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ATENEO LAW SCHOOL

LABOR LAW I

3-A

[ATTY. CADIZ]

L.T.J.F.

1 st Semester S.Y. 2013-2014

LABOR LAW REVIEWER

I. GENERAL PROVISIONS

Constitutional Provisions State Policies

Promotion of a just social order and free the people from poverty, promote full employment and an improved quality of life for all

State values the dignity of every human person and guarantees full respect of human rights

State recognizes the vital role of the youth in nation building and shall protect their well-being

State recognizes the role of women in nation-building and shall ensure their equality before the law

State affirms labor as a primary social

economic force and shall protect the rights of workers

State recognizes the indispensable role of the private sector, encourages private enterprise and provides incentives to needed investments

Bill of Rights

Guarantee of due process and equal protection of the law

No law shall be passed abridging the freedom of speech, right to peaceably to assemble and petition the government for redress of grievances

Right to information on matters of public concern

Right to form unions, associations and societies for purposes not contrary to law

Non-impairment of contracts

Right to a speedy disposition of cases before all judicial, quasi-judicial and administrative bodies

No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have been duly convicted

Social Justice

Congress shall prioritize the enactment of

measures that protect and enhance the right of all people to human dignity, reduce social, political and economic inequalities, by diffusing wealth and political power for the common good.

State shall regulate the acquisition, ownership, use and disposition of property and its increments

Commitment to create economic opportunities based on freedom of initiative and self-reliance

State shall afford:

o

Full protection of labor, local and overseas, organized and unorganized

o

Promote full employment and equality of employment opportunities for all

Guarantee the rights of workers to:

o

self-organization

o

collective bargaining and negotiations

o

peaceful concerted activities

o

security of tenure

o

humane working conditions

o

living wage

o

participate in policy-making decisions

State shall promote:

o

shared responsibility between employers and workers

o

preferential use of voluntary modes in settling disputes and shall enforce their mutual compliance to foster industrial peace

Regulation of worker-employer relations end recognizing:

o

right of labor to its just share in the fruits of production

o

right of enterprises to reasonable returns on investments and growth

Establishment of an agency for disabled persons for their rehabilitation, self- development and self-reliance

Protection of working women; taking into account their maternal functions

Civil Code Provisions

Abuse of Right Doctrine – Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due and

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

Page 1 of 41

ATENEO LAW SCHOOL

LABOR LAW I

3-A

[ATTY. CADIZ]

L.T.J.F.

1 st Semester S.Y. 2013-2014

observe honesty and good faith

Relation between capital and labor are not merely contractual but is impressed with public interest

Labor contracts must yield to the common good

In case of doubt, all labor legislation and contracts shall be construed in favor of the safety and decent living for the laborer

II. RECRUITMENT AND PLACEMENT

State Policies (Art. 12 Labor Code)

Promote and maintain a state of full employment through improved manpower training

Protect every citizen by securing the best

possible terms and conditions of employment

Facilitate a free choice of available employment

Facilitate and regulate the movement of workers

Regulate the employment of aliens

Strengthen the network of public employment offices

Insure careful selection of Filipino workers for overseas employment in order to protect the name of the Philippines abroad

RA 8042 – Migrant Workers Act

Establishes a higher standard of protection of migrant workers, their families and of OFW's in distress

Declares the policy that the State does

not promote overseas employment as a means to sustain economic growth.

State shall continuously create local employment opportunities

RA 10022 – Amendments to RA 8042

Extended the protection of the law to all

OFW's whether documented/ regular or undocumented/ irregular

Expanded definition of OFW – “who is to be engaged, is engaged or has been engaged in a remunerated activity in a

state of which he or she is not a citizen or on board a vessel navigating the foreign seas other than a government ship or on an installation located offshore or on the high seas”

Recruitment and Placement

Any act of:

o

canvassing

o

enlisting

o

contracting

o

transporting

o

utilizing

o

hiring

o

procuring workers

Includes:

o

referrals

o

contact services

o

promising or advertising for employment locally or abroad, whether for profit or not

Any person or entity which offers or promises employment for a fee to two or more persons shall be deemed engaged in recruitment

The number of persons dealt with is NOT the determinative factor in considering whether or not an act constitutes as recruitment – the number of persons merely laws down a rule of evidence (presumptions)

Name Hires and Direct Hires

Direct Hiring is when a foreign employer engages the services of the Filipino agency directly or without going through a legitimate employment agency

General Rule: Direct hiring is prohibited Exception: When done by members of the diplomatic corps, international organizations and other employers allowed by the DOLE

Name Hiring is when an individual worker is able to secure contracts for overseas employment on their own efforts without the assistance of any agency

Name Hiring is not a prohibited practice thus it is another exception to Art. 18

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

Page 2 of 41

ATENEO LAW SCHOOL

LABOR LAW I

3-A

[ATTY. CADIZ]

L.T.J.F.

1 st Semester S.Y. 2013-2014

(Ban on Direct Hiring), however, their employment must be processed and registered with the POEA

POEA and NLRC

Employer-employee relation cases are under the jurisdiction of the NLRC

POEA jurisdiction:

o

Cases which are administrative in character

o

Violations of rules relating to licensing and registration of recruitment agencies

o

Disciplinary action cases, which are

administrative in character, involving employers, principals, contracting partners and OFW's.

POEA Minimum Employment Conditions

1. Guaranteed wages based on (whichever

is highest):

Prescribed minimum wage in host country

Minimum wage standard set in a bilateral agreement or international convention

Minimum wage in the Philippines

2. Free food and accommodation or offsetting benefit

3. Free transportation to and from work site, or offsetting benefit

4. Just/authorized causes for termination of contract

5. Stipulations of the labor contract should not contradict Philippine law, public policy and morals

OWWA

Functions: Provide to OFW's:

Social and welfare services

Legal assistance

Insurance coverage

Placement assistance

Remittance services

Repatriation

Repatriation General Rule: All costs shall be borne by or

charged to the agency and/or its principal

Exception: If termination is due to the sole fault of the employee, the principal or agency shall not be responsible for the repatriation

Automatic repatriation of underage or minor workers

Responsibility of repatriation falls on the agency/principal but it may be undertaken by the OWWA without

prejudice to reimbursement by the principal/agency concerned

Repatriation bond is abolished

Recruitment Regulations

Travel agencies and sales agencies of airline companies are prohibited from engaging in the business of recruitment and placement of workers, whether for profit or not

Only Filipino Citizens or juridical entities at least 75% of voting capital stock is Filipino-owned shall be allowed in the recruitment of workers

License or authority is non-transferable. Any transfer is subject to prior approval of DOLE

All applicants for license or authority shall post bonds to ensure compliance with recruitment procedures

Direct hiring of Filipino workers is prohibited except through entities authorized by the DOLE

Exception on the ban on direct hiring:

hiring by diplomatic corps, international organizations and other employers allowed by DOLE

Illegal Recruitment

Act of recruitment (under Art. 13(b)), including the prohibited acts under Art. 34 undertaken by a non-license or non- holder of authority (Labor Code)

RA 8042 – expanded the offenders liable for illegal recruitment. It holds even licensed persons or holders of authority, who committed the prohibited acts, liable for the crime.

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

Page 3 of 41

ATENEO LAW SCHOOL

LABOR LAW I

3-A

[ATTY. CADIZ]

L.T.J.F.

