulsory coverage] with no realized income for a given month, who chose to continue with contributions to maintain right to full benefit.
A.1. COVERAGE I. COMPULSORY [SEC. 9 [A]; SEC. 9-A] (1) Employees not over 60 years including domestic helpers with at least P1,000 monthly pay; and (2) Self-employed as may be determined by the Commission, but not limited to: I. Self-employed professionals II. Partners and single proprietors of businesses III. Actors and actresses, directors, scriptwriters, and news correspondents who do not fall within the definition of the term “employee” under Section 8 [d] IV. Professional athletes, coaches, trainers and jockeys V. Individual farmers and fishermen
Note Foreign governments, international organizations or their wholly owned instrumentality employing workers in the Philippines may enter into an agreement with the Philippine government to include their employees in the SSS except those already covered by their civil service retirement system.
A domestic worker who has rendered at least one [1] month of service shall be covered by the Social Security System [SSS], the Philippine Health Insurance Corporation [PhilHealth], and the Home Development Mutual Fund or Pag-IBIG, and shall be entitled to all the benefits in accordance with the pertinent provisions provided by law.
A.2. EXCLUSIONS FROM COVERAGE [SEC. 8 [J]] (1) Employment purely casual and not for the purpose of occupation or business of the employer. (2) Service performed on or in connection with an alien vessel by an employee if he is employed when such vessel is outside the Philippines; (3) Service performed in the employ of the Philippine Government or instrumentality or agency thereof; (4) Service performed in the employ of a foreign government or international
Premium payments or contributions shall be shouldered by the employer. However, if the domestic worker is receiving a wage of Five thousand pesos [P5,000.00] and above per month, the domestic worker shall pay the proportionate share in the premium payments or contributions, as provided by law.
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III. RETIREMENT BENEFITS [SEC. 12-B]
organization, or their wholly-owned instrumentalities; and (5) Services performed by temporary and other employees which may be excluded by SSS regulation. Employees of bona fide independent contractors shall not be deemed employees of the employer engaging the services of said contractors.
Eligibility requirements (1) 120 monthly contributions; (2) Age I. 65 years old; or II. a member who has reached 60 years may also avail if he is already separated from employment or has ceased to be self-employed.
A.3. BENEFITS I. MONTHLY PENSION [SEC.12]
Benefit – entitlement to monthly pension from retirement until death.
Computation of monthly pension The monthly pension shall be the highest of the following amounts: (1) P300 + [20% x [average monthly credit]] + [2% x [average monthly credit] x [# of cash credited years of service in excess of 10 years]]; (2) 40% x [average monthly credit]; (3) P1,000; provided, that the monthly pension shall in no case be paid for an aggregate amount of less than 60 months.
The monthly pension shall be suspended upon the reemployment or resumption of selfemployment of a retired member who is less than sixty-five [65] years old. In Case of Death of Member (1) His/her primary beneficiaries as of the date of his/her retirement shall be entitled to receive the monthly pension; or (2) If he/she has no primary beneficiaries AND he/she dies within sixty [60] months from the start of his/her monthly pension, his/her secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the total monthly pensions corresponding to the balance of the fiveyear guaranteed period, excluding the dependents’ pension.
Note: Notwithstanding the abovementioned, minimum pension is P1,200 for members with at least 10 years credit service, P2,400 for those with 20 years.
II. DEPENDENTS’ PENSION [SEC. 12-A] (1) Paid on account of members’ I. death, II. retiring, or III. permanent total disability; (2) Paid to each child conceived on or prior to contingency, but not exceeding 5, beginning with the youngest and preferring the legitimate; (3) Amount is either P250 or 10% of the monthly pension as computed above, whichever is higher.
Lump Sum Alternative Member may opt to receive his first 18 monthly pensions in lump sum but such is discounted at a preferential rate of interest. Lump Sum Eligibility A 60 year old member with less than 120 monthly contributions who is no longer employed or self-employed, and who is not continuing contributions independently, he is entitled to a lump sum equal to his total contributions paid.
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IV. PERMANENT DISABILITY BENEFITS [SEC. 13-A]
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In Case of Death of Member (1) His primary beneficiaries as of the date of disability shall be entitled to receive the monthly pension; OR (2) If he has no primary beneficiaries and he dies within sixty [60] months from the start of his monthly pension, his secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the total monthly pensions corresponding to the balance of the five-year guaranteed period excluding the dependents’ pension.
Eligibility requirement 36 monthly contributions prior to the semester of disability; same as death benefit; the only difference is that the pension is paid directly to the member. In case the permanently disabled member dies, it would be given the same treatment as a retiree dying. For permanent partial disability, the pension is not lifetime. [e.g. loss of thumb entitles member to only 10 months of pension, while loss of arm 50 months]. It shall be paid in lump sum if the period is less than 12 months. For multiple partial disabilities, they shall be additive when related or deteriorating – the percentage shall be equal to the number of months the partial disability is entitled to, divided by 75 months. [e.g. loss of sight in one eye 25/75; loss of arm 50/75; if both occur due to same cause, then 25/75 + 50/75 = 100% so treated as if it were permanent total disability]
V. DEATH BENEFITS [SEC. 13] Eligibility requirement 36 monthly contributions prior to the semester of death. Benefit – monthly pension to primary or a lump sum benefit equivalent to thirty-six [36] times the monthly pension secondary beneficiaries. To those ineligible – lump sum benefit which shall be the higher between the two: [monthly pension] x 12; or [monthly pension] x [# of monthly contributions]
Lump Sum Alternative A member is entitled to a lump sum benefit equivalent to the monthly pension times the number of monthly contributions paid to the SSS or twelve [12] times the monthly pension, whichever is higher.
VI. FUNERAL BENEFITS [13-B] P12,000 in cash or in kind, upon death of member
VII. LOAN
Lump Sum Eligibility A member who has not paid at least 36 monthly contributions
Social Security Commission Resolution No. 669. Moreover, several SSS-issued circulars such as Circular No. 21-P and No. 52 pertain to the treatment of salary loans, sometimes providing for more flexible payment terms or condonation for delinquent payers; Santiago v. CA and SSS, GR # L-39949 [1984] resolved an issue involving the treatment of salary loan repayments; SSS website also shows loans
Note: A member who [1] has received a lump sum benefit; and [2] is reemployed or has resumed self-employment not earlier than one [1] year from the date of his disability shall again be subject to compulsory coverage and shall be considered a new member.
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VIII. SICKNESS BENEFITS [SEC. 14]
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only for each day of confinement starting from the tenth calendar day immediately preceding the date of notification to the SSS. (3) SSS shall reimburse the employer or pay the unemployed member only for confinement within the one-year period immediately preceding the date the claim for benefit or reimbursement is received by the SSS, except confinement in a hospital in which case the claim for benefit or reimbursement must be filed within one [1] year from the last day of confinement.
Eligibility requirements and other conditions (1) Inability to work due to sickness or injury (2) Confined for at least 4 days either in a hospital or elsewhere with SSS approval; (3) At least 3 months of contributions in the 12 month period immediately before the semester of sickness or injury has been paid; (4) All company sick leaves with pay for the current year have been used up; (5) Maximum of 120 days per 1 calendar year [i.e maximum permissible for the same sickness and confinement is 240 days for 2 consecutive years]; (6) The employer has been notified, or, if a separated, voluntary or self-employed member, the SSS directly notified within 5 days of confinement; (7) Notice to employer or SSS not needed when confinement is in a hospital; notice to employer not required as well when Employee became sick or injured while working or within premises of the employer.
IX. MATERNITY LEAVE BENEFITS [SEC. 14-A] Eligibility Requirements (1) A female member (2) Paid at least three [3] monthly contributions in the twelve-month period immediately preceding the semester of her childbirth or miscarriage (3) She shall have notified her employer of her pregnancy and the probable date of her childbirth, which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide;
Benefit: daily cash allowance paid for the number of days a member is unable to work due to sickness or injury equivalent to 90% x [average daily salary credit]
Process The full payment shall be advanced by the employer within thirty [30] days from the filing of the maternity leave application;
Note: One hundred percent [100%] of the daily benefits provided in the preceding paragraph shall be reimbursed by the SSS to said employer upon receipt of satisfactory proof of such payment and legality thereof if the following conditions are met: (1) The employer notified the SSS of the confinement within five calendar days after receipt of the notification from the employee member (2) If the notification to the SSS is made by the employer beyond five calendar days after receipt of the notification from the employee member, he shall be reimbursed
Coverage The maternity benefits provided under this section shall be paid only for the first four [4] deliveries or miscarriages; Employer’s Reimbursement That the SSS shall immediately reimburse the employer of one hundred percent [100%] of the amount of maternity benefits advanced to the employee by the employer upon receipt of satisfactory proof of such payment and legality thereof. Note: All of these benefits are tax-exempt. 133
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A.4. BENEFICIARIES 1. PRIMARY
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B.3. BENEFITS Computation of Service From date of original appointment/election, including periods of service at different times under one or more employers, those performed overseas under the authority of the Republic of the Philippines, and those that may be prescribed by the GSIS in coordination with the Civil Service Commission.
(1) Dependent spouse – until remarriage [see above]; (2) Dependent children [legitimate, legitimated, legally adopted, and illegitimate] [see above]; illegitimate children are entitled only to 50% of the share of legitimate children unless there are no legitimate children, in which case, they get 100%.
In case of reinstatement in the service of an employer and subsequent retirement or separation which is compensable under this Act, all service credited for retirement, resignation or separation for which corresponding benefits have been awarded under this Act or other laws shall be excluded in the computation of service
2. SECONDARY Shall only receive when the primary beneficiaries are absent Dependent parents
3. OTHERS – shall only receive when the primary and secondary beneficiaries are absent Any other person designated by member as his/her secondary beneficiary.
Note: The GSIS may prescribe rules for the inclusion of part time and other services with compensation.
I. MONTHLY PENSION [SEC. 9] The amount shall be: (a) 37.5% x [revalued ave. monthly compensation] (b) Plus 2.5 x [revalued ave. monthly compensation] x [years in service in excess of 15 years]. The monthly pension shall not exceed 90% of the average monthly compensation. It shall not be less than P2,400 for those with 20 years of service and not less than P1,300 for everyone else.
B. GSIS [RA 8291] B.1. COVERAGE All public sector employees below the compulsory retirement age of 65, irrespective of employment status.
B.2. EXCLUSIONS FROM COVERAGE (1) AFP and PNP; (2) Members of the Judiciary and Constitutional Commissions who are covered only by life insurance as they have separate retirement schemes; (3) Contractual employees with no employeremployee relationship with the agency they serve.
II. RETIREMENT BENEFITS [SEC. 13] Eligibility requirements [Sec. 13-A] (1) 15 years service; (2) 60 years of age; and (3) Not receiving pension benefit permanent total disability.
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Note: Retirement is compulsory for employees 65 years of age who have rendered at least 15 years of service; if employee has less than 15 years of service, he may be allowed to continue in accordance with civil service laws.
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an additional cash payment of 18 times basic monthly pension. To the ineligible If member has rendered at least 3 years of service, then he shall receive cash payment equal to 100% of ave. monthly compensation for each year of service [essentially total amount of contributions made] or P12,000 whichever is higher.
Benefit [Sec. 13]: Choice between (a) 60 x [basic monthly pension] lump sum payment at the time of retirement plus basic monthly pension payable monthly for life after expiry of the 5-year guaranteed period which is already covered by the lump sum; or (b) Cash payment equivalent to 18 x [basic monthly pension] plus monthly pension for life immediately but with no 5-year guarantee Note: Subject to periodic adjustment [Sec. 14]
Partial Disability Paid according to GSIS prescribed schedule [this is similar to the scheme used by SSS; refer to section II subsection D-3 above]; member availing of permanent partial disability must satisfy condition E.1.a. above regarding the disability not being due to his own fault and either E.1.b.i. or E.1.b.ii. regarding employment status and services rendered.
III. PERMANENT DISABILITY BENEFITS Eligibility requirements for Permanent Total Disability (1) Disability not due to employee’s own grave misconduct, notorious negligence, habitual intoxication, or willful intention to kill himself or another; (2) Employee is: (a) in service at the time of disability; or (b) even if separated, he has paid at least 36 monthly contributions within the 5year period immediately prior to disability or has paid a total of at least 180 monthly contributions prior to disability; and (c) Member is not enjoying old-age retirement benefit.
IV. DEATH BENEFITS [SEC. 21] When member dies, the primary beneficiaries are entitled to only one of the following: (1) Survivorship pension a. If he was in the service when he died; or b. Even if separated from the service, he has at least 3 years of service and has paid 36 monthly contributions within the 5 years immediately preceding death; or c. Even if separated from the service, he has paid 180 monthly contributions prior to death. (2) Survivorship pension plus cash payment of 100% ave. monthly compensation for every year of service [so essentially, pension plus total contributions made] a. If he was in the service when he died; and b. With 3 years of service. (3) Cash payment equivalent to 100% ave. monthly compensation for each year of
Benefit for Permanent Total Disability Monthly income benefit for life equal to basic monthly pension – This is effective from date of disability; If member is in service at the time of disability and he has paid at least 180 monthly contributions, in addition to the monthly income benefit, he shall receive 135
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VIII. SEPARATION BENEFITS
service he paid contributions or P12,000 whichever is higher a. With 3 years of service; and b. He has failed to qualify in the prior 2 schemes.
Eligibility requirements (1) 60 years of age, or separation from service with at least 3 years but not over 15 years served (2) Below 60 years of age, but at least 15 years of service rendered.
V. FUNERAL BENEFITS [SEC. 23] Fixed by GSIS rules and regulations
Benefit (1) For 60 years of age or separated from service with 3 to 15 years of service: cash payment of 100% of ave. monthly compensation for each year of service [so essentially, the total amount of all contributions paid] or P12,000 whichever is higher. (2) Below 60 years of age and at least 15 years of service: cash payment equivalent to 18 x [monthly pension] at the time of resignation or separation plus an old-age pension benefit equal to basic monthly pension.
Entitled to this are the following: (1) Active member; (2) Member separated from service but still entitled to funeral benefit; (3) Pensioner; (4) Retiree who at the time of retirement was of pensionable age but opted to retire under RA 1616.
VI. LOAN GSIS website provides for this
VII. TEMPORARY DISABILITY BENEFITS Similar to sickness
IX. UNEMPLOYMENT BENEFITS [SEC. 11] Eligibility requirements (1) Employee separated from service due to abolition of his office or position; and (2) Employee has been paying integrated contributions for at least 1 year prior to separation.
Eligibility requirements and other conditions: (1) Employee must be: I. in service at the time of disability; or II. if separated, he has rendered at least 3 years of service and paid at least 6 monthly contributions in the 12 month period immediately prior to disability; (2) All sick leave credits including CBA sick leaves for the current year has been used up; and (3) Maximum of 120 days per 1 calendar year [so maximum permissible for the same sickness and confinement is 240 days for 2 consecutive years].
Benefit Monthly cash payments of 50% of average monthly compensation for a duration which is proportional to years rendered, ranging from 2 months to 6 months.
X. SURVIVORSHIP BENEFITS Beneficiaries are entitled to the following: (1) Basic survivorship pension which is 50% of basic monthly pension; and (2) Dependent children’s pension not exceeding 50% of the basic monthly pension.
Benefit 75% of the current daily compensation for every day or fraction thereof of disability or P70 whichever is higher.
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XI. LIFE INSURANCE BENEFITS
distinguish share of illegitimate children.
Note: Judiciary and Constitutional Commissions are entitled to life insurance only.
and
Shall only receive when the primary beneficiaries are absent: (1) Dependent parents (2) Legitimate descendants, subject to the restrictions on dependent children.
(1) Dependent spouse – until remarriage; (2) Dependent children [legitimate, legitimated, legally adopted, and illegitimate] – but RA 8291 does not
Definition of Terms
legitimate
II. SECONDARY
B.4. BENEFICIARIES I. PRIMARY
Enabling law
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SSS RA 1161 as amended by RA 8282: Social Security Act of 1997 Employer – any person, natural or juridical, domestic or foreign, who carries on in the Philippines any trade business, industry, undertaking, and uses the services of another person who is under his orders as regards the employment, except those considered as employer under the GSIS. A self-employed person shall be both employer and employee at the same time. Employee – any person who performs services for an employer in which either or both mental and physical efforts are used and who receives compensation for such services, where there is an employer— employee relationship; also, a selfemployed person who is both employee and employer at the same time Self-employed – any person whose income is not derived from employment, including, but not limited to: self-employed professionals; partners and single proprietors of businesses; actors, directors, scriptwriters, news correspondents not considered as employees under the above definition; athletes, coaches, trainers, jockeys; and individual farmers and fishers.
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GSIS RA 8291 amending PD 1146 Employer – National government, its political subdivisions, branches, agencies or instrumentalities, including government-owned or controlled corporations and financial institutions with original charters [GOCCs]; constitutional commissions; and judiciary Employee – any person receiving compensation while in service of an employer whether by election or appointment, irrespective of status of appointment; baranggay officials; and sangguniang officials
Note: No employed.
counterpart
for
self-
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SOCIAL WELFARE LEGISLATION Dependents: Legal spouse entitled by law to receive support; Child – unmarried, not gainfully employed, and below 21 or Child over 21 if he or she became permanently incapacitated and incapable of self-support, physically or mentally,; child may be legitimate, legitimated, legally adopted, or illegitimate; Parent who is receiving regular support. Beneficiaries Primary Dependent spouse – until remarriage [see above]; Dependent children [see above]; illegitimate children are entitled only to 50% of the share of legitimate children unless there are no legitimate children, in which case, they get 100%. Secondary Shall only receive when the primary beneficiaries are absent: Dependent parents Other Any other person designated by the member as his/her secondary beneficiary. Compensation – all actual remuneration for employment, including living allowance, as well as the cash value of any remuneration paid in any medium other than cash except that portion already above the max salary credit under Sec. 18 of the Act. Compulsory Employers as defined above; Employees not over 60 years including household helpers with at least P1,000 monthly pay; and Self-employed.
Coverage
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Same except that a child here is below 18
Same except that RA 8291 does not distinguish share of legitimate and illegitimate children
Compensation – basic pay received excluding per diems, bonuses, overtime, honoraria, allowances and other emoluments not integrated into the basic pay under existing laws. Public sector employees below the compulsory retirement age of 65.
Exceptions: (1) AFP and PNP; (2) Members of the Judiciary and Constitutional Commissions who are covered only by life insurance Voluntary as they have separate retirement Spouses who devote full time to schemes; managing household and family (3) Contractual employees with no affairs; employee-employer relationship OFWs recruited by foreign-based with the agency they serve. employers; Employees already separated from 138
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employment or those self-employed with no realized income for a given month, who chose to continue with contributions to maintain right to full benefit.
