LABOR LAW

Atty. Benedict Dominic Q. Baybay, MBA

 GENERAL
PRINCIPLES
 Employee-Employer Relationship

• Selection and engagement (hiring)

The four- • Payment of wages and salaries
fold test • Exercise of power of dismissal
• Power of control

CONTROL

Over the means Over the

and manner of results of the
work done by the work
employee
“RESULT”
“METHOD”
 Elements of Employment Relationship

Jurisprudential Tests to Determine Existence of EER:

A. The employer has the ability (need not be actual) to exercise

control over the following:

1. Payment of Wages
payment of compensation by way of commission does not
militate against the conclusion that EER exists. Under Art. 97 of
the Labor Code, "wage" shall mean "however designated,
capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, price or commission basis…"
(Insular Life Assurance Co., Ltd. V. NLRC,GR No.119930, 12 March
1998)
 Elements of Employment Relationship

Wages are defined as remuneration or earnings, however

designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece or commission basis, or
other method of calculating the same, which is payable by an
employer to an employee under a written or unwritten contract of
employment for work done or to be done, or for services rendered
or to be rendered, and included the fair and reasonable value, as
determined by the Secretary of Labor, of board, lodging, or other
facilities customarily furnished by the employer to the employee.
[Ruga v. NLRC,181 SCRA 266 (1990)]
 Elements of Employment Relationship

2. Hiring
Employment relation arises from contract of hire, express or implied
[Ruga v. NLRC, 181 SCRA 266 (1990)]

Selection and engagement of the workers rests with the employers

*Not a conclusive test since it can be avoided by the use of subcontracting

agreements or other contracts other than employment contracts

3. Firing
Disciplinary power exercised by employer over the worker and the
corresponding sanction imposed in case of violation of any of its rules and
regulations
 Elements of Employment Relationship

4. Control

Not only over the end product/RESULT of the work, but more importantly,
control over the MEANS through which the work is accomplished.(most
essential element; without it, there is no EER)

B. Economic Relations Test

A subordinate/alternative test. Existing economic conditions between the

parties are used to determine whether EER exists.
1. payment of PAG-IBIG Fund contributions
2. payment / remittance of contributions to the State Insurance Fund
3. deduction of withholding tax
4. deduction / remittance of SSS contributions
Construction in Favor of Labor

■ Art. 4. All doubts in the • In interpreting the labor code’s

implementation and provisions and its implementing
interpretation of the provisions regulations, the working man’s
of this Code, including its welfare should be the paramount
implementing rules and consideration.
regulations, shall be resolved in
favor of labor.
Reasons for According Greater Protection for Employees

■ The employer is at a higher

footing when it comes to
bargaining

• First, there is a greater supply,

than demand for labor
(jobs<vacancies).

• Second, the need for employment

by the labor comes from vital, even
desperate, necessity.

■ The law must step-in order to

offset the tilt
Management Rights

■ However, the law, in protecting

the rights of the laborers,
authorizes neither oppression
nor self destruction of the
employer. Employers have
management rights.
The Right to Recover their Investments

• There is nothing wrong with

profit-making.

• It creates jobs and provides a

means of livelihood for
employees.

• The employer has the right to

manage, control and use his
property and conduct his
business in any manner
satisfactory to himself for as long
as it is not contrary to law.
The Right to Prescribe Rules
■ Employers have the right to make
reasonable rules and regulations
for the government of their
employees, and when employees,
with knowledge of an established
rule, enter the service, the rule
becomes a part of the contract of
employment.

■ Violating these rules gives the

employer to right to discipline
his/her employees.
Illustration
■ A chauffeur of an autocalesas,
without the consent of the
employer, allowed another
chauffer to drive the autocalesa
which was under his charge.

• It was against Company rules

• However, there was no damage
done
• Chauffeur ultimately fired for
violating company rules and
regulations.

■ Was the regulation reasonable?

The Right to Select Employees
■ An employer has the right to
select his employees and the
right to decide when to engage
them. He has a right under the
law to full freedom in employing
any person free to accept
employment from him, except
as restricted by valid statute or
valid contract, at a wage and
under conditions agreeable to
them.
Illustration

■ The Court issued an order

compelling a Company to recruit
members of a labor union to
replace older members.

■ Is the right to select employees

violated?
The Right to Transfer or Discharge Employees

• An employer has the right to

transfer, reduce, or lay off in
order to minimize expenses and
to ensure the stability of the
business and even to close the
business, provided that the
transfer or dismissal is not
abused but is done in good faith
and is due to causes beyond
control.

• To hold otherwise would be

oppressive and inhumane
Management Prerogative
– - acts by which one directing a business is able to control the variables thereof
so as to enhance the chances of making a profit.
– - Management determines the direction and conduct of its business and
regulates all aspects of employment, including:

Hiring LIMITATIONS:
Work assignments • General principles of Good
Working methods Faith, Fair Play and Justice
Time, place, manner of work • Valid business reasons
Tools and processes • Law
Supervision of workers • CBA
Work regulations • Employment contract
Transfer of employees • Employer policy and
practice
Discipline, dismissal, lay off, recall of employees
Management Prerogative

– An owner of a business enterprise is given considerable leeway in

managing his business because it is deemed important to society
as a whole that he should succeed. Our law, therefore, recognizes
certain rights as inherent in the management of business
enterprises. These rights are collectively called management
prerogatives or acts by which one directing a business is able to
control the variables thereof so as to enhance the chances of
making a profit. (Chu vs. NLRC [G.R. No. 106107, 02 June 1994])
Management Prerogative

 While the law recognizes and safeguards this right of an employer to

exercise what are clearly management prerogatives, such right
should not be abused and used as a tool of oppression against
labor. The company's prerogatives must be EXERCISED IN GOOD
FAITH and with due regard to the rights of labor. A priori, they are
not absolute prerogatives but are SUBJECT TO LEGAL LIMITS,
COLLECTIVE BARGAINING AGREEMENTS and the GENERAL
PRINCIPLES OF FAIR PLAY AND JUSTICE.
Management Prerogative

Reorganization

■ Even as the law is solicitous of the welfare of employees, it must also protect
the right of an employer to exercise what are clearly management
prerogatives. Hence, management is not precluded from undertaking are
organization within the company or entering into mergers with other
companies to meet the demands of the enterprise.

In such cases, the company has the prerogative to abolish managerial and
confidential positions or create new ones as the necessity for them requires.
(Yap vs. Ichong [G.R. No.L-51314, 21 June 1990])
Management Prerogative

– TRANSFERS
– [T]he Court has recognized and upheld the prerogative of management to
transfer an employee from one office to another within the business
establishment provided that there is no demotion in rank or a diminution of his
salary, benefits and other privileges.
– The managerial prerogative to transfer personnel must be exercised without grave
abuse of discretion and putting to 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. Thus ,it cannot be used as a subterfuge by the
employer to rid himself of an undesirable worker. Nor when the real reason is to
penalize an employee for his union activities, and thereby defeat his right to self-
organization.
– But the transfer can be upheld when there is no showing that it is unnecessary,
inconvenient and prejudicial to the displaced employee .
CONDITIONS OF
EMPLOYMENT
HOURS OF WORK
Hours of Work
■ Work hours shall not exceed 8. Thus, part-time work, or a day’s work of less than 8 hours, not prohibited.
■ Work Day – 24-hr period commencing from the time an employee regularly starts to work regardless of whether
the work is broken or continuous.
■ Calendar Day – 24-hr. period commencing at 12 midnight and ending at 11:59 p.m.
■ Compressed Work Week (CWW)

• Resorted to by the employer to prevent serious losses due to causes beyond his control, such as when there
is substantial slump in demand for his goods and services or when there is lack of raw materials.
• Instead of working 6 days a week, the employees will be regularly working for less than 6 days but each
workday exceeds 8 hrs. For the hours exceeding 8 in a workday, the employees waive their OT pay because,
in return, they will no longer incur transport and other expenses.
• Allowed on condition that it is freely agreed upon between the employer and majority of the employees.
Further, the arrangement should not diminish the employees’ monthly or daily pay or their established
employment benefits.
• Extended workday in CWW should not exceed 12 hrs. Work exceeding 12 hrs. in a day or 48 hrs. in a week
should be considered OT.
• Should the work shift revert to 8 hrs., the reversion shall not constitute a diminution of benefits.
Hours of Work
Considered as Compensable Hours Worked
1. All time during which an employee required to be on duty or to be at the employer’s premises or to be at a
prescribed work place; and
2. All time during which an employee suffered or permitted to work.
3. Rest periods of short duration during working hours.
Principles in Determining Hours Worked
1. All hours are hours worked which the employee is required to give to 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 workplace in order that his rest period shall not be counted, it
being enough that he stops working, may rest completely and may leave his workplace
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 or 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 if
– a. 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.
Waiting Time
• Waiting time spent by an employee shall be considered as working time if

– 1. waiting is an integral part of his work or

– 2. the employee is required or engaged by the employer to wait.