1 st Semester S.Y. 2013-2014

Illegal recruitment is malum prohibita:

intent is not an element

Active and conscious participation of the accused must be shown for him to be held liable as a principal

Syndicated Illegal Recruitment:

o

If carried out by a group of 3 or more persons conspiring in carrying out the offense

o

Considered as economic sabotage

Large Scale Illegal Recruitment:

o

If committed against 3 or more persons individually or as a group

o

Considered as economic sabotage

Prohibited Acts

a) To charge or accept any amount greater than the allowable fees prescribed by Secretary of Labor

b) Publish false information or notice or document inn relation to recruitment

c) Give any false information, testimony, document or do any act of misrepresentation for purposes of

securing a license or authority

d) To induce/ attempt to induce a worker already employed to quit his employment in order to offer him another, EXCEPT when the transfer is designed to liberate the worker from the oppressive conditions of his work

e) To influence/ attempt to influence any person not to employ any worker who has not applied through his agency

f) Recruitment of workers in jobs harmful to public health, morality or to the dignity of the Republic

g) Obstruct inspection by the Secretary of Labor

h) Failure to file reports in the status of employment, placement, vacancies or other matters and information as may be required by the Secretary of Labor

i) Substitute or alter employment contracts without the approval of the Secretary of Labor (but the alteration must be prejudicial to the employee)

j) To be an officer or member of the Board

of any travel agency corporation or be directly or indirectly engaged in the management of a travel agency

k) To withhold or deny travel documents from applicant workers for monetary considerations other than what is authorized by the Code

l) Failure to actually deploy a contracted worker without valid reason

m) Failure to reimburse expenses incurred by worker in connection with his deployment, in cases where deployment does not take place without the worker's fault.

n) To allow a non-Filipino citizen to head or manage a licensed recruitment agency

Prohibitions A-K – from the labor code

Prohibitions L-M – from RA 8042

Prohibition N – from RA 10022

Prescriptive Periods Case

 

Period

Illegal Recruitment

5

years

Economic Sabotage

20 years

Claims arising from employer- employee relationship

3

years

Case Doctrines

Sunace v. NLRC – Theory of Imputed Knowledge

Knowledge of the agent is knowledge to the principal, thus binding to the latter

However, knowledge to the principal is NOT knowledge to the agent

EDI Staff Builders v. NLRC – Presumed Identity Approach

What law governs the relationship of the employer and employee – local or foreign laws?

The party invoking the application of a foreign law has the burden of proving the same

If foreign law is not pleaded or proved it is presumed that Philippine law is the same as the foreign law, thus Philippine

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

Page 4 of 41

ATENEO LAW SCHOOL

LABOR LAW I

3-A

[ATTY. CADIZ]

L.T.J.F.

1 st Semester S.Y. 2013-2014

law is applied

South Eastern Shipping v. Navarra

For benefit claims to prosper, seafarer's death or injury must occur during the period of his contract or employment

Burden of proof lies on the party asserting that the disease/injury occurred during the course of the employment or it increased the risk of the injury

Catan v. NLRC

Liability of the principal and agent over the employee is dependent on the term of the employment contract and NOT on the agency contract between the agent and principal.

Employment contract is not coterminous with the agency contract

Even if the agency contract is terminated, the solidary liability over the employee still subsists since the employment or recruitment contract has not expired yet.

III. SPECIAL WORKERS

Apprenticeship

Practical training supplemented by theoretical instruction

Occupations which requires more than 3 months of practical training with theoretical instruction

Only employers in highly technical industries may employ apprentices

Maximum apprenticeship period – 6 months

Wage – not less than 75% of applicable minimum wage

Apprenticeship program needs prior approval from DOLE, otherwise apprentice is deemed a regular employee

Tax deduction:

o

Additional deduction of ½ of value of training expenses

o

Program must be approved by DOLE

o

Deduction shall not exceed 10% of direct labor wage

o

Apprentice must be paid the minimum

wage

Q: May apprentices be hired without compensation?

A: Yes, if the apprenticeship is required by the school, training program curriculum or as a requisite for graduation or board examination – subject to the approval of the Secretary of Labor

Learners

Trainees in semi-skilled and other industrial occupations which are not apprenticeable

Learners may only be employed when no experienced workers are available

Maximum period of learnership – 3 months

Wages – not less than 75% of applicable minimum wage

Employer is committed to hire the learner as a regular employee after the training period

Apprentice

Learner

Highly skilled or technical industry

Semi-skilled or industrial occupation

Max term of 6 months

Max term of 3 months

75% of minimum wage

75% of minimum wage

Apprentice program is approved by DOLE

No prior approval by DOLE is required

Employer is NOT committed to hire apprentice at end of training period

Employer is committed to hire learner at end of training period

Handicapped Workers

Those whose earning capacity is impaired by age or physical or mental deficiency or injury

Entitled to be wages not less than 75% of

the legal minimum wage

May be hired as apprentices or learners if their handicap does not impede the performance of job operations

May even acquire the status of a regular

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

Page 5 of 41

ATENEO LAW SCHOOL

LABOR LAW I

3-A

[ATTY. CADIZ]

L.T.J.F.

1 st Semester S.Y. 2013-2014

employee

RA 7277 – Magna Carta for Disabled Persons Forms of discrimination on employment

1. Limiting, classifying or segregating a disabled job applicant in a manner that

adversely affects his work opportunities

2. Using standards and tests that screen out a disabled person unless such tests are job-related and consistent with business necessity

3. Using standards that:

1. have the effect of discrimination on the basis of disability

2. perpetuate the discrimination of

others who are subject to common administrative control

4. Providing less compensation and benefits by reason of his disability

5. Deprivation of training opportunities and promotion solely on account of disability

6. Transferring a disabled employee to a job he cannot perform be reason of his disability

7. Dismissing a disabled employee by reason of his disability unless the employer proves that the work is impaired to the prejudice of the business:

Provided that the employer first sought to provide reasonable accommodations for disabled persons

8. Failing to administer employment tests which accurately reflect the skills of the disabled applicant

9. Excluding disabled persons from membership in labor unions

IV. EMPLOYER-EMPLOYEE RELATIONSHIP

Jurisprudential Tests

Economic Reality Test (Francisco v. NLRC)

1. Extent to which the services performed are an integral part of the employer's business

2. Extent of worker's investment in equipment and facilities

3. Nature and degree of employer's control

4. Worker's opportunity for profit and loss

5. Amount of initiative, skill and judgment

required for the success of the independent enterprise

6. Permanency and duration of the relationship of worker and employer

7. Degree of dependency of worker upon employer for his continued employment

Four-Fold Test (Manila Water v. Pena)

1. Selection and engagement of employees

2. Payment of wages

3. Power of dismissal

4. Power of control over:

as to the result of the work to be done -AND-

as to the means to accomplish it

Control Test

Most important test in the 4-fold test

Where employer has a right to control the conduct of the employee in relation to his work

Power of control refers to the existence of such right/power and not the actual exercise thereof (Republic v. Asiapro)

Existence of right/power of control is sufficient proof of EER. Such right/power need not to be actually exercised.

If the worker (TV commentator) had a free hand on what to say or discuss in his shows, the TV Network is deemed to have no control over the performance of the commentator’s work (Sonza v. ABS-CBN)

Management Prerogative

Work reassignment as a response to an

unfavorable business climate is a legitimate exercise of management prerogative (Pantoja v. SCA Hygiene)

There is no obligation on the part of the employer to reinstate an employee when:

o

The employee himself resigned

o

There is a need to protect the unbiased image of the company (Ymbong v. ABS-CBN Corp)

The transfer or reassignment of an

employee is a legitimate exercise of management prerogative provided:

o There is no demotion in rank

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

Page 6 of 41

ATENEO LAW SCHOOL

LABOR LAW I

3-A

[ATTY. CADIZ]

L.T.J.F.

1 st Semester S.Y. 2013-2014

o

There is no diminution of salary

(100% of average daily salary) for:

o

The action is not motivated by bad

o

60 days for normal delivery

faith, or is not a demotion without valid cause (Herida v. F&C Pawnshop)

o

78 days for caesarian delivery, subject to certain conditions

In the absence of proof that the act of the employer is ill-motivated, it is presumed that the employer acted in good faith (San Miguel Corp v. NLRC)

But management prerogative cannot be used as an excuse to abandon or violate the CBA (San Miguel Corp v. NLRC)

A job evaluation conducted for the purpose of evaluating the positions of the employees, absent the intent to adjust the salaries, is a valid exercise of management prerogative (SCA Employees Association v. SCA Corp)

V. SPECIAL CLASS OF WORKERS

Women

Maternity Leave Benefits (Art. 131 Labor Code)

Woman employee must have rendered an aggregate service of at least 6 months for the last 12 months

At least 2 weeks – prior to the expected date of delivery

Another 4 weeks – after normal delivery or abortion with full pay

Employer may require the production of a medical certificate

General Rule: If employee falls ill due to the pregnancy, abortion, delivery or miscarriage, maternity leave shall be extended without pay

Exception: If employee has unused leave credits, such extended leave may be off-set or charged to it

Maternity leave shall be paid only for the first 4 deliveries.

