1. HOURS OF WORK
Rotation must be subject to the
Article 82 - Only excluded in working conditions
and hours of work. Title 1, Book 3.
Article 83. Normal Hours of Work
- Normal hours of work is 8 hours/day,
anything less or in excess of 8 hours is not
necessarily illegal or invalid. However, it
must be subject to one condition: the
employee should receive at the very least the
minimum wage for that day.
Anyone receiving wage higher that the minimum
wage would not be covered by Title 1, Book 3.
Question: A company with a normal working hours
of 6 hours/day. For more than 5 years this
company has a working hours of 6 hours /day.
Is the agreement valid?
- Yes. if the employers and employees
agreed on a certain kind of working
hours it is valid provided that the
employees particularly the rank and
file employees receive benefits
equivalent to the minimum wage
that can be receive by people who
are working for 8 hours/day.
What if management require the employees to work
for 7 hours/day for one week due to installations
and repairs in the company. Would the employees
be entitled to overtime pay?
- Yes because the normal working
hours in the said company is 6
hours/day. Anything beyond that is
overtime work and therefore
compensable with overtime pay.
General Rule : Normal hours of work is 8
hours/day.
Exception:
1. Agreement by the parties. When the
parties agrees for a working hours of less or
in excess of 8 hours. The agreement must
be voluntarily agreed upon and there must
be no diminution of benefits.
2. Reduction of working hours - Part of
flexible working arrangements. (Department
Advisory #2 s. 2009)
3. Reduction of work days - Part of flexible
working arrangements. (should not exceed
6 months)
4. Rotation of workers - Part of flexible
working arrangements. When business is
low and management cannot accomodate to
provide work to all employees so that
instead of dismissing or retrenching the
employees, the employees are instead
rotated.
consent of the employees concerned and
must not last for more than 6 months.
5. Force Leave - The arrangement is
temporary in nature and cannot last for
more than 6 months.
6. Broken time schedule- Management
learns that there will be a brown out -
Management may require the employees to
work when power will be restore. It is also a
flexible working arrangement.
*Flexible working arrangements are resorted to by
the employer in order to adress extra-ordinary
emergency/ occurence to business. Normally
related to cost cutting or cost saving.
*Anything beyond 6 months would mean
termination of employer-employee relationship.
7. Flexi- Holidays - instead of being absent
during the regular working holidays, the
employees will be given the opportunity to
choose when to use the holidays.
8. Compressed Work Week - To be valid, the
ff conditions must be complied with:
a. The CWW scheme must be agreed
upon by the majority of the
employees;
b. In a firm where hazardous
substances are manufacture, the
employer must secure a certification
from an occupational safety expert
that exposure to these substances
for a period of more than 8 hours
will be hazardous to the health of
the employees;
c. The employer shall notify the
Department of Labor and
Employment about the CWW. (so
that the DOLE in the exercise of its
visitorial and enforcement power
can determine if there is a need for
the CWW);
d. The CWW ideally should not be
more than a month but in the case
of Bisig Manggagawa sa Tryco case
the SC ruled that when the CWW
lasted for more than a month it is
tantamount to constructive
dismissal. ---> tantamount to
constructive dismissal because the
working conditions had been made
so unbearable that quitting becomes
an attractive option.
*The work should not be more than 12 hours daily.
*There should be no diminution of benefits.
*If there is a CWW, and the employees are to work
for 9 hours/day, anything in excess of 9 hours will
be considered as compensable overtime of service.
*Reason of employees in adopting a CWW:
1. Cost saving particularly on energy;
2. Greater work efficiency/
productivity;
3. Lower rate of absenteeism
*Advantages to the employees of the CWW:
1. Savings on transportation and meal
costs;
2. Longer weekends
Article 84. Hours Worked.
What are considered hours worked?
(Article 84 of LC and Section 4, Rule 1 Book 3-The
rules to implement the labor code )
1. All the time during which the employee is
required to be on duty or to be at the
prescribed workplace;
2. All time during which an employee is
suffered or permitted to work.
*Suffered - Requirement to be on duty or at
the prescribed workplace
Question:
Marie a task worker, finished her work earlier or
only after 5 hours of work.
Will Marie be paid for 8 hours/day?