• Working while on call - 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.
Hours of Work
TRAVEL TIME
Travel From Travel that is All in Days Travel Away
Home to Work Work from Home
Normal travel from Time spent by an Travel that keeps an
home to work which is employee in travel as Employee away from
not work time part of his principal home overnight
activity, like travel from
jobsite to jobsite during
the workday

Not compensable Compensable and Work time when it cuts

because it is a normal counted as hours across an employee’s
incident of Employment worked workday because it
substitutes for the
hours the employee
should have been in
the Office
Hours of Work
Exceptions to Travel From
Home to Work:
1. Where employee made to work on an emergency call and travel is necessary in proceeding to the
workplace
2. travel is done through a conveyance provided by the employer
3. travel is done under the supervision and control of the employer
4. travel is done under vexing and dangerous circumstances
• Semestral break of teachers is compensable hours worked for it is a form of interruption beyond their
control. Applies only for regular full-time teachers.[Univ. of Pangasinan Faculty Union v. Univ. of
Pangasinan, 127 SCRA 691 (1984)]

• The fact that he picks up employees at certain specified points in EDSA in going to the project site and
drops them off at the same time on his way back from the field office going home to Marikina is not
merely incidental to petitioner’s job as a driver. Said transportation arrangement had been adopted not
so much for the convenience of the employees, but primarily for the benefit of the employer. Since the
assigned task of fetching and delivering employees is indispensable and consequently mandatory, then
the time required of and used by petitioner in going from his residence to the field office and back
should be paid as overtime work. [Rada v. NLRC, 205 SCRA 69 (1992)]
Hours of Work
Lectures, Meeting, Trainings, Programs

■ NOT considered working time if ALL the following conditions are met:

1. Attendance is outside of the employee's regular working hours

2. Attendance is in fact voluntary
3. The employee does not perform any productive work during such attendance.
 Hours of Work
Meal and Rest Periods
■ General Rule: not less than 1 hour time-off for regular meals – non-compensable
■ Except: meal period of not less than 20 mins. in the
■ following cases – compensable hours worked:
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 16 hours a day
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
4. Where the work is necessary to prevent serious loss of perishable goods

– Rest periods or coffee breaks – running from 5 to 20 mins. considered as compensable working
time.
– To shorten meal time to less than 20 mins, is not allowed. If the so-called “meal time” is less than
20 mins., it becomes only a rest period.
Hours of Work
Overtime Pay (OT) – work exceeding eight hours within the worker’s 24-hour workday. Work within
the employees’ shift is not overtime.
■ OT on a Regular Day: regular wage + at least 25% thereof
■ OT on a Holiday/Employee’s Rest Day: rate of 1st 8 hrs. on holiday/rest day + at least 30%
thereof.
■ Since the OT work is considered hourly, the pay rate is computed also on per hour basis.
■ The daily wage is divided by 8 to get the hourly base rate.
■ If employee is paid on a monthly salary basis, the daily rate is obtained by the following formula:
Daily Rate = (monthly salary x 12)/
(Total no of days considered paid in a year)
• Permissible for the employer to stipulate that the employee’s monthly salary constitutes
payment for all the days of the month, including rest days and holidays, where the
employee’s monthly salary, when converted by the increased divisor into its daily
equivalent, would still meet minimum wage.
Hours of Work
Regular Wage – includes the cash wage only, without deduction on account of facilities
provided by the employer
Conditions to be entitled to OT pay
1. Actual rendition of OT work
2. Submission of sufficient proof that said work was actually performed
3. OT work is with the knowledge and consent of the employer
– Undertime NOT Offset by OT – an employee’s regular pay rate is lower than the OT
rate. Offsetting the undertime hours against the OT hours would result in undue
deprivation of the employee’s extra pay for OT work.
– Right to OT pay cannot be waived. But when the alleged waiver of OT pay is in
consideration of benefits and privileges which may even exceed the OT pay, the waiver
may be permitted.
Hours of Work
Night Shift Differential (NSD) – every employee shall be paid a night shift differential of not less than
10% of his regular wage for each hour of work performed between ten o’clock in the evening and six
o’clock in the morning.
NSD = (10% x regular wage/hr.) x no. of hrs. of work between 10 pm – 6 am
• If work done between 10 pm and 6 am is OT work, the NSD should be based on the OT rate.
Employees NOT Covered by NSD
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 5 workers
3. Domestic helpers and persons in the personal service of another
4. Managerial employees
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
HOLIDAYS
REST PERIODS AND HOLIDAYS

• Weekly Rest Periods – applies to all employers whether operating for profit or not, including public
utilities operated by private persons
• Business on Sundays/Holidays – All establishments and enterprises may operate or open for
business on Sundays and holidays provided that the employees are given the weekly rest day and
the benefits as provided.
• Weekly Rest Day – Every employer shall give his employees a rest period of not less than 24
consecutive hrs. after every 6 consecutive normal work days.
• Preference of employee – The preference of the employee as to his weekly day of rest shall be
respected by the employer if the same is based on religious grounds.
1. The employee shall make known his preference to the employer in writing at least 7 days
before the desired effectivity of the initial rest day so preferred.
2. Where, however, 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 of the undertaking and
the employer cannot normally be expected to resort to other remedial measures, the employer
may so schedule the weekly rest day of his choice for at least 2 days in a month.
 HOLIDAYS
REST PERIODS AND HOLIDAYS

Holidays with Pay; Applies to ALL employees.

EXCEPT:
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 ten 10 workers
3. Domestic helpers and persons in the personal service of another
4. 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.
HOLIDAYS

■ Double Holiday – an employee who is ■ Successive Regular Holidays – Where

entitled to holiday pay should receive there are 2 successive regular
at least 200% of his basic wage even holidays, like Holy Thursday and Good
if he did not work on that day, Friday, an employee may not be paid
provided, he was present or on leave for both holidays if he absents himself
wit pay on the preceding work day. If from work on the day immediately
he worked, he is entitled to 300% of preceding the first holiday, unless he
his basic wage. works on the first holiday, in which
case he is entitled to his holiday pay
on the second holiday. To be entitled
■ Holiday-Sunday – a legal holiday to 2 successive holidays, employee
falling on a Sunday creates no legal must: (1) be present on the day
obligation for the employer to pay immediately preceding the 1st holiday;
extra, aside from the usual holiday or (2) be on leave with pay.
pay, to its monthly-paid employees
HOLIDAYS
Special Non-working Days
Regular Holidays
1. New Year’s Day - Jan. 1
1. All Saints’ Day - Nov. 1
2. Maundy Thursday - Movable Date
2. Last Day of the Yr - Dec. 31
3. Good Friday - Movable Date
3. Ninoy Aquino Day - August 21
4. Araw ng Kagitingan - April 9
4. Chinese New Year
5. Labor Day - May 1
5. Immaculate Conception – December 08
6. Independence Day - June 12
6. EDSA – 25 February
7. Nat’l Heroes Day - Last Monday of Aug.
7. Other government Proclamations
8. Bonifacio Day - Nov. 30
9. Eidul Fit’r - Movable Date
Special Working
10. Eidl Adha – Movable Date
1. Japanese Surrender of Baguio – September
11. Christmas Day - Dec. 25 03
12. Rizal Day - Dec. 30
Rules on Payment of Holiday Pay
1. REGULAR HOLIDAYS 2. SPECIAL DAYS (Non-Working)
a. If it is employee’s regular work day: a. Unworked – no pay unless there is a
favorable company policy, practice or CBA
- Unworked: - 100% granting payment of wages on special days
even if unworked
- Worked: b. Worked
1st 8 hrs - 200% – 1st 8 hrs. - + 30% of the
– daily rate of 100%
excess of 8 hrs. - + 30%
– excess of 8 hrs. - + 30% of hourly
of hourly rate on said day rate on said day
b. If it is employeee’s rest day: c. Falling on employee’s rest day and if worked
– 1st 8 hrs. - + 50% of the
- Unworked: - 100%
– daily rate of 100%
- Worked: – excess of 8 hrs. - + 30% of hourly
rate on said day
1st 8 hrs. - + 30% of 200%
excess of 8 hrs. - + 30% of 3. SPECIAL WORKING HOLIDAYS – only basic
rate. Considered as ordinary work day.
hourly rate on said day
SERVICE INCENTIVE LEAVE

Service Incentive Leave (SIL) – every employee who has rendered at least 1 year of service shall
be entitled to a yearly service incentive leave of 5 days with pay
• Commutable to its money equivalent if not used or exhausted at the end of the year.
Employees NOT Covered
1. Those of the government and any of its political subdivisions, including government-
owned and controlled corporations
2. Domestic helpers and persons in the personal service of another
3. Managerial employees
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
6. Those enjoying vacation leave with pay of at least five days
7. Those employed in establishments regularly employing less than ten employees
105-Day Expanded Maternity Leave Law (RA 11210)
Coverage:
■ Applies to all female employees in private sector whether married or unmarried on the
instance of pregnancy, miscarriage, or emergency termination of pregnancy regardless of
frequency
Entitlement:
■ Maternity leave benefit of 105 with full pay with option to extend by an additional 30 days
with no pay. For cases of miscarriage or emergency termination the female employee is
entitled to 60 days maternity leave with full pay.
■ Additional 15 days with full pay if worker is a solo parent under the “Solo Parent’s Welfare
Act.”
■ Upon the election of the female employee, up to seven (7) days of maternity leave benefits
may be allocated to child’s father, whether married or not to the female worker. In the
absence of incapacity of the child’s father, this may be allocated to an alternative caregiver
who may be a relative within the forth degree of consanguinity or current partner of female
employee sharing the same household. This benefit is separate from the Paternity Leave Act
of 1996.
■ Former employees, whose pregnancy, miscarriage or emergency termination occurs not more
than fifteen (15) calendar days from date of termination of an employee’s services, are
entitled to maternity benefits.
105-Day Expanded Maternity Leave Law (RA 11210)
Conditions:
■ Cannot be deferred and must be availed either before after actual delivery in a continuous and
uninterrupted manner.
■ SSS member employed at time of delivery or miscarriage and has paid at least three (3) in the twelve-
month period immediately preceding the semester of her childbirth, miscarriage or emergency
termination.
■ Employer must have paid at least 3 monthly contributions to the SSS within 12-month period before
date of contingency.
■ Employee must notify her employer of her pregnancy and probable date of birth.
■ Employer must transmit employee’s notice to SSS
■ Full payment shall be advanced by employer within thirty (30) days from the filing of the maternity leave
application, subject to reimbursement by SSS upon receipt of satisfactory and legal proof of payment.
■ Payment of maternity benefits is a bar to recover sickness benefits under RA 1161.
■ Employer shall be liable to SSS for damages if the required contributions have not been remitted or if no
notification was made by the employer of the pregnancy.
■ Due notice in writing at least forty-five (45) days before the end of the maternity leave must be given by
the employee to the employer in order to avail of the additional thirty (30)) days maternity leave without
pay.
105-Day Expanded Maternity Leave Law (RA 11210)
Non-Discrimination:
■ No employer shall discriminate against the employment of women in order to avoid the
benefit provided in the Expanded Maternity Leave Law
Penalties
■ Violations of the Expanded Maternity Leave Law are punishable by a fine of Php
20,000.00 to Php 200,000.00 and imprisonment of not less than six (6) years one (1)
day but not more than twelve (12) years or both.
■ If the violations are committed by an association, partnership, corporation or any other
institution, its managing head, directors, or partners shall be held liable for the
penalties.
Paternity Leave (RA 8187)
■ Coverage:
■ All married male employees in private sector
regardless of their employment status.
■ Shall apply to first four deliveries of wife
whom he is cohabiting
■ Purpose:
■ To support wife in period of recovery
■ Entitlement:
■ 7 calendar days after delivery; subject to
employer policy of having it before or
intermittent.
■ Conditions:
1. Employee at time of delivery
2. Cohabiting with spouse
3. Applied for paternity leave within reasonable
period
4. Wife gives birth or suffers miscarriage
5. Unused not convertible to cash
Parental Leave for Solo Parents (RA
8972)
Coverage:
Granted to solo parents left alone with responsibility of parenthood due to:
1. Rape and other crimes of chastity
2. Death of Spouse
3. Spouse detained and serving conviction for at least 1 year
4. Physical/mental incapacity of spouse as certified by a public medical practitioner
5. Legal separation or de facto separation of at least 1 year with legal custody of child
6. Declaration of nullity of marriage
7. Abandonment of spouse for at least 1 year.
8. Unmarried father or mother with custody of child
9. Any other person who solely provides parental care and support to a child or children (licensed foster
parent)
10. A family member who assumes the role of head of the family as a result of death abandonment,
disappearance absence ( at least 1 year) of parents or solo parent.
Paternity Leave (RA 8187)