Maternity Leave (SSS Law)

Must be a female SSS member

Has paid at least 3 monthly contributions in the 12-month period immediately preceding the semester of her childbirth

Shall be paid a daily maternity benefit

Maternity leave shall be paid only for the first 4 deliveries

Legitimacy of the marriage (whether or not the woman is married) is immaterial in order to avail of the benefit

NOTE: Since there is compulsory membership of every employee with the SSS, the provisions of the SSS Law essentially set aside Arts. 133(a) and (b) of the Labor Code. However, if the employee is proved to be a non-member, the SSS Law cannot and will not apply since membership is a pre-requisite.

Paternity Leave (R.A. 8187)

7 calendar days with full pay

Must be in relation to the childbirth of his legitimate wife with whom he is cohabiting

May be availed of 4 times (entitlement is for the first 4 deliveries or miscarriage)

Battered Woman Leave - VAWC (R.A. 9262)

Victims of physical, psychological or sexual violence

Paid leave of up to 10 days

Victim must apply for a Baranggay Protection Order to avail of the reliefs provided by R.A. 9262

Victim must apply for a certificate from the clerk of court that a case under R.A. 9262 is pending in court to avail of the paid leaves

The Protection Order may extend the leave period depending on its necessity

Special Leave for Women (R.A. 9710)

Special leave benefit of 2 months with full

pay after a surgery caused by gynecological disorders

Parental Leave for Solo Parents (R.A. 8972)

An addition to the leave privileges under existing laws

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

Page 7 of 41

ATENEO LAW SCHOOL

LABOR LAW I

3-A

[ATTY. CADIZ]

L.T.J.F.

1 st Semester S.Y. 2013-2014

Leave of not more than 7 working days every year

the homeworker, the employer shall be jointly and severally liable with the

Granted to any solo parent employee who has rendered service of at least 1 year

contractor or subcontractor

Summary

Leave

Statute

 

Days

Maternity

SSS Law

60

days (normal)

78

days (caesarian)

Paternity

R.A. 8187

7

calendar days

VAWC

R.A. 9262

10

days (extendable)

Special

R.A. 9710

60

days (2 months)

Solo Parents

R.A. 8972

7

days annually

Minors General Rule: No child below 15 years of age shall be employed

Exception: When the child works under the sole responsibility of his parents or guardian AND his employment doesn't interfere with his schooling.

Any person between 15 and 18 years old may be employed for such number of hours and periods of the day as determined by the Secretary of Labor

No person below 18 years of age may be employed in an undertaking which is hazardous or deleterious in nature

Homeworkers

One who performs in or about his home any processing of goods or materials which have been furnished directly or indirectly, by an employer and thereafter to be returned to the latter

Employer must remit SSS, Philhealth and ECC Premiums for the homeworker

For homeworker's organization, the organization shall acquire legal personality and acquire all the rights and privileges granted by law upon registration with the DOLE

In case the homeworker is employed through a contractor and such contractor or subcontractor fails to pay the wages of

Employer of a homeworker – any person, natural or juridical, who for his account, or on behalf of any person residing outside the country or through any other person:

1. Delivers any goods or materials to be processed in or about a home and

thereafter be returned or to be distributed in accordance with his directions 2. Sells any goods to be processed in or about the home and then rebuys them after such processing

Prohibitions

No homework shall be performed on:

1. Explosives, fireworks and the like

2. Drugs and poisons

3. Other articles, the processing of which requires exposure to toxic substances

Kasambahay Law

Rights and Privileges

Employer shall provide 3 adequate meals a day, human sleeping arrangements and medical assistance

The withholding of the basic necessities as a form of disciplinary action shall be prohibited

Right to privacy of domestic workers shall be guaranteed at all times and shall extend to all forms of communications and personal effects

In case of emergencies, access to outside

communication shall be granted even during work time. Should domestic worker make use of the employer's telephone, cost shall be borne by the domestic worker

Employer shall afford the worker the opportunity to finish basic education and may allow access to alternative learning systems

All communication and information pertaining to the employer shall not be

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

Page 8 of 41

ATENEO LAW SCHOOL

 

LABOR LAW I

3-A

[ATTY. CADIZ]

L.T.J.F.

1 st Semester S.Y. 2013-2014

 

disclosed by the domestic worker during

Such privileged information shall be

original employer

and after employment

Domestic worker is entitled to 13 th month pay

inadmissible in evidence except when the suit involves the employer or any member of the household in a crime

If worker leaves without any justifiable reason, any unpaid salary for a period of not exceeding 15 days shall be forfeited

against persons, property, personal

Service Incentive Leaves:

liberty and security and chastity

o

Granted to worker who has rendered at least 1 year of service

Pre-Employment

o

Paid leaves of 5 days

Prior to the execution of the employment

o

Unused leaves shall NOT be

contract, the employer may require:

convertible to cash

 

o

Medical certificate

o

Unused leaves shall not be cumulative

o

Barangay and police clearance

or carried over to the succeeding

o

NBI Clearance

years

o

Birth certificate, voter's ID or passport (for purposes of identifying the

Entitlement to SSS, PhilHealth and PagIBIG:

 

worker's age)

o

Domestic worker has rendered at

Prohibited practices

least 1 month of service

 

o

Charging recruitment or agent's fees to the domestic worker

o

General Rule: Premium payments shall be shouldered by employer

o

Requiring deposits from which deductions may be made for losses and damages

o

Exception: Domestic worker shoulders the proportionate share in premium payments if the worker is

o

Debt Bondage

receiving a wage of Php5,000 or more

Minimum employment age of domestic workers: 15 years old

 

per month

Post-Employment

Employer shall register all domestic workers in the Registry of Domestic

Termination of Service

Workers in their respective baranggays

o

Grounds stated by the law are NOT exclusive (allows analogous causes)

Employment

o

If unjustly dismissed, worker is

Domestic worker is entitled to an aggregate daily rest of 8 hours per day

Worker is entitled to at least 24

entitled to compensation already earned plus wages equivalent to 15 days of work by way of indemnity

consecutive hours of rest in a week

o

If worker leaves without any

Permissible arrangements:

justifiable reason, any unpaid salary

o

Offsetting a day of absence with a particular rest day

for a period of not exceeding 15 days shall be forfeited

o

Waiving a rest day for a paid day

o

Employer may recover from the

o

Accumulating rest days not exceeding 5 days

domestic worker costs incurred related to deployment expenses

o

Other similar arrangements

Work outside the household (for the benefit of another household) shall entitle the worker to additional payment of not

provided, the service has been terminated within 6 months from time of employment

Termination Initiated by Worker

less than the minimum wage and any

o

Verbal or emotional abuse

liability incurred shall be borne by the

o

Inhumane treatment and physical

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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ATENEO LAW SCHOOL

LABOR LAW I

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[ATTY. CADIZ]

L.T.J.F.

1 st Semester S.Y. 2013-2014

abuse

o

Commission of a crime against the domestic worker

o

Violation of the employment contract or the standards set by law

o

Any disease prejudicial to the health of the worker, the employer or members of the household

o

Other analogous causes

Termination Initiated by Employer

o

Misconduct or willful disobedience of the lawful order of the employer in relation with the worker's duties

o

Gross or habitual neglect or inefficiency in the performance of duties

o

Commission of a crime against the person of the employer or any immediate member of the employer's family (NOTE: the provision does not cover crimes against the property of the employer)

o

Violation of the employment contract or the standards set by law

o

Any disease prejudicial to the health of the worker, the employer or members of the household

o

Other analogous causes

Upon severance of the employment relationship, the employer shall issue a certificate of employment indicating the nature, duration of service and work performance

Employment certification is issued within 5 days from request of domestic worker

Settlement of Disputes

All labor-related disputes shall be elevated to the DOLE Regional Office

DOLE Regional Office shall act both as conciliator and arbitrator (All conciliation and mediation efforts shall be exhausted first before a decision is rendered)

Ordinary crimes committed under the RPC or special laws shall be filed with the regular courts

Case Doctrines

Apex Mining v NLRC – A house helper is employed in the employer's home to minister exclusively to the personal comfort and enjoyment of the employer's family.