Answer:
Yes. She is at the prescribed workplace during the
8 hours, the requirement does not require that the
employee must be productive during the said 8
hours. If Marie leaves her place of work
notwithstanding the fact that she has finished the
work earlier, then Marie is not entitled to her full
daily pay because she does not stay at the
workplace for the full 8 hours.
Question:
A worker that has a rest period of 20 minutes a
day. During the said period she cannot completely
rest because she is always listening to the buzzer
coming from the office of the Pres.
Would that 20 minutes be considered hours
worked?
Answer:
YES because she cannot use the period for herself
exclusively.
Question:
In a company, there is a practice of giving a rest
period of 1 hour. But whenever there are
customers the employees would serve the
customers.
Answer:
The 1 hour would still be considered as
compensable working hours.
If the employees can use the time exclusively for
his/her own purpose totally undisturbed by the
employer then it is not considered as compensable
working hours
Although an employee is not required, if the
employee is permitted impliedly or expressly by the
employer to work, then the employee is entitled to
a compensation for the said period/day.
Question:
There is an announced brown-out that will happen
at 2pm of Monday morning. The employees were
told that the employees may do whatever they want
during the brown-out period, however as soon as
the power is restored the employees must be at the
workplace. Is it compensable working hours?
Answer:
Yes, the employees cannot use the time exclusively
for personal purpose.
Attendance to meetings, seminars, lectures,
trainings sponsored by the company. - If the
attendance is outside working hours and it is
voluntary and the employee does not perform
productive work then all the hours will not be
compensated. All the conditions must exist for the
hours to be considered not worked. (Section 6,
Rule 1, Book 3)
Is traveled time compensable? - If it is part of the
employees’ work to travel, all the travel would be
considered as compensable hours (medical
representatives, real estate agents).
*Power interruption of short duration is considered
as compensable working hours. (nothing in excess
of 20 minutes)
A company allows the union members and officers
to meet regularly - Is the union meeting considered
compensable? - As a general rule: No. Exception: If
theres is a provision in the CBA that provides for
compensable working hours with respect to their
attendance.
An employee who was suspended from work
because of violation of company policy. The
employee filed a complaint for illegal suspension.
The hearing is conducted during her working day. -
The time she used for attending hearing is not
considered as compensable working hours.
Time used by the employee in conducting a strike
is as a general rule not compensable (No work, No
pay). Exception is when there is a provision on the
CBA which considers it a compensable hours.
(Strike duration pay).
Arica et al. vs. NLRC (30 minute assembly time)
*Waiting time as a general rule is not compensable
but if waiting is integral to the work of the
employee then waiting time is compensable.
*Pahinante - waiting is an integral part of
his work
* Waiting to be engaged is different from engaged to
wait. In the first one the compensable working
hours will start when the employee has been
engaged, while in the second one, even if the
employee is not doing anything, the time is
compensable.
Article 85. Meal Period
General rule: The employer must provide a meal
period of 60 minutes.
Meal periods of not less than 20 minutes may also
be valid;
1. when the work is non-manual in nature or
does not involve strenuous physical activity
provided that the employees agrees and the
rest (40 minute) is compensable;
2. Where the establishment regularly operates
for not less than 16 hours/ day.
3. In case of emergency work (repair of
machineries etc)
Sime Darby Pilipinas vs. NLRC
A company that gives a meal break of 30 minutes
with compensation decided to give the employees a
full one hour break. The employees filed a
complaint for diminution of benefits. - The
complaint will not prosper.
“For a full one hour of undisturbed lunch break the
employees can freely and effectively use this hour
not only for eating but also for rest and comfort
which are conducive to more efficiency and better
performance at their work. Since the employees are
no longer required to work during the break, there is
no more need for them to be compensated”
Article 86. Night Shift Differential
Only employees who worked between the hours of
10pm-6am will be entitled to Night shift
differential.
Excluded: Aside from those stated in Article 82, are
those employees working in establishments
regularly employing not more than 5 workers.
Night shift differential is a kind of premium given
for work performed between the hours of 10pm-
6am.
- In recognition of the health hazards of night
work and in recognition in the fact that
people who work in the night shift are
exposed to criminal elements.
READ ARTICLE 87-93
2. WAGES
Is wages synonymous with honorarium, love gift,
allowances, token fees?
- Wage under the labor code has
something to do with the existence
of employer-employee relationship.
A person may be paid, but if it not
in the concept of employer employee
relationship then it is not a wage.