■ Entitlement:
■ 7 work days a year
■ Conditions:
1. At least 1 year of service
2. Notification to employer within
reasonable time
3. Presents a solo parent identification
card from the DSWD
4. Not convertible to cash
5. Benefit terminates if status of parent
changes and is no longer left alone
Victims of Violence against Women and their Children (RA 9262)

■ Coverage
■ Private sector women employees who are
victims as defined in RA 9262
■ Leave benefit shall cover the days employee
has to attend to medical and legal concerns.
■ Requirement:
■ Certification from Barangay Fiscal or Judge
where case is pending.
■ Entitlement:
■ 10 days at option of the woman; not
convertible to cash
■
Special Leave for Women ( RA 9710)

■ Coverage: ■ Gynecological disorder refers to disorders

which would require surgical procedures
■ Any female employee regardless of age or such as but not limited to dilatation and
civil status curettage and those involving female
reproductive organs as certified by a
■ Entitlement: competent physician. It shall also include
■ 2 months paid leave; employer may front hysterectomy, ovariectomy and mastectomy.
load
■ Conditions:
1. Rendered at least 6 mos of continuous
aggregate employment for the last 12 months
prior to surgery
2. Filed leave without reasonable period of time
3. Undergone surgery gynecological disorders as
certified by a competent physician.
WAGES
CONCEPT AND DEFINITIONS

■ Fair Wage for Fair Work; No Work – No

Pay Principle – if there is no work
performed by the employee, there can
be no wage or pay unless the laborer
was able, willing, and ready to work
but was prevented by management or
was illegally locked out, suspended or
dismissed. But where the failure of
employees to work was not due to the
employer’s fault, the burden of
economic loss suffered by the
employees. Should not be shifted to
the employer. Each party must bear
his own loss.
CONCEPT AND DEFINITIONS
■ Equal Pay for Equal Work – persons who work with substantially
equal qualifications, skill, effort and responsibility, under similar
conditions, should be paid similar salaries.
CONCEPT AND DEFINITIONS

■ Facilities – articles or services for ■ Acceptance of Facilities – in order

the benefit of the employee or his that the cost of facilities furnished
family but shall not include tools of by the employer may be charged
the trade or articles or service against an employee, the
primarily for the benefit of the employee’s acceptance of such
employer or necessary to the facilities MUST BE VOLUNTARY.
conduct of the employers business.
May be deducted from the
employees’ wages.
CONCEPT AND DEFINITIONS
Facilities Supplements
Items for expense necessary for the extra remuneration or special
laborer’s and his family’s existence privileges or benefits given to or
and subsistence received by the employees over and
above their ordinary earnings or
wages.

Part of the wage Independent of the wage

Deductible from the wage Not wage deductible

Non-Diminution Rule
■ General Rule: Nothing in the Labor Code shall be
construed to eliminate or in any way diminish
supplements, or other employee benefits being
enjoyed at the time of promulgation of the Labor
Code. Benefits being given to employees shall not
be taken back or reduced unilaterally by the
employer because the benefit has become part
of the employment contract, written or unwritten.
■ When Non-Diminution Rule Applicable – The rule is applicable if
it is shown that the grant of the benefit is:

1. based on an express policy or has ripened into practice over

a long period of time;

2. the practice is consistent and deliberate;

3. Not due to an error in the construction/application of a

doubtful or difficult question of law; and
4. Diminution or discontinuance done unilaterally by employer.

■ = CANNOT ELIMINATE OR REDUCE BENEFIT

 ■ 4. Negotiated benefits. What the
■ Exceptions: last prohibits is elimination or
modification done unilaterally by
■ 1. To correct an error, otherwise, if the the employer.
error is left uncorrected for a ■ 5. Reclassification of Position;
reasonable period of time, it ripens Promotion. Personnel movement
into a company policy and employees shall be done in good faith.
can demand for it as a matter of right.
■ 2. Not an established practice. It ■ 6. Contingent or Conditional
should have been practiced over a Benefits; Bonus. Benefit not
long period of time and must be demandable if preconditions are
shown to be consistent and absent.
deliberate.
■ 3. Benefit on reimbursement basis.
■ Per diem.
■ Bonus – a benefit which is contingent
or conditional; its demandability
depends on certain pre-conditions.
• It is an amount granted voluntarily to
an employee for his/her industry and
loyalty which contributed to the
success and realization of profits of
the employer’s business.
• It is not a demandable and
enforceable obligation unless it was
promised to be given without any
conditions imposed for its payment in
which case it is deemed part of the
wage.
WAGES
■ Wage – paid to any employee shall mean the:

1. remuneration or earnings, however designated, capable of being

expressed in terms of money, whether fixed or ascertained on a time,
task, piece, or commission basis, or other method of calculating the
same, which is payable by an employer to an employee under a written
or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered; and includes
2. the fair and reasonable value, as determined by the DOLE Secretary, of
board, lodging, or other facilities customarily furnished by the employer
to the employee. "Fair and reasonable value" shall not include any profit
to the employer, or to any person affiliated with the employer.
Employees NOT Covered by Provisions on Wages
1. farm tenancy / leasehold
2. domestic service (Kasambahay Law applies)
3. persons working in their respective homes in needle work or in any cottage
industry duly registered in accordance with law
4. Barangay micro business enterprise (BMBE) under RA 9178, the BMBE Law.
BMBE – any business entity or enterprise engaged in the production, processing,
or manufacturing of products or commodities, including agroprocessing, trading
and services, whose total assets including those arising from loans but exclusive
of the land on which the particular business entity’s office, plant and equipment
are situated, shall not be more than P3M
■ Basic Wage – means all
remuneration or earnings paid by
an employer to a worker for services
rendered on normal working days
and hours but does not include
cost-of living allowances, profit
sharing payments, premium
payments, 13th month pay or other
monetary benefits which are not
considered as part of or integrated
into the regular salary of the
workers
■ Minimum Wage – lowest wage rate fixed by ■ Wage Distortion – a situation where an
law than an employer can pay his employees increase in prescribed wage rates results in
the elimination or severe contraction of
intentional quantitative differences in wage
or salary rates between and among
■ Who Sets Minimum Wage employee groups in an establishment as to
■ 1. Regional Tripartite Wages and Productivity effectively obliterate the distinctions
Board embodied in such wage structure based on
skills, length of service or other logical basis
■ 2. Congress of differentiation. Simply, if the pay
advantage of a position over another is
removed or significantly reduced by a pay
adjustment required by a wage order, such
■ Frequency – a wage order issued by the pay advantage should be restored.
Board may not be disturbed for a period of
12 months from its effectivity and no petition
for wage increase shall be entertained during
said period EXCEPT when Congress itself
issues a law increasing wages.
Wage-Fixing

■ Regional Minimum Wages – the minimum ■ Monthly-Paid Employee – employees paid

wage rates for agricultural and non- by the month, irrespective of the number
agricultural employees and workers in each of working days therein, with a salary of
and every region of the country shall be not less than the statutory or established
those prescribed by the Regional Tripartite minimum wage, shall be presumed to be
Wages and Productivity Boards paid for all the days in the month whether
worked or not. The monthly min. wage
■ Minimum Wage – lowest wage rate fixed by shall not be less than the statutory
law that an employer can pay his employee; minimum wage multiplied by 365 days
payment of minimum wages is not divided by 12.
dependent on the employer’s ability to pay ■ Agricultural Rate – farm work from land
■ Daily-Paid Employee – paid only for days he preparation to harvesting
actually worked ■ Industrial Rate – manufacturing or
processing of farm products
Payment of Wages
■ Manner of wage payment – wages shall be paid in legal tender and the use of tokens,
promissory notes, vouchers, coupons, or any other form alleged to represent legal tender is
absolutely prohibited even when expressly requested by the employee.

■ Payment by check – Payment of wages by bank checks, postal checks or money orders is
allowed where
1. such manner of wage payment is customary on the date of the effectivity of the Labor
Code,
2. where it is so stipulated in a collective agreement, or
3. where all of the following conditions are met:
– a. There is a bank or other facility for encashment within a radius of 1 kilometer
from the workplace
– b. The employer or any of his agents or representatives does not receive any
pecuniary benefit directly or indirectly from the arrangement
– c. The employees are given reasonable time during banking hours to withdraw their
wages from the bank which time shall be considered as compensable hours worked
if done during working hours
– d. The payment by check is with the written consent of the employees concerned if
there is no collective agreement authorizing the payment of wages by bank checks
Payment of Wages
■ Time of payment
■ General Rule:
1. not less than once every 2 weeks; or
2. twice a month at intervals not exceeding 16 days
■ Except:
1. In case payment cannot be made with such regularity due to
force majeure or circumstances beyond the employer's control –
the employer shall pay the wages immediately after such force
majeure or circumstances have ceased.
2. In case of payment of wages by results involving work which
cannot be finished in 2 weeks, payment shall be made at
intervals not exceeding sixteen days in proportion to the amount
of work completed. Final settlement shall be made immediately
upon completion of the work.
■ Direct Payment of Wages
■ General Rule: paid directly to workers to whom they are due
■ Exceptions:
1. Payment Through Another Person
– a. In case of force majeure rendering such payment impossible provided such person is
under written authority given by the worker for the purpose
– b. When authorized under existing law
– including:
■ i. payments for the insurance premiums of
■ the employee
■ ii. union dues where the right to check-off has been recognized by the employer in
accordance with a collective agreement
■ iii. authorized in writing by the individual
■ employees concerned
2. Payment Through Heirs of Worker – in case the worker has died, employer may pay wages of the
deceased to the heirs of the latter without necessity of intestate proceedings