Barcenas v NLRC – Activities done which are essential and important to the operation and functions of the temple are not deemed activities of a household helper

Duncan v Glaxo – The policy of prohibiting employees from having personal relationships with employees of competitor companies in order to protect trade secrets is a valid exercise of management prerogatives

PTT v NLRC – A company policy prohibiting the employment of married women, without valid or justifiable reasons, is a blatant form of discrimination

Star Paper Inc v Simbol – The failure to prove a legitimate business concern in prohibiting employees from marrying their co-employees cannot prejudice the worker's right against discrimination based upon stereotypes of married persons working together in one company

VI. WORKING CONDITIONS AND REST PERIODS

Coverage General Rule: This shall apply to employees in all establishments whether for profit or not

Exceptions:

Government employees

Managerial employees

Field personnel

Members of the family of the employer who are dependent on him for support

Domestic helpers

Persons in the personal service of another

Workers paid by results

Definitions

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

Page 10 of 41

ATENEO LAW SCHOOL

LABOR LAW I

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L.T.J.F.

1 st Semester S.Y. 2013-2014

1. Overtime Work – work performed beyond 8

hours a day

2. Compressed Work Week – each workday is

extended beyond the 8-hour limit but the total

weekly work hours does not exceed the statutory limit (48 Hours)

3. Night Work – work done at night for a period

of not less than 7 hours (Art. 154 as amended

by R.A. 10151)

4. Night Worker – any employed person whose

work covers the period from 10PM to 6AM provided the period is no less than 7 consecutive

hours of work (I.R.R. of R.A. 10151)

5. Night Shift Differential – work done

between 10PM and 6AM

6. Weekly Rest Day – a rest period of not less

than 24 consecutive hours after every 6 consecutive normal work days

7. Holiday Pay – A full day's wage paid for each

of the 11 regular holidays set by law

8. Premium Pay – Additional compensation

(30% of regular wage) for work performed on

the employee's rest day or holidays

9. Service Incentive Leave – Paid leaves for

employees who have rendered service for at least 1 year. Equivalent to 5 days per year.

10. Service Charges – Charges (additional

income) collected by restaurants, hotels and similar establishments. Art. 96 of the Labor Code mandates that employees have a share of 85%

on such service charges.

11. 13th Month Pay – One twelfth (1/12) of

the basic salary of an employee within a calendar year

12. Special/ Non-working Holiday

Employee is not required to work but at the same time, employer is not obliged to give any premiums or regular pay. Follows the “no work- no pay” rule.

Compensation, Rates and Premiums

Compensation

Premium

Night Shift

10% of regular wage for each hour worked between 10PM and 6AM

Differential

Overtime Work

25% of regular wage for ordinary work days 30% for holidays or rest days

Work done on

30% of regular wage

rest day or holiday*

 

Work done on a holiday AND rest day

50% of regular wage (both holiday and rest day must fall on the same day)

*Holidays in this chart refer to Special Non-Working Holidays. Premium for Regular/Legal Holidays is 200%

NOTES:

Premiums are computed on an hourly rate unless a valid contract states otherwise

The law entitles the employee to two possible premiums for work done on a rest day or holiday – 30% for the 1 st 8 hours and another 30% for overtime. Thus if an employee works during a rest day AND renders overtime, the total premium is 60%

Emergency Rest Day Work (Art. 92)

In case of actual or impending emergencies caused by calamities

When there is urgent work to be performed on machines and equipment to avoid serious loss or damage

Abnormal pressure of work where the employer cannot ordinarily be expected to resort to other measures

To prevent loss or damage to perishable goods

When nature of work requires continuous operations and stoppage may result in irreparable injury or loss

Under any other analogous circumstances

Emergency Overtime Work (Art. 89)

When country is at war or when any other national emergency is declared

When it is necessary to prevent loss of life or property or in case of imminent danger to public safety

When there is urgent work to be performed on machines and equipment to avoid serious loss or damage

To prevent loss or damage to perishable goods

When continuation or completion of the

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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work started before the 8 th hour is necessary to prevent serious prejudice to the business operations

NOTES:

The exceptions are instances when overtime work becomes obligatory. However, the employee is still entitled to the additional compensation (premium pay) mandated by law.

Emergency overtime work (Art. 89) is exclusive as to its applicable situations. Emergency rest day work (Art. 92) is NOT exclusive since it is applicable to “any analogous circumstances.”

Service Incentive Leaves (SIL)

5 days of paid leave each year

Available to employees who have rendered at least 1 year of service

Unused SIL credits at the end of the year should be converted into cash (I.R.R.)

The required 1 year period may be continuous or broken.

For less than 1 year of service, SIL may not be granted nor pro-rated.

NOTE: Under the Kasambahay Law, the SIL is NOT convertible to cash.

Holidays and Employees Regular/Legal Holidays

1. New Year's Day

2. Maundy Thursday

3. Good Friday

4. Eidul Fitr

5. Araw ng Kagitingan (Bataan Day)

6. Labor Day

7. Independence Day

8. National Heroes Day

9. Bonifacio Day

10. Christmas Day

11. Rizal Day

12. Eidul Adha

Special Holidays

1. Ninoy Aquino Day

2. All Saints Day

3. Last Day of the Year

Implementing Rules on Holiday Pay

General Rule: Employees who are absent on the day immediately preceding a regular holiday may NOT be paid the holiday pay

Exceptions:

1. If he has worked on such holiday

2. If the day immediately preceding the holiday is a nonworking day in the establishment

3. If the day immediately preceding the holiday is the scheduled rest day of the employee (leave of absence with pay) provided he has worked on the day immediately preceding such rest day or nonworking day

Monthly-paid Employees

They are included in the benefits of holiday pay

It cannot be presumed that holiday pay is already included in the monthly wages

If all nonworking days are paid:

o

Divisor of monthly salary to obtain daily rate is 365

o

365 – all days in the year are paid

If only the worked days are paid

(assuming it is from Monday to Friday)

o

Divisor to be used is 251

o

251 – Saturdays, Sundays and the 10 legal holidays are subtracted already

o

249 – if there are 12 legal holidays

Hourly-paid Employees (Teachers)

When a special holiday is declared (non- working) the teacher is deprived of expected income

Hourly-paid teacher is entitled to their

regular rate on days declared as non- working holidays or for some reason classes are suspended or shortened.

Hourly-paid teacher is NOT entitled to their regular rate for regular holidays, whether the same be during the regular semester or during semestral vacations

In case of extended work, they are paid

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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their regular rates – no premium.

Field Personnel

Not entitled to holiday pay (Art. 82 specifically excludes them)

“whose actual hours of work xxx cannot be determined with reasonable certainty” - ability to ascertain that the field personnel actually performed work

Whether or not the employer is still able

to exercise supervision and control over the field personnel

If control is still exercised, then such employee is NOT a field personnel

Piece-rate Workers

2 kinds of piece-rate workers:

o

Who are paid rates (standards) as prescribed by the DOLE

o

Who are paid rates as prescribed by employer and NOT approved by DOLE

1st kind – NOT entitled to overtime pay and premium rates

2 nd kind – entitled to overtime pay and

premium pay (it is the difference between the legal rate and the employee's rate)

Common benefits to both kinds of piece- rate workers:

o

Statutory Minimum Daily Rate

o

Service Incentive Leave

o

Night shift differential

o

Holiday pay

o

Meal and rest periods

o

13 th Month pay

o

Other benefits granted by law or CBA

NOTE: Default rule is that a piece-rate worker is entitled to overtime and premium pay. It is presumed that the employer is not following the standards prescribed by DOLE. Employer has burden of proving that there is adherence to the DOLE Standards (Labor Congress v. NLRC)

Double Holiday Rules

2 Successive Regular Holidays – General Rule: an employee may not be paid for both holidays if he absents himself on the day immediately preceding the first

holiday. Exception: If the employee works on the 1 st holiday, then he is entitled to holiday pay on the 2 nd holiday

2 Regular Holidays on the Same Day – an employee is entitled to 200% of his basic wage provided he worked on the immediately preceding day.