Wages is a remuneration for services rendered or
to be rendered.
It has to be a monetary value.
Wages vs. Salary
- Wages is remuneration received by
blue collar workers, while salary is
the remuneration received by white
collar workers.
*RA 6727
Basic wage- all the remuneration / earnings paid
by an employer to a worker for services rendered
on normal working days and hours.
The following are not included in the term wages:
1. Cost of living allowance(Cola):
2. Profit sharing payments
3. Premium payments;
4. Commission;
5. 13th month pay.
Cost of living allowance and commissions: COLA
and commissions are not deemed as part of wages
but they become part of wages when they are
integrated in to the basic wage.
Different Concept of wages:
1. Minimum wage rate
2. Statutory minimum wage
3. Regional minimum wage
Wage increase cannot be legislated. Wage increase
is done by wage fixing done by the Regional
Tripartite Wages and Productivity Board (RTWPB)
headed by the Regional Director of DOLE.
Is it still necessary on the part of the National
wages and productivity commission to review the
salary increase decided upon by the RTWPB before
it can become effective?
- NO. The National Wages and
Productivity Commission (NWPC)
 does not have jurisdiction to review
the wage fixed by the RTWPB.
- NWPC’s jurisdiction will apply when
an appeal has been filed about a
wage order.
- Appeal should be filed by individual
employers. The effectivity of the
wage order is not suspended
however, when a bond is put up by
the employer who appeal the wage
order then it may be suspended.
There is no specific amount of bond.
- If the employees would like the order
to be implemented notwithstanding
the bond filed by the employer, the
employees must put up a counter-
bond.
*RA8188
Double Indemnity - when a wage order has been
passed, and no appeal has been filed, all the
employers in the concern region must comply with
the wage order.
Is lack of financial capacity to comply in a wage
order a defense? No. It is not a defense.
If the employer is unable to pay the wages in
accordance with the new wage order. - th
employees has an option to file a complaint for
underpayment of salary.
-The workers must file their complaint for
underpayment of salary to the Regional
Director. →provided that the aggregate
money claims of each employee does not
exceed 5k. (Article 129).
- The 5k each claim will not have a bearing
if there is a claim for reinstatement or
severance of er-ee relationship.
If an employees has already been dismissed, he
can file simple money claims to Regional Director.
If the claim of each employee exceeds 5k each - the
employee must file before the Labor Arbiter
subject to the qualification that the workers should
not belong to a company that is organized (could
have a CBA which provides provision pertaining to
underpayment of salary).
Payment of double indemnity will not erase the
criminal liability of an employer.
Regional minimum wage rate - there are different
wage in every region.
Facilities - Includes articles, or services for the
benefit of the employee or his family but does not
include tools of the trade or articles, services
primarily for the benefit of the employer or
necessary to the conduct of employers business.
● Uniforms provided by security agencies
to the guards - considered as
supplements because they are for the
benefit of the employer primarily for the
conduct of its business operation.
● Barracks provided to construction
workers - considered as an expense on the
part of the management, and they are not
considered as supplements or facilities
because they are charged to project cost.
○ Our Haus Realty vs, Parian et al. -
Accomodations being charged to
project cost of the company.
Can facilities be added to wages?
- Yes. In Our haus realty vs. Parian the SC
said that “There is no substantial distinction
between deducting and charging a facilities
value from the employees wage. The legal
requirement for creditibility apply to both.”
Facilities cannot be granted unilaterally, it has to
be accepted by the employee in writing. The
payment of facilities must be customary/ regular/
consistent. Facilities must also be given at a fair
and reasonable value. → Facility evaluation - and
evaluation / inspection conducted by the
appropriate RTWPB. → Facility evaluation order
issued by Regional Director of DOLE as
chairperson of the RTWPB
The order can be a subject of an appeal by
any party aggrieved by the order. The appeal must
be filed within 10 days from the receipt of the
evaluation. It must be filed before the NWPC (DO
126 s. 2013).
For facilities to be included as part of wages:
1. Must be customarily furnished by the
employer (company policy);
2. The policy must be observed for a
considerably length of time;
3. The deductibility of creditability must be
accepted voluntarily in writing by the
employees;
4. Must be charged at fair and reasonable
value.
● Meals provided by the employer - 1.
HOURS OF WORK
Article 82 - Only excluded in working conditions
and hours of work. Title 1, Book 3.