3. Payment through Member of Worker’s Family – where the employer is authorized in writing by the
employee to pay his wages to a member of his family
Payment of Wages

■ Wage Deductions ■ Deductions for Loss or Damage

■ General Rule: NOT allowed ■ General Rule: No employer shall require his
worker to make deposits for the
■ Except: reimbursement of loss of or damage to
material, equipment, or tools supplied by the
1. In cases where the worker is insured with his employer.
consent by the employer, and the deduction is to
recompense the employer for the amount paid by ■ Except: When the trade, occupation or
him as premium on the insurance business of the employer recognizes or
considers the practice of making deductions
2. For union dues, in cases where the right of the or requiring deposits necessary or desirable.
worker or his union to check-off has been
recognized by the employer or authorized in
writing by the individual worker concerned
3. In cases where the employer is authorized by
law or regulations issued by the DOLE Secretary
■ Requisites for Valid Deduction for ■ Prohibited / Unlawful Acts
Loss/Damage
1. Withhold any amount from the wages of a
1. The employee concerned is clearly shown to worker or induce him to give up any part of
be responsible for the loss or damage his wages by force, stealth, intimidation,
threat or by any other means whatsoever
2. The employee is given reasonable without the worker’s consent.
opportunity to show cause why deduction
should not be made 2. Deduction from the wages of any employee
for the benefit of the employer or his
3. The amount of such deduction is fair and representative or intermediary as
reasonable and shall not exceed the actual consideration of a promise of employment
loss or damage or retention in employment.
4. The deduction from the wages of the 3. Refuse to pay or reduce the wages and
employee does not exceed 20% of the benefits, discharge or in any manner
employee's wages in a week discriminate against any employee who has
filed any complaint or instituted any
proceeding under this Title or has testified
or is about to testify in such proceedings.
4. Make any statement, report, or record filed
or kept pursuant to the provisions of this
Code knowing such statement, report or
record to be false in any material respect.
Liability for Wages

■ Worker Preference in Case of Employer’s

Bankruptcy – workers shall enjoy first
preference as regards their wages and
other monetary claims, any provisions of
law to the contrary notwithstanding. Such
unpaid wages and monetary claims shall
be paid in full before claims of the
government and other creditors may be
paid.
• A declaration of bankruptcy or a
judicial liquidation must take place
before the worker’s preference may
be enforced.
• Establishes a preference of credit and
NOT a lien.
LABOR RELATIONS
I.

■ Labor Relations – defines the

status, rights and duties, as well
as the institutional mechanisms
that govern the individual and
collective interactions between
employers, employees and their
representatives
Right to Self Organization: Concept and
Scope Employee
•includes any person in the employ of an employer but not
limited to it.
•It shall include any individual whose work has ceased as a

Who are the

result of or in connection with any current labor dispute or
because of any unfair labor practice
•Any employee shall, beginning on his first day of service, be

actors… considered as an employee for purposes of membership in any

labor union.

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
…for the
officers or agents except when acting as
employer
purposes of
the right to self
organization?
Some principles
■ Labor Relations is Human Relations
– The relations between capital and labor are not merely contractual , impressed with
public interest that labor contract must yield to the common good (Art. 1700, NCC)
– Every person must, in the exercise of his rights and in the performance of duties, act
with justice, give everyone his due and observe honesty and good faith.
Ex. * Management Prerogative is always delimited by the exercise of good faith, fair play
and justice
* Compromises/Settlement below standard
* Past claims vs. Future claims
■ Labor Relations and Labor Standards are inter-related
This interplay of inter-party character and LS AND LR is the reason why the law mandates
voluntary modes of dispute settlement. Government comes in only when bilateral
attempts to settle the issue fails or when one party disregards the right of the other or
commits ULP.
Ex. * Desire to improve workingman’s lot
* Maintain industrial harmony
Some principles

■ Security of Tenure
– Non- deprivation of life, liberty or property without due process of law, equal protection of the law;
– Dismissal of laborer shall be subject to the supervision of the government (Art. 1710, NCC)

■ Forced Labor
– No involuntary servitude in any form shall exist except as punishment for a crime of convicted party (Sec.
18,(2), Art. III, Bill of Rights)
– No contract which practically amounts to involuntary servitude, under any guise whatsoever, shall be
valid. (Art.1703, NCC)

■ Interpretation in favor of labor

– “ All doubts in the implementation and interpretation of the provisions of the Code , including its
implementing rules and regulations, shall be resolved in favor of Labor. (Art. 4, LCP)
– In case of doubt, all labor regulations and labor contracts shall be construed in favor of the safety and
decent living of the laborer. (Art.1702, NCC)
– Neither capital nor labor shall act oppressively against the other, or impair the interest or
convenience of the public. (Art.1701, NCC)
Art. 211. Declaration of Policy (for labor relations)

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 unitedlabor movement;
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.
What is a labor organization (union)?

■ A labor or trade union is a combination of workmen

organized for the ultimate purpose of securing
through united action the most favorable
conditions as regards wages, hours of labor,
conditions of employment etc. for its members.
Why do unions organize?

■ SELF –HELP through economic action. Main objective is to represent to the employer, the
needs interests of the employees and to speak as one voice, hence only one Union.
What is the principle behind unionism?

■ In private industry, industrial peace cannot be secured through

compulsion of the law. Relations between employers and their
employees is essentially voluntary basis. Subject to minimum
requirements of wages and other social legislations, terms and
conditions of employment for unionized employees is settled through
the process of collective bargaining.
■ Human desires that led workers to organize: 1) JOB
Security; 2) regulate the relations , substitute the rule
of law; 3) collective bargaining, improvement of terms
and conditions; 4) participate in policy and decision-
making processes (Art. 255)
Rights of a Labor Organization

1. To act as the representative of its members

for the purpose of collective bargaining;
Rights of a Labor Organization

2. To be certified as the exclusive representative for purposes of

collective bargaining;
Rights of a Labor Organization

3. To be furnished by the employer, with its annual

audited financial statements, including the
balance sheet and the profit and loss statement.
Rights of a Labor Organization

4. To own property, real or personal, for the use and benefit

of the labor organization and its members;
Rights of a Labor Organization

5. To sue and be sued in its registered name;

Rights of a Labor Organization

6. To undertake all other activities designed to benefit the organization and its
members, including cooperative, housing, welfare and other projects not contrary to law.
Rights of a Labor Organization

■ The income and properties received by legitimate

labor organization which are actually, directly and
exclusively used for their lawful purposes shall be free
from taxes, duties and other assessments.

■ 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
Special Groups of Employees
1. Managerial & Supervisory Employees
■ Under Art. 245, managerial employees are not eligible to
join, assist or form any labor organization.
■ 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.

■ Manager – one who is vested with the power or prerogative

to lay down an execute management policies and/or to
hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees

■ Note that the management policies must pertain

exclusively to labor relations.
■ Supervisor – one, who, in the interest of the employer, effectively recommends
managerial actions. Power to recommend must be both
– 1. Effective, and
– 2. Requires the Use of Independent Judgment.
2. Confidential Employees
• a confidential employee is one who is
entrusted with confidence on delicate
matters, or with custody, handling, or care
and protection of the employer’s property.
(National Association of Trade Unions (NATU)
– Republic Planters Bank Supervisors
Chapter v. Honorable Ruben Torres, 1994)
• Confidential employees assist and act in a
confidential capacity to, or have access to
confidential matters of, persons who exercise
managerial functions in the field of labor
relations [Philips Industrial Development v.
NLRC; G.R. No. 88957 (June 25, 1992)]
Confidential employees may be managerial, supervisory or even a rank
and file employee. Confidential employees are also prohibited from
forming, joining or assisting any labor organization.

Doctrine of Necessary Implication – what is implied in a statute is as

much part thereof as that which is expressed

• Under Art. 245, confidential employees are not prohibited from

joining, assisting, or forming any labor organization. But by virtue of
necessary implication, confidential employees are similarly
disqualified.
• By the very nature of their functions, they assist and act in a
confidential capacity to, or have access to confidential matters of,
persons who exercise managerial functions in the field of labor
relations. As such, the rationale behind the ineligibility of managerial
employees to form, assist or join a labor union equally applies to
them. (Metrolab Industries, Inc. v. Roldan- Confesor ,1996)
Kinds of Union Security Agreements

■ Closed-shop – only union members can be hired by the company and must retain union
member to retain employment
■ Union shop – non-members may be hired, but to retain employment, must become union
member after a certain period; applies to present and future employees;
■ Modified Union shop – non-union members at the time of signing of contract need not join
the Union, but all those hired thereafter must join.
■ Maintenance of membership shop – no employee is compelled to join the union, but all
present and future members must, as a condition of continued employment, remain in good
standing with the Union
■ Exclusive Bargaining shop – Union is recognized as the exclusive bargaining agent for all
employees in the BU, whether union members or not;
■ Bargaining for members only – Union is recognized as the bargaining agent only for its own
members
Collective Bargaining

■ A process by which workers and employers negotiate and come to an agreement on

■ 1) the terms and conditions of employment and

■ 2) the mechanism to administer the agreement and resolve disputes or differences
arising from it.

CBA
Bargaining unit
 A grouping of all or less than all of the ■ SEBA (Sole and exclusive bargaining agent)
employees in an employer unit  Right to financial information
 State policies  Right and duty to represent entire
bargaining unit for purposes of CB
 Principal basis for grouping is mutuality
 Right and duty to bargain in good faith
or commonality of interests; also a basis
is the will of the employees  Right and duty to conclude and administer
CBA
 One employer unit, one bargaining unit
to avoid fragmentation
 Geographical, occupational or other ■ PCE (Petition for Certification Election) – process
similar grouping allowed provided it is to be the SEBA
inequitable to the employer
Collective Bargaining Process
PRELIMINARY PROCESS
Serving of written notice to the other party with a statement of
proposals

NEGOTIATION PROCESS
Conference between Mgt & Union for the purpose of discussing
differences, with the end view of concluding with an agreement

EXECUTION PROCESS
Signing of the CBA by representatives of both Mgt & Union

ADMINISTRATION/INTERPRETATION/ APPLICATION PROCESS

Interpretation, construction, and application of the provisions and
stipulations embodied in the CBA by the parties
CBA ADMINISTRATION

■ 2 Aspects of Collective Bargaining

– Contract Negotiations (Promise Making)

■ Contract Administration (Promise Checking)

Grievance Machinery
What is a Grievance?
- any question by either the employer 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.
Grievance Process
Third Party
Level
Voluntary
Arbitration

No period Region Mgt.