If he worked on such day, he is entitled to 300% of his basic wage

Summary

Benefit

Regular

Hourly

Piece-

Piece-

Contractual

rate A

rate B

Overtime

Y

N

N

Y

 

Premium

Y

 

N

Y

 

N.S.D.

Y

 

Y

Y

 

Holiday

Y

N

Y

Y

 

S.I.L.

Y

 

Y

Y

Y

13 th MP

Y

 

Y

Y

N

“Piece Rate A” - Following the DOLE Standard “Piece Rate B” - Following the employer's standard Holiday – refers only to LEGAL HOLIDAY

Case Doctrines

Bisig ng Manggagawa v. Phil Refining Co – Absent any contrary agreement, the “regular base pay” excludes bonus pay and fringe benefits

Cebu Institute v Ople

Proceeds of schools must be allocated accordingly: 60% to teachers’ salaries and 40% administrative expenses.

The 60% is the minimum amount thus a bigger allocation may be agreed upon

The current rule in allocation is 70% salaries and 30% administrative expense

Benefits and holiday pay are chargeable to the 70% allocation

Chartered Bank EA v Ople

When monthly paid employees work on a holiday, they are given an additional 100% base pay on top of a premium pay of 50%

If their monthly pay already includes their

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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salaries for holidays, they should be paid only premium pay but NOT both premium and base pay

Framanlis Farms v Minister of Labor – Non- monetary benefits (free food or electricity) are not proper substitutes for the 13 th month pay. Neither may year-end rewards for loyalty be considered in lieu of 13 th month pay.

JRC v NLRC

Teachers paid by the hour are NOT entitled to holiday pay whether the same may be during regular semesters, semestral break, Christmas break or Holy Week Vacations.

However they are entitled to their regular hourly rate on special holidays (non- working) or on days classes are suspended or shortened

In case of extensions in work hours, the teacher is entitled to their hourly rates (not overtime pay/premium)

NOTE: Private school teachers are not paid for the regular holidays during semestral vacations. However, they shall be paid for regular holidays during Christmas vacation (Sec. 8 Rule IV, Implementing Rules of Book III) ~ I assume that the IRR refers to teachers NOT paid by the hour

Kwok v Phil Carpet Mfg Corp – Absent any agreement to the contrary, Sick Leaves and Vacation Leaves are not convertible to cash since these benefits are voluntary in nature; NOT statutory requirements.

Labor Congress v NLRC – Piece-rate Workers:

Entitled to 13 th month pay

If they are paid according to the standards issued by DOLE – NOT entitled to premium or overtime pay

If they are NOT paid according to the DOLE standards – entitled to the difference between the legal rate and the employer's rate (if employer's rate is lower)

Meralco Workers Union v Meralco General Rule: Overtime pay cannot be waived. Exception: When the total benefits are over and above the legal amount

Mercidar v NLRC – Fishing crew members are not field personnel since the employer still exercised control over the crew even aboard the vessel through its ship master.

National Semiconductor v NLRC – The employee's allegation that he is not paid is a negative allegation, thus the burden of proof does not rest upon him. Employee is also not in a position to prove non-payment since the payrolls and records are in the possession of the employer. Burden of proof lies on the employer

National Sugar Refineries v NLRC – Supervisors are considered managerial staff not by their title but by the duties and responsibilities they exercise (authority to hire and fire, decision making, training of subordinates, exercise of independent judgment and discretion)

National Federation of Sugar Workers v Ovejera – Christmas bonuses, profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary are considered “equivalents” of the 13 th month pay. Non- monetary benefits and allowances already enjoyed by the employee are NOT considered as “equivalents”

Petroleum Shipping v NLRC – Seafarers are not regular employees but contractual employees, thus they are not entitled to 13 th month pay

Philippine Duplicators v NLRC – Commissions of salesmen are part of their basic salary for purposes of computing their 13 th month pay. However, medical representatives, are not salesmen, thus their “commissions” are productivity bonuses, thus not included in their basic salary (citing Boie-Takeda Case)

San Miguel v Inciong – The following are not deemed part of the basic salary:

Cost of Living Allowances (COLA)

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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Profit-sharing payments

Overtime pay

Premium pay

All monetary benefits and allowances not considered part of the basic salary at the time PD 851 was promulgated

Sime Darby v NLRC – A change in work schedule (from one with a paid 30-minute lunch break to a one with a full 1-hour, but unpaid, lunch break) is not considered a diminution of their benefits since such management prerogative was exercised in good faith

Union of Filipro Workers v Vivar – The phrase “whose actual hours of work in the field cannot be determined with reasonable certainty” means that the employer has no way of determining whether or not the employee really spends actual work in the field. It means that their time and performance in the field is unsupervised by the employer.

UP Union v UP – Teachers paid on monthly or daily basis are entitled to ECOLA pay and their regular pay during semestral breaks

NOTE: There are differences between hourly paid and monthly/daily paid teachers when it comes to their regular pay during school breaks

Hourly Paid Teachers

Monthly Paid Teachers

Paid only for actual hours worked

Entitled to regular pay during semestral breaks

Not entitled to holiday pay during Christmas vacations or semestral breaks

Not entitled to holiday pay during semestral breaks except during the Christmas vacation

Universal Corn v NLRC – A Christmas bonus given for employee loyalty (and as provided for in the CBA) cannot be considered equivalents of 13 th Month Pay since it has a different purpose from P.D. 851 (rewarding employee loyalty)

Villuga v NLRC – The test of “managerial status” depends on whether a person possesses

authority that is not merely routinary or clerical in nature but one that requires the use of independent judgment.

VII. WAGES

Application and Coverage

Title on Wages does not cover:

Farm tenancy or leasehold

Domestic service

Persons working in their respective homes in needlework

Cottage industries duly registered (small

business enterprise)

Cooperatives (I.R.R. and DOJ Opinion)

Barangay Micro Business Enterprise (R.A. 9178)

Engaged in the processing or manufacturing of products including agro- processing, trading and services

Total assets, including loans BUT exclusive of land where the business is situated, is not more than

Php3,000,000.00.

What Constitutes as Wages or Basic Pay?

Remuneration or earnings capable of being expressed in money

Salesmen's commission

Facilities or Commodities furnished for the benefit of employees

o

Value is to be determined by Secretary of Labor

o

Facilities must be for the benefit of the employee or his family

o

Items of expense necessary for the employee’s subsistence

o

Eg: Food and housing

o

NOT the same as supplements

What are Deemed Excluded?

Overtime pay

Any compensation for work rendered beyond the normal workload or hours

Cost of Living Allowances

13 th Month Pay

Profit-sharing agreements

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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Other monetary benefits not considered integrated as part of the basic salary

Facilities

Supplements

Food, housing

Tools of trade

Wage-deductible

Not wage-deductible

For benefit of employee

For benefit of employer

Necessary for laborer’s subsistence

Extra remunerations and privileges

Legal requirements before deducting value of facilities

1. Proof that such facilities are customarily furnished by the trade

2. Provision of deductible facilities are VOLUNTARILY accepted by employee in writing

3. Facilities are charged or deducted at a reasonable value

Minimum Wage Rates

Lowest wage rate fixed by law

Prescribed by the Regional Tripartite

Wage and Productivity Boards

Rates differ per region and are dependent on the following factors:

o

Cost of living

o

Consumer price index

o

Needs of the workers and their families

o

Demand for living wages

o

Fair return of capital invested and capacity to pay of employers

o

Need to induce industries to invest in country side (incentives to investors)

o

Prevailing wage rates

Daily-Paid vs. Monthly-Paid

Daily-Paid

Monthly-Paid

Paid only for the days actually worked

Uniformly paid by the month

Worked days are easier to count

Presumed to be paid for ALL days in the month whether worked or not

Minimum legal rates are easier to compute (daily rate)

Monthly wage >= Legal minimum x (365/12)

Computation of Daily Rate for Monthly Paid Employees

Daily Rate = (Monthly Wage x 12/365)

Divisor shows the number of days covered

Divisor must be 365, to show that all days are paid, even unworked rest days. This determines the legal minimum rate.