Article 83. Normal Hours of Work
- Normal hours of work is 8 hours/day,
anything less or in excess of 8 hours is not
necessarily illegal or invalid. However, it
must be subject to one condition: the
employee should receive at the very least the
minimum wage for that day.

Anyone receiving wage higher that the minimum
wage would not be covered by Title 1, Book 3.
Question: A company with a normal working hours
of 6 hours/day. For more than 5 years this
company has a working hours of 6hours/day.
Is the agreement valid?
- Yes. if the employers and employees
agreed on a certain kind of working
hours it is valid provided that the
employees particularly the rank and
file employees receive benefits
equivalent to the minimum wage
that can be receive by people who
are working for 8 hours/day.
What if management require the employees to work
for 7 hours/day for one week due to installations
and repairs in the company. Would the employees
be entitled to overtime pay?
- Yes because the normal working
hours in the said company is 6
hours/day. Anything beyond that is
overtime work and therefore
compensable with overtime pay.
General Rule : Normal hours of work is 8
hours/day.
Exception:
9. Agreement by the parties. When the
parties agrees for a working hours of less or
in excess of 8 hours. The agreement must
be voluntarily agreed upon and there must
be no diminution of benefits.
10. Reduction of working hours - Part of
flexible working arrangements. (Department
Advisory #2 s. 2009)
11. Reduction of work days - Part of flexible
working arrangements. (should not exceed
6 months)
12. Rotation of workers - Part of flexible
working arrangements. When business is
low and management cannot accommodate
to provide work to all employees so that
instead of dismissing or retrenching the
employees, the employees are instead
rotated. Rotation must be subject to the
consent of the employees concerned and
must not last for more than 6 months.
13. Force Leave - The arrangement is
temporary in nature and cannot last for
more than 6 months.
14. Broken time schedule- Management
learns that there will be a brown out -
Management may require the employees to
work when power will be restore. It is also a
flexible working arrangement.
*Flexible working arrangements are resorted to by
the employer in order to address extraordinary
emergency/ occurence to business. Normally
related to cost cutting or cost saving.
*Anything beyond 6 months would mean
termination of employer-employee relationship.
15. Flexi- Holidays - instead of being absent
during the regular working holidays, the
employees will be given the opportunity to
choose when to use the holidays.
16. Compressed Work Week - To be valid, the
ff conditions must be complied with:
a. The CWW scheme must be agreed
upon by the majority of the
employees;
b. In a firm where hazardous
substances are manufacture, the
employer must secure a certification
from an occupational safety expert
that exposure to these substances
for a period of more than 8 hours
will na be hazardous to the health of
the employees;
c. The employer shall notify the
Department of Labor and
Employment about the CWW. (so
that the DOLE in the exercise of its
visitorial and enforcement power
can determine if there is a need for
the CWW);
d. The CWW ideally should not be
more than a month but in the case
of Bisig Manggagawa sa Tryco case
the SC ruled that when the CWW
lasted for more than a month it is
tantamount to constructive
dismissal. ---> tantamount to
constructive dismissal because the
working conditions had been made
so unbearable that quitting becomes
an attractive option.
*The work should not be more than 12 hours daily.
*There should be no diminution of benefits.
*If there is a CWW, and the employees are to work
for 9 hours/day, anything in excess of 9 hours will
be considered as compensable overtime of service.
*Reason of employees in adopting a CWW:
4. Cost saving particularly on energy;
5. Greater work efficiency/
productivity;
6. Lower rate of absenteeism
*Advantages to the employees of the CWW:
3. Savings on transportation and meal
costs;
4. Longer weekends
Article 84. Hours Worked.

What are considered hours worked?
(Article 84 of LC and Section 4, Rule 1 Book 3-The
rules to implement the labor code )
3. All the time during which the employee is
required to be on duty or to be at the
prescribed workplace;
4. All time during which an employee is
suffered or permitted to work.
*Suffered - Requirement to be on duty or at
the prescribed workplace
Question:
Marie a task worker, finished her work earlier or
only after 5 hours of work.
Will Marie be paid for 8 hours/day?
Answer:
Yes. She is at the prescribed workplace during the
8 hours, the requirement does not require that the
employee must be productive during the said 8
hours. If Marie leaves her place of work
notwithstanding the fact that she has finished the
work earlier, then Marie is not entitled to her full
daily pay because she does not stay at the
workplace for the full 8 hours.