Effective Date of Coverage
Summary of Benefits
Effects of separation from employment
Dispute Settlement Prescriptive Period
Note: Foreign governments, international organizations or their wholly owned instrumentality employing workers in the Philippines may enter into an agreement with the Philippine government to include their employees in the SSS except those already covered by their civil service retirement system. Employer: 1st day of operation Employee: 1st day at work Self-employed: upon registration with SSS (1) Monthly pension (2) Dependents’ pension (3) Retirement benefits (4) Permanent disability benefits (5) Death benefits (6) Funeral benefits (7) Loan – Social Security Commission Resolution No. 669. Moreover, several SSS-issued circulars such as Circular No. 21-P and No. 52 pertain to the treatment of salary loans, sometimes providing for more flexible payment terms or condonation for delinquent payers; Santiago v. CA and SSS, GR # L39949 [1984] resolved an issue involving the treatment of salary loan repayments; SSS website also shows loans (8) Sickness benefits (9) Maternity leave benefits (1) Employer’s contribution, and (2) Employee’s obligation to pay contribution both cease at the end of the month of separation; (3) Employee shall be credited with all contributions paid on his behalf and entitled to all benefits set forth by the law. Social Security Commission CA [Rule 43; questions of law and fact] SC [Rule 45; questions of law only] 20 years
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(1) (2) (3) (4) (5) (6)
Monthly pension Retirement benefits Permanent disability benefits Death Benefits Funeral benefits Loan – GSIS website provides for this (7) Temporary disability benefits [similar to sickness] (8) Separation benefits (9) Unemployment benefits – Sec 11 (10) Survivorship benefits (11) Life insurance benefits Note: Judiciary and Constitutional Commissions are entitled to life insurance only.
Continued membership for the unemployed member; and entitlement to whatever benefits he has qualified to in the event of any compensable contingency.
GSIS CA [Rule 43] SC [Rule 45]; appeal does not stay execution. 4 years
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(3) An employee over sixty [60] years of age shall be covered if he had been paying contributions to the System prior to age sixty [60] and has not been compulsorily retired. (4) An employee who is coverable by both the GSIS and SSS shall be compulsorily covered by both Systems. [Sec. 2, IRR of Title II, Book IV of LC] (5) Filipinos working abroad in the service of an employer as defined in Section 3 hereof shall be covered by the System, and entitled to the same benefits as are provided for employees working in the Philippines. [Sec. 5, IRR of Title II, Book IV of LC]
C. LIMITED PORTABILITY LAW [RA 7699] C.1 COVERAGE (1) Workers who transfer employment from one sector to another; or (2) Those employed in both sectors [public and private].
C.2. PROCESS The covered worker shall have his credible services or contributions in both Systems credited to his service or contribution record in each of the Systems and shall be totalized for purposes of old-age, disability, survivorship and other benefits in case the covered member does not qualify for such benefits in either or both systems without totalization: Provided, however, That overlapping periods of membership shall be credited only once for purposes of totalization [Sec. 3]
D.2. EFFECTIVITY Coverage of employees shall take effect on the first day of employment. [Sec. 6]
D.3. WHEN COMPENSABLE Grounds (1) For the injury and the resulting disability or death to be compensable, the injury must be the result of accident arising out of and in the course of the employment. (2) For the sickness and the resulting disability or death to be compensable, the sickness must be the result of an occupational disease listed under Annex “A” of these Rules with the conditions set therein satisfied, otherwise, proof must be shown that the risk of contracting the disease is increased by the working conditions.
“Totalization” shall refer to the process of adding up the periods of creditable services or contributions under each of the Systems, for purposes of eligibility and computation of benefits [Sec. 2e]. Overlapping periods of membership in case of those employed in both sectors at once are to be counted only ONCE for purposes of totalization to be able to satisfy eligibility requirements of benefits provided for by either SSS or GSIS.
Limitation: No compensation shall be allowed to the employee or his dependents when the injury, sickness, disability, or death was occasioned by any of the following: (1) his intoxication; (2) his willful intention to injure or kill himself or another; or (3) his notorious negligence (4) As otherwise provided by law.
D. EMPLOYEE’S COMPENSATION – COVERAGE AND WHEN COMPENSABLE D.1 COVERAGE (1) Every employer shall be covered. (2) Every employee not over sixty [60] years of age shall be covered. 140
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VII. Labor Relations
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the Labor Code. Employees have the right to form, join or assist labor organizations for the purpose of collective bargaining or for their mutual aid and protection. (UST Faculty Union v Bitonio)
A. RIGHT TO SELF-ORGANIZATION Basis of Right (1) 1987 Constitution Art. III Sec. 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged.
Infringement of the right to self-organization It shall be unlawful for any person to restrain, coerce, discriminate against or unduly interfere with employees and workers in their exercise of the right to self-organization. […] (Art. 252) Scope of right to self-organization (1) Right to form, join and assist labor organizations of their own choosing for the purpose of collective bargaining through representatives (Art. 252); (2) Right to engage in lawful concerted activities for the same purpose or for their mutual aid and protection (Art. 252) (3) Subsumed in the right to join, affiliate with, or assist any union is the right NOT to join, affiliate with, or assist any union; or to leave a union and join another one. (Heritage Hotel Manila v. PIGLAS-Heritage, 2009) (4) The right of the employees to selforganization is a compelling reason why their withdrawal from the cooperative must be allowed. As pointed out by the union, the resignation of the memberemployees is an expression of their preference for union membership over that of membership in the cooperative. (Central Negros Electric Cooperative v SOLE, 1991)
Art. XIII Sec. 3. The state shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment opportunities for all. It shall guarantee the rights of all workers to selforganization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. [...] (2) Labor Code Art. 249. All persons employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions, whether operating for profit or not, shall have the right to self-organization and to form, join, or assist labor organizations of their own choosing for purposes of collective bargaining. Ambulant, intermittent, and itinerant workers, self-employed people, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. Art. 250. Employees of government corporations established under the corporation code shall have the right to organize and to bargain collectively with their respective employers. Right to Self-Organization: A Fundamental Right Self-organization is a fundamental right guaranteed by the Philippine Constitution and 141
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A.1. WHO MAY UNIONIZE FOR PURPOSES OF COLLECTIVE BARGAINING?
work councils and other forms of workers’ participation schemes to achieve the same objectives. (EO 180 §2 [1987])
(1) All employees (General Rule) (2) Employees of the government under the civil service, and government employees of corporations created under the Corporation Code (3) Supervisory Employees (4) Aliens with valid working permits (5) Security personnel
(3) Supervisory Employees Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. (Art. 218 (m)) Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. (Art. 251)
(1) All Employees Any employee, whether employed for a definite period or not, shall, beginning on his first day of service, be considered as an employee for purposes of membership in any labor union. (Art. 283 [c])
Rationale Supervisory employees, while in the performance of supervisory functions, become the alter ego of the management in the making and the implementing of key decisions. It would be difficult to find unity or mutuality of interests in a bargaining unit consisting of a mixture of rank-and-file and supervisory employees. (Toyota Motor Phil. Corp. v Toyota Motor Phil. Corp. Labor Union, 1997)
Employees of non-profit organizations are allowed to join, form and/or assist labor organizations (FEU-Dr. Nicanor Reyes Medical Foundation Inc. v Trajano, 1992) (2) Employees of Government Corporations Created under the Corporation Code The right to self-organization shall not be denied to government employees. (1987 Constitution, Art. IX-B, §2 [5])
Effect of Mixed Membership The inclusion as union members of employees outside the bargaining unit shall not be a ground for the cancellation of the registration of the union. Said employees are automatically deemed removed from the list of membership of said union. (Art. 251-A)
Employees of government corporations established under the Corporation Code shall have the right to organize and to bargain collectively with their respective employers. All other employees in the civil service shall have the right to form associations for purposes not contrary to law. (Art. 250)
Note: [T]he rank and file union and the supervisors’ union operating the same establishment may join the same federation or national union. (Art. 251)
All government employees can form, join, or assist employees’ organizations of their own choosing for the furtherance and protection of their interests. They can also form, in conjunction with appropriate government authorities, labor-management committees, 142
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I. WHO CANNOT FORM, JOIN OR ASSIST LABOR ORGANIZATIONS
(4) Aliens General rule: All aliens […] are strictly prohibited from engaging directly or indirectly in all forms of trade union activities. (Art. 275)
(1) (2) (3) (4) (5) (6) (7)
Exception: Aliens working in the country […] with valid permits issued by the DOLE [and] are nationals of a country which grants the same or similar rights to Filipino workers. (Art. 275) The DFA provides the certification on the requirement of reciprocity. (Book V, Rule II, §2, ¶1, 3rd sentence)
Managerial employees Confidential employees Non-employees Member-employee of a cooperative Employees of international organizations High-level government employees Members of the AFP, police officers, policemen, firemen and jail guards
(1) Managerial Employees A managerial employee is one who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. (Art. 218 (m))
(5) Security Guards The security guards and other personnel employed by the security service contractor shall have the right: (1) To form, join, or assist in the formation of a labor organization of their own choosing for purposes of collective bargaining and (2) To engage in concerned activities which are not contrary to law including the right to strike.(D.O. No. 14 Series of 2001 Guidelines Governing the Employment and Working Conditions of Security Guards and Similar Personnel in the Private Security Industry)
Managerial employees are not eligible to join, assist or form any labor organization. […] (Art. 251) (2) Confidential employees Nature of Access Test A confidential employee is one who, by the nature of his functions, assists or acts in a confidential capacity, and who formulates, determines and effectuates management policies in the field of labor relations.
On Dec. 1986, President C. Aquino issued EO No. 111 which eliminated the provision which made security guards ineligible to join any labor organizations. In 1989, Congress passed RA 6715 which also did not impose limitations on the ability of security guards to join labor organizations. Thus, security guards “may now freely join a labor organization with the rankand-file or the supervisory union, depending on their rank.”(Manila Electric Co. v. SOLE, 1991)
The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee – that is, (1) the confidential relationship must exist between the employees and his supervisor, and (2) the supervisor must handle the prescribed responsibilities relating to labor relations. (San Miguel Supervisors and Exempt Union v Laguesma, 1997) Rationale of Exclusion of Confidential Employees By the very nature of their functions, they assist and act in a confidential capacity to, or have 143
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access to confidential matters of, persons who exercise managerial functions in the field of labor relations. (Thus there is a fiduciary and confidential relationship between manager and employer.) It is not far-fetched that in the course of Collective Bargaining, they might jeopardize that interest which they are duty bound to protect. (Metrolab Industries Inc. v. Roldan-Confessor, 1996)
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(4) Employee-Member of Cooperative Members of cooperatives are not eligible to form, assist or join a labor organization for the purpose of collective bargaining, even though they do not participate in the actual management of the cooperative. Irrespective of their degree of participation, they are still coowners. Thus they cannot invoke the right to collective bargain because an owner cannot bargain with himself or his co-owners. (Benguet Electric Cooperative v. Ferrer-Calleja, 1989) Exception Employees who withdrew their membership from the cooperative are entitled to form or join a labor union for the negotiations of a Collective Bargaining Agreement (“CBA”). (CENECO v. DOLE, 1991)
The disqualification of managerial and confidential employees from joining a bargaining unit for rank and file employees is already well-entrenched in jurisprudence. While Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly confidential records. (Standard Chartered Bank Employees Union v SCB, 2008)
(5) Employees of International Organizations International organizations are endowed with some degree of international legal personality. They are granted jurisdictional immunity. A certification election cannot be conducted in an international organization to which the Philippine Government has granted immunity from local jurisdiction. (International Catholic Migration Commission v. Calleja, 1990)
Function Test: nomenclature is not controlling The mere fact that an employee is designated “manager” does not ipso facto make him one. Designation should be reconciled with the actual job description of the employee. (Paper Industries Corp. of the Philippines. v. Laguesma, 2000)
(6) High-level / Managerial Government Employees High-level employees of the government whose functions are normally considered as policy-making or managerial or whose duties are of a highly confidential nature shall not be eligible to join the organization of rank-andfile government employees. (E.O. 180 Sec. 3)
(3) Non-Employees Persons who are not employees of a Company are not entitled to the constitutional right to join or form a labor organization for purposes of collective bargaining. “The question of whether employer-employee relationship exists is a primordial consideration before extending labor benefits under the workmen's compensation, social security, medicare, termination pay and labor relations law.[…]” (Singer Sewing Machine Co. v. Drilon, 1993)
Managerial functions refer to powers such as to: (1) Effectively recommend managerial actions; (2) Formulate or execute management policies or decisions; or 144
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(3) Hire, transfer suspend, lay-off, recall, dismiss, assign or discipline employees.(San Miguel Supervisors and Exempt Union v Laguesma, 1997)
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Role of a bargaining unit The labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit shall be the exclusive representative of the employees of such unit for the purpose of collective bargaining.
(7) Members of the AFP, Policemen, Police Officers, Firemen and Jailguards Members of the AFP, Policemen, Police Officers, Firemen and Jailguards are expressly excluded by EO 180 §4 from the coverage of the law which provides guidelines for the exercise of the right to organize of government employees.
Exception However, an individual employee or group of employees shall have the right at any time to present grievances to their employer. Any provision of law to the contrary notwithstanding, workers shall have the right, to participate in the policy and decisionmaking processes of the establishment where they are employed insofar as said processes will directly affect their rights, benefits and welfare. For this purpose, workers and employers may form labor-management councils: Provided, that the representatives of the workers in such labor-management councils shall be elected by at least the majority of all employees in said establishment. (Art. 261)
A.2. BARGAINING UNIT A “Bargaining Unit” refers to a group of employees sharing mutual interests within a given employer unit, comprised of all or less than all of the entire body of employees in the employer unit or any specific occupational or geographical grouping within such employer unit. (Book V, Rule 1, Sec. 1[d]) A bargaining unit is “a group of employees of a given employer comprised of all or less than all of the entire body of employees, which the collective interests of all the employees indicate to be best suited to serve reciprocal rights and duties of the parties consistent with equity to the employer. (Belyca Corp. v. Calleja, 1988)
CBA Coverage When there has been a factual determination by the Labor Arbiter that the petitioners were regular employees, said employees shall fall within the coverage of the bargaining unit and are therefore entitled to CBA benefits as a matter of law and contract. (Farley Fulache, et al. v ABS-CBN, 2010)
Functions of an Appropriate Bargaining Unit (1) An ELECTORAL DISTRICT. – It marks the boundaries of those who may participate in a certification election. (2) An ECONOMIC UNIT. – They are a group of employees with community of interests. (3) A SOVEREIGN BODY. – It selects the sole and exclusive bargaining agent.
Effect of Prior Agreement A prior agreement as to the inclusion or exclusion of workers in a bargaining unit or a prohibition from forming their own union agreed upon by the corporation with the previous bargaining representatives can never bind subsequent federations. (General Rubber & Footwear Corp. v BLR, 1987)
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Rationale It is a curtailment of the right to selforganization. During the freedom period, the parties may not only renew the existing collective bargaining agreement but may also propose and discuss modifications or amendments thereto. (DLSU v. DLSUEA, 2000)
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Calica, 1992; Diatagon Labor Federation v. Ople, 1980) Spun-off corporations The transformation of companies is a management prerogative and business judgment which the courts cannot look into unless it is contrary to law, public policy or morals. If, considering the spin-offs, the companies would consequently have their respective and distinctive concerns in terms of nature of work, wages, hours of work and other conditions of employment. The nature of their products and scales of business may require different skills, volumes of work, and working conditions which must necessarily be commensurate by different compensation packages. (San Miguel Union v Confesor, 1996)
Corporate Entities Two companies having separate juridical personalities shall NOT be treated as a single bargaining unit. Exception: Pervasive Unitary Aspect of Management Doctrine The cross-linking of the agencies command, control, and communication systems indicate their unitary corporate personality. (Philippine Scouts Veterans v. Torres)
I. TEST TO DETERMINE THE CONSTITUENCY OF AN APPROPRIATE BARGAINING UNIT
Principles in determining whether to establish separate bargaining units (1) The existence of a bona fide business relationship between the 2 companies is not proof of being a single corporate entity, especially when the services provided by the other company are merely auxiliary. (2) The fact that there are as many bargaining units as there are companies in a conglomeration of companies is a positive proof that a corporation is endowed with a legal personality DISTINCTLY ITS OWN, independent and separate from other corporations. (3) Separate legitimate purposes militate against treating one corporation as an adjunct or alter ego of the other. (4) The fact that the businesses are related, that some of the employees are the same persons working in the other company and the physical plants, offices and facilities are in the same compound are NOT sufficient to justify piercing the corporate veil. (Indophil Textile Mills Workers Union v.