If divisor is less than 365, it means:

o

Daily rate is higher BUT

o

It indicates that not all days of the year are covered

o

If divisor is 314, it means only 6 days out of a week are paid

o

If divisor is 261, it means only 5 days out a week are paid

o

Regular holidays are to be subtracted or added to the divisor accordingly

13 th Month Pay

A statutory obligation

1/12 of the total basic salary earned by the employee within the calendar year

All rank-and-file employees are entitled to 13 th month pay provided they have worked at least 1 month during the calendar year

P.D. 851 exempts employers who are already paying their employees 13 th month pay or its equivalent

Payment of Wages

Permissible forms of Payment

Cash (legal tender)

Check or money order when such manner of payment is customary on the date of effectivity of the Labor Code (Art. 102)

Payment through ATM (Labor Advisory)

NOTE: Other forms (promissory note, coupons,

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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tokens, etc.) of payment shall NOT be allowed even when expressly requested by the employee

Time of Payment

At least once every 2 weeks or twice a month

In case of force majeure, employer must pay the wages immediately after such force majeure has ceased

No employer shall make payment with

less frequency than once a month

Q: What if the employees' is engaged to work a specific task which cannot be completed in 2 weeks? How will the wages be paid?

A: Payments are made at intervals not exceeding 16 days (in proportion to the amount of work completed) and the final settlement is made upon completion of the work

Q: Is there an exception to this rule?

A: Yes. If a Collective Bargaining Agreement or arbitration award states a contrary manner of payment of wages

Direct Payment of Wages General Rule: Wages shall be paid directly to the workers to whom they are due

Exceptions:

1. Force Majeure – worker may be paid through another person under written

authority given by the worker

2. Where worker has died – wages are paid to the heirs of the deceased worker:

Claimants shall execute an affidavit

Affidavit is presented to employer

Employer pays to the Secretary of Labor and the latter shall act as referee in dividing the amount among the heirs

Employer is then absolved from any further liability with respect to the amount paid

Employers Bankruptcy

Employees shall enjoy first preference as

regards to their wages

Unpaid wages shall be paid in full before the claims of the government or creditors

A declaration of bankruptcy or a judicial liquidation is a prerequisite in the enforcement of worker's preference

Attorney's Fees

10% of the amount of wages recovered is the MAXIMUM allowable for attorney's fees. Anything lower than 10% is permissible

What is prohibited is fees exceeding 10%

Prohibitions Regarding Wages

Wage Deductions

General Rule: No employer shall make any deduction from the wages of his employees

Exceptions:

Labor Code Exceptions:

1. Worker is insured with his consent by the

employer and deduction is for payment of the insurance premium

2. Payment of Union Dues

3. Other cases authorized by law or the Secretary of Labor

Other Exceptions Authorized by Existing Laws:

1. Where employee is indebted to the employer and such debt has become due and demandable (Civil Code Art. 1706)

2. Court Awards (execution and attachment)

3. Withholding Tax

4. Salary deductions of a legally established cooperative

5. Deductions for payment to 3 rd persons, upon written authorization of employee

6. Union Dues

7. Agency Fee

8. Deductions for value of meals and other facilities

9. Deductions for loss or damage (Art. 114)

10. SSS, Philhealth, Pag-IBIG Premiums

Deductions for Loss or Damage

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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General Rule: No employer shall require his worker to make deposits for the reimbursement of loss or damage to materials, tools or equipment supplied by employer

Exception: When the trade, occupation or business of the employer recognizes such practice, or the practice is necessary or desirable as determined by the Secretary of Labor

Requisites for Payment for Loss/Damage:

1. Employee is shown to be responsible for

such loss or damage

2. Employee is given ample opportunity to show cause why deduction should not be made

3. Amount of deduction is fair and reasonable and shall not exceed actual loss or damage

4. Deduction does not exceed 20% of the employee's wages in a week

Other Prohibitions

Withholding any amount of the wages or inducing the worker to give up any part of his wages by force, intimidation or threat

Withholding of wages because the worker has not completed an assigned task or has violated company rules

Deduction of wages as consideration of a promise of employment or retention in employment

Withholding or reduction of wages as a

retaliatory measure against an employee who has filed any complaint against the employer

False reporting

Wage Orders and Wage Fixing

National Wages and Productivity Commission

National consultative and advisory body on matters on wages, income and productivity

Exercise supervision over the Regional Tripartite Wages and Productivity Boards

Review regional wage levels set by the Regional Tripartite Wages and

Productivity Boards

Undertake studies and research on information regarding employment, cost of living, labor costs, investments and returns

Regional Tripartite Wages and Productivity Board

Develop plans, programs and projects relative to wages, income and productivity improvement for their respective regions

Determine and fix the minimum wage rates applicable in their region, provinces or industries and issue the wage orders

Receive and process applications for exemption from prescribed wage rates

Exercise technical supervision over the regional office of the DOLE

Conduct public hearings, consultations and give notices to interested parties in determining the appropriate wages

Wage Orders

Issued by the Regional Boards

Aggrieved parties may appeal the wage order to the Commission within 10 days from the publication of such order

Filing of appeal does NOT stay the order unless the person appealing shall file an undertaking with a surety or sureties

Wage Distortion

If the pay advantage is of a position over another is removed or significantly reduced by a pay adjustment required by a wage order, such pay advantage should somehow be restored

For salary distortion to exist, the law does not require FULL elimination of salary differences; a severe contraction is enough

Full compliance with the wage order and upward adjustment of the distorted salaries is prejudicial to the employer

Wage orders adjusts the minimum level but not the levels above the minimum – it DOES NOT mandate across-the-board salary increase

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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Supreme Court formula to correct a salary distortion:

Prescribed Increase = Minimum Wage x 100 Actual Salary

Elements of Wage Distortion

1. Existing hierarchy of positions with corresponding salary rates

2. Significant change in the salary rate of lower pay class without a concomitant increase in salary rate of a higher one

3. Elimination of distinction between the two levels

4. Existence of the distortion in the same region of the country

How to Resolve Wage Distortion Disputes

No Union

With Union

NCMB

NCMB

CBA Arbitration Process

NLRC

NLRC

Voluntary Arbitration

Court of Appeals

Court of Appeals

Court of Appeals

Supreme Court

Supreme Court

*NCMB – National Conciliation and Mediation Board (A conciliator; NOT an arbitrator)

Case Doctrines

American Wire Employees v American Wire – The withdrawal of benefits gratuitously given by the employer is not violative of the Non- diminution of benefits (Art. 100) and such benefits may not ripen into a demandable obligation

Apodaca v NLRC – The wages of an employee may not be applied to satisfy his obligation to pay his stock subscriptions. The employee is indebted to the employer-corporation not as a worker but as a stock purchaser

Bankard Employees v NLRC – While seniority may be a factor in determining the wages of

employees, it cannot be the SOLE basis in cases where the nature of their work differs (for wage distortion cases)

Commando Security v NLRC – An employer may not deduct its so-called “share” from the wages of its employees even if such deduction has been agreed by them being contrary to law. This is especially true if the employer is placed in a contractually disadvantaged position and signs a waiver contrary to law and public policy

Eastern Telecom v Eastern Telecom Union – The practice of giving bonuses beyond the legal requirement, whether the company has earned profits or not, may not be withdrawn since it will be against Art. 100 (non-diminution of benefits)

Gaa v CA – The salaries of managers and those holding supervisory positions may be the subject of judicial execution since they are not “laborers” as contemplated by Art. 1708 of the Civil Code

Lingkod Manggagawa v Rubberworld – Upon the appointment of a rehabilitation receiver, for bankruptcy and liquidation proceedings, all claims for actions, including labor claims, shall be suspended accordingly

Metrobank Employees Union v NLRC – In mandating an adjustment in wage distortion cases, the law does not require that there be a total elimination of wage differences; a severe contraction is enough

Millares v NLRC – Transportation allowance given primarily for the benefit of the employer or necessary to the conduct of the employer's business does NOT form part of the employer's wages

Nasipit Lumber v NWPC – Guidelines issued by the Regional Tripartite Wages and Productivity Board (RTWPB) without the approval of the National Wages and Productivity Commission (NWPC) are ineffectual, void and cannot be a source of rights and privileges

PNB v Cruz – Art. 110 (Preference of worker's

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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claims in case of bankruptcy) covers not only unpaid wages but also separation pay. Separation pay must be considered as part of remuneration for services rendered or to be rendered.