Top Level indicated Level
Resolve in 15 days

UM Grievance
7 days Committee
To resolve w/in 5 days from
Plant Level receipt of the grievance

Worker & Shop Immediate

3 days verbal Steward Supervisor
3 days written

To exert efforts to settle the grievance w/in 5 days

Shopfloor
Worker Shop Steward
To present grievance or
To verify facts and determine
complaint orally or in
Incident validity of grievance
writing
Unfair labor practices

■ Concept
 Unfair labor practices violate the constitutional right of workers to self-organization, are
inimical to the legitimate interest 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, disrupt industrial peace, and hinder the promotion of healthy and
stable labor- management relations (Art. 247, LCP).

■ Essential element
 Any restraint, coercion, discrimination against or undue interference with the exercise of
the right to self-organization (Art. 246, LCP).
Unfair labor practices of employers
1. Interference, restraint or coercion

a) dismissal of union members upon their refusal to give up their membership, under the pretext of
retrenchment due to reduced dollar allocations (Manila Pencil Co. v. CIR, 14 SCRA 953)
b) refusal over a period of years to give salary adjustments according to the improved salary scales in the
collective bargaining agreements (Benguet Consolidated v. BCI Employees and Workers Union, 22 SCRA
129)
c) dismissal of an old employee allegedly for inefficiency, on account of her having joined a union and
engaging in union activities (East Asiatic Co. v. CIR, 16 SCRA 820).
d) Dismissal of teachers for fear by the school that there would be strike the following semester (Rizal
Memorial Colleges Faculty Union, et. al. et. al. v. NLRC GR. Nos. 59012-13, 12 October 1989)
e) A company’s capital reduction efforts, to camouflage the fact that it has been making profits to justify the
mass lay-off of its employees especially union members. (Madrigal & Company, Inc. v. Zamora, Gr. No. L-
4823, 30 June 1987)
Totality of Conduct Doctrine
• The culpability of employer’s remarks is to be evaluated on the basis of their
implication, against the background of and in conjunction with collateral
circumstances.
• Under this doctrine, an expression which might be permissibly uttered by one
employer, might be deemed improper when spoken by a more hostile employer, and
consequently actionable as an unfair labor practice
• This doctrine, expressions of opinion by an employer, though innocent in themselves,
frequently were held to be culpable because of the circumstances under which they
were uttered, the history of the particular employer’s labor relations or anti – union
bias or because of their connection with an established a collateral plan of coercion
or interference.
2. Union membership or disaffiliation as a condition for employment (“Yellow
Dog Condition”)

- a promise exacted from workers as a condition of employment that they

are not to belong to, or attempt to foster, a union during their period of
employment
■ Three Usual Provisions under the Yellow Dog Contract

1. a representation by the employee that he is not a member of a labor

union
2. a promise by the employee not to join a labor union
3. a promise by the employee that, upon joining a labor union, he will quit
his employment
3. Contracting Out services of union members
■ Contracting out services or functions being performed by union members when such act will interfere with,
restrain, or coerce employees in the exercise of their right to self – organize.
■ However, an employer is not guilty of an unfair labor practice in contracting work out for business reasons
such as decline in business, the inadequacy of his equipment, or the need to reduce the cost, even if the
employer’s estimate of his cost is based on a projected increase attributable to unionization.

■ Runaway shop
■ An industrial plant moved by its owners from one location to another to escape union labor regulations or
state laws or to discriminate against employees at the old plant because of their union activities.
■ Resorting to runaway shop is ULP.
■ Where a plant removal is for business reasons but the relocation is hastened by anti – union motivation,
the early removal is unfair labor practice. It is immaterial that the relocation is accompanied by a transfer of
title to a new employer who is an alter ego of the original employer.
■ Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a
corporation is not of itself sufficient ground for disregarding the separate corporate personality. [Sunio v.
NLRC, 127 SCRA 390 (1984)]
4. Company domination

1. Initiation of the company union idea. This may further occur in three styles:
a. outright formation by the employer or his representatives
b. employee formation on outright demand or influence by employer
c. managerially motivated formation by employees
2. Financial support to the union. By defraying the union expenses or pays the attorney’s fees to
the attorney who drafted the constitution and by – laws of the union.
3. Employer encouragement and assistance. Immediately granting the union exclusive recognition
as a bargaining agent without determining whether the union represents the majority of
employees.
4. Supervisory assistance. This takes the form of soliciting membership, permitting union
activities during working time or coercing employees to loin the union by threats of dismissal or
demotion (Philippine American Cigar & Cigarette Factory Workers Union v. Philippine American
Cigar & Cigarette Mfg. Co., Inc., 7 SCRA 375).
5. Discrimination

Test of Discrimination
■ For the purpose of determining whether or not a discharge is discriminatory, it is
necessary that the underlying reason for the discharge be established.
■ The fact that a lawful cause for discharge is available is not a defense where the
employee is actually discharged because of his union activities. If the discharge is
actually motivated by a lawful reason, the fact that the employee is engaged in union
activities at the time will not lie against the employer and prevent him from the
exercise of his business judgment to discharge an employee for cause. (NLRB v. Ace
Comb Co., 342 F. 2 841)
6. Discharge or discrimination for giving testimony
■ The testimony or proceedings might involve wages, employee’s benefits disciplinary rules, or
organizational rights, or anything covered by the Labor Code. What is chargeable as ULP is the employer’s
retaliatory act regardless of the subject of the employee’s complaint or testimony.

7. Violation of duty to bargain collectively

■ Four Forms of ULP in bargaining:
a. Failure or refusal to meet and convene
b. Evading the mandatory subjects of bargaining
c. Bad faith in bargaining, including failure or refusal to execute the collective agreement, if requested
d. Gross violation of the CBA
8. Payment of attorneys’ or negotiation fees to the union or its officers or agents to settle a
CB issue
■ Self – organization and collective bargaining are treasured rights of the workers. The law
zealously shields them from corruption. It is a punishable act of ULP for the employer to
pay the union or any of its officers or agents any negotiation fee or attorney’s fees as
part of the settlement in collective bargaining or any labor dispute. To do so is not only
unlawful. It is ethically reprehensible.
■ Correspondingly, Art. 249 prohibits union officers or agents from asking for or accepting
such payments. Such act, furthermore, is a ground for cancellation of union registration
under Art. 239 (g).
9. Gross violation of CBA
■ Implementation of the CBA is still part of the bargaining process. The duty to bargain
requires good faith, and good faith implies faithful observance of what has been agreed
upon. It logically follows that noncompliance with the agreement is non – observance of
good faith in bargaining; therefore, the noncompliance amounts to a ULP.
■ Violation of the CBA must be gross.
Unfair labor practices of Unions
1. Interference, restraint or coercion, subject to union’s right to prescribe rules on acquisition
and retention of membership
– A labor organization commits ULP when it restrains or coerces employees in their right
to self – organization.
– A labor organization may interfere in the employees’ right to self – organization as
long as the interference does not amount to restraint or coercion.
2. Causing the employer to discriminate against an employee
Arbitrary use of union security clause
– The broad rule is that the union has the right to
– determine its membership and to prescribe the conditions for the acquisition and
retention thereof. Consequently, admission to membership may not be compelled.
– This rule, however, is qualified in the case of labor unions holding a monopoly in the
supply of labor, either in a given locality, or as regards a particular employer by reason
of a closed – shop or similar agreements. In such case, qualified applicants may not
be barred by unreasonable rules.
3. Violation of duty to bargain collectively, including refusal to bargain
– A union violates its duty to bargain collectively by entering negotiations with a fixed
purpose of not reaching an agreement or signing a contract.
4. Causing the employer to pay or to deliver any thing, in the nature of an exaction, for services
not performed, including demanding for negotiation fees
– Featherbedding – employee practices which create or spread employment by
unnecessarily maintaining or increasing the number of employees used, or the amount
of time consumed, to work on a particular job
– It may take the form of minimum – crew regulations on the railroad, make – work rules
such as the setting of and prompt destruction of unneeded bogus type in the newspaper
industry, stand – by pay for musicians when a radio station broadcasts music from
phonograph records or production ceilings for work on the assembly lines or at the
construction site
5. Asking or accepting negotiation or attorney’s fees in exchange for CBA settlement
6. Gross violation of CBA
Strikes and Lockouts

■ Strike – any temporary stoppage of work by the concerted action

of the employees as a result of an industrial or labor dispute
Strikes and Lockouts
■ Characteristics of a Legal Strike

 There must be an employer-employee relationship.

 Existence of a dispute.
 Employment relation is deemed to continue although in a state of
belligerent suspension.
 There is temporary work stoppage.
 Work stoppage is done through concerted action.
 The striking group is a legitimate labor organization. In case of
bargaining deadlock, it must be the employees’ sole bargaining
representative.
Strikes and Lockouts
■ Lockout – temporary refusal of any employer to
furnish work as a result of an industrial or labor
dispute

■ Grounds for lockout

 Collective Bargaining Deadlock

 Unfair Labor Practice
• violations of CBA must be gross to be considered
as ULP
Strikes and Lockouts
■ When strike or lockout cannot be declared

 Violations of CBA which are not gross.

 Grounds involving inter/intra union disputes
 When there is no notice of strike or lockout or without the strike or
lockout vote
 After assumption of jurisdiction by the DOLE Secretary
 After certification or submission of dispute to compulsory or
voluntary arbitration or during the pendency of cases involving the
same grounds for strike or lockout.
Strikes and Lockouts

■ Who may declare a strike or lockout?