4 Factors: (1) Will of the Employees (Globe Doctrine) (2) Affinity and unity of employees’ interest (3) Prior collective bargaining history (4) Employment status (UP v. Ferrer-Calleja, 1992) Note: Of these 4 factors, the court has identified that it is the 2nd factor which has emerged as the standard in determining the proper constituency of a collective bargaining unit. Other factors: (5) Geography and Location (6) Policy of avoiding fragmentation of the bargaining unit (1) Globe Doctrine: Concept A practice designated as the "Globe doctrine," sanctions the holding of a series of elections, not for the purpose of allowing the group 146
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receiving an over all majority of votes to represent all employees, but for the specific purpose of permitting the employees in each of the several categories to select the group which each chooses as a bargaining unit. (Kapisanan ng mga Manggagawa sa Manila Road Co. v. Yard Crew Union, 1960)
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of work to which they belong, and the unity of employees' interest such as substantial similarity of work and duties. (Belyca Corp. v. Calleja, 1988) (5) Geography and Location Geography and location only play a significant role if: (1) The separation between the camps and the different kinds of work in each all militate in favor of the system of separate bargaining units; (2) When the problems and interests of the workers are peculiar in each camp or department; (3) The system of having one collective bargaining unit in each camp has operated satisfactorily in the past. (Benguet Consolidated Inc. and Balatok Mining Co. v. Bobok Lumberjack Assn.,1958)
Rationale Highly skilled or specialized technical workers may choose to form their own bargaining unit because they may be in better position to bargain with the employer considering the market value of their skills. (2) Community or Mutuality of Interests The basic test of an asserted bargaining unit’s ACCEPTABILITY is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights. This is related to the policy of the law in ensuring the right to collective bargain. (UP v. Ferrer-Calleja, 1992)
(6) Policy of avoiding fragmentation of the bargaining unit It bears noting that the goal of the DOLE is geared towards "a single employer wide unit which is more to the broader and greater benefit of the employees working force." The philosophy is to avoid fragmentation of the bargaining unit so as to strengthen the employees’ bargaining power with the management. To veer away from such goal would be contrary, inimical and repugnant to the objectives of a strong and dynamic unionism. (Phil. Diamond Hotel and Resort Inc v Manila Diamond Hotel and Employees Union, 2006)
Rationale There are greater chances of success for the collective bargaining process. The bargaining unit is designed to maintain the mutuality of interest among the employees in such unit. When the interest between groups has changed over time, there is reason to dissolve, change or expand a certain bargaining unit. (3) Prior Collective Bargaining History The existence of prior collective bargaining history is neither decisive nor conclusive in the determination of what constitutes an appropriate bargaining unit. (San Miguel Corp. v. Laguesma, 1994)
Since the confidential employees are very few in number and are by practice and tradition identified with the supervisors in their role as representatives of management vis-à-vis the rank and file employees, such identity of interest has allowed their inclusion in the bargaining of supervisors for purposes of
(4) Employment status Among the factors to be considered is the employment status of the employees to be affected—that is the positions and categories 147
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collective bargaining in turn as employees in relation to the company as their employer. This identity of interest logically calls for their inclusion in the same bargaining unit and at the same time fulfills the law’s objective of insuring to them the full benefit of their right to self-organization and to collective bargaining, which could hardly be accomplished if the respondent association’s membership were to be broken up into five separate ineffective tiny units. Creating fragmentary units would not serve the interest of industrial peace. The breaking up of bargaining units into tiny units will greatly impair their organizational value. (Filoil Refinery Corp. v Filoil Supervisory and Confidential Employees Union, 1972)
LABOR LAW
conspicuous places in the establishment or bargaining unit where the union seeks to operate; (3) The approximate number of employees in the bargaining unit, accompanied by the names of those who support the voluntary recognition comprising at least a majority of the members of the bargaining unit; and (4) A statement that the labor union is the only legitimate labor organization operating within the bargaining unit. All accompanying documents of the notice for voluntary recognition shall be certified under oath by the employer representative and president of the recognized labor union. The employer may voluntarily recognize the representation status of a union in unorganized establishments. However, in cases where an establishment is already organized, as when a petition for certification election has already been filed by a union, if the company voluntarily recognizes a different union during such time, then the company’s voluntary recognition is void. (SLECC v Sec. of Labor, 2009)
II. VOLUNTARY RECOGNITION Voluntary Recognition refers to the process by which a legitimate labor union is recognized by the employer as the exclusive bargaining representative or agent in a bargaining unit, reported with the Regional office in accordance to Rule VII, Sec 2 of these Rules. (Book V, Rule I, Sec. 1 [bbb]) Requirements Substantive Requirements (1) Unorganized establishment; (2) Only one union asking for recognition; (3) The members of the bargaining unit did not object to the projected recognition of the union. (Book V, Rule VII, Sec. 2)
III. CERTIFICATION ELECTION “Certification Election" is the process of determining, through secret ballot, the sole and exclusive bargaining agent of the employees in an appropriate bargaining unit, for purposes of collective bargaining. (Book V Rule I Sec. 1 [x])
Procedural Requirements The notice of voluntary recognition shall be accompanied by the original copy and two (2) duplicate copies of the following documents: (1) A joint statement under oath of voluntary recognition attesting to the fact of voluntary recognition (2) Certificate of posting of the joint statement of voluntary recognition for fifteen (15) consecutive days in at least two (2)
The certification election is the best method of determining the will of the workers on the crucial question of who shall represent them in their negotiations with the management for a collective bargaining agreement that will best protect and promote their interests. It is essential that there be no collusion against this objective between an unscrupulous management and a union covertly supporting 148
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it while professing its loyalty to labor, or at least that the hopes of labor be not frustrated because of its representation by a union that does not enjoy its approval and support. It is therefore sound policy that any doubt regarding the real representation of the workers be resolved in favor of the holding of the certification election. This is preferable to the suppression of the voice of the workers through the prissy observance of technical rules that will exalt procedure over substantial justice. (Port Workers Union of the Philippines v Laguesma, 1992)
LABOR LAW
It is a fundamental postulate that the will of the majority given expression in an honest election with freedom on the part of the voters to make their choice, is controlling. (PLUM Federation of Industrial and Agrarian Workers v Noriel, 1978) Certification Election To determine the Exclusive Bargaining Agent All members of the appropriate bargaining unit may vote.
Union Election To elect union officers Only union members may vote.
It is a statutory policy. (Belyca Corp. v. FerrerCalleja, 1998)
Purpose The purpose of a certification election is precisely the ascertainment of the wishes of the majority of the employees in the appropriate bargaining unit: to be or not to be represented by a labor organization, and in the affirmative case, by which particular labor organization. (Reyes v Trajano, 1992)
Implications Thus it should not be circumvented. There should be no obstacle in conducting the Certification election. (George & Peter Lines, Inc. v. Associated Labor Union, 1985) Technical rules and objections should not hamper the correct ascertainment of the labor union that has the support and confidence of the majority of the workers and is thus entitled to represent them in bargaining for the terms and conditions of their employment. (Port Workers Union v. DOLE, 1992)
Nature of proceeding It is not litigation, but a mere investigation of a non-adversary character. The object of the proceedings is merely the determination of proper bargaining units and the ascertainment of the will and choice of the employees in respect of the selection of the bargaining representative. The determination of the proceeding does not entail the entry of remedial orders or redress of rights, but culmination solely in an official designation of bargaining units and an affirmation of the employees expressed choice of bargaining agent. (Young Men Labor Union Stevedores v CIR, 1965)
Who may vote All employees whether union members or not, as long as they belong to the appropriate bargaining unit can vote. Who may file a petition for certification election (1) Legitimate labor organization (registered w/ DOLE) (2) Unregistered local chapter with charter certificate from national union or federation (3) National union or federation in behalf of its local/chapter (4) Employer (when requested to bargain collectively and no existing CBA)
It is the most democratic and most efficacious/ effective way of determining the will of the bargaining unit. (Samahang Manggagawa sa Permex v Sec. of Labor, 1998)
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(1) Legitimate Labor Organization "Legitimate labor organization" means any labor organization duly registered with the Department of Labor and Employment, and includes any branch or local thereof. (Art. 218 (f))
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(2) submitting the list of employees during the pre-election conference should the Med-arbiter act favorably on the petition (Art 258-A introduced by RA 9481) A company’s interference in the Certification Election creates a suspicion that it intends to establish a company union. (Oriental Tin Can Labor Union v. Secretary of Labor, 1998)
(2) Unregistered Chapter with Charter certificate A duly registered federation or national union may directly create a local chapter by issuing a charter certificate indicating the establishment of the local chapter. The chapter shall acquire legal personality only for purposes of filing a petition for certification election from the date it was issued a charter certificate. (Art. 240-A)
The employer is not a party to a certification election, which is the sole or exclusive concern of the workers. The only instance when the employer may be involved in that process is when it is obliged to file a petition for certification election on its workers’ request to bargain collectively pursuant to Art. 258. (Hercules Industries, Inc. v Sec. of Labor, 1992)
(3) National Union/Federation In any establishment where there is no certified bargaining agent, a certification election shall automatically be conducted by the MedArbiter upon filing of a petition by any legitimate labor organization, including a national union or federation which has already issued a charter certificate to its local/chapter participating in the certification election, or a local/chapter which has been issued a charter certificate by the national union or federation. In cases where the petition was filed by a national union or federation, it shall not be required to disclose the names of the local chapter’s officers and members. (Art. 263)
The employer is a total stranger in the process of certification election. The employer has no standing to file a motion to dismiss. (PT&T v Laguesma, 1993) Venue for filing the petition BLR Regional Office which issued the petitioning union’s certificate of registration or certificate of creation of chartered local.
(4) Employer When requested to bargain collectively, an employer may petition the Bureau for an election. (Art. 264)
CERTIFICATION ELECTION IN AN UNORGANIZED ESTABLISHMENT Procedure (1) A petition for certification election shall be filed by a legitimate labor organization. (2) Upon filing of the petition, the Med- Arbiter shall automatically conduct a certification election.
Bystander rule The employer shall not be considered a party in the petition with a concomitant right to oppose a petition for certification election. The employer’s participation shall be limited to: (1) being notified or informed of petitions of such nature
Filing of petition is by a legitimate labor organization It cannot be an unregistered labor organization. This is best read in relation to Art. 242 which enumerates the rights granted to a legitimate labor organization and one of those rights is the right to be chosen as the 150
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exclusive bargaining representative. This is one way the law encourages union registration.
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Rule does not apply to Motions for Intervention The requisite written consent representing substantial support of the workers in the bargaining unit [as required in Art. 256 applies to petitions for certification only, and not to motions for intervention. (PAFLU v Calleja, 1989)
Venue BLR Regional Office which issued the petitioning union’s certificate of registration or certificate of creation of chartered local.
Discretionary rule If the petition does not comply with the substantial support requirement, the BLR may exercise its discretion in determining whether or not a certification election must be conducted. (Scout Albano Memorial College v. Noriel, 1978)
CERTIFICATION ELECTION IN AN ORGANIZED ESTABLISHMENT Procedure (1) A verified petition questioning the majority status shall be filed by a legitimate labor organization (2) It must be filed within the 60-day period before expiration of CBA (freedom period) (3) Supported by written consent of at least 25% of ALL employees in the bargaining unit (substantial support)
Effect of withdrawal of signatures The employees’ withdrawal from a labor union made before the filing of the petition for certification election is presumed voluntary, while withdrawal after the filing of such petition is considered to be involuntary and does not affect the petition. (S.S. Ventures International vs. S.S. Ventures Labor Union, 2008)
Substantial support rule In organized establishments, the incumbent sole bargaining agent should not be easily replaced for that would disturb industrial peace. To justify the disturbance, it must appear that at least a substantial number (25% requirement) seeks to have a new exclusive bargaining unit.
Forced Intervenor The incumbent bargaining agent shall automatically be one of the choices in the certification election as forced intervenor. (Book V Rule VIII Sec. 7)
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Organized vs. Unorganized Establishment Art. 256: Organized Bargaining agent Petition filed
Freedom Period
Substantial support rule
Art. 257: Unorganized
Existing, has one Has to be a VERIFIED petition No petition for Certification election EXCEPT within 60 days before the expiration of the collective bargaining agreement (See Art. 253 & 253-A)
None No need to be verified Not applicable. No freedom period. Can file petition anytime.
Take note how SC interpreted the term “WITHIN”. What is the rationale of freedom period in Organized establishments, why is there none in unorganized establishments? It has something to do with industrial peace Must be duly supported by 25% of ALL THE MEMBERS OF THE APPROPRIATE BARGAINING UNIT. Percentage base: all members of an appropriate bargaining unit.
NO substantial support rule. WHY? Intention of law is to bring in 71 the union, to implement policy behind Art. 211a.
What is intent and purpose of law for requiring the substantial support rule? Law wants to know the intention of the employees. If they really want a CE, since they already have a bargaining agent.
BARS TO CERTIFICATION ELECTION (1) One year bar rule (2) Negotiation bar rule (3) Deadlock bar rule (4) Contract bar rule
(2) Negotiation bar rule A petition for certification election may be filed anytime EXCEPT: (1) When the duly certified union has commenced and sustained negotiations in good faith with the employer (2) In accordance with Art. 256 of the Labor Code (3) Within one year after the certification election. (Book V, Rule VIII, Sec 3 [b])
(1) One year bar rule No certification election may be held within 1 year from the fact that voluntary recognition has been entered, or a valid certification, consent or run-off election has been conducted within the bargaining unit.
(3) Deadlock bar rule A petition for certification election may be filed anytime, EXCEPT: [w]hen a bargaining deadlock to which an incumbent or certified bargaining agent is a party had been submitted to conciliation or arbitration or had become the subject of a
If appealed, the reckoning period is the date when the decision becomes final and executory. (Book V, Rule VIII, Sec 3 [a])
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valid notice of strike or lockout (Book V, Rule VIII, Sec. 3 [c])
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The purpose of the prohibition against the filing of a petition for certification election outside the so-called freedom period is to ensure industrial peace between the employer and its employees during the existence of the CBA. (Republic Planters Bank Union v. Laguesma, 1996)
A “deadlock” is defined as the counteraction of things producing entire stoppage; a state of inaction or of neutralization caused by the opposition of persons or of factions (as in government or voting body); standstill. (Divine World University v Sec of Labor and Employment, 1992)
The premature renewal of a CBA cannot bar the holding of a certification election by virtue of a bona fide petition filed within the freedom period if the clear intention was to frustrate the constitutional right of the employees to selforganization. (Associated Labor Union v. Calleja, 1989)
(4) Contract Bar Rule The Bureau shall not entertain any petition for certification election or any other action which may disturb the administration of duly registered existing collective bargaining agreements affecting the parties except under Articles 253, 253-A and 256 of this code. (Art. 238)
What is prohibited is the filing of the petition for certification election outside the 60-day freedom period. The signing of the authorization to file was merely preparatory to the filing of the Petition for Certification Election, or an exercise of the right to selforganization. (PICOP Resources Inc. v. Ricardo Dequita, 2011)
The contract bar rule shall not apply: (1) When the petition is filed during the freedom period in Articles 253, 253-A, and 256. (2) When the CBA is incomplete (3) When the CBA is substandard (4) When the CBA is prematurely renewed (5) When the CBA is unregistered
Expiration of Freedom Period At the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed.
No petition for certification election may be filed after the lapse of the freedom period. The old CBA is extended until a new one is agreed upon by the parties. (Colegio de San Juan de Letran v. Assoc., 2000)
Petition for cancellation of union registration does not bar certification election A petition for cancellation of union registration shall not suspend the proceedings for certification election nor shall it prevent the filing of a petition for certification election. […] (Art. 238-A)
Freedom Period The last 60 days in a Collective Bargaining Agreement (CBA) is referred to as the “freedom period” when rival union representation can be entertained during the existence of a CBA. It is during this particular period when the majority status of the incumbent bargaining agent can be challenged. (Tanduay Distillery Labor Union v. NLRC, 1987)
A certification election can be conducted despite pendency of a petition to cancel the union registration certificate. For the fact is that at the time the union, whose registration 153
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certificate is sought to be cancelled, filed its petition for certification, it still had legal personality to perform such act absent an order directing its cancellation. (Samahan ng mga Manggagawa v Laguesma, 1997)
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NOTICE REQUIREMENT Posting of Notice Who: Election Officer shall cause the posting What: Notice of election Where: 2 conspicuous places in company premises When: At least 10 days before actual election
SUSPENSION OF ELECTION Prejudicial Question Rule A formal charge of Unfair Labor Practice against the employer for establishing a company union triggers suspension. (B.F. Goodrich Phils. Marikina v. B.F. Goodrich Confidential and Salaried Employees Union)
Contents of Notice (1) Date and Time of election; (2) Names of all contending unions; (3) Description of the bargaining unit (4) List of eligible and challenged Voters.
Note: The ONLY party who could ask for the suspension of the Certification Election is the labor union which filed a complaint for Unfair Labor Practices against the employer.
The posting of the notice of election, the information required to be included therein and the duration of the posting cannot be waived by the contending unions or the employer. (Book V Rule IX Sec 6, IRR)
Rationale If there is a union dominated by the company, to which some of the workers belong, an election among workers and employees of the company would not reflect the true sentiment and wishes of the said workers and employees because the votes of the members of the dominated union would not be free. Such charge of company domination is a prejudicial question that until decided, shall suspend or bar proceedings for certification election. If it were a labor organization objecting to the participation in a certification election of a company-dominated union, as a result of which a complaint for an unfair labor practice case against the employer was filed, and when the court finds that said union is employerdominated in the unfair labor practice case, the union selected would be decertified and the whole election proceedings would be rendered useless and nugatory.' There would be an impairment of the integrity of the collective bargaining process if a companydominated union were allowed to participate in a certification election. (United CMC Textile Worker’s Union v. BLR, 1984)
All Employees entitled to vote All rank-and-file employees in the appropriate bargaining unit are entitled to vote. The Code makes no distinction as to their employment status. All they need to be eligible to support the petition is to belong to a bargaining unit. (Airtime Specialists, Inc. v Director of BLR, 1990) Employees who have been improperly laid off but who have a present, unabandoned right to or expectation of reemployment, are eligible to vote in certification elections. If the dismissal is under question, employees concerned could still qualify to vote in the elections. (Philippine Fruits v Torres, 1992) Rationale for Non-Distinction Policy Collective bargaining covers all aspects of the employment relation and the resultant CBA binds all employees in the bargaining unit. All rank and file employees, probationary or permanent, have a substantial interest in the selection of the bargaining representative. (Reyes v. Trajano, 1992) 154
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Voting List and Voters The basis of determining voters may be agreed upon by the parties (i.e. the use of payroll). (Acoje Workers Union v NAMAWU, 1963)
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IV. RUN-OFF ELECTION A "Run-Off election" refers to an election between the labor unions receiving the 2 highest number of votes in a certification election.
Effect of Non-participation in previous election Failure to take part in previous elections is no bar to the right to participate in future elections. No law, administrative rule or precedent prescribes forfeiture of the right to vote by reason of neglect to exercise the right in past cases. (Reyes v. Trajano, 1992)
It occurs when a certification election provides for 3 or more choices and the total number of votes for all contending unions is at least fifty percent (50%) of the number of votes cast, where no choice receives a majority of the valid votes cast, a Run-Off election will be conducted
Challenge Voter An employer has no standing to question a certification election since this is the sole concern of the workers but may question the inclusion of any disqualified employee in the certification election during the exclusioninclusion proceedings before the representation officer. (Phil. Telephone & Telegraph Co. v Laguesma, 1993)
Requirements (1) majority of the bargaining unit voted (first majority of the double majority rule) (2) three or more choices are available (note: “no union” is a choice) (3) not one of the choices receives a majority of the valid votes cast (4) total number of votes for all contending unions is at least 50% of the total number of votes cast (this means that at least 50% of the bargaining unit wants to have a union) (5) the run-off election shall be conducted between the labor unions receiving the two highest number of votes
Voting Day The election shall be set on a regular business day. (IRR, Book V Rule IX Sec. 2) Validity Double majority requirement: (voters, valid votes) To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. (Art. 262)
Illustration The CBU has 100 members and eighty of which voted. Union “A”= 30; Union “B”= 15; Union “C”=15 and No Union= 20. There were no invalid votes. Since none got the majority of the 80 valid votes and the contending unions obtained 60 votes (which exceeds½ of the total), a run-off election is proper. The run-off will be between the labor unions receiving “the two highest number of votes.” The run-off is NOT between two unions but between “two highest votes”. Thus, the run-off will be among Union “A”, “B” and “C.” (Azucena)
Appeal from order of Med-Arbiter holding certification election Any party to an election may appeal the order or results of the election […] directly to the Secretary of Labor […] on the ground that the rules and regulations or parts established by the Secretary of Labor for the conduct of election have been violated. (Art. 265) 155
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V. RE-RUN ELECTION
VI. CONSENT ELECTION
A motion for the immediate holding of another certification or consent election can be filed within six (6) months from the date of the declaration of failure of election. (Book V, Rule IX Sec 18)
"Consent Election" means the election voluntarily agreed upon by the parties to determine the issue of majority representation of all the workers in the appropriate collective bargaining unit. The contending unions may agree to the holding of an election. In which case, it shall be called a consent election. The Med-Arbiter shall forthwith call for the consent election reflecting the parties’ agreement and the call in the minutes of the conference. (Book V RVIII Sec 10)
Purpose
Conduct
Certification election Aimed at determining the sole and exclusive bargaining agent of all employees in an appropriate bargaining unit for the purpose of collective bargaining
Consent Election Merely to determine the issue of majority representation of all the workers in the appropriate collective bargaining unit
1st Level of Choice: Yes Union or No Union 2nd Level of Choice: If “Yes Union” wins, WHICH union. (UST Faculty Union v. Bitonio, 1999) Ordered by the DOLE
VI. AFFILIATION AND DISAFFILIATION OF THE LOCAL UNION FROM THE MOTHER UNION
Voluntarily agreed upon by the parties, with or w/o intervention from DOLE
Independent Union A labor organization operating at the enterprise level that required legal personality through independent registration under Art.234 of the Labor Code and Rule III Sec. 2-A of the IRR.(Book V Rule 1 Sec. 1 [w])
Definitions Affiliate An affiliate is an independent union affiliated with a federated, national union or a chartered local which was subsequently granted independent registration but did not disaffiliate from its federation, reported to the Regional Office and the Bureau in accordance with Rule III Secs. 6 and 7 of the IRR. (Book V Rule 1 Sec. 1 [a])
Local Chapter (Chartered Local) A labor organization in the private sector operating at the enterprise level that acquired legal personality through the issuance of a charter certificate by a duly registered federation or national union, and reported to the Regional Office in accordance with Rule III Sec. 2-E of the IRR. (Book V Rule 1 Sec. 1 [i]) 156
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National Union or Federation National Union or Federation – a group of legitimate labor unions in a private establishment organized for collective bargaining or for dealing with employers concerning terms and conditions of employment for their member union or for participating in the formulation of social and employment policies, standards and programs, registered with the BLR in accordance with Rule III Sec. 2-B of the IRR. (Book V Rule 1 Sec. 1 [kk])
LABOR LAW
Disaffiliation General rule: Local unions may disaffiliate from the mother union. Disaffiliation must be by a majority decision The members shall determine by secret ballot, after due deliberation, any question of major policy affecting the entire membership of the organization, unless the nature of the organization or force majeure renders such secret ballot impractical, in which case, the board of directors of the organization may make the decision. (Art. 247 (d))
Purpose of affiliation To foster the free and voluntary organization of a strong and united labor movement (Art. 211)
Limitations: Terms of the affiliation agreement (e.g. agreement may require 2/3 vote to disaffiliate instead of a majority) (Phil. Skylanders v. NLRC)
The sole essence of affiliation is to increase, by collective action, the common bargaining power of local unions for the effective enhancement and protection of their interests. Admittedly, there are times when without succor and support local unions may find it hard, unaided by other support groups, to secure justice for themselves. (Philippine Skylanders v. NLRC, 1992)
Generally, a labor union may disaffiliate from the mother union to form a local or independent union only during the 60-day freedom period immediately preceding the expiration of the CBA. However, even before the onset of the freedom period, disaffiliation may be carried out when there is a shift of allegiance on the part of the majority of the members of the union. (ANGLO KMU v Samana Bay, G.R. No. 118562 July 5, 1996)
Nature of Relationship (Agency) The mother union, acting for and in behalf of its affiliate, had the status of an agent while the local remained the basic unit of the association, free to serve the common interest of all its members, subject only to restraints imposed by the constitution and by the by-laws of the association. The same is true even if the local is not a legitimate labor organization. (Filipino Pipe and Foundry Corp v. NLRC, 1998)
A local union, being a separate and voluntary association, is free to serve the interests of all its members. It has the right to disaffiliate or declare its autonomy from the federation to which it belongs when circumstances warrant, in accordance with the constitutional guarantee of freedom of association, and such disaffiliation cannot be considered disloyalty. (Malayang Samahan ng mga Manggagawa v. Ramos, 2000)
Effect of Affiliation Inclusion of [the federation] in the registration is merely to stress that they are its affiliates at the time of registration. It does not mean that said local unions cannot stand on their own. Affiliation does not mean they lost their own legal personality. (Adamson v CIR, 1984)
The locals are separate and distinct units primarily designed to secure and maintain an equality of bargaining power between the employer and their employee-members; and 157
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VIII. UNION DUES ASSESSMENTS
the association of the locals into the national union was in furtherance of the same end. These associations are consensual entities capable of entering into such legal relations with their member. The essential purpose was the affiliation of the local unions into a common enterprise to increase by collective action the common bargaining power in respect of the terms and conditions of labor. (Tropical Hut Employees Union v. Tropical Hut Food Market Inc., 1990)
LABOR LAW
AND
SPECIAL
Union dues Union dues are payments to meet the union’s general and current obligations. The payment must be regular, periodic, and uniform. (Azucena) Every payment of fees, dues or other contributions by a member shall be evidenced by a receipt signed by the officer or agent making the collection and entered into the record of the organization to be kept and maintained for the purpose. (Art. 247 (h))
Effect of disaffiliation A registered independent union retains its legal personality while a chartered local loses its legal personality unless it registers itself.
Special assessments Special assessments are payments for a special purpose, especially if required only for a limited time. (Azucena)
SUBSTITUTIONARY DOCTRINE The “substitutionary” doctrine provides that the employees cannot revoke the validly executed collective bargaining contract with their employer by the simple expedient of changing their bargaining agent. And it is in the light of this that the phrase “said new agent would have to respect said contract” must be understood. It only means that the employees, thru their new bargaining agent, cannot renege on their collective bargaining contract, except of course to negotiate with management for the shortening thereof. (Benguet Consolidated v. BCI Employees and Workers Union-PAFLU, 1998)
No special assessment or other extraordinary fees may be levied upon the members of a labor organization unless authorized by a written resolution of a majority of all the members of a general membership meeting duly called for the purpose. (Art. 247 (n)) Other than for mandatory activities under the Code, no special assessments, attorney’s fees, negotiation fees or any other extraordinary fees may be checked off from any amount due to an employee without an individual written authorization duly signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deduction. (Art. 247 (o))
Conditions: (1) change of bargaining agent (through affiliation, disaffiliation, or other means) (2) existing CBA with the previous bargaining agent
REQUIREMENTS FOR VALIDITY OF SPECIAL ASSESSMENT (1) Authorization by written resolution of majority of ALL the members at the general membership meeting called for that purpose
Effects: (1) new bargaining agent cannot revoke and must respect the existing CBA (2) it may negotiate with management to shorten the existing CBA’s lifetime
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(2) Secretary’s record of the minutes of the meetings attested to by the president. (3) Individual written authorization for checkoff duly signed by the employees concerned.
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Requisites for assessment of Agency Fees Employees of an appropriate bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non-union members accept the benefits under the collective bargaining agreement: Provided, that the individual authorization required under Article 242, paragraph (o) of this Code shall not apply to the non-members of the recognized collective bargaining agent. (Art. 254 (e))
Attorney’s fees, negotiation fees, and similar charges No attorney’s fees, negotiation fees or similar charges of any kind arising from any collective bargaining negotiations or conclusion of the collective agreement shall be imposed on individual member of contracting union. Provided, however, that attorney’s fees may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void. (Art. 228 (b))
Requirements: (1) Non-member of SEBA (2) Member of Collective Bargaining Unit (3) Reasonable fee equivalent to the dues and other fees paid by member
General rule: that attorney’s fees, negotiation fees, and similar charges should be charged against the union funds and not as a special assessment.
B. RIGHT BARGAINING
TO
COLLECTIVE
B.1 DUTY TO BARGAIN COLLECTIVELY Constitutional Policies (1) [The State] shall guarantee the rights of workers to self-organization, collective bargaining and negotiations. […] [1987
However, if a special assessment is required to pay such fees, then the requirements above must be satisfied.
Constitution, Art. XIII, Sec. 3]
Strict compliance for special assessment There must be strict and full compliance with the requisites. Substantial compliance is not enough. (Palacol v. Ferrer-Calleja)
(2) The State shall promote the principle of shared responsibilities between workers and employers […] and shall enforce their mutual compliance therewith to foster industrial peace. [1987 Constitution, Art. XIII, Sec. 3]
IX. AGENCY FEES Agency fee is an amount, equivalent to union dues, which a non-union member pays to the union because he benefits from the CBA negotiated by the union. (Azucena)
Statutory Policies (1) To promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of setting labor or industrial disputes. [Art. 217 (a)] (2) It is the policy of the State to promote and emphasize the primacy of free and
Rationale for allowing agency fees Avoiding unjust enrichment on the part of nonunion members who benefit from the union's efforts without paying any fee therefor, unlike the members of the bargaining agent.
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responsible exercise of the right to selforganization and collective bargaining, either through single enterprise level negotiations or through the creation of a mechanism by which different employers and recognized certified labor unions in their establishments bargain collectively.
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Nature and Purpose of Collective Bargaining The institution of collective bargaining is a prime manifestation of industrial democracy at work. The two parties to the relationship, labor and management, make their own rules by coming to terms to govern themselves in matters that really count. [United Employees Union of Gelmart Industries v. Noriel, 1975]
[Book V, Rule XVI, §1] Definition The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages hours of work and all other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such agreement and executing a contract incorporating such agreement if required by either party but such duty does not compel any party to agree to a proposal or to make any concession. [Art. 258]
When Employers May Be Compelled to Bargain Collectively While the duty to bargain collectively is a mutual obligation, the employer is not under any legal duty to initiate contract negotiation. [Kiok Loy v NLRC, 1986]
Collective bargaining, which is defined as negotiations towards a collective agreement, is one of the democratic frameworks under the Labor Code designed to stabilize the relations between labor and management and to create a climate of sound and stable industrial peace. It is a mutual responsibility of the employer and the Union and is characterized as a legal obligation. So much so that Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an employer to refuse "to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work, and all other terms and conditions of employment.” [Kiok Loy v. NLRC, 1986]
An employer asked by a labor organization (which is not the SEBA of the establishment) to bargain collectively may file a petition for certification election to ascertain the will of the bargaining unit or it may voluntarily recognize the labor organization in proper circumstances.
Requisites to Compel Employer to Bargain Collectively: (1) Proof of majority representation by the representative labor organization (exclusive bargaining agent) (2) Demand by the labor organization [Art. 250(a)]
Waiver of Right to Collectively Bargain The right to free collective bargaining includes the right to suspend it. [Rivera v. Espiritu, 2000] Rights of the Parties during Bargaining To be furnished by the employer, upon written request, with its annual audited financial statements, including the balance sheet and the profit and loss statement, within thirty (30) calendar days from the date of receipt of the request, after the union has been duly recognized by the employer or certified as the 160
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sole and exclusive bargaining representative of the employees in the bargaining unit, or within sixty (60) calendar days before the expiration of the existing collective bargaining agreement, or during the collective bargaining negotiation. [Art. 248 (c)]
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[A]t the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed. [Art. 256]
B.2 COLLECTIVE AGREEMENT (CBA)
The parties may agree to make available such up-to-date financial information which is normally submitted to relevant government agencies material and necessary for meaningful negotiations. They may also agree to the condition that the information be kept confidential. [Book V Rule XVI §2]
BARGAINING
A collective bargaining agreement refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit, including mandatory provisions for grievances and arbitration machineries. [Book V Rule I § 1(j)]
I. WHEN THERE IS ABSENCE OF A CBA In the absence of an agreement or other voluntary arrangement providing for a more expeditious manner of collective bargaining, it shall be the duty of employer and the representatives of the employees to bargain collectively in accordance with the provisions of this Code. (Art. 257)
CBA Impressed with Public Policy A CBA, as a labor contract within the contemplation of Article 1700 Civil Code which governs the relations between labor and capital, is not merely contractual in nature but impressed with public interest, thus, it must yield to the common good. [Davao Integrated Port Stevedoring Services v. Abarquez, 1993]
II. WHEN THERE IS A CBA General Rule The duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime.
The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore such contracts are subject to the special laws on labor unions collective bargaining strikes and lockouts closed shop wages working conditions hours of labor and similar subjects. [Art. 1700 Civil Code]
Exception In organized establishments, when a verified petition questioning the majority status of the incumbent bargaining agent is filed before the Department of Labor and Employment within the sixty-day period before the expiration of the collective bargaining agreement, the MedArbiter shall automatically order an election by secret ballot when the verified petition is supported by the written consent of at least twenty-five percent (25%) of all the employees in the bargaining unit to ascertain the will of the employees in the appropriate bargaining unit.
Substandard CBA A CBA that falls below the minimum standards required by law is prohibited. Nonetheless, RA 9481 removed substandard CBAs as a ground for the cancellation of registration of union registration. Note: A substandard CBA cannot bar a petition for certification election under the contract-bar rule. 161
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Confidentiality of registered CBA or Parts Thereof
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Contract Interpretation Interpretation Tools A CBA, just like any other contract, is respected as the law between the contracting parties and compliance in good faith is mandated. Similarly, the rules embodied in the Civil Code (Art. 1700) on the proper interpretation of contracts can very well govern.
General rule: CBA is not confidential Exceptions: (1) confidentiality authorized by Secretary of Labor (2) when it is at issue in any judicial litigation (3) public interest or national security requires [Art. 231]
General Rule: If the terms of the contract are clear, the literal meaning of the stipulations shall control.
Effect of Unregistered CBA An unregistered CBA is binding upon the parties but cannot serve as a bar to a petition for certification election under the contract-bar rule.
Exception: If the words appear to be contrary to the evident intention of the parties, the latter shall prevail over the former. [Kimberly Clark Phils. V. Lorredo, 1993]
Beneficiaries of the CBA The CBA benefits all workers in a collective bargaining unit. When a collective bargaining contract is entered into by the union representing the employees and the employer, even the non-member employees are entitled to the benefits of the contract. [New Pacific Timber and Supply v. NLRC, 2000]
Bargaining Procedure [Book V, Rule XVI] (1) Private Procedure - The parties may provide for their own procedures in collective bargaining. The law only requires that these procedures be more expeditious than the procedure in Art. 250. [Art 251] Rationale - It is the policy of the state to promote the primacy of free collective bargaining [Art. 211 (a)]
To accord its benefits only to members of the union without any valid reason would constitute undue discrimination against nonmembers.
(2) Labor Code Procedure [Art. 250] i. Written notice and statement of proposals. When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of its proposals. ii. Reply. The other party shall make a reply thereto not later than ten (10) calendar days from receipt of such notice. iii. Conference. Should differences arise on the basis of such notice and reply, either party may request for a conference which shall begin not later than ten (10) calendar days from the date of request.
Nature of Contract and Contract Interpretation The terms and conditions of a collective bargaining contract constitute the law between the parties. [Mactan Workers Union vs. Aboitiz, 1972] Those who are entitled to its benefits can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved party has the right to go to court for redress. [Babcock-Hitachi (Phils.) v. BabcockHitachi, 2005] 162
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v.
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Board intervention and conciliation. If the dispute is not settled, the Board shall intervene upon request of either or both parties or at its own initiative and immediately call the parties to conciliation meetings. The Board shall have the power to issue subpoenas requiring the attendance of the parties to such meetings. It shall be the duty of the parties to participate fully and promptly in the conciliation meetings the Board may call; Voluntary arbitration. The Board shall exert all efforts to settle disputes amicably and encourage the parties to submit their case to a voluntary arbitrator. Prohibition against disruptive acts. During the conciliation proceedings in the Board, the parties are prohibited from doing any act which may disrupt or impede the early settlement of the disputes.
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Failure to Reply as Indicia of Bad Faith GMC’s failure to make a timely reply to the proposal sent by the union is indicative of its utter lack of interest in bargaining with the union. Its excuse that it felt the union no longer represented the workers was mainly dilatory as it turned out to be utterly baseless. GMC’s refusal to make a counter-proposal is an indication of its bad faith. Where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively. It is guilty of ULP. [General Milling Corp. v. CA, 2004] Conciliation / Preventive Mediation – Privileged Communication Information and statements made at conciliation proceedings shall be treated as privileged communication and shall not be used as evidence in the Commission. Conciliators and similar officials shall not testify in any court or body regarding any matters taken up at conciliation proceedings conducted by them. [Art. 233]
Period to Reply; Bad Faith The period to reply is merely procedural, and non-compliance cannot be automatically deemed to be an Unfair Labor Practice (“ULP”). [National Union of Restaurant Workers vs. CIR, 1964]
Rationale i. a person is entitled to ‘buy his or her peace’ without danger of being prejudiced in case his or her efforts fail ii. offers for compromise are irrelevant because they are not intended as admissions by the parties making them [Pentagon Steel v. CA, 2009]
The company’s refusal to make a counterproposal to the union’s proposed CBA is an indication of its bad faith. Where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively. The employer’s actuations show a lack of sincere desire to negotiate, rendering it guilty of unfair labor practice. [Colegio de San Juan de Letran vs. Association, 2000]
Mandatory Bargainable Issues (1) Wages (2) Hours of work (3) All other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such agreement [Art. 252]
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Permissive Issues: Unilateral benefits extended by the employer [cf., Union of Filipino Employees-Drug v. Nestle, 2008]
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agree or that agreement was not reached with respect to other disputed clauses.” Such refusal will not be deemed as an unfair labor practice. However, if a party refuses to contract based on an issue which is not a mandatory bargainable issue, the party will be guilty of ULP. [Samahang Manggagawa sa Top Form v. NLRC, 1998]
A collective bargaining agreement refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit […]. As in all other contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided they are not contrary to law, morals, good customs, public order or public policy. [Manila Fashions v. NLRC, 1996]
I. MANDATORY PROVISIONS OF CBA Grievance Procedure The parties to a Collective Bargaining Agreement shall include therein: 1) Provisions that will ensure the mutual observance of its terms and conditions. 2) A machinery for the adjustment and resolution of grievances arising from: a) The interpretation or implementation of their CBA; and b) those arising from the interpretation or enforcement of company personnel policies. All grievances submitted to the grievance machinery which are not settled within 7 calendar days from the date of its submission shall be automatically referred to voluntary arbitration prescribed in the CBA. [Art. 260]
Test for Mandatory Bargainable Issues: NEXUS Between the Nature of Employment and the Nature of the Demand. For “other terms and conditions of employment” to become a mandatory bargainable issue, they must have a connection between the proposal and the nature of the work. Importance of Determining Whether an Issue is a Mandatory Bargaining Issue or Only a Permissive Bargaining Issue "The question as to what are mandatory and what are merely permissive subjects of collective bargaining is of significance on the right of a party to insist on his position to the point of stalemate. A party may refuse to enter into a collective bargaining contract unless it includes a desired provision as to a matter which is a mandatory subject of collective bargaining. But a refusal to contract unless the agreement covers a matter which is not a mandatory subject is in substance a refusal to bargain about matters which are mandatory subjects of collective bargaining; and it is no answer to the charge of refusal to bargain in good faith that the insistence on the disputed clause was not the sole cause of the failure to
Grievances arising from the interpretation or implementation of the CBA are subjects of the grievance procedure. [Navarro III v. Damasco, 1995] It should be remembered that a grievance procedure is part of the continuous process of collective bargaining. It is intended to promote a friendly dialogue between labor and management as a means of maintaining industrial peace. [Master Iron Labor Union v. NLRC, 1993] No particular setup for a grievance machinery is required by law. Art. 260 of, as incorporated by R.A. 6715, only mandates that the parties to 164
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the CBA establish a machinery to settle problems arising from "interpretation or implementation of their collective bargaining agreement and those arising from the interpretation or enforcement of company personnel policies. [Caltex Refinery Employees Association v. Brillantes, 1997]
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same force and effect as if the has been selected by the parties as described above. [Art. 266] Voluntary Arbitration as a Condition Precedent The stipulation to refer all future disputes to an arbitrator or to submit an ongoing dispute to one is valid. Being part of a contract between the parties, it is binding and enforceable in court in case one of them neglects, fails or refuses to arbitrate. Going a step further, in the event that they declare their intention to refer their differences to arbitration first before taking court action, this constitutes a condition precedent, such that where a suit has been instituted prematurely, the court shall suspend the same and the parties shall be directed forthwith to proceed to arbitration. A court action may likewise be proper where the arbitrator has not been selected by the parties. [Chung Fu Industries v. CA, 1992]
Voluntary Arbitration Constitutional Basis The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. [CONST. Art. XIII Section 3] Automatic Referral If Grievance Machinery Fails All grievances submitted to the grievance machinery which are not settled within 7 calendar days from the date of its submission shall automatically be referred to voluntary arbitration prescribed in the CBA. [Art. 266]
Arbitrable Issues 1. interpretation or implementation of the CBA [Art. 261] 2. interpretation or enforcement of company personnel policies [Art. 261] 3. gross violations of CBA provision (flagrant/malicious refusal to comply with the economic provisions of the CBA [Art. 261] 4. all other labor disputes including ULP and bargaining deadlock, if the parties agree [Art. 262]
Provision for Voluntary Arbitration in the CBA (1) Parties to a CBA shall: a. Name and designate in advance a Voluntary Arbitrator or panel of Voluntary Arbitrators, OR b. Include in the agreement a procedure for the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators preferably from the listing of qualified Voluntary Arbitrators duly accredited by the Board. 2. In case the parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be necessary, pursuant to the selection Voluntary Arbitrator or panel of Arbitrators procedure agreed upon in the CBA, which shall act with the
In general, the arbitrator [“VA”] is expected to decide those questions expressly stated and limited in the submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that he has the power to make a final settlement. The VA has plenary jurisdiction and authority to interpret the CBA and to determine the scope of his or her own authority. Subject to judicial review, this 165
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leeway of authority and adequate prerogative is aimed at accomplishing the rationale of the law on voluntary arbitration – speedy labor justice. [Goya, Inc. vs. Goya, Inc. Employees Union-FFW, 2013]
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he and the panel are comprehended within the concept of a "quasi-judicial instrumentality." A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable to the Court of Appeals. [Luzon Development Bank v. Assoc of Luzon Dev’t Employees, 1995] Costs The parties to a Collective Bargaining Agreement shall provide therein a proportionate sharing scheme on the cost of the voluntary arbitration including the Voluntary Arbitrators fee. […] [Art. 262-B]
Powers of the voluntary arbitrators (1) hold hearings (2) receive evidence (3) take whatever action is necessary to resolve the issue or issues subject of dispute, including efforts to effect a voluntary settlement between parties (4) determine attendance of any third parties (5) determine exclusion of any witness (6) issue writ of execution for sheriff of NLRC or regular courts to execute the final decision, order, or award (Art 268A)
Voluntary Arbitrator's Fee […] The fixing of the fee of the Voluntary Arbitrators, whether shouldered wholly by the parties or subsidized by the special voluntary arbitration fund, shall take into account the following factors: I. nature of the case II. time consumed in hearing the case III. professional standing of the voluntary arbitrator IV. capacity to pay of the parties. [Art. 268-B]
Finality of the final decision, Order, or Award [T]he award or decision of the Voluntary Arbitrator […] shall be final and executory after 10 calendar days from receipt of the copy of the award or decision by the parties. […] (268-A)
Appeal While there is an express mode of appeal from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to an appeal from the decision of a voluntary arbitrator.
No Strike-No Lockout Clause A "no strike, no lock-out" provision in the CBA is a valid stipulation although the clause may be invoked by an employer only when the strike is economic in nature or one which is conducted to force wage or other concessions from the employer that are not mandated to be granted by the law itself. It would be inapplicable to prevent a strike which is grounded on unfair labor practice. [Panay Electric Co. v. NLRC, 1995; Malayang Samahan ng mga Manggagawa sa Greenfield v. Ramos, 2000]
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly be considered as a quasijudicial agency, board or commission, still both
Labor Management Council Any provision of law to the contrary notwithstanding, workers shall have the right, subject to such rules and regulations as the
No Motion for Reconsideration The voluntary arbitrator lost jurisdiction over the case submitted to him the moment he rendered his decision. Therefore, he could no longer entertain a motion for reconsideration of the decision for its reversal or modification. [Solidbank v. BLR]
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Secretary of Labor and Employment may promulgate, to participate in policy and decision-making processes of the establishment where they are employed insofar as said processes will directly affect their rights, benefits and welfare. For this purpose, workers and employers may form labor-management councils: Provided, That the representatives of the workers in such labor-management councils shall be elected by at least the majority of all employees in said establishment. [Art. 255]
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day period immediately before the date of the expiry of such five year term of the Collective Bargaining Agreement. [Contract-bar rule] CBA Effectivity If it is the first ever CBA, the effectivity date is whatever date the parties agree on. If it is renegotiated CBA, the effectivity date depends upon the duration of conclusion. i. If it is concluded within 6 months from the expiry date, the new CBA will retroact to the date following the expiry date [Illustration: expiry date: December 13; effectivity date: December 14]. ii. If the renegotiated CBA is concluded beyond 6 months from the expiry date, the matter of retroaction and effectivity is left with the parties.
II. DURATION OF COLLECTIVE BARGAINING AGREEMENT Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five-year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other. [Art. 259-A]
Art. 253-A serves as the guide in determining when the CBA at bar is to take effect. It provides that the representation aspect of the CBA is to be for a term of 5 years. All other provisions of the CBA shall be renegotiated not later than 3 years after its execution. Any agreement on such other provision of the CBA entered into within 6 months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement shall retroact to the day immediately following such date. If such agreement is entered into beyond 6 months, the parties shall agree on the duration of the effectivity thereof. If no agreement is reached within 6 months from the expiry date of the 3 years that follow the CBA execution, the law expressly gives the parties — not anybody else — the discretion to fix the effectivity of the agreement. The law does not specifically cover the situation where 6 months have elapsed but no agreement has been reached with respect to effectivity. In this eventuality, any provision of law should then apply. [Manila Electric Co. v. Quisumbing, 1999]
CBA Duration for economic provisions 3 years. CBA Duration for non-economic provisions 5 years for representational or political issues. CBA Duration: Freedom Period No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the DOLE outside of the sixty167
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Hold Over Principle [In the absence of a new CBA], [i]t shall be the duty of the parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60 day period and/or until a new agreement is reached by the parties. [Art. 259]
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issued by the Secretary of Labor pursuant to Art. 263(g), the latter is deemed vested with plenary and discretionary powers to determine the effectivity thereof. [Manila Central Line Corp. v. Manila Central Line Free Workers Union, 1998] CBA and 3rd Party Applicability Labor contracts such as employment contracts and CBAs are not enforceable against a transferee of an enterprise, labor contracts being in personam, is binding only between the parties. As a general rule, there is no law requiring a bona fide purchaser of the assets of an on-going concern to absorb in its employ the employees of the latter. However, although the purchaser of the assets or enterprise is not legally bound to absorb in its employ the employees of the seller of such assets or enterprise, the parties are liable to the employees if the transaction between the parties is colored or clothed with bad faith. [Sundowner Dev’t. Corp. v. Drilon, 1989]
The last sentence of Article 253, which provides for automatic renewal pertains only to the economic provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute a bar to a filing of petition for certification election. When there is a representational issue, the status quo provision insofar as the need to await the creation of a new agreement will not apply. Otherwise, it will create an absurd situation where the union members will be forced to maintain membership by virtue of the union security clause existing under the CBA and, thereafter, support another union when filing a petition for certification election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise their right to self-organization. The holding of a certification election is a statutory policy that should not be circumvented, or compromised. [PICOP Resources, Inc. v. Taneca et al., 2010]
General Rule: An innocent transferee of a business establishment has no liability to the employees of the transferor to continue employing them. Nor is the transferee liable for past unfair labor practices of the previous owner. Exception: When the liability therefore is assumed by the new employer under the contract of sale, or when liability arises because of the new owner's participation in thwarting or defeating the rights of the employees.
Arbitrated CBA In the absence of an agreement between the parties, an arbitrated CBA takes on the nature of any judicial or quasi-judicial award. It operates and may be executed only prospectively unless there are legal justifications for its retroactive application. [Manila Electric Company vs. Quisumbing, 1999]
The most that the transferee may do, for reasons of public policy and social justice, is to give preference to the qualified separated employees in the filling of vacancies in the facilities of the purchaser. [Manlimos v. NLRC, 1995]
[O]n the other hand, [when the CBA is only] part of an arbitral award [,] […] it may be made retroactive to the date of expiration of the previous agreement. Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards 168
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B.3. UNION SECURITY
agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part. [GMC v. Casio, 2010]
Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. [Art. 254 (e)]
Only union members can be hired by the company and they must remain as members to retain employment in the company. [Azucena]
Union security is any form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. [GMC v. Casio, 2010]
Due Process in Termination Under Closed Shop Provision The requirements laid down by the law in determining whether or not an employee was validly terminated must still be followed even if it is based on a closed-shop provision of a CBA, i.e. the substantive as well as the procedural due process requirements. [Del Monte v. Saldivar, 2007]
Purpose To safeguard and ensure the existence of the union and thus, promote unionism in general as a state policy.
Construction The closed shop provision is the most prized achievement of unionism. However it can also be a potent weapon wielded by the union against the workers whom the union is supposed to protect in the first place. Hence, any doubt as to the existence of a closed shop provision in the CBA will be resolved in favor of the nonexistence of the closed shop provision.
Limitation Employees who are already members of another union at the time of the signing of the collective bargaining agreement may not be compelled by any union security clause to join any union. [Art. 254 (e)] Types (1) (2) (3) (4) (5)
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Closed shop Maintenance of membership shop Union shop Modified union shop Agency shop
Maintenance of Membership Shop There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for [their] continued employment until they are promoted or transferred out of the bargaining unit or the agreement is terminated. [GMC v. Casio, 2010]
I. UNION SECURITY CLAUSES; CLOSED SHOP, UNION SHOP, MAINTENANCE OF MEMBERSHIP SHOP, ETC. Closed Shop A closed shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the
No employee is compelled to join the union, but all present or future members of the union must, as a condition of employment, remain in good standing in the union. [Azucena]
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Union Shop There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. [GMC v. Casio, 2010]
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Jurisdiction over Check-off Disputes The Bureau of Labor Relations has jurisdiction to hear, decide and to mete out punishment any reported violation under Article 241. Note: Sec of Labor or his duly authorized representative may inquire into financial activities of legitimate labor orgs – UPON filing of complaint under oath and supported by written consent of at least 20% of total membership, Provided, such inquiry shall not be conducted during (60)-day freedom period nor within the thirty (30) days immediately preceding the date of election of union officials. [Art. 274]
Non-members may be hired, but to retain employment, they must become union members after a certain period. The requirement applies to present and future employees. [Azucena] Modified Union Shop Employees who are not union members at the time of signing the contract need not join the union, but all workers hired thereafter must join. [Azucena]
B.4 UNFAIR LABOR PRACTICE COLLECTIVE BARGAINING
Agency Shop An agreement whereby employees must either join the union or pay to the union as exclusive bargaining agent a sum equal to that paid by the members. [Azucena]
IN
Both employers and labor organizations can commit acts of unfair labor practices in collective bargaining. However, the labor organization must be the representative of the employees before any act it does may be considered as a violation of the duty to bargain collectively. [Art. 248 (g) and Art. 249 (c)]
II.CHECK-OFF, UNION DUES, AGENCY FEES Check-off A check-off is a process or device whereby the employer, on agreement with the Union, recognized as the proper bargaining representative, or on prior authorization from the employees, deducts union dues or agency fees from the latter’s wages and remits them directly to the Union. [Marino v Gamilla, 2009]
I. BARGAINING IN BAD FAITH GMC’s refusal to make a counter-proposal to the union’s proposal for CBA negotiation on the excuse that it felt the union no longer represented the workers is an indication of bad faith. […] Failing to comply with the mandatory obligation to submit a reply to the union’s proposals, GMC violated its duty to bargain collectively, making it liable for unfair labor practice. [GMC v. CA, 2004]
The system of check-off is primarily for the benefit of the Union, and only indirectly, for the benefit of the individual employees. [Marino v Garnilla, 2009] Note: For a check-off to be valid, it must comply with the requirements of a valid special assessment.
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II. REFUSAL TO BARGAIN
IV. BLUE SKY BARGAINING
Statutory Basis of Employers (1) To violate the duty to bargain collectively as prescribed by this code.
Blue-Sky Bargaining is defined as "unrealistic and unreasonable demands in negotiations by either or both labor and management, where neither concedes anything and demands the impossible." It actually is not collective bargaining at all. [Standard Bank Chartered Employees Union v. Confesor, 2004]
[Art. 254 (g)] Statutory Basis of Labor Organizations (1) To violate the duty, or refuse to bargain collectively with the employer, provided it is the representatives of the employees; [Art. 256 (c)] (2) [I]t shall be the duty of employer and the representatives of the employees to bargain collectively in accordance with the provisions of this Code. [Art.
V. SURFACE BARGAINING Surface bargaining is defined as "going through the motions of negotiating," without any real intent to reach an agreement. It violates the Act's requirement that parties negotiate in "good faith." It is prohibited because, as one commentator explained: The bargaining status of a union can be destroyed by going through the motions of negotiating almost as easily as by bluntly withholding recognition […] As long as there are unions weak enough to be talked to death, there will be employers who are tempted to engage in the forms of collective bargaining without the substance. [K-MART Corporation v NLRB, 1980 626 F.2d 704]
257] Implied refusal The school is guilty of unfair labor practice when it failed to make a timely reply to the proposals of the union more than one month after the same were submitted by the union. In explaining its failure to reply, the school merely offered a feeble excuse that its Board of Trustees had not yet convened to discuss the matter. Clearly, its actuation showed a lack of sincere desire to negotiate. [Colegio de San Juan de Letran v. Association, 2000]
B.5 UNFAIR LABOR PRACTICE (ULP) Unfair labor practice refers to acts that violate the workers’ right to organize. The prohibited acts are related to the workers’ right to selforganization and to the observance of a CBA. Without that element, the acts, no matter how unfair, are not unfair labor practices. The only exception is Art. 248 (f) [i.e. to dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code]. [Philcom Employees Union v. Phil. Global, 2006]
III. INDIVIDUAL BARGAINING It is an unfair labor practice for an employer operating under a CBA to negotiate with his employees individually. That constitutes interference because the company is still under obligation to bargain with the union as the bargaining representative. Individual bargaining contemplates a situation where the employer bargains with the union through the employees instead of the employees through the union. [The Insular Life Assurance Co. Ltd., Employees Assn. v. Insular Life Assurance Co. Ltd, 1971]
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I. NATURE OF ULP Statutory Construction The Labor Code does not undertake the impossible task of specifying in precise and unmistakable language each incident which constitutes an unfair labor practice. Rather, it leaves to the court the work of applying the law's general prohibitory language in light of infinite combinations of events which may be charged as violative of its terms. [HSBC Employee Union V. NLRC, 1997]
a. inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect b. disrupt industrial peace c. hinder the promotion of healthy and stable labor-management relations d. violations of the civil rights of both labor and management but are also criminal offenses [Art. 247]
II. ULP OF EMPLOYERS (1) Interference/ Restraint/ Coercion An act which restrains, coerces, or interferes with employees in the exercise of their right to self-organization is an Unfair Labor Practice.
Purpose of the Policy Against ULPs Protection of right to self-organization and/or collective bargaining: a) The employee is not only protected from the employer but also from labor organizations. b) Employer is also protected from ULP committed by a labor organization. The public is also protected because it has an interest in continuing industrial peace.
Interrogation
General rule: employer may interrogate its employees regarding their union affiliation for legitimate purposes and with the assurance that no reprisals would be taken against the unionists.
Exception: when interrogation interferes with
Employer-Employee Relationship Required General Rule - An unfair labor practice may be committed only within the context of an employer-employee relationship [American President Lines v. Clave, 1982]
or restrains employees' right to selforganization. [Phil. Steam Navigation Co. v. Phil. Marine Officer’s Guild, 1965]
Exception “Yellow Dog” condition: to require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs. [Art 248 (b)]
Speech The acts of a company which subjects a union to vilification and its participation in soliciting membership for a competing union are also acts constituting a ULP. [Phil. Steam Navigation Co. v. Phil. Marine Officer’s Guild, 1965]
Parties Not Estopped from Raising ULP by Eventual Signing of the CBA The eventual signing of the CBA does not operate to estop the parties from raising unfair labor practice charges against each other. [Standard Chartered Bank Union v. Confesor, 2004]
An employer may not send letters containing promises or benefits, nor of threats of obtaining replacements to individual workers while the employees are on strike due to a bargaining deadlock. This is tantamount to interference and is not protected by the Constitution as free speech. [Insular Life 172
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Assurance Co. Employees Assn. v. Insular Life Assurance Co. Ltd, 1971]
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4) Company Union "Company union" means any labor organization whose formation, function or administration has been assisted by any act defined as unfair labor practice by this Code. [Art. 212(i)]
Espionage Espionage and/or surveillance by the employer of union activities are instances of interference, restraint or coercion of employees in connection with their right to organize, form and join unions as to constitute unfair labor practice. […] The information obtained by means of espionage is invaluable to the employer and can be used in a variety of cases to break a union. [Insular Life Assurance Co. Employees Assn. v. Insular Life Assurance Co. Ltd, 1971]
The employer commits ULP if it initiates, dominates, or otherwise interferes with the formation or administration of any labor organization. Example: giving out financial aid to any union's supporters or organizers. 5) Discrimination – Encourage/Discourage Unionism General rule: it is ULP to discriminate in regard to wages, hours of work and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. [Art. 254 (e)]
(2) Yellow Dog Contracts Yellow dog contracts require, as a condition of employment, that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs. Examples: 1. a representation by the employee that he is not a member of a labor organization 2. a promise by the employee that he will not join a union 3. a promise by the employee that upon joining a labor organization, he will quit his employment
Exception [union security clause]: Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment. [Art. 254 (e)] Exception to exception: Those employees who are already members of another union at the time of the signing of the collective bargaining agreement. [Art. 254(e)]
3) Contracting Out General rule: contracting out is not a ULP Exception: a. contracted-out services or functions are performed by union members AND b. contracting out will interfere with, restrain, or coerce employees in the exercise of their right to selforganization. [Art. 248 (c)]
6) Testimony It is an act of ULP by an employer to dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code. [Art. 254 (f)] 7) Violate duty to bargain collectively Duty to bargain collectively is a continuous process, non-compliance constitutes ULP. Collective bargaining does not end with the execution of an agreement, being a continuous 173
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process, the duty to bargain necessarily imposing on the parties the obligation to live up to the terms of such a collective bargaining agreement if entered into, it is undeniable that non-compliance therewith constitutes an unfair labor practice. [Shell Oil Workers Union v Shell Co., 1971]
LABOR LAW
2) Discrimination: Encourage/Discourage Unionism [Art. 255 (b)] General rule: it is a ULP for a labor organization to cause an employer to discriminate against an employee. Exception: provisions of a valid union security clause and other company policies applicable to all employees.
8) Payment of negotiation or attorney's fees Sweetheart contracts are favorable both to the union and the employer at the expense of the employees. The settlement of bargaining issues must be made by fair bargaining in good faith, and not through the payment of negotiation or attorney's fees which will ultimately lead to sweetheart contracts.
3) Violate duty to bargain or the CBA Please refer to part B.4 for some examples. 4) Exaction (Featherbedding) Featherbedding or “make-work” by the union is the practice of the union asking (exacting) for money or other things of value from the employer in return for services which are not performed or are not to be performed.
9) To violate a collective bargaining agreement Flagrant and/or malicious refusal required Violations of collective bargaining agreements, except flagrant and/or malicious refusal to comply with its economic provisions, shall not be considered unfair labor practice and shall not be strikeable. [IRR]
5) Asking or accepting negotiation and other attorney's fees See counterpart in ULP by employers (sweetheart contracts).
Note: The list in Art. 254 is not exhaustive. Other acts which are analogous to those enumerated can be ULPs.
6) Violate a collective bargaining agreement Flagrant and/or malicious refusal required Violations of collective bargaining agreements, except flagrant and/or malicious refusal to comply with its economic provisions, shall not be considered unfair labor practice and shall not be strikeable. [IRR]
The alleged violation of the CBA, even assuming it was malicious and flagrant, is not a violation of an economic provision, thus not an Unfair Labor Practice. [BPI Employees Union-Davao FUBU v. BPI, 2013]
III. ULP OF LABOR ORGANIZATIONS 1) Restraint, or coercion “Interfere” is not included in Art. 255 simply because any act of a labor organization amounts to interference to the right of selforganization.
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Limitation: Concerted activities must be in accordance with law The strike is a powerful weapon of the working class. Precisely because of this, it must be handled carefully, like a sensitive explosive, lest it blow up in the workers’ own hands. Thus, it must be declared only after the most thoughtful consultation among them, conducted in the only way allowed, that is, peacefully, and in every case conformably to reasonable regulation. Any violation of the legal requirements and strictures will render the strike illegal, to the detriment of the very workers it is supposed to protect. [Batangas Laguna Tayabas Bus Co. v NLRC, 1992]
C. RIGHT TO PEACEFUL CONCERTED ACTIVITIES Basis [The state] shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, peaceful concerted activities, including the right to strike in accordance with law. [CONST. Art. XIII §3] Workers shall have the right to engage in concerted activities for purposes of collective bargaining or for their mutual benefit and protection. The right of legitimate labor organizations to strike and picket and of employers to lockout, consistent with the national interest, shall continue to be recognized and respected. However, no labor union may strike and no employer may declare a lockout on grounds involving inter-union and intra-union disputes. [Art. 269 (b)]
C.1. FORMS OF CONCERTED ACTIVITIES Concerted Activities by Employees: a. Strike b. Picketing Response to Concerted Activities available to Employers: c. Lockout
Definition A concerted activity is one undertaken by two or more employees to improve their terms and conditions of work.
(a) Strike A strike is any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. [Art. 218(o)]
Right to self-organization includes the right to engage in lawful concerted activities and may not be abridged. It shall be unlawful for any person to restrain, coerce, discriminate against or unduly interfere with employees and workers in their exercise of the right to self-organization. Such right shall include the right to form, join, or assist labor organizations for the purpose of collective bargaining through representatives of their own choosing and to engage in lawful concerted activities for the same purpose or for their mutual aid and protection, subject to the provisions of Article 264 of this Code. (Art. 252)
Strikes not limited to work stoppages The term “strike” shall comprise not only concerted work stoppages, but also slowdowns, mass leaves, sit-downs, attempts to damage, destroy or sabotage plant equipment and facilities, and similar activities. [Samahang Manggagawa v. Sulpicio Lines, 2004] As coercive measure by employees A strike is a coercive measure resorted to by laborers to enforce their demands. The idea behind a strike is that a company engaged in a profitable business cannot afford to have its production or activities interrupted, much less, paralyzed. [Phil. Can Co. v. CIR, 1950] 175
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No severance of employer-employee relationship during lawful strike Although during a strike the worker renders no work or service and receives no compensation, […] his relationship as an employee with his employer is not severed or dissolved. [Elizalde Rope Factory, Inc. v. SSS, 1972]
LABOR LAW employer which he is not required by law to grant [Consolidated Labor
Payment of wages during lawful strikes General rule: Striking employees are not entitled to the payment of wages for unworked days during the period of the strike pursuant to the “no work-no pay” principle.
Association of the Phil. v. Marsman and Company, 1964] ULP strike – called against a company's unfair labor practice to force the employer to desist from committing such practices.
As to how committed I. Slowdown strike – one by which workers, without a complete stoppage of work, retard production or their performance of duties and functions to compel management to grant their demands.
Exception: Agreement to the contrary.
A slowdown is inherently illicit and unjustifiable because while the employees continue to work, they, at the same time, select what part of their duties they perform. In essence, they work on their own terms. [Ilaw at Buklod ng Manggagawa v. NLRC, 1991]
Reinstatement after a lawful strike When strikers abandon the strike and apply for reinstatement despite the existence of valid grounds but the employer either: a) refuses to reinstate them or b) imposes upon their reinstatement new conditions then the employer commits an act of ULP.
II. Wild-cat strike – one declared and staged without filing the required notice of strike and without the majority approval of the recognized bargaining agent.
The strikers who refuse to accept the new conditions and are consequently refused reinstatement are entitled to the losses of pay they may have suffered by reason of the employer’s discriminatory acts from the time they were refused reinstatement.
III. Sit-down strike – one wherein workers take over possession of the property of such business to cease production and to refuse access to owners.
Forms of Strikes As to legality (1) Legal strike – one called for a valid purpose and conducted through means allowed by law. (2) Illegal strike – one staged for a purpose not recognized by law, or if for a valid purpose, conducted through means not sanctioned by law.
IV. Sympathetic strike– one in which the striking workers have no demands of their own, but strike to make common cause with other strikers in other establishments. Conversion from economic to ULP strike It is possible for a strike to change its character from an economic to a ULP strike. In the instant case, initially, the strike staged by the Union was meant to compel the Company to grant it certain economic benefits set forth in its proposal for collective bargaining. However,
As to grounds Economic strike – one staged by workers to force wage or other economic concessions from the 176
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the strike changed its character from the time the Company refused to reinstate complainants because of their union activities after it had offered to admit all the strikers and in fact did readmit the others. It was then converted into an unfair labor practice strike. [Consolidated Labor Assoc. of the Phil. v. Marsman and Company, 1964]
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C.2 WHO MAY DECLARE A STRIKE OR LOCKOUT? Who may declare a strike 1. The certified or duly recognized bargaining representative 2. Any legitimate labor organization in the absence of #1, but only on grounds of ULP [Book V, Rule XXII, §6]
Strike cannot be converted to a lockout by a return to work offer A strike cannot be converted into a pure and simple lockout by the mere expedient filing before the trial court a notice of offer to return to work during the pendency of the labor dispute between the union and the employer. [Rizal Cement Workers Union v. CIR, 1962]
Who may declare a lockout 1. The employer [Book V, Rule XXII, Sec. 6]
C.3 REQUISITES FOR A VALID STRIKE A valid strike must have a lawful ground and must conform with the procedural requirements set by law. Substantial Requirements/Grounds A strike or lockout may be declared in cases of: a) Bargaining deadlocks b) ULP [Art. 263 (c)]
(b) Picketing The right of legitimate labor organizations to strike and picket and of employers to lockout, consistent with the national interest, shall continue to be recognized and respected. [Art. 269 (b)]
When violations of collective bargaining strikeable as a ULP Only gross violations of the economic provisions of the CBA are treated as ULP. [BPI Employees Union-Davao FUBU v. BPI, 2013]
Picketing is the right of workers to peacefully march to and fro before an establishment involved in a labor dispute generally accompanied by the carrying and display of signs, placards and banners intended to inform the public about the dispute. [NCMB Manual, §1]
When no lawful strike can be declared 1. Ground is an inter-union or intra-union dispute 2. No notice of strike 3. No strike vote obtained and reported to the NCMB 4. After assumption or certification by the Secretary of Labor
(c) Lockout Lockout is the temporary refusal of an employer to furnish work as a result of an industrial or labor dispute. [Art. 218 (p)]
Procedural requirements 1) Effort to bargain 2) Filing and service of notice of strike 3) Observance of cooling-off period 4) Strike vote 5) Strike vote report 6) Observance of the waiting period 177
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(1) Effort to bargain No labor organization […] shall declare a strike […] without first having bargained collectively in accordance with Title VII of this Book. (Art. 270(a))
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In cases of ULP: 1. Statement of Acts complained of 2. Efforts taken to resolve the dispute amicably. Action on Notice 1. Upon receipt of a valid notice of strike or lockout, the NCMB, through its Conciliator-Mediators, shall call the parties to a conference the soonest possible time in order to actively assist them to explore all possibilities for amicable settlement. 2. The Conciliator-Mediator may suggest/offer proposals as an alternative avenue for the resolution of their disagreement/conflict which may not necessarily bind the parties. 3. If conciliation/mediation fails, the parties shall be encouraged to submit their dispute for voluntary arbitration.
(2) Filing and service of notice of strike Bargaining deadlocks [T]he duly certified or recognized bargaining agent may file a notice of strike […] with the Department at least 30 days before the intended date thereof. […][Art. 269(c)] Unfair Labor Practice; Union Busting [I]n cases of unfair labor practice, the period to file notice of strike shall be 15 days. However, in cases of union busting (dismissal of duly elected union officers from employment), the cooling period shall not apply. […] [Art. 269 (c)] Note: the notice must be served to the employer. Failure to do so will constitute noncompliance with the procedural requirements and will result to an illegal strike. Rationale: due process. [IRR]
(3) Observance of cooling-off periods Cooling off periods 1. Bargaining deadlock – 30 days 2. ULP but not union busting – 15 days 3. ULP and union busting – no cooling-off period
Contents of Notice of Strike 1. Names and addresses of the employer and the union involved 2. Nature of the industry to which the employer belongs 3. Number of union members and of workers in the bargaining unit 4. Such other relevant data as may facilitate the settlement of the dispute. [Book V Rule XXII Sec. 8]
Purpose of Cooling Off Period During the cooling-off period, it shall be the duty of the Ministry to exert all efforts at mediation and conciliation to effect a voluntary settlement. Should the dispute remain unsettled until the lapse of the requisite number of days from the mandatory filing of the notice, the labor union may strike or the employer may declare a lockout. [Art. 269 (e)]
Additional Requirements In case of Bargaining Deadlocks: 1. Statement of Unresolved issues in the bargaining negotiations 2. Written Proposals of the union 3. Counterproposals of the employer 4. Proof of a request for conference to settle the differences.
The purpose of the cooling-off period is to provide an opportunity for mediation and conciliation. [National Federation of Sugar Workers v. Ovejera, 1982]
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(4) Strike Vote Requirements for a declaration of a strike in a strike vote 1. approval by a majority of the total union membership in the bargaining nit concerned 2. approval is obtained by secret ballot in a meeting/referendum called for the purpose
take a strike vote and report the same within the statutory cooling-off period. The coolingoff and 7-day strike ban provisions of law constitute a valid exercise of police power of the State. [National Federation of Sugar Workers v. Ovejera, 1982] Strike-vote Reported within the Cooling-off Period When the strike-vote is reported within the cooling-off period, the phrase “at least 7 days before the intended strike or lockout, subject to the cooling-off period herein provided.” in Article 269 (f) admits two interpretations: (1) Mutually exclusive periods (used in the NCMB Manual). The cooling off period and the 7-day period are mutually exclusive. Thus, in the case of Capitol Medical Center v. NLRC, the Court held that when the strike vote is conducted within the coolingoff period, the 7-day requirement shall be counted from the day following the expiration of the cooling off period. (2) Coexistent periods. The cooling-off period and the 7-day requirement may coexist. After all, the purpose of the 7-day requirement is to give time for the DOLE to verify if the projected strike is supported by the majority. There is no reason to add it to the cooling-off period.
Duration of the Validity of the Strike-Vote [T]he decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. […][Art. 269 (f)] Department of Labor and Employment intervention [T]he Department may, at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. […][Art. 269 (f)] (5) Strike Vote Report [I]n every case, the union or the employer shall furnish the Department the results of the voting at least 7 days before the intended strike1 or lockout, subject to the cooling-off period herein provided.[Art. 269 (f)] (6) Observance of the 7-day“waiting period” The waiting period, on the other hand, is intended to provide opportunity for the members of the union or the management to take the appropriate remedy in case the strike or lockout vote report is false or inaccurate. [National Federation of Sugar Workers v. Ovejera, 1982]
C.4 REQUISITES LOCKOUT
FOR
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Limitations [N]o employer may declare a lockout on grounds involving inter-union and intra-union disputes. [Art. 269 (b)] Grounds Similar to a strike, the proper grounds for a lockout are 1. bargaining deadlock 2. ULP by labor organizations
Compliance with Both Cooling-off and Waiting Periods The observance of both periods must be complied with, although a labor union may 1
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7-day “Waiting Period”.
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2. Written proposals of the union 3. Counterproposals of the employer 4. Proof of a request for conference to settle the differences.
Requisites 1. Effort to bargain 2. Filing and service of notice of lockout 3. Observance of cooling-off period 4. Lockout vote 5. Report of lockout vote 6. Observance of the waiting period
In cases of ULP 1. Statement of acts complained of 2. Efforts taken to resolve the dispute amicably. Action on notice 1. Upon receipt of a valid notice of strike or lockout, the NCMB, through its ConciliatorMediators, shall call the parties to a conference the soonest possible time in order to actively assist them to explore all possibilities for amicable settlement. 2. The Conciliator-Mediator may suggest/offer proposals as an alternative avenue for the resolution of their disagreement/conflict which may not necessarily bind the parties. 3. If conciliation/mediation fails, the parties shall be encouraged to submit their dispute for voluntary arbitration. [Book V Rule XXII Sec. 9]
(1) Effort to bargain No employer shall declare a […] lockout without first having bargained collectively in accordance with Title VII of this Book. [Art 270 (a)] (2) Filing and service of Notice of Lockout Bargaining deadlocks [T]he duly certified or recognized bargaining agent may file […] a notice of lockout with the Department at least 30 days before the intended date thereof. […] [Art. 269(c)] Unfair Labor Practice; Union Busting [I]n cases of unfair labor practice, the period to file notice of strike shall be 15 days. […] [Art. 269 (c)]
(3) Observance of Cooling-off Periods Lockout cooling-off periods: based on bargaining deadlock – 30 days based on ULP – 15 days.
Note: the notice must be served to the employees through the representative union. Contents of notice 1. Names and addresses of the employer and the union involved 2. Nature of the industry to which the employer belongs 3. Number of union members and of workers in the bargaining unit 4. Such other relevant data as may facilitate the settlement of the dispute.
(4) Lockout Vote A decision to declare a lockout must be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose.The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. [Art. 269 (f)]
Additional Requirements In cases of bargaining deadlocks 1. Statement of unresolved issues in the bargaining negotiations 180
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(5) Report of Lockout Vote In every case, the union or the employer shall furnish the Ministry the results of the voting at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided. [Art. 269 (f)]
Picketing as Part of Freedom of Speech/Expression General rule: picketing enjoys constitutional protection as part of freedom of speech and/or expression. Exceptions/limitations: 1. When picketing is coercive rather than persuasive [Security Bank Employees Union v. Security Bank] 2. When picketing is achieved through illegal means [Mortera v. CIR] 3. Courts may confine the communication/demonstration to the parties to the labor dispute [PCIB v. Philnabank Employees Association] 4. Innocent bystander rule. Courts may insulate establishments or persons with no industrial connection or having interest totally foreign to the context of the dispute [PCIB v. Philnabank Employees Association]
(6) Observance of Waiting Period (7 days) See notes under strike. Effect of Illegal Lockout Any worker whose employment has been terminated as a consequence of any unlawful lockout shall be entitled to reinstatement with full backwages. [Art. 270 (a) Sec. 3, 1st Sentence]
C.5 REQUISITES PICKETING
FOR
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LAWFUL
Prohibited activities in picketing 1. By any person. No person shall obstruct, impede, or interfere with, by force, violence, coercion, threats or intimidation, any peaceful picketing by employees during any labor controversy or in the exercise of the right to self-organization or collective bargaining, or shall aid or abet such obstruction or interference. [Art. 264 (b)] 2. By police force. The police force shall keep out of the picket lines unless actual violence or other criminal acts occur therein: Provided, That nothing herein shall be interpreted to prevent any public officer from taking any measure necessary to maintain peace and order, protect life and property, and/or enforce the law and legal order. [Art. 264 (d)] 3. By person engaged in picketing. No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer’s premises for lawful purposes, or obstruct public thoroughfares. [Art. 264 (e)]
Picketing and Libel Libel laws are not applied strictly considering that there is emotional tension in the picket lines and expected discourteous and impolite exchanges between the employees and the employer. [PCIB v. Philnabank Employees Association, 1981] Peaceful picketing is legal even in the absence of employer-employee relationship Picketing, peacefully carried out, is not illegal even in the absence of employer-employee relationship, for peaceful picketing is a part of the freedom of speech guaranteed by the Constitution. [De Leon v. National Labor Union, 1957]
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C.6 ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY OR CERTIFICATION OF THE LABOR DISPUTE TO THE NLRC FOR COMPULSORY ARBITRATION
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C.7 NATURE OF ASSUMPTION ORDER OR CERTIFICATION ORDER 1. Automatic injunction 2. Return-to-work and admission 3. Immediately executory (1) Automatic injunction of intended of impending strike or lockout [S]uch 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. […] [Art.269 (g)]
When Sec. of Labor can Assume Jurisdiction: 1.Labor dispute in an industry indispensable to the national interest 2.Such dispute is causing or is likely to cause a strike or lockout Powers of the Secretary of Labor (alternative) 1. Assumption of jurisdiction. The Secretary of Labor will decide the labor dispute himself/herself. 2. Certification for compulsory arbitration. The Secretary of Labor will certify the labor dispute to the NLRC for compulsory arbitration.
(2) Return-to-work and readmission if strike or lockout has already taken place [I]f 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. […] [Art.269 (g)]
Powers of the President (Not precluded by the powers of the Secretary of Labor) 1. Determine the industries indispensable to the national interest 2. Assume jurisdiction over any such labor dispute to settle or terminate such dispute
Nature of return-to-work order [T]he return-to-work order not so much confers a right as it imposes a duty; and while as a right it may be waived, it must be discharged as a duty even against the worker's will. Returning to work in this situation is not a matter of option or voluntariness but of obligation. The worker must return to his job together with his co-workers so the operations of the company can be resumed and it can continue serving the public and promoting its interest. That is the real reason such return can be compelled. So imperative is the order in fact that it is not even considered violative of the right against involuntary servitude. [Kaisahan ng Mga Manggagawa sa Kahoy v. Gotamco Sawmills, 1948]
Who determines industries indispensable to the national interest [I]t is in the discretion of the Secretary of Labor to determine which industries are indispensable to the national interest. However, the President may determine such industries himself: The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining the industries that, in his opinion, are indispensable to the national interest, and from intervening at any time and assuming jurisdiction over any such labor dispute in order to settle or terminate the same.[Art. 263 (g)]
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(3) Immediately executory The assumption and certification orders are executory in character and must be strictly complied with by the parties. [Allied Banking v. NLRC, 1996]
Strike/lockout becomes illegal A strike undertaken despite the issuance by the Secretary of Labor of an assumption or certification order becomes a prohibited activity and thus, illegal, pursuant to Article 264 (a) of the Labor Code. [Allied Banking v. NLRC, (1996)]
Strikes and lockouts in hospitals, clinics and similar medical institutions It shall be the duty of the striking union or locking-out employer to provide and maintain an effective skeletal workforce of medical and other health personnel, whose movement and services shall be unhampered and unrestricted, as are necessary to insure the proper and adequate protection of the life and health of its patients, most especially emergency cases, for the duration of the strike or lockout.
See notes on liabilities of employer, union officers, and ordinary workers under illegal strike. Summary of Liabilities of Participants in an Illegal Strike/Lockout [Art. 264] 1. Employer in an illegal lockout – workers terminated due to illegal lockout shall be entitled to reinstatement plus full backwages. 2.Union officers who participated in illegal strike – deemed to have lost their employment 3. Union officers who participated in illegal acts during a lawful strike – deemed to have lost their employment. 4.Ordinary workers – deemed to have lost their employment only if they participated in illegal acts.
In such cases, therefore, the Secretary of Labor and Employment may immediately assume, within twenty four (24) hours from knowledge of the occurrence of such a strike or lockout, jurisdiction over the same or certify it to the Commission for compulsory arbitration. Rationale The highest respect is accorded to the right of patients to life and health.
C.8 EFFECT OF ASSUMPTION OR ORDERS
LABOR LAW
Stricter penalties for non-compliance with orders, prohibitions, and/or injunctions issued by the Secretary of Labor in strikes involving hospitals, clinics, and similar medical institutions 1. Immediate disciplinary action against both union and employer 2. Dismissal/loss of employment for members of the striking union 3. Payment by employer of backwages, damages, and other affirmative relief 4. Criminal prosecution against either or both the union and employer
DEFIANCE OF CERTIFICATION
No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout. [Art. 270 (a)]
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(3) Noncompliance with procedural requirements See notes under procedural requirements of a valid strike.
C.9 ILLEGAL STRIKE Reasons for being illegal 1. Prohibited by law 2. Improper grounds 3. Noncompliance with procedural requirements 4. Unlawful means and methods 5. Violation of injunction order 6. No strike/lockout provisions in the CBA
A strike which does not strictly comply with the procedural requirements set by law and the rules is an unlawful/illegal strike. Good faith strike must still comply with procedural requirements Even if the union acted in good faith in the belief that the company was committing an unfair labor practice, if no notice of strike and a strike vote were conducted, the said strike is illegal. [Grand Boulevard Hotel v. GLOWHRAIN, 2003]
(1) Prohibited by law Government employees While the Constitution guarantees the right of government employees to organize, they are otherwise not allowed to strike. (2) Improper grounds A legal strike must be based on a bargaining deadlock and/or a ULP act only.
(4) Unlawful means and methods Purpose and means test There must be concurrence between the validity of the purpose of the strike and the means of conducting it.
Intra-union and inter-union disputes are not proper grounds to strike. Good faith strike Good faith may be used as a defense if the strike is held on the basis of an act of ULP by the employer even if it turned out that there was no act of ULP. However, the mandatory procedural requirements cannot be dispensed with (notice of strike, cooling-off period, strike vote, strike vote report). [Grand Boulevard Hotel v. GLOWHRAIN, 2003]
A strike is a legitimate weapon in the universal struggle for existence. It is considered as the most effective weapon in protecting the rights of the employees to improve the terms and conditions of their employment. But to be valid, a strike must be pursued within legal bounds. The right to strike as a means for the attainment of social justice is never meant to oppress or destroy the employer. The law provides limits for its exercise. Among such limits are the prohibited activities under Art. 264, particularly paragraph (e), which states that no person engaged in picketing shall: commit any act of violence, coercion, or intimidation or obstruct the free ingress to or egress from the employer's premises for lawful purposes or obstruct public thoroughfares. [Association of Independent Unions in the Philippines (AIUP), et. al. v NLRC, 1999]
Good faith strike requires rational basis A mere claim of good faith would not justify the holding of a strike under the aforesaid exception as, in addition thereto, the circumstances must have warranted such belief. It is, therefore, not enough that the union believed that the employer committed acts of ULP when the circumstances clearly negate even a prima facie showing to sustain such belief. [Interwood Employees Assoc. v. Int’l Hardwood, 1956]
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A legal strike may turn into an illegal strike Even if the strike is valid because its objective or purpose is lawful, the strike may still be declared invalid where the means employed are illegal. [Phil. Diamond Hotel and Resort, Inc. v. Manila Diamond Hotel Employees Union, 2006]
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If there be in this case a weighing of interests in the balance, the ban the law imposes on unfair labor practices by management that could provoke a strike and its requirement that it be conducted peaceably, it would be, to repeat, unjustified, considering all the facts disclosed, to stamp the strike with illegality. It is enough that individual liability be incurred by those guilty of such acts of violence that call for loss of employee status. Such an approach is reflected in our recent decisions. [Shell Oil Workers Union v. Shell Co. of the Phils, 1971]
Examples of unlawful means and methods (1) Acts of violence and terrorism (2) Destruction of property Guidelines and Balancing of Interest (1) A strike otherwise valid, if violent in character, may be placed beyond the pale. (2) Care is to be taken especially where an unfair labor practice is involved, to avoid stamping it with illegality just because it is tainted by such acts. To avoid rendering illusory the recognition of the right to strike, responsibility in such a case should be individual and not collective. (3) A different conclusion would be called for if the existence of force while the strike lasts is pervasive and widespread, consistently and deliberately resorted to as a matter of policy. It could be reasonably concluded then that even if justified as to ends, it becomes illegal because of the means employed'. (4) This is not by any means to condone the utilization of force by labor to attain its objectives. It is only to show awareness that in labor conflicts, the tension that fills the air as well as the feeling of frustration and bitterness could break out in sporadic acts of violence.
(5) Violation of injunction order An automatic injunction under Article 263 (g) or a valid injunction order under the exceptions to Article 254 must be complied with. Otherwise, the strike becomes illegal. (6) No strike/lockout provisions in the CBA A “no strike, no lock-out” is a valid provision in the CBA. However, it only applies to economic provisions. It cannot prevent a strike which is grounded on unfair labor practice. [Malayang Samahan ng mga Manggagawa sa Greenfield v. Ramos, 2000]
I. LIABILITY OF UNION OFFICERS Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status. Note: Mere participation in an illegal strike by a union officer is sufficient ground to terminate his employment. In case of a lawful strike, the union officer must commit illegal acts during a strike for him to be terminated.
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II. LIABILITY OF ORDINARY WORKERS
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Truly, it is more logical and reasonable for condonation to apply only to strikers who signified their intention to return and did return to work. The reason is obvious. These strikers took the initiative in normalizing relations with their employer and thus helped promote industrial peace. However, as regards the strikers who decided to pursue with the case, […] the employer could not be deemed to have condoned their strike, because they had not shown any willingness to normalize relations with it. [Philippine Inter-Fashion, Inc. v. NLRC, 1982]
General rule: Participation by a worker in a lawful strike is not ground for termination of his employment. Exception: When the worker participated in illegal acts during the strike. When the strike is or becomes illegal, the workers who participate in it are not deemed to have lost their employment status by express omission in the second sentence of the third paragraph of Art. 264. Only the union officers are deemed to have lost their employment status.
However, the mere act of entering into a compromise agreement cannot be deemed to be a waiver of the illegality of the strike, unless it such a waiver is clearly shown in the agreement. The court has emphasized that “[for] a waiver to be valid and effective [it] must be couched in clear and unequivocal terms which leave no doubt as to the intention of a party to give up a right or benefit which legally pertains to him.” [Filcon Manufacturing Corp v. Lakas Manggagawa sa Filcon – Lakas Manggagawa Labor Center]
III. LIABILITY OF EMPLOYER Any worker whose employment has been terminated as a consequence of any unlawful lockout shall be entitled to reinstatement with full backwages.
IV. WAIVER OF ILLEGALITY OF STRIKE When defense of illegality of strike is deemed waived An employer can be deemed to have waived the defense that a strike is illegal. In one case, the Court held that:
C.10 INJUNCTIONS No temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity, except as otherwise provided in Articles 218 and 264 of this Code. [Art. 260]
“Admitting for the sake of argument that the strike was illegal for being premature, this defense was waived by the [Company], when it voluntarily agreed to reinstate the radio operators.” [Bisaya Land Transportation Co., Inc. v. CIR, 1957]
General Rule: Injunctions are prohibited. When defense of illegality of strike is not deemed waived The ruling cited in the Bisaya case that the employer waives his defense of illegality of the strike upon reinstatement of strikers is applicable only to strikers who signified their intention to return to work and were accepted back. […]
Exceptions: Those provided under Art. 224 (referring to the Powers of the NLRC) in connection with Art.270 (on Prohibited Activities) under the Labor Code.
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I. REQUISITES FOR LABOR INJUNCTIONS
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shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike.
Requisites for injunction to issue (in accordance with the Powers of the NLRC) i. actual or threatened commission of a prohibited or unlawful act OR requirement of performance of a particular act in a labor dispute ii. if unrestrained or unperformed, the act will cause grave or irreparable damage to any party OR render ineffectual any decision in favor of such party [Art. 224 (e)]
(b) No person shall obstruct, impede, or interfere with, by force, violence, coercion, threats or intimidation, any peaceful picketing by employees during any labor controversy or in the exercise of the right to self-organization or collective bargaining, or shall aid or abet such obstruction or interference. (c) No employer shall use or employ any strike-breaker, nor shall any person be employed as a strike-breaker.
Prohibited Activities [Art. 270] (a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding Article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry.
(d) No public official or employee, including officers and personnel of the New Armed Forces of the Philippines or the Integrated National Police, or armed person, shall bring in, introduce or escort in any manner, any individual who seeks to replace strikers in entering or leaving the premises of a strike area, or work in place of the strikers. The police force shall keep out of the picket lines unless actual violence or other criminal acts occur therein: Provided, That nothing herein shall be interpreted to prevent any public officer from taking any measure necessary to maintain peace and order, protect life and property, and/or enforce the law and legal order.
No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout. Any worker whose employment has been terminated as a consequence of any unlawful lockout shall be entitled to reinstatement with full backwages. Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike
(e) No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer’s premises for lawful purposes, or obstruct public thoroughfares.
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II. “INNOCENT BYSTANDER RULE” Test to Determine if a Party is an “Innocent Bystander” An "innocent bystander," who seeks to enjoin a labor strike, must satisfy the court that aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different from, without any connection whatsoever to, either party to the dispute and, its interests are totally foreign to the context thereof. [MSF Tire and Rubber Inc. v. CA, 1999] Injunction Available to Innocent Bystanders An innocent by-stander is entitled to injunction if it is affected by the activities of a picketing union. Rationale The right [to picket] may be regulated at the instance of […] `innocent bystanders' if it appears that the inevitable result of its exercise is [1] to create an impression that a labor dispute with which they have no connection or interest exists between them and the picketing union or [2] constitute an invasion of their rights. [Liwayway Publishing v. Permanent Concrete Worker's Union, 1981]
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VIII. Procedure and Jurisdiction
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voluntarily settled by the parties. [Art. 124] (9) Enforcement of compromise agreements when there is noncompliance by any of the parties. [Art. 227] (10) Other cases as may be provided by law.
A. LABOR ARBITER A.1 JURISDICTION Except as otherwise provided under the Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide: (1) Unfair labor practices cases; (2) Termination disputes; (3) If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; (4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; (5) Cases arising from any violation of Art. 264 of this Code, including questions involving the legality of strikes and lockouts; (6) Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employeremployee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000) regardless of whether accompanied with a claim for reinstatement. [Art. 217] (7) Money claims arising out of employeremployee relationship or by virtue of any law or contract, involving claims for actual, moral, exemplary an other forms of damages, as well as employment termination of OFWs; (8) Wage distortion disputes in unorganized establishments not
“Exclusive and Original” Jurisdiction subject to Articles 261 and 262 A case under Art 217 may be lodged instead with a voluntary arbitrator. The policy of the law is to give primacy to voluntary modes of settling dispute.
I. VERSUS REGIONAL DIRECTOR Jurisdiction on Money Claims (Labor Arbiter vs. Regional Director) A money claim arising from employeremployee relations, except SSS, ECC/Medicare claims, is within the jurisdiction of a labor arbiter if: 1. The claim, regardless of amount, is accompanied with a claim of reinstatement; or 2. The claim exceeds P5,000, whether or not there is a claim for reinstatement. The Regional Director has jurisdiction if: 1. the money claim is not accompanied by reinstatement AND 2. the claim does not exceed P5,000 Notes: 1. The money claim must arise from law or contracts other than CBA. 2. For money claims arising from the implementation of a CBA – Voluntary Arbitrator or Panel of Voluntary Arbitrators have jurisdiction. 3. For money claims which do not arise from ER-EE relations – Regular Courts have jurisdiction.
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4. Nature of Proceeding: Non-litigious. The Labor Arbiter is not bound by the technical rules of procedure. 5. The Labor Arbiter shall use all reasonable means to ascertain the facts in each speedily and objectively. [Art. 221] 6. Employer-employee relationship is a jurisdictional requisite, absent of which, the NLRC has no jurisdiction to hear and decide the case. [HawaiianPhilippine Company v. Gulmatico] 7. Venue: Regional Arbitration Branch (RAB) having jurisdiction over the workplace of the complainant or petitioner. 8. Workplace – place or locality where the employee is regularly assigned at the time the cause of action arose. 9. In the case of field employees, ambulant or itinerant workers, their workplace is (a) where they are regularly assigned or (b) where they are supposed to regularly receive their salaries and wages or work instructions from, and report the results of their assignment to their employers.
LABOR LAW RAB having jurisdiction over the place where the complainant resides or where the principal office of any of the respondents is situated.
A.2 REINSTATEMENT PENDING APPEAL An order for reinstatement entitles an employee to receive his accrued backwages from the moment the reinstatement order was issued up to the date when the same was reversed by a higher court without fear of refunding what he had received. [Garcia v. Philippine Airlines, Inc., G.R. No.164856, 2009]
A.3 REQUIREMENTS APPEAL TO NLRC
TO
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1) The appeal should be filed within the reglementary period; 2) The Memorandum of Appeal should be under oath; 3) The appeal fee should be paid; 4) There should be posting of cash or surety bond, if judgment involves monetary award; and 5) There should be proof of service to the adverse party.
B. NATIONAL LABOR RELATIONS COMMISSION (NLRC)
Some Rules on Venue 1. Exclusion. Where 2 or more Regional Arbitration Branches have jurisdiction over the workplace of the complainant, that first which acquired jurisdiction over the case shall exclude others. 2. Waiver. When venue is not objected to before the filing of position papers, such issue shall be deemed waived. 3. Transfer. Venue of an action may be transferred to a different Regional Arbitration Branch upon written agreement of the parties or upon order of the LA in meritorious cases and on motion of the proper party. 4. OFW Cases. Cases involving overseas Filipino workers may be filed before the
B.1 JURISDICTION NLRC divisions (1) Original Jurisdiction: Over petitions for injunction or temporary restraining order under Art. 218 (e). (2) Exclusive Appellate Jurisdiction: over all cases decided by labor arbiters (Art 217[b]) and the DOLE regional directors under Art 129.
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Period of Appeal 1. Labor Arbiter to NLRC: Decisions and Resolutions of the LA shall be final and executory unless appealed to the NLRC by any or both parties within 10 calendar days from receipt thereof. [2005 NLRC Rules of Procedure] 2. Regional director to NLRC: Decisions of the Regional director shall be final and executory unless appealed within 5 days from receipt thereof. [Art. 129]
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the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. [Garcia v. Philippine Airlines, Inc., G.R. No.164856, 2009]
Note: If the last day of the reglementary period falls on a Sunday or a holiday, the last day shall be the next working day.
B.3 REMEDIES Requisites for Perfection of Appeal to the Court of Appeals [Rule 43] (1) The appeal shall be: Filed within the reglementary period; Verified by the appellant himself in accordance with §4, Rule 7 of the Rules of Court; In the form of a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof, the relief prayed for, and with a statement of the date the appellant received the appealed decision, resolution or order; In three (3) legibly typewritten or printed copies; and Accompanied by (a) proof of payment of the required appeal fee; (b) posting of a cash or surety bond as provided in Section 6 of the 2005 NLRC Rules, (c) a certificate of nonforum shopping; and (d) proof of service upon the other parties. (2) A mere notice of appeal without complying with the other requisites aforestated shall not stop the running of the period for perfecting an appeal. (3) The appellee may file with the Regional Arbitration Branch or Regional Office
Grounds of Appeal 1. If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter or Regional Director; 2. If the decision, resolution or order was secured through fraud or coercion, including graft and corruption; 3. If made purely on questions of law; and/or 4. If serious errors in the findings of fact are raised which, if not corrected, would cause grave or irreparable injury to the appellant It is clear from the NLRC Rules of Procedure that appeals must be verified and certified against forum-shopping by the parties-ininterest themselves. The purpose of verification is to secure an assurance that the allegations in the pleading are true and correct and have been filed in good faith. [Antonio B. Salenga, et al. v. CA, 2012]
B.2 EFFECT OF NLRC REVERSAL OF LABOR ARBITER’S ORDER OF REINSTATEMENT Even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on 191
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where the appeal was filed, his answer or reply to appellant’s memorandum of appeal, not later than 10 calendar days from receipt thereof. Failure on the part of the appellee who was properly furnished with a copy of the appeal to file his answer or reply within the said period may be construed as a waiver on his part to file the same. (4) Subject to the provisions of Article 218 of the Labor Code, once the appeal is perfected in accordance with these Rules, the Commission shall limit itself to reviewing and deciding only the specific issues that were elevated on appeal.
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earliest time possible and with the end in view that its action would not only serve the interests of the parties alone, but would also have favorable implications to the community and to the economy as a whole. This is the clear intention of the legislative body in enacting Art. 263 paragraph (g) of the Labor Code, as amended by Section 27 of R.A. 6175 [Union of Filipino Employees v. NLRC, 1990] Effects of Certification 1. Upon certification, the intended or impending strike or lockout is automatically enjoined, notwithstanding the filing of any motion for reconsideration of the certification order nor the nonresolution of any such motion which may have been duly submitted to the Office of the Secretary of Labor and Employment. 2. If a work stoppage has already taken place at the time of the 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. 3. All cases between the same parties, except where the certification order specifies otherwise the issues submitted for arbitration which are already filed or may be filed, and are relevant to or are proper incidents of the certified case, shall be considered subsumed or absorbed by the certified case, and shall be decided by the appropriate Division of the Commission. 4. The parties to a certified case, under pain of contempt, shall inform their counsels and the Division concerned of all cases pending with the Regional Arbitration Branches and the Voluntary Arbitrators relative or incident to the certified case before it. 5. When a certified labor dispute involves a business entity with several workplaces
B.4 CERTIFIED CASES Definition Certified labor disputes are cases certified to the Commission for compulsory arbitration under Art. 263 (g) of the Labor Code. [§2, The 2011 NLRC Rules and Procedures] 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. [Art. 263] Function of the NLRC When sitting in a compulsory arbitration certified to by the Secretary of Labor, the NLRC is not sitting as a judicial court but as an administrative body charged with the duty to implement the order of the Secretary. Its function only is to formulate the terms and conditions of the CBA and cannot go beyond the scope of the order. Moreover, the Commission is further tasked to act within the 192
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located in different regions, the Division having territorial jurisdiction over the principal office of the company shall acquire jurisdiction to decide such labor dispute; unless the certification order provides otherwise. [Section 3, 2011 NLRC Rules and Procedures]
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which shall include the position papers of the parties and the order of the SOLE denying the motion for reconsideration of the certification order, if any. b. Where a clarificatory hearing is needed, the Commission shall, within 5 calendar days from receipt of the records, issue a notice to be served on the parties through the fastest means available, requiring them to appear and submit additional evidence, if any. All certified cases shall be resolved by the Commission within 60 calendar days from receipt of the complete records by the assigned Commissioner. c. No motion for extension or postponement shall be entertained. [Sec. 5, 2011 NLRC Rules and Procedures]
Effects of Defiance Non-compliance with the certification order of the SOLE shall be considered as an illegal act committed in the course of the strike or lockout and shall authorize the Commission to enforce the same under pain of immediate disciplinary action, including dismissal or loss of employment status or payment by the lockingout employer of backwages, damages and/or other affirmative relief, even criminal prosecution against the liable parties.
Execution of Judgment Upon issuance of the entry of judgment, the Commission motu propio or upon motion by the proper party, may cause the execution of the judgment in the certified case. [Sec. 6, 2011 NLRC Rules and Procedures]
The Commission may also seek the assistance of law enforcement agencies to ensure compliance and enforcement of its orders and resolutions. [Sec. 4, 2011 NLRC Rules and Procedures]
C. BUREAU OF LABOR RELATIONS – MED-ARBITERS
Strict Compliance of Assumption and Certification Orders The Secretary's assumption and certification orders being executory in character are to be strictly complied with by the parties even during the pendency of a petition questioning their validity for this extraordinary authority given by law to the Secretary of Labor is "aimed at arriving at a peaceful and speedy solution to labor disputes, without jeopardizing national interests." [Union of Filipro Employees v. NLRC, 1990]
C.1 JURISDICTION APPELLATE)
(ORIGINAL
AND
The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the Department of Labor and Employment shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces whether agricultural or nonagricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be the
Procedure in certified cases a. When there is no need to conduct a clarificatory hearing, the Commission shall resolve all certified cases within 30 calendar days from receipt by the assigned Commissioner of the complete records, 193
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subject of grievance procedure and/or voluntary arbitration. The Bureau shall have fifteen (15) calendar days to act on labor cases before it, subject to extension by agreement of the parties. [Art. 232]
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Mediation A mild intervention by a neutral third party, the Conciliator-Mediator, wherein the CM advises the parties or offers solutions or alternatives to the problems with the end in view of assisting them towards voluntarily reaching their own mutually acceptable settlement of the dispute.
Appellate Jurisdiction 1) BLR has the power to review the decisions of the Regional Director 2) Decisions rendered through its appellate power are final and executory. Hence, the remedy of the aggrieved party is to seasonably avail of the special civil action of certiorari under Rule 65 of the Rules of Court.
Conciliation C-M facilitates disputants to keep things calm, delivers messages back and forth between the parties.
Mediation C-M assists parties to voluntarily reach mutually acceptable settlement.
D.3 PREVENTIVE MEDIATION
D. NATIONAL CONCILIATION AND MEDIATION BOARD
Preventive mediation case — refers to the potential or brewing labor dispute which is the subject of a formal or informal request for conciliation and mediation assistance sought by either or both parties in order to remedy, contain or prevent its degeneration into a full blown dispute through amicable settlement.
D.1 NATURE OF PROCEEDINGS Conciliation and mediation is nonlitigious/non-adversarial, less expensive, and expeditious. Under this informal set-up, the parties find it more expedient to fully ventilate their respective positions without running around with legal technicalities and, in the course thereof, afford them wider latitude of possible approaches to the problem.
E. DOLE REGIONAL DIRECTORS E.1 JURISDICTION Small money claims Recovery of wages, simple money claims and other benefits. —Upon complaint of any interested party, the Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of the Department is empowered, through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an employee or person employed in domestic or household service or househelper under this Code, arising from employer-employee relations: Provided, That such complaint does not include a claim for reinstatement:
D.2 CONCILIATION VS. MEDIATION Conciliation A mild form of intervention by a neutral third party, the Conciliator-Mediator, relying on his persuasive expertise, takes an active role in assisting parties by trying to keep disputants talking, facilitating other procedural niceties, carrying messages back and forth between the parties, and generally being a good fellow who tries to keep things calm and forward-looking in a tense situation.
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Provided, further, That the aggregate money claims of each employee or househelper do not exceed five thousand pesos (P5,000).
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may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto.
The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the filing of the same.
Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employeremployee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. [Art. 128]
Any sum thus recovered on behalf of any employee or househelper pursuant to this Article shall be held in a special deposit account by, and shall be paid, on order of the Secretary of Labor and Employment or the Regional Director directly to the employee or househelper concerned. Any such sum not paid to the employee or househelper, because he cannot be located after diligent and reasonable effort to locate him within a period of three (3) years, shall be held as a special fund of the Department of Labor and Employment to be used exclusively for the amelioration and benefit of workers. *** The Secretary of Labor and Employment or his duly authorized representative may supervise the payment of unpaid wages and other monetary claims and benefits, including legal interest, found owing to any employee or househelper under this Code. [Art. 129]
The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of accounts and records of any person or entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on violation of any provisions of this Title. [Art. 37]
F. DOLE SECRETARY
The Secretary of Labor and Employment or his duly authorized representative is hereby empowered to inquire into the financial activities of legitimate labor organizations upon the filing of a complaint under oath and duly supported by the written consent of at least twenty percent (20%) of the total membership of the labor organization concerned and to examine their books of accounts and other records to determine
F.1 VISITORIAL AND ENFORCEMENT POWERS The Secretary of Labor and Employment or his duly authorized representatives, including labor regulation officers, shall have access to employer’s records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which 195
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F.5 VOLUNTARY ARBITRATION POWERS
compliance or non-compliance with the law and to prosecute any violations of the law and the union constitution and by-laws: Provided, That such inquiry or examination shall not be conducted during the sixty (60)-day freedom period nor within the thirty (30) days immediately preceding the date of election of union officials. [Art. 280]
Before or at any stage of the compulsory arbitration process, the parties may opt to submit their dispute to voluntary arbitration. [Art. 269 (h)] The Secretary of Labor and Employment […] shall decide or resolve the dispute […]. [Art. 269 (i)]
F.2 POWER TO SUSPEND/EFFECTS OF TERMINATION
G. GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION
The Secretary of the Department of Labor and Employment may suspend the effects of the termination pending resolution of the dispute in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom such dispute is pending that the termination may cause a serious labor dispute or is in the implementation of a mass lay-off. [Art. 283 (b)]
G.1 SUBJECT MATTER OF GRIEVANCE Grievance is any question by either the ER or the union regarding the interpretation or application of the CBA or company personnel policies or any claim by either party that the other party is violating any provisions of the CBA or company personnel policies.
F.3 ASSUMPTION OF JURISDICTION
It is a complaint or dissatisfaction arising from the interpretation or implementation of the CBA and those arising from interpretation or enforcement of personnel policies.
When in his opinion, there exist a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the SOLE may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration.[Art. 269 (g)]
Grievance Machinery It refers to the mechanism for the adjustment and resolution of grievances. It is part of the continuing process of collective bargaining.
F.4 APPELLATE JURISDICTION a. Orders issued by the duly authorized representative of the SOLE under Art. 128 may be appealed to the latter. b. Denial of application for union registration or cancellation of union registration originally rendered by the BLR may be appealed to the SOLE (if originally rendered by the Regional Office, appeal should be made to the BLR) Decisions of the Med-Arbiter in certification election cases are appealable to the SOLE (decisions of med-arbiters in intra-union disputes are appealable to the BLR) [Art. 259]
G.2 VOLUNTARY ARBITRATOR I. JURISDICTION Exclusive and Original Jurisdiction Over Grievances The VA or panel of VAs shall have original and exclusive jurisdiction to hear and decide all unresolved grievances. Violations of a CBA, except those which are gross in character, shall no longer be treated as ULP and shall be resolved as grievances under the CBA. 196
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II. PROCEDURE [IRR, Book V, Rule XI] Hearing All parties to the dispute shall be entitled to attend the arbitration proceedings. The attendance of any third party or the exclusion of any witness from the proceedings shall be determined by the VA or panel of Vas. Hearing may be adjourned for cause or upon agreement by the parties.
Note: Gross violations of CBA shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the DOLE shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the grievance machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement. [Art. 261]
Days to render an award/decision Unless the parties agree otherwise, it shall be mandatory for the VA or panel of Vas to render an award or decision within 20 calendar days from the date of submission of the dispute to voluntary arbitration.
Other Labor Disputes The VA or panel of VAs, upon agreement of the parties, shall also hear and decide all other labor disputes including ULP and bargaining deadlocks. [Art. 268]
Form of award/decision The award or decision of the VA or panel of VAs must state in clear, concise and definite terms the facts, the law and/contract upon which it is based.
Even if the specific issue brought before the arbitrators merely mentioned the question of “whether an employee was discharged for just cause,” they could reasonably assume that their powers extended beyond the determination thereof to include the power to reinstate the employee or to grant back wages. In the same vein, if the specific issue brought before the arbitrators referred to the date of regularization of the employee, law and jurisprudence gave them enough leeway as well as adequate prerogative to determine the entitlement of the employees to higher benefits in accordance with the finding of regularization. [Manila Pavilion Hotel, etc. vs. Henry Delada, 2011]
Finality It shall be final and executory after 10 calendar days from the receipt of the copy of the award or decision by the parties. Execution of award/decision Upon motion of any interested party, the Voluntary Arbitrator or panel of Voluntary Arbitrators or the Labor Arbiter in the region where the movant resides, in case of the absence or incapacity of the Voluntary Arbitrator or panel of Voluntary Arbitrators, for any reason, may issue a writ of execution requiring either the sheriff of the Commission or regular courts or any public official whom the parties may designate in the submission agreement to execute the final decision, order or award. [Art. 262-A]
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III. REMEDIES
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petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent to desist from further proceedings in the action or matter specified therein, or otherwise granting such incidental reliefs as law and justice may require.
The decision of a Voluntary Arbitrator or panel of Voluntary Arbitrators is appealable by ordinary appeal under Rule 43 of the Rules of Civil Procedure directly to the Court of Appeals. [Rule 43 §1, RULES OF COURT]
H. COURT OF APPEALS
The petition shall likewise be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as provided in the third paragraph of section 3, Rule 46.
H.1 RULE 65, RULES OF COURT Section 1. Petition for certiorari. — When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.
Section 3.Petition for mandamus. — When any tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent, immediately or at some other time to be specified by the court, to do the act required to be done to protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the respondent.
The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as provided in the third paragraph of section 3, Rule 46. Section 2.Petition for prohibition. — When the proceedings of any tribunal, corporation, board, officer or person, whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified
I. SUPREME COURT [A]ll references in the amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65. Consequently, all such petitions should hence forth be initially filed in the Court of Appeals in strict observance of the doctrine on the 198
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hierarchy of courts as the appropriate forum for the relief desired. [St. Martin Funeral Home vs. NLRC, 1998]
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(1) Money Claims Money claims. – All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred.
I.1 RULE 45, RULES OF COURT Section 1. Filing of petition with Supreme Court. — A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.
All money claims accruing prior to the effectivity of this Code shall be filed with the appropriate entities established under this Code within one (1) year from the date of effectivity, and shall be processed or determined in accordance with the implementing rules and regulations of the Code; otherwise, they shall be forever barred.
Appeal from CA to SC should be under Rule 45 (Petition for Review on Certiorari) and not Rule 65 (Special Civil Action for Certiorari). [Sea Power Shipping Enterprises, Inc. vs. CA, G. R. No. 138270, 2001]
Workmen's compensation claims accruing prior to the effectivity of this Code and during the period from November 1, 1974 up to December 31, 1974, shall be filed with the appropriate regional offices of the Department of Labor not later than March 31, 1975; otherwise, they shall forever be barred. The claims shall be processed and adjudicated in accordance with the law and rules at the time their causes of action accrued. [Art. 297]
Since the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged errors committed by it in the exercise of its jurisdiction would be errors of judgment which are reviewable by timely appeal and not by a special civil action of certiorari. If the aggrieved party fails to do so within the reglementary period, and the decision accordingly becomes final and executory, he cannot avail himself of the writ of certiorari, his predicament being the effect of his deliberate inaction. [Tirazona v Phil EDS Techno-Service Inc, 2009]
The Labor Code has no specific provision on when a monetary claim accrues. Thus, again the general law on prescription applies. Article 1150 of the Civil Code provides that: Article 1150. The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be counted from the day they may be brought.
J. PRESCRIPTION OF ACTIONS No claim for compensation shall be given due course unless said claim is filed with the System within three (3) years from the time the cause of action accrued. [Art. 201, as amended by Section 5, Presidential Decree No. 1921]
The day the action may be brought is the day a claim started as a legal possibility. In the present case, the day came when petitioner learned of Asiakonstrukt’s deduction from his salary of the amount of advances he had received but had, by his claim, been settled, 199
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the same having been reflected in his payslips, hence, it is assumed that he learned of it at the time he received his monthly paychecks. [Anabe v Asian Const, et al., 2009]
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(3) Unfair Labor Practice Offenses penalized under this Code and the rules and regulations issued pursuant thereto shall prescribe in three (3) years. All unfair labor practice arising from Book V shall be filed with the appropriate agency within one (1) year from accrual of such unfair labor practice; otherwise, they shall be forever barred. [Art. 296]
(2) Illegal dismissal In illegal dismissal cases, the employee concerned is given a period of four years from the time of his dismissal within which to institute a complaint. This is based on Article 1146 of the New Civil Code which states that actions based upon an injury to the rights of the plaintiff must be brought within four years. [Victory Liner, Inc. v Race, 2007]
Concept of unfair labor practice and procedure for prosecution thereof. – […] No criminal prosecution under this Title may be instituted without a final judgment finding that an unfair labor practice was committed, having been first obtained in the preceding paragraph. During the pendency of such administrative proceeding, the running of the period of prescription of the criminal offense herein penalized shall be considered interrupted: Provided, however, that the final judgment in the administrative proceedings shall not be binding in the criminal case nor be considered as evidence of guilt but merely as proof of compliance of the requirements therein set forth. [Art. 253, as amended by Batas Pambansa Bilang 70, May 1, 1980 and later further amended by Section 19, Republic Act No. 6715, March 21, 1989]
Article 1146. The following actions must be instituted within four years: (1) Upon an injury to the rights of the plaintiff; (2) Upon a quasi-delict; However, when the action arises from or out of any act, activity, or conduct of any public officer involving the exercise of powers or authority arising from Martial Law including the arrest, detention and/or trial of the plaintiff, the same must be brought within one (1) year. [As amended by PD No. 1755, Dec. 24, 1980.]
(4) Offenses penalized by the Labor Code and IRR issued pursuant thereto Offenses penalized under this Code and the rules and regulations issued pursuant thereto shall prescribe in three (3) years. [Art. 290] (5) Prescriptive Period of Illegal Recruitment Cases Section 7.Prescription. Illegal recruitment cases under this Rule shall prescribe in five (5) years; Provided, however, that illegal recruitment cases involving economic sabotage shall prescribed in twenty (20) years. [RA 8040] 200
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SUPREME COURT Rule 45, Rules of Court COURT OF APPEALS
Rule 43
Rule 65 NATIONAL LABOR RELATIONS COMMISSION
VOLUNTARY ARBITRATOR OR PANEL OF VOLUNTARY ARBITRATORS
LABOR ARBITERS Original and Exclusive Jurisdiction to decide cases of: 1. Unfair Labor Practices 2. Termination disputes 3. Those involving wages, rates of pay, hours of work and other terms and conditions of employment IF accompanied with a claim for reinstatement 4. Claims for actual, moral, exemplary and other forms arising from ER-EE relations. 5. Any violation the Labor Code provisions on Prohibited Activities including questions on the legality of strikes and lockouts. 6. All claims arising from ER-EE relations involving an amount exceeding P5,000, except claims for Employee Compensation, SSS, Medicare and maternity benefits.
1. 2. 3.
4.
Original and exclusive jurisdiction to hear and decide: All unresolved grievances Interpretation and implementation of CBA Cases arising from interpretation and enforcement of company personnel policies Other labor disputes including ULP and bargaining deadlocks upon agreement by the parties.
Rule 65 BUREAU OF LABOR RELATIONS Original and exclusive authority to act on: 1. All inter-union and intra-union conflicts 2. Disputes, grievances, problems arising from or affecting labormanagements relations in all workplaces. Except: those from implementation or interpretation of CBAs. Cases decided by the BLR on appeal are final and executory. Those decided through original jurisdiction can be appealed to the DOLE Secretary.
Labor Relations Division in the Regional Offices of the DOLE
Department of Labor and Employment Regional Director Money claims and benefits arising from ER-EE relations not accompanied by claim for reinstatement and not exceeding P5,000.
1. 2. 3.
Inter-union and intra-union disputes Applications for registration of unions Certification election and representation cases
Rule 65 DEPARTMENT OF LABOR AND EMPLOYMENT SECRETARY Assumption of jurisdiction over disputes, in his opinion, causing or likely to cause a strike/lockout in an industry indispensable to the national interest.
National Conciliation and Mediation Board 1.
2. 3.
Petition for Assumption of jurisdiction or certification of jurisdiction or certification to NLRC of strike/lockout disputes. Notice of strike/lockout Any other disputes submitted by the parties for preventive mediation proceedings.
Note: The BLR has jurisdiction over cases involving Federations and National Unions 201involving independently registered unions and chartered The LRD has jurisdiction over cases locals.