Prubankers Association v Prudential Bank – A wage disparity between employees in the same rung but located in different regions of the country is NOT the situation the law contemplates regarding wage distortion. The distortion must exist in the same region of the country

VIII. CONTRACTORS OR SUBCONTRACTORS

Contracting in General

An arrangement whereby a principal

agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job within a definite or predetermined period (D.O. No. 18-A)

Creates a trilateral relationship:

NOTE: Under the current I.R.R. (D.O. 18-A), “substantial capital” refers to at least:

Php3,000,000 paid-up capital stocks (corporations, partnerships and cooperatives)

Php3,000,000 net worth for single proprietorship

“Labor Only” Contracting

Where the person supplying the workers does not have substantial capital or investment and the workers placed by such persons are performing activities which are directly related to the principal business of the employer (ART. 106 (4))

Where the contractor does not have substantial capital or investment and the employees recruited are performing activities usually necessary or desirable to the operation of the company –OR–

Contractor does not exercise right of

control over the performance of the work of the employee (D.O. No. 18-A)

o

Contractor and its employees (Employment)

Intent to create or engage in a “labor- only” contracting is immaterial

o

Contractor and Principal (Agency)

The principal-employer is deemed to be an “indirect employer” in such a way that he is joint and severally liable with the contractor in the event the latter fails to pay wages to its employees

The employer may require the contractor to post a bond to answer for the unpaid wages of the employees

Requisites of Legitimate Contracting (D.O. 18-A)

1. Registration with DOLE

2. Carries on a distinct and independent business and undertakes to perform the work or service in its own responsibility, free from the control and direction of the principal in all matters except as to the results thereof

3. Possesses substantial capital/investment

4. Engaged through a Service Agreement that ensures compliance with all the rights and benefits under Labor Laws

“Labor-Only” Contracting as defined by:

Labor Code

Relevance of work + Capital

I.R.R. (D.O.

Capital AND relevance of work + Control of principal

No. 18-A)

Atty. Azucena

EE + CE1 or CE2

EE (Essential Element) – to place or recruit workers to perform a job for the principal CE (Confirming Element):

CE1 – Capital AND Relevance of Work CE2 – Control of Principal

Consequences and Liabilities

The labor-only contractor shall be considered merely as an agent of the principal

The employees of the contractor shall be treated as regular employees of the principal

The principal becomes liable as a direct employer

Principal becomes solidarily liable with

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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the contractor for any violation of any provision of the Labor Code

Other Prohibitions Under D.O. No. 18-A

Contracting out of jobs not done in good faith:

Contracting out when the same results in the termination of regular employees

Contracting out of work with a “Cabo”

Taking undue advantage of the economic situation or circumventing the provisions of regular employment by:

o

Requiring them to perform functions currently being performed by regular employees of the principal

o

Requiring the contractor's employees to sign an antedated resignation letter, a blank payroll or a waiver of labor standards

Contracting out of a job through an in- house agency

Contracting out of a job by reason of a strike or lockout

Contracting out of a job in order to interfere, restrain or coerce union members in the exercise of their rights to self-organization

Repeated hiring of employees under an employment contract of short duration

Fixing the period of employment to a term shorter than the term of the service agreement, unless the contract is divisible unto phases for which different skills are required

Refusal to provide a copy of the Service Agreement to the Sole and Exclusive Bargaining Agent

Maintaining subcontracted employees in excess of those provided in the CBA

Contracting out of jobs analogous to the above

Q: Is it possible to contract out the core processes of a business (activities which are relevant or necessary to the business of the principal)?

A: Yes, provided that the contractor is legitimate

Case Doctrines

Aliviado v PnG (2010) – Even if the work of the employees recruited is necessarily desirable to the business of the principal, as long as the contractor has substantial capital and retains control over its employees, the contractor is a legitimate one.

Baguio v NLRC – The mere fact that the independent contractor ran out of capital (as an after-the-fact development) does not detract his status as an independent contractor.

Bernarte v PBA – Basketball referees are independent contractors since the PBA does not exercise control as to how the referees exercise its authority or judgment on the playing court

Coca Cola v Agito – For contractor corporations, “substantial capital” refers not to the authorized capital stock but to the paid up capital. Capital is deemed to be substantial if it can meet the demands of the principal

Coca Cola v Climaco – Since the respondent doctor is only required to be in the company premises for 2 hours a day and that the company does not dictate how he does his work, there is no employer-employee relationship. The company never exercised control over the respondent doctor

DOLE v Esteva – Primary standard of determining regular employment is the reasonable connection between the activities performed by the employer in relation to the usual business of the employer. If the employee has been performing the job for at least a year, whether continuous or intermittent, the law deems it as sufficient evidence of the indispensability of the activity to the business

Emmanuel Babas v Lorenzo Shipping Co – The mere possession of a Certificate of Registration is not conclusive proof that the contractor is a legitimate contractor

GSIS v NLRC – The principal is solidarily liable

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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with the contractor, regardless of whether or not the latter is legitimate or “labor-only”, in the event the contractor fails to pay its employees.

Jaguar Security v Sales – The jurisdiction of the labor courts extends only to cases where an employer-employee relationship exists. In the event that the principal seeks reimbursement from the contractor after paying its obligations to the contractor’s employees, such claim must be filed as an ordinary civil action in the regular civil courts

Kaisahan at Kapatiran v Manila Water – The 10% attorney’s fees in Art. 111 of the Labor Code refer to extraordinary fees, which are paid as indemnity to the prevailing party. The fees arising from the relationship between the lawyer and the client is not covered by Art. 111 and may exceed 10% on the basis of quantum meruit.

Meralco Industrial v NLRC General Rule: The principal's solidary liability with the contractor is only up to the payment of wages and overtime pay. Separation pay and other liabilities arising from illegal dismissal are NOT included. Exceptions: When the principal has conspired with the contractor in the acts giving rise to the illegal dismissal. When the contractor is a “labor- only” contractor, the principal is now deemed the employer thus the latter is liable for separation pay.

Neri v NLRC – Once substantial capital is established or proved, it is no longer necessary for the contractor to show evidence that it has investment in the form of tools, machineries, equipment, work premises, among others.

Sonza v ABS CBN – Radio and TV talents are deemed to be independent contractors since the employer-network has no control over what they say or discuss on their shows. Even if the network supplied the equipment and crew, they are not the “tools and instrumentalities” Sonza needed to perform his job. What Sonza principally needed were his talent, skills or costumes necessary for his appearances.

Urbanes v Secretary of Labor – The Regional Director has no jurisdiction over a claim for reimbursement by a principal employer from a contractor since it is a civil action, which must be ventilated in the proper civil courts.

Vinoya v NLRC – It is not enough to show substantial capitalization or investment in the form of tools, equipment and work premises to be considered as an independent contractor.

NOTES: Cadiz Sez:

Once investment or substantial capital is proved, there is no need to prove the existence or absence of the other elements (relevance of employee's work and control of principal may be dispensed with) – Neri v NLRC

The Vinoya Case has an opposite stand from the Neri Case. It says that substantial capitalization is not enough to prove contractor independence

IX. ADMINISTRATION AND ENFORCEMENT

Secretary of Labor (Art. 128)

Has access to employer's records and premises at any time of the day or night whenever work is being undertaken

Authority to question any employee

Investigate any fact which may aid in the enforcement of any labor law

Right to copy records

Power to issue compliance orders based on findings made in the course of inspection

May order stoppage of work or suspension of operations when the non- compliance poses a grave and imminent danger to the safety of the employees

Issue writs of execution for the enforcement of their orders, EXCEPT, in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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Process of Suspension of Operations

1.

Issuance of order suspending operations or stopping work

2.

Within 24 hours, a hearing shall be conducted to determine whether the order shall be lifted or not

3.