1. Any legitimate labor organization but only on grounds of unfair labor practice

2. Any certified or duly recognized bargaining representative

3. Employer
Strikes and Lockouts

■ Notice of strike or lockout

1. In case of bargaining deadlocks: at least 30 days before the intended date of strike

2. In case of unfair labor practice: at least 15 days before the intended date of strike

3. In case of ULP involving the dismissal of a union officer which may constitute union-
busting: union may take action immediately after the strike vote and the submission
of the results of the strike vote to the regional branch of the Board
Strikes and Lockouts
■ Prohibited activities during strikes and lockouts

1. strike or lock-out without first having bargained collectively strike or lock-out without
the necessary notice being filed with the DOLE

2. strike or lock-out without the necessary vote first having been obtained and
reported to the DOLE

3. strike or lock-out after DOLE has assumed jurisdiction or the President or after
certification or submission of dispute to the compulsory arbitration/voluntary
arbitration or during the pendency of cases involving the same grounds for the
strike or lockout
Strikes and Lockouts
4. knowingly participating in illegal strike or knowingly participates in the commission of
illegal acts during a strike -> ground for termination of employment

5. obstruct, impede, or interfere with by force, violence, coercion, threats, or

intimidation any peaceful picketing by employees during any labor controversy or shall
abait or aid such obstruction or interference

6. employment or use of any strikebreaker/ employed as a strike breaker

7. bringing in, introducing, or escorting by any public officer or employee, including
officers and personnel of the AFP or PNP, or any armed person in any manner of any
individual who seeks to replace strikers in entering or leaving the premises of a strike
area or work in place of strikers

8. commit any act of violence, coercion or intimidation while engaged in picketing or

obstruct the ingress or egress from the employer's premises for lawful purposes or
obstruct public thoroughfares (must be pervasive and widespread/consistently and
deliberately resorted to as a matter of policy)
Picketing

■ Industrial action by unionized workers (called pickets) who either are on, or are
trying to gather support for, a strike by assembling near the entrance to the
employer's premises. Pickets try to persuade

 coworkers to join them,

 workers of other firms to refuse to enter the premises, and
 customers to refrain from doing business with their employer.
POST EMPLOYMENT
Employee-Employer Relationship

Classifications of Classifications of
employment employees

Regular employment Managerial employees

Fixed period or project

Supervisory employees
employment

Casual employment Rank-and-File employees

Note: Probationary employment Note: Confidential employee is

is not a separate employment not a separate employee
classification classification
Classifications of Employment
1. Regular employment (Art 280) - notwithstanding any written or oral
agreement between the employer and the employee to the contrary:

a. the employee has been engaged to perform activities which are

usually necessary or desirable in the usual business or trade of the
employer.
b. the employee has rendered at least one year of service, whether such
service is continuous or broken, with respect to the activity in which he
is employed and his employment shall continue while such activity
exists.
c. the employee is allowed to work after a probationary period.
 Classifications of Employment

2. Project employment 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.

A project employee, according to Maraguinot, Jr. vs. NLRC, [284 SCRA 539, 556
(1998)], may acquire the status of a regular employee when the following factors
concur:
(1) There is a continuous (as opposed to intermittent) rehiring of project
employees even after cessation of a project for the same tasks or nature of
tasks; and
(2) The tasks performed by the alleged “project employee” are vital,
necessary and indispensable to the usual business or trade of the employer.
(See also Imbuido vs. NLRC, G. R. No. 114734, March 31, 2000).
 Classifications of Employment

3. Seasonal employment where the work or service to be performed by the employee

is seasonal in nature and the employment is for the duration of the season.

If repeatedly hired for several seasons, then employees become regular.

4. Probationary employment (Art 281) where the employee is on trial by an employer

during which the employer determines the qualification of the employee for regular
employment.

Terminated only for cause:

1. Particular time is prescribed and termination must be within such time
2. Employer’s dissatisfaction must be real and in good faith, not feigned
3. No unlawful discrimination in the dismissal
 Classifications of Employment

5. Casual employment (Art 280) which is not in the nature of a regular,

project or seasonal employment as these kinds of employment are
defined under Article 280 of the Labor Code.

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 engagement; provided, that any
employee who has rendered at least one year of service, whether
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.
 Classifications of Employment

6. Fixed-period employment contracts are not mentioned in the Labor Code.

But the Civil Code recognizes the validity and propriety of contracts and
obligations with a fixed period. These are contracts to which the parties by
free choice, have assigned a specific date of termination.

The Supreme Court set down two (2) criteria under which fixed contracts of
employment cannot be said to be in circumvention of security of tenure, to
wit:
a. The fixed period of employment was knowingly and voluntarily agreed
upon 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
 Classifications of Employment

b. 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 on the latter.

If the foregoing criteria are not present, the contract should be struck down for
being illegal.

In a fixed-period employment, lack of notice of termination is of no

consequence because when the contract specifies the period of its duration, it
terminates on the expiration of such period. (Pangilinan vs. General Milling
Corporation, supra; Blancaflor vs. NLRC, 218 SCRA 366 [1993]).
 Classifications of Employment

Hiring of employees on a 5-month period basis.

In Pure Foods Corporation vs. NLRC, [G. R. No. 122653, Dec. 12, 1997, 283
SCRA 133], the scheme of the employer in hiring workers on a uniformly fixed
contract basis of 5 months and replacing them upon the expiration of their
contracts with other workers with the same employment status was found to
have been designed to prevent the “casual” employees from attaining the
status of a regular employee. It was a clear circumvention of the employee’s
right to security of tenure and to other benefits like minimum wage, cost-of-
living allowance, sick leave, holiday pay, and 13th month pay.
 Classifications of Employment

CONTRACTUAL EMPLOYMENT

MAY REGULAR JOBS BE CONTRACTED OUT?

Court upheld termination of employment of water tenders and their replacement by

independent contractors. Employer’s good faith in implementing a redundancy program is not
necessarily put in doubt by availment of services of an independent contractor.(Asian Alcohol vs
NLRC)

Efficiency and economical operations are recognized as valid, lawful reasons for contracting
out jobs even those done by direct-hire regular employees. But:
1) Contractor must be a legitimate one and not a labor only contractor
2) Contracting out is not one of the arrangements prohibited by DO 18-A nor does it amount
to unfair labor practice
Withholding of Wages

Although management prerogative refers to “the right to regulate all aspects of

employment,” it cannot be understood to include the right to temporarily withhold
salary/wages without the consent of the employee. To sanction such an
interpretation would be contrary to Article 116 of the Labor Code, which provides:

ART. 116. Withholding of wages and kickbacks prohibited. – It shall be unlawful for
any person, directly or indirectly, to withhold any amount from the wages of a worker
or induce him to give up any part of his wages by force, stealth, intimidation, threat
or by any other means whatsoever without the worker’s consent.
Withholding of Wages
Any withholding of an employee’s wages by an employer may only be allowed in the form of
wage deductions under the following circumstances:
ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any person, shall
make any deduction from the wages of his employees, except:
(a) 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;
(b) 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
(c) In cases where the employer is authorized by law or regulations issued by the Secretary
of Labor.
Security of Tenure

Every employee is guaranteed the right to

SECURITY OF TENURE
What is Security of Tenure?
An employee cannot be dismissed from the service
(employment) for causes other than those provided by law
and only after due process is accorded the employee

(De Guzman v. COMELEC, G.R. No. 129118, 19 July

2000)
 What is Due Process?
• By “due process” we mean “a law which hears before
it condemns; which proceeds only upon inquiry, and
renders judgment only after trial.
• Due process of law contemplates notice and
opportunity to be heard before judgment is rendered.

(Albert v. University Publishing Co. Inc., G.R. No. L-19118,

30 January 1965.)
Due Process in Administrative Proceedings

• Does not require a trial type proceedings

• Satisfied when a person is notified of the charge
against him
• The person must also be given the opportunity to
defend himself
• Essence is the opportunity to explain one’s side.

(Ledesma v. Court of Appeals, G.R. No. 166780, 27

December 2007.)
Aspects of Due Process

Substantive Due Process

An employee can only be separated from employment for
authorized or just causes.

Procedural Due Process

Before a decision is made, the employee must be notified
of the charges against him and be given the opportunity
to explain his side.
Substantive Due Process

SUBSTANTIVE DUE PROCESS

1. Authorized Cause
2. Just Cause
Authorized Cause

Art. 283. Closure of establishment and reduction of

personnel
 Installation of labor-saving devices
 Redundancy
 Retrenchment to prevent losses
 Closing or cessation of operation

Art. 284. Disease as ground for termination.

Art. 287. Retirement.
Installation of Labor Saving
Devices
•Labor saving device need not be a machine. It can be a
system or a procedure
Retirement
Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have
earned under existing laws and any collective bargaining agreement and other agreements: Provided,
however, That an employee’s retirement benefits under any collective bargaining and other agreements
shall not be less than those provided therein.
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, who has served at least five (5) years
in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least 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.
Unless the parties provide for broader inclusions, the term ‘one-half (1/2) month salary’ shall mean fifteen
(15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5)
days of service incentive leaves.
 Redundancy
Redundancy exists where the services of an employee are in excess of what
would reasonably be demanded by the actual requirements of the 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. An
employer has no legal obligation to keep on the payroll employees more than
the number needed for the operation of the business.(Edge Apparel, Inc. vs.
NLRC [G.R. No. 121314, 12 February 1998])
Redundancy
Adequate Proof of Redundancy

It is the employer’s burden to show that redundancy exists. It is not

enough for a company to merely declare that it has become overmanned.
It must produce adequate proof of such redundancy to justify the
dismissal of the affected employees (Asufrin vs. San Miguel Corporation,
2004).

Creation of Positions with Functions Related or Similar to Those of the

Abolished Positions Does not Necessarily Invalidate the Declaration of
Redundancy (Santos, et.al. vs Pepsi Cola Products Phils., 2001)
 Redundancy
Redundancy Arising from Contracting Out of Labor
In several cases, the court upheld the dismissal on ground of redundancy even when the employer
contracts out the services of another company to perform the same task as the redundant positions.
Contracting out of labor has been held as a valid management prerogative. (See De Ocampo vs. NLRC,
1992; Serrano vs. NLRC, 2000.)

Cases
The employer was engaged in the production of wooden doors and furniture. The complainants
who were hired as mechanics were terminated by the employer when their positions were
abolished, and contracted out to Gemac Machineries. The dismissal is proper. In contracting
the services of Gemac, which the company has the right to do, the services rendered by the
mechanics became redundant and superfluous, and therefore properly terminable. (De
Ocampo vs. NLRC, G.R. No. 101539 September 4, 1992.)
 Retrenchment
Retrenchment, is used interchangeably with the term "lay-off." Resorted to
by management during periods of business recession, industrial
depression, or seasonal fluctuations, or during lulls occasioned by lack of
orders, shortage of materials, conversion of the plant for a new production
program or the introduction of new methods or more efficient machinery,
or of automation.