Question:
A worker that has a rest period of 20 minutes a
day. During the said period she cannot completely
rest because she is always listening to the buzzer
coming from the office of the Pres.
Would that 20 minutes be considered hours
worked?
Answer:
YES because she cannot use the period for herself
exclusively.
Question:
In a company, there is a practice of giving a rest
period of 1 hour. But whenever there are
customers the employees would serve the
customers.
Answer:
The 1 hour would still be considered as
compensable working hours.
If the employees can use the time exclusively for
his/her own purpose totally undisturbed by the
employer then it is not considered as compensable
working hours
Although an employee is not required, if the
employee is permitted impliedly or expressly by the
employer to work, then the employee is entitled to
a compensation for the said period/day.
Question:
There is an announced brown-out that will happen
at 2pm of Monday morning. The employees were
told that the employees may do whatever they want
during the brown-out period, however as soon as
the power is restored the employees must be at the
workplace. Is it compensable working hours?
Answer:
Yes, the employees cannot use the time exclusively
for personal purpose.
Attendance to meetings, seminars, lectures,
trainings sponsored by the company. - If the
attendance is outside working hours and it is
voluntary and the employee does not perform
productive work then all the hours will not be
compensated. All the conditions must exist for the
hours to be considered not worked. (Section 6,
Rule 1, Book 3)
Is traveled time compensable? - If it is part of the
employees’ work to travel, all the travel would be
considered as compensable hours (medical
representatives, real estate agents).
*Power interruption of short duration is considered
as compensable working hours. (nothing in excess
of 20 minutes)
A company allows the union members and officers
to meet regularly - Is the union meeting considered
compensable? - As a general rule: No. Exception: If
theres is a provision in the CBA that provides for
compensable working hours with respect to their
attendance.
An employee who was suspended from work
because of violation of company policy. The
employee filed a complaint for illegal suspension.
The hearing is conducted during her working day. -
The time she used for attending hearing is not
considered as compensable working hours.
Time used by the employee in conducting a strike
is as a general rule not compensable (No work, No
pay). Exception is when there is a provision on the
CBA which considers it a compensable hours.
(Strike duration pay).
Arica et al. vs. NLRC (30 minute assembly time)
*Waiting time as a general rule is not compensable
but if waiting is integral to the work of the
employee then waiting time is compensable.
*Pahenante - waiting is an integral part of
his work
* Waiting to be engaged is different from engaged to
wait. In the frist one the compensable working
hours will start when the employee has been
engaged, while in the second one, even if the
employee is not doing anything, the time is
compensable.
Article 85. Meal Period
General rule: The employer must provide a meal
period of 60 minutes.
Meal periods of not less than 20 minutes may also
be valid;
4. when the work is non-manual in nature or
does not involve strenuous physical activity
provided that the employees agrees and the
rest (40 minute) is compensable;
5. Where the establishment regularly operates
for not less than 16 hours/ day.
6. In case of emergency work (repair of
machineries etc.
Sime Darby Pilipinas vs. NLRC
A company that gives a meal break of 30 minutes
with compensation decided to give the employees a
full one hour break. The employees filed a
complaint for diminution of benefits. - The
complaint will not prosper.
“For a full one hour of undisturbed lunch break the
employees can freely and effectively use this hour
not only for eating but also for rest and comfort
which are conducive to more efficiency and better
performance at their work. Since the employees are
no longer required to work during the break, there is
no more need for them to be compensated”
Article 86. Night Shift Differential
Only employees who worked between the hours of
10pm-6am will be entitled to Night shift
differential.
Excluded: Aside from those stated in Article 82, are
those employees working in establishments
regularly employing not more than 5 workers.
Night shift differential is a kind of premium given
for work performed between the hours of 10pm-
6am.
- In recognition of the health hazards of night
work and in recognition in the fact that
people who work in the night shift are
exposed to criminal elements.
READ ARTICLE 87-93
2. WAGES
Is wages synonymous with honorarium, love gift,
allowances, token fees?
- Wage under the labor code has
something to do with the existence
of employer-employee relationship.
A person may be paid, but if it not
in the concept of employer employee
relationship then it is not a wage.
Wages is a remuneration for services rendered or
to be rendered