If violation is attributable to the fault of the employer, he shall pay the employees concerned their wages during the period of such stoppage or suspension

Appeals

Orders issued by authorized representatives of the DOLE Secretary may be appealed to the latter

Appeal period: 10 calendar days

If order involves monetary award, appeal by employer is perfected only upon the posting of a bond equivalent to the award in the order appealed from

Limits of the Enforcement Power

Case does not arise from the exercise of the visitorial power

When employer-employee relationship ceased to exist at the time of inspection

If employer contests the finding of the labor officer and such contestable issue is not verifiable in the normal course of inspection

Regional Director (Art. 129)

Jurisdiction over recovery of wages, simple money claims and other benefits including legal interest

Proceeding is summary and non-litigious

in character

Aggregate claims of each employee nor househelper does NOT exceed Php5,000

Complaint must NOT include:

o

a claim for reinstatement

o

claims for Employee’s Compensation, SSS, PhilHealth and Maternity benefits

Claims arise from an employer-employee relationship

LABOR LAW I [ATTY. CADIZ] 1 st Semester S.Y. 2013-2014

Appeals

Appeal to NLRC within 5 calendar days

NLRC to resolve appeal within 10 calendar days from submission of last pleading

Summary

 

Art. 128

Art. 129

WHO

DOLE Secretary or his authorized representative

Regional director or any authorized hearing officer of DOLE

EXERCISES

POWER

NATURE OF

Visitorial and

Adjudicatory power on matter involving recovery of wages

POWER

enforcement

power exercised

through routine

inspections of

 

establishment

EXISTENCE

Requires existence of EER

EER not necessary since it should not include a claim for reinstatement

OF E.E.R.

HOW

Enforcement power is an offshoot of visitorial power

Sworn complaint filed by any interested party

INITIATED

LIMITS TO

No limit

Aggregate claim

CLAIM

of each

complainant does

not exceed

Php5,000

APPEAL

Appeal to Secretary of Labor within 10 calendar days

Appeal to NLRC within 5 calendar days

Procedures

Art. 128 DOLE Secretary

Visitorial Power Initiated by DOLE Secretary or his duly authorized representative

by DOLE Secretary or his duly authorized representative Issues Compliance Order Appeal Compliance Order to DOLE

Issues Compliance Order

his duly authorized representative Issues Compliance Order Appeal Compliance Order to DOLE Secretary Employer contests
his duly authorized representative Issues Compliance Order Appeal Compliance Order to DOLE Secretary Employer contests
his duly authorized representative Issues Compliance Order Appeal Compliance Order to DOLE Secretary Employer contests

Appeal Compliance Order to DOLE Secretary

Employer contests findings of enforcement officer

Order Appeal Compliance Order to DOLE Secretary Employer contests findings of enforcement officer Appeal to NLRC

Appeal to NLRC

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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his duly authorized representatives. The failure to keep payrolls and daily time records in the work premises (Laguna), since the same is kept in their head office (Quezon City), is not an acceptable excuse.

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Art. 129 Regional Director

Filing of sworn complaint to the Regional Director or any authorized hearing officer

 
   
   
 

Claim does not exceed

Claim exceeds

People's Broadcasting v Secretary of Labor (2009) – Power to determine the existence of an employer-employee relationship lies with the NLRC and NOT with the Secretary of Labor

 

Php5,000.00

Php5,000.00 and no reinstatement is demanded

or reinstatement is demanded

 
   
   
 
People's Broadcasting v Secretary of Labor (2012) – (overturned the 2009 case) In the exercise

People's Broadcasting v Secretary of Labor (2012) – (overturned the 2009 case) In the exercise of the DOLE visitorial and enforcement power, the Secretary or his authorized representative, shall have the power to determine the existence of an employer- employee relationship (EER), to the exclusion of the NLRC. The determination of the EER in the exercise of its visitorial and enforcement power is subject to judicial review, NOT review by the NLRC.

Conducts summary proceeding

Case is indorsed to NLRC

 

[Appeal]

Case Doctrines

 

Aboitiz v Dela Serna – The Regional Director has jurisdiction over cases involving recovery of wages and other monetary claims provided:

1. the claim is presented by an employee or househelper

2. claim arises from an employer-employee relationship

3. claimant does not seek reinstatement

4. aggregate money claim does not exceed

Php5,000.00

In the absence of any of the requisites, it is the Labor Arbiter who shall have exclusive jurisdiction, EXCEPT claims for employee's compensation, social security, medicare and maternity benefits.

Ex-Bataan Security v Secretary of Labor – The visitorial power of the DOLE Regional Director, in his capacity as the representative of the

Secretary of Labor, to enforce compliance with labor laws can be exercised even where the individual claim exceeds Php5,000.00. However, if the case is covered by the exception clause in Art. 128(b) of the Labor Code, then the Regional Director will gave to endorse the case to the appropriate Arbitration Branch of the NLRC.

X. CLASSIFICATION OF EMPLOYMENT

Security of Tenure

It is the right not to be removed from one's job except for a valid reason and through proper procedure

Applies not only to regular employees but

also to non-regular employees (eg: fixed- period employment, project employment, probationary employment)

Managerial employees are entitled to security of tenure

An employee unjustly dismissed is entitled to reinstatement and to his full backwages and other benefits

NOTE: Security of tenure for non-regular employees means that they may not be terminated without a valid cause during the period in which they are hired.

Classifications of Employment

Jethro Intelligence v Secretary of Labor – The

As to Nature

Php5,000.00 monetary claim limit in Art. 129 of

o

Regular

the Labor Code does not cover the visitorial and enforcement power of the Secretary of Labor or

o

Probationary

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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o

Project

2.

Those who have rendered at least 1

o

Fixed-Term

year of service, whether continuous or

o

Seasonal

broken, with respect to the activity in

o

Casual

which they are employed

As to Rank

Standards for determining regular

o

Managerial

employment:

o

Supervisory

o

Reasonable connection between the

Length of service

o

Rank-and-File

work performed and the usual trade

o

or business of the employer

Managerial – Vested with powers or prerogatives to lay down and execute management policies, to hire, transfer, suspend and lay-off employees

Casual Employment

Supervisory – Those who effectively recommend such managerial actions if the exercise of such

When employment is neither regular, seasonal, fixed or for a specific project

When employment is irregular, sporadic, occasional, unpredictable and brief in nature

authority is not merely routinary or clerical in nature but requires independent judgment

Rank-and-File – Everybody else

When the work performed is NOT in the usual course of the employer's business

Legally, the period is only for 1 year

General Rule: Employment is deemed regular

Exception: Probationary, seasonal, fixed-term, casual and project employment

Exceptions to the Exception:

1. Probationary employees allowed to work after probationary period

2. Casual workers rendering service for more than 1 year

3. Seasonal workers hired repeatedly for the same tasks every season

4. Fixed-term employees who entered the contract on unequal terms with the employer

5. Project employees hired even after the completion of the project they engaged in

Types of Employment

Regular Employment

Those who are hired for activities which

are necessary or desirable in the usual trade or business of the employer

2 kinds of regular employees:

1. Those engaged in labor which is necessary or desirable in the usual trade or business of the employer

Regularization of a casual employee:

o

Rendered service for at least 1 year, whether continuous or broken

o

The activity for which he is hired still exists (regularization is only with respect to such activity)

Casual employees who are dismissed from their employment before the expiration of the 1-year period CANNOT lawfully claim that their dismissal is illegal

Fixed-Term Employment

Contract of employment that lasts for a definite period as agreed by the parties

Employment is not terminated; it merely expires along with the contract

Standards for validity:

1. Contract was entered into knowingly and voluntarily by the parties

2. Both parties dealt with each other on

more or less equal terms

Must not be used to circumvent the law granting security of tenure

If the fixed-term employee is dismissed without a valid cause prior to the expiration of said contract, the employee is entitled to the payment of salaries corresponding to the unexpired portion of

Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007 Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.). Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)

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the employment contract (Medenilla v. Phil Veterans Bank)

Project Employment

When employment is fixed for a specific project or undertaking

Period of employment is coterminous with the project for which the employee was hired

Standards for validity:

1. The employees were assigned to carry out a specific project or undertaking

2. The duration and scope of which were specified at the time the employees

were engaged in said project (employees were duly informed)

2 types of “projects” as determined by the Supreme Court:

1. A particular undertaking that is within the usual business of the employer BUT which is distinct, separate and identifiable as such, from the other undertakings of the company (eg:

different construction projects of a construction firm)

2. A particular undertaking which is NOT within the regular business of the employer, separate and distinct from the ordinary business or operations

Separation Pay for Project Employment

o