Simply put, it is an act of the employer of dismissing employees because of

losses in the operation of a business, lack of work, and considerable
reduction on the volume of his business, a right consistently recognized
and affirmed by this Court. (Sebuguero vs. NLRC [G.R. No. 115394,
27September 1995])
 Retrenchment

The case of Sugar Lopez Corporation v. Federation of Free

Workers, lays down the general standards for retrenchment:

1. The losses expected should be substantial and not merely de

minimis in extent. If the loss purportedly sought to be
forestalled by retrenchment is clearly shown to be
insubstantial and inconsequential in character, the bonafide
nature of the retrenchment would appear to be seriously in
question.
 Retrenchment
2. The substantial loss apprehended must be reasonably imminent, as such
imminence can be perceived objectively and in good faith by the employer.

3. be reasonably necessary and likely to effectively prevent the expected losses.

4. but certainly not the least important, the alleged losses if already incurred,
and the expected imminent losses sought to be forestalled, must be proved
by sufficient and convincing evidence.(Balasbas vs. NLRC [G.R. No. 85286,
24 August 1992])
 Disease
Section 8, Rule I, Book VI, of the Rules and Regulations Implementing the
Labor Code reading as follows:

1. His continued employment is prohibited by law or prejudicial to his health

or to the health of his co-employees,
2. Certification by a competent public health authority that the disease is of
such nature or at such a stage that it cannot be cured within a period of
six (6) months even with proper medical treatment.
3. If the disease or ailment can be cured within the period, the employer
shall not terminate the employee but shall ask the employee to take a
leave
 Disease

DISEASE AS A 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.

 Requirements:
• Certification by a competent public health authority that the disease is of such nature
or at such a stage

• It cannot be cured within a period of six (6) months even with proper medical
treatment.

• If the disease or ailment can be cured within the period, the employer “shall not terminate
the employee but shall ask him to take a leave.”
Just Causes

 Violation of Article 282 of the Labor Code

• Serious misconduct
• Willful Disobedience/Insubordination
• Gross and habitual neglect
• Fraud or willful breach of trust
• Commission of a crime or offense against the person…
• Analogous (Similar) Cases
Just Causes

SERIOUS MISCONDUCT

• An improper conduct willful in character and of

such grave nature that transgressed some
established and definite rule of action in relation
to the employee’s work
■ Misconduct is improper or wrong conduct. It is the transgression of
some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and
not mere error in judgment. (Telecommunications Distributors
Specialist, Inc. v. Raymond Garriel, G.R. No. 174981, 25 May 2009)
Just Causes

WILLFUL DISOBEDIENCE TO ORDERS

• The employees are bound to follow

reasonable and lawful orders of the
employer which are in connection with
their work and made known to the
employee.
■ Elements of willful disobedience:
• disobedience must be willful
• order must be reasonable and lawful
• order sufficiently known to the employee
• order in connection with the duties which the employee has been engaged to
discharge

– Example: valid transfer (exercise of management prerogative, must not be

done in bad faith)
• Refusal to render overtime – Such an order is legal under Article 89 of the Labor
Code and the employee’s unexplained refusal to obey is insubordination that merits
dismissal from service (Realda v. New Age Graphics, Inc., G.R. No. 192190, 25 April
2012)
• Refusal to be transferred
• Refusal to undergo drug testing
• Disobedience to Company Policies:
• Use of company-owned vehicles for private purposes
• Sales associate refusing to use Tool of Trade because it is not on 4 wheels.
• Refusing to wear proper uniform despite reminder
Just Causes

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.

• “Gross negligence” – absence of that diligence

that an ordinarily prudent man would use in
his own affairs.
■ Negligence must be gross and habitual.
• Gross neglect means an absence of that diligence that an ordinarily prudent man would
use in his own affairs (failure to exercise the slightest care or diligence).
• Habitual not isolated acts
• No need for actual damage, loss or prejudice
■ Example: Abandonment (AWOL), tardiness and absenteeism
■ AWOP/AWOL – if due to emergency situation (floods), should be excused (Navarro vs
CCBPI)

■ (In Abandonment as cause for termination, abandonment with intent to abandon. Filing
an illegal dismissal case negates that intent.)

Classified - Internal use

Just Causes

Fraud or willful breach of trust

• Fraud is any act, omission, or concealment

which involves a breach of legal duty, trust,
or confidence justly reposed and is
injurious to another

Classified - Internal use

 Just Causes

LOSS OF TRUST AND CONFIDENCE

• Can be invoked as a just cause for termination from employment when an employee
holds a position of responsibility, trust and confidence.

 Generally, applicable to 2 types of employees:

1. Managerial employees, or those vested with the power to lay down or

recommend management policies (supervisors).
2. Regularly handle significant amounts of money or property in the exercise of
their functions (cashiers, auditors).

• The act complained of must be related to the performance of the duties of the
employee.
Just Causes

COMMAND RESPONSIBILITY
• The principle of respondeat superior may be cited as
basis for termination based on loss of trust and
confidence
• Managerial position requires high degree of
responsibility which includes unearthing of fraudulent
and irregular activities
• Failure to detect anomaly; direct participation in
irregularity need not be proved
• Actuations must sow the seed of mistrust and loss of
confidence
■ “The principle of respondent (sic) superior or command responsibility may be cited
as basis for the termination of employment of managerial employees based on loss
of trust and confidence. In the Etcuban case (Etcuban v. Sulpicio Lines, Inc., G.R.
No. 148410, 17 January 2005) the Supreme Court in upholding the validity of
petitioner-employee’s dismissal on the ground of loss of trust and confidence, ruled
that even if the employee x x x had no actual and direct participation in the alleged
anomalies, his failure to detect any anomaly that would normally fall within the
scope of his work reflects his ineffectiveness and amounts to gross negligence and
incompetence which are likewise justifiable grounds for his irregularity, for what is
material is that his actuations were more than sufficient to sow in his employer the
seed of mistrust and loss of confidence.” (Wesleyan University Philippines v. Nowella
Reyes, G.R. No. 208321, 30 July 2014)
■ In the case of ordinary rank-and-file employees, termination on the basis of these
same grounds requires a higher proof of involvement in the events in question; mere
uncorroborated assertions and accusations by the employer will not suffice.
(Gonzales v. NLRC, G.R. No. 131653, 26 March 2001)
Just Causes

COMMISSION OF A CRIME OR
OFFENSE

• Commission of a crime or offense by the

employee against his employer or any
immediate member of his family or his duly
authorized representative, is a just cause for
termination of employment
■ Members of the family are those persons having family relations referred to in
Article 150 of the Family Code of the Philippines. It shall include the employer-
parent’s or legal guardian’s husband or wife, parents, children, other ascendants or
descendants, brothers and sisters whether full or half-blood (D.O. No. 18, 1994)
Just Causes

ANALOGOUS CAUSES

• Other causes analogous to the above

grounds may also be a just cause for
termination of employment
• 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. “Gross
inefficiency” is closely related to “gross neglect,” for both involve specific acts or
omission on the part of the employee resulting in damage to the employer or to his
business (Aliling v. Feliciano, G.R. No. 185829, 25 April 2012)
• Analogous cases
• Union members’ commission of illegal acts during a strike
• Illegal use, possession, etc of drugs
• Possession of deadly weapons or firearms
• Disloyalty/conflict of interest
Procedural Due Process

PROCEDURAL DUE PROCESS

FOR AUTHORIZED CAUSES

Classified - Internal use

 Art 283

1. By serving a written notice on the workers and the Department of Labor and
Employment at least one (1) month before the intended date thereof.
2. In case of termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation
pay equivalent to at least one (1) month pay or to at least one (1) month pay
for every year of service, whichever is higher.
3. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent
to one (1)month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.

Classified - Internal use

Procedural Due Process

PROCEDURAL DUE PROCESS

FOR JUST CAUSES
 Twin Notice Requirement
 Opportunity to be Heard
Procedural Due Process

NOTICE OF CHARGES TO OPPORTUNITY NOTICE OF

THE EMPLOYEE TO BE HEARD DECISION

Employee is ANSWER Employee Employee is

informed in writing is given additional informed in
of the deviation/s opportunity to: writing of the
allegedly • explain and clarify decision against
committed and his side to the him or in his favor.
directs him to charge
explain in writing. • present his
evidence
• refute evidence
against him
1st Notice

 A written notice served on the employee specifying

the ground or grounds for the disciplinary action,
and giving said employee a reasonable opportunity
within which to explain his side.
Reasonably opportunity?

• Five (5) days from receipt of the notice by the employee. (King of Kings
Transport, Inc. v. Mamac, G.R. No. 166208, 29 June 2007)
Why?
• To give the employees an opportunity to study the accusation against
them, consult a union official or lawyer, gather data and evidence, and
decide on the defenses they will raise against the complaint. Moreover,
in order to enable the employees to intelligently prepare their
explanation and defenses.
 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.
Preventive Suspension
Basis for imposition of preventive suspension is Section 8 and Section 9 of Rule XXIII,
Book V, of the Omnibus Rules Implementing the Labor Code, as amended by
Department Order No. 9, Series of 1997, which read as follows:

Section 8. Preventive suspension. The employer may place the worker concerned under
preventive suspension only if his continued employment poses a serious and imminent
threat to the life or property of the employer or of his co-workers.

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

■ The employee placed under preventive suspension is not entitled to payment

of wages. This rule, however, presupposes that the suspension is valid. If the
suspension is invalid or illegal, the employee shall be entitled to payment of
wages during the entire period of illegal suspension. (See Gatbonton vs.
NLRC, G.R. NO. 146779, January 23, 2006.)

■ Likewise, if the suspension is extended beyond the 30-day limit, the

employee shall be entitled to wages and other benefits for the period of the
extension.
When to impose preventive suspension?

• Employee poses a serious and imminent threat to the life or property

of the employer or of his co-workers.

• It is not a penalty but an intermediate protective measure by the

Management.

• It shall be effective for a maximum thirty (30) days.

• The employer may extend the period provided that the wages and
other benefits due to the employee are paid.

• When there is no sufficient basis to justify an employee’s preventive

suspension, the latter is entitled to the payment of his salaries during the
time of preventive suspension (Valiao vs CA, 435 SCRA 543 (2004)
 EFFECT OF DEFECTIVE NOTICE

• It is a violation of the right to due process

• Warrants the award of nominal damages

“In this case, the employer was not direct and specific in its
first notice to the employee. The words used were couched in
general terms and were in no way informative of the charges
against her that may result in her dismissal from employment.
Evidently, there was a violation of her right to statutory due
process warranting the payment of indemnity in the form or
nominal damages.” (Unilever Philippines, Inc. v. Rivera, G.R.
No. 201701, 3 June 2013)
Answer

If employee refuses or fails to reply?

He is considered to have waived his right to submit an

Answer and conduct a formal administrative hearing

The Employer can decide the case even without the

employee’s Answer. What is required is that the employee
was given an opportunity to explain his side.
2nd Notice

A written notice served on an employee indicating the

grounds justifying his termination or absolvement
Termination by Employee (ART
285)
(a) An employee may terminate without just cause the employee-
employer relationship by serving a written notice on the employer
at least one month in advance. The employer upon whom no such
notice was served may hold the employee liable for damages.
(b) An employee may put an end to the relationship without serving
any notice on the employer for any of the following just causes:
 Serious insult by the employer or his representative on the honor and
person of the employee;
 Inhuman and unbearable treatment accorded the employee by the
employer or his representative;
 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
 Other causes analogous to any of the foregoing.
Procedural Due Process

Administrative Investigation is a process of

inquiring and data-gathering to:

 Ascertain the truth about a given situation,

 Determine accountabilities, and
 Prove evidence of innocence or fault.
Evidence Required: Substantial Evidence

“That amount of relevant evidence which a reasonable mind

might accept as adequate to justify a conclusion” (Rules of Court,
Section IV, Rule #133)
Why apply due process?

Non-compliance to due process for

authorized causes may result to
payment of nominal damages,
reinstatement, backwages.
Constructive Dismissal

Constructive Dismissal concept

■ Constructive dismissal is an employer’s act amounting to dismissal but made to
appear as if it were not – a dismissal in disguise. In most cases of constructive
dismissal, the employee is allowed to continue to work, but is simply reassigned,
or demoted, or his pay diminished without a valid reason to do so.
■ Constructive dismissal does not always involve forthright dismissal or diminution
in rank, compensation, benefit and privileges. There may be constructive
dismissal if an act of clear discrimination, insensibility or disdain by an employer
becomes so unbearable on the part or the employee that it could foreclose any
choice by him except to forego his continued employment. (See Hyatt Taxi
Services case, G.R. No. 143204, June 26, 2001.)
Constructive Dismissal

 Diminution of pay. A diminution of pay is prejudicial to the employee and

amounts to constructive dismissal. (Francisco vs. NLRC)
 Transfer of employee not amounting to constructive dismissal. Transfer of an
employee from one area of operation to another is a management prerogative
and is not constitutive of constructive dismissal, when the transfer is based on
sound business judgment, unattended by a demotion in rank or a diminution of
pay or bad faith. (Tan vs. NLRC, G.R. No. 128290, November 24, 1998.)
 Transfer of employee amounting to constructive dismissal. A transfer amounts to
constructive dismissal when the transfer is unreasonable, unlikely, inconvenient,
impossible, or prejudicial to the employee. (Phil. Industrial Security Agency Corp. vs.
Aguinaldo, G.R. No. 149974, June 15, 2005.)
QUITCLAIMS
The requisites of a valid quitclaim are:
(a) It was voluntarily entered into by the parties;
(b) There was no fraud or deceit on the part of any of the parties;
(c) The consideration of the quitclaim is credible and reasonable; and,
(d) The contract is not contrary to law, public order, public policy, morals or
good customs or prejudicial to a third person with a right recognized by law.

■ It is only where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the
questionable transaction. (Periquet v. NLRC)
Burden of Proof in Labor Cases
■ The fact that Santos neglected to substantiate his claim for night shift
differentials is not prejudicial to his cause. After all, the burden of proving
payment rests on petitioner NSC.

■ Santos' allegation of non-payment of this benefit, to which he is by law

entitled, is a negative allegation which need not be supported by evidence
unless it is an essential part of his cause of action. It must be noted that
his main cause of action is his illegal dismissal, and the claim for night
shift differential is but an incident of the protest against such dismissal.
Thus, the burden of proving that payment of such benefit has been made
rests upon the party who will suffer if no evidence at all is presented by
either party. NationalSemiconductor (HK) Distribution, Ltd. vs. NLRC [G.R.
No. 123520, 26 June 1998])
Burden of Proof in Labor Cases
■ The reason for this rule is that the pertinent personnel files, payrolls, records,
remittance and other similar documents – which will show that overtime,
differentials, service incentive leave and other claims of workers have been paid –
are not in the possession of the worker but in the custody and absolute control of
the employer. Thus, in choosing not to present evidence to prove that it had paid all
the monetary claims of petitioners, HI-TECH failed once again to discharge the
onus probandi. Consequently, we have no choice but to award those claims to
petitioners. (Villar vs. NLRC [G.R. No.130935, 11 May 2009])

■ Burden to prove legality of dismissal rests on EMPLOYER

■ Burden to prove employment relationship rests with COMPLAINANT
■ Burden to prove payment rests on EMPLOYER
Consequences of Termination
If an employee is illegally dismissed, he becomes entitled to
reinstatement to his former position without loss of seniority
rights.

An employee who is unjustly dismissed is entitled to his full

backwages computed from the time his compensation was
withheld from him up to the time of his reinstatement. (Condo
Suite Club Travel, Inc. vs. NLRC [G.R. No. 125671, 28 January
2000])
Consequences of Termination
Exception: Strained relations
■ "Strained relations,“ must be of such a nature or degree as to preclude
reinstatement. But, where the differences between the parties are neither
personal nor physical, nor serious, then there is no reason why the illegally
dismissed employee should not be reinstated rather than simply given
separation pay and backwages. More so if the cause of the perceived
'strained relations' is the filing of a complaint for illegal dismissal. (Kunting vs.
NLRC [G.R.No. 101427, 08 November 1993])

■ Obviously, the principle of "strained relations" cannot be applied

indiscriminately. Otherwise reinstatement can never be possible simply
because some hostility is invariably engendered between the parties as a
result of litigation.
Consequences of Termination
■ Separation pay
■ Separation pay is granted where reinstatement is no longer advisable because of
strained relations between the employee and the employer. Backwages represent
compensation that should have been earned but were not collected because of the unjust
dismissal. The bases for computing the two are different, the first being usually the length of
the employee's service and the second the actual period when he was unlawfully prevented
from working.
■ Financial Assistance
■ Financial assistance is justified only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those adversely affecting his moral
character. Thus, if the reason for the valid dismissal is, for example, habitual intoxication or
an offense involving moral turpitude, like theft, fraud, falsification or illicit sexual relations
with a fellow worker, separation pay or financial assistance, or by whatever other name it is
called, may not be allowed. (PAL vs. NLRC [G.R. No. 126805, 16 March2000]
Prescriptive Periods
■ ILLEGAL DISMISSAL – prescriptive period based on Civil Code provision; an action for
damages involving a plaintiff separated from his employment for alleged unjustifiable
causes is one for “injury to the rights of the plaintiff, and must be brought within four
(4) years.”

Art. 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;

■ MONEY CLAIMS - based on Labor Code provision

■ Article 291. 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 barred forever.
(Emphasis supplied)
 LABOR-ONLY
CONTRACTING
 What is labor-only contracting?
■ 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. (Article 106 of the Labor Code)

■ Refers to an arrangement where the contractor or subcontractor merely recruits,

supplies or places workers to perform a job or work for a principal (Sec 3. (h) of
DOLE DO No. 174)
Parties to a LOC

Employee/Worker Intermediary/Contractor

Principal/Employer
Labor-only contracting arrangement exists
when any of the 3 following circumstances
are present:
1. The contractor or subcontractor does not have substantial capital and the
contractor’s employees recruited and placed are performing activities which are
directly related to the main business operation of the principal.
2. The contractor or subcontractor does not have investments in the form of tools,
equipment, machineries, supervision, work premises, among others and the
contractor’s employees recruited and placed are performing activities which are
directly related to the main business operation of the principal.
3. When the principal possesses the right to control not only as to the end to be
achieved but also as to the means to be used in reaching such end (control test).
If there is labor-only contracting, the employees of the contractor will be considered as
the employees of the principal.
 What can be contracted out?

Jobs that are not necessary or desirable to

the business
Supreme Court rulings on “necessary or
desirable”
Business of Principal Necessary/Directly Related
Production and processing of pineapple can processing attendant, feeder of canned
products for export. (Dole Philippines Inc. vs. pineapple and pineapple processing, nata de
Esteva et al, GR No. 16115, November 30, coco processing attendant, fruit cocktail
2006) processing attendant

Shipping Industry (Babas vs. Lorenzo checkers, welders, utility men, drivers, and
Shipping Corporation, GR No. 186091, mechanics
December 15 2010)
Rattan Furniture Manufacturing (Mandaue weavers, grinders, sanders, and finishers
Gallon Trade, Inc. vs. Vicente Andales, GR No.
159668, March 7, 2008)

Manufacturing and marketing of beer Segregating and cleaning bottles

products (San Miguel Corporation vs. Vicente
Semillano et al., GR No. 164257, July 5,
2010)
Supreme Court rulings on “necessary or
desirable”

Business of Principal Not Directly Related

Manufacture of Agro-chemicals (Rhone- Janitorial services
Poulenc Agrochemicals Philippines vs. NLRC,
GR Nos. 102633-35, January 19, 1993);
Manufacture of consumer paper products
and cigarette paper (Kimberly Independent
Labor Union vs Drilon, G.R. No. L-77629 May
9, 1990; Coca Cola Bottlers Phils. Inc. vs.
NLRC et al. GR No. 120466, May 17, 1999)

Manufacturer and distributor of food Merchandisers - withdrawing of stocks from

products. (Escario et al vs. NLRC et al, GR the warehouse, the fixing of prices, price-
No. 124055, June 8, 2000) tagging, displaying of merchandise, and the
inventory of stocks.

Manufacturer of soft drinks (Mafinco Trading Peddler/Distributor

Corporation vs. Ople, GR No. L-37790 March
Requirements to be a Legitimate labor
contractor
■ Registration under the DO 174 of the DOLE
– Payment of registration fee of Php 100,000.00 every two years
– Submission of Service Agreement between contractor and principal ( to check
if job is not necessary and desirable)
– Workers are considered to be considered as regular employees of contractor
entitled to separation pay
■ Substantial capitalization of 5 Million Pesos
■ Not an in-house agency of the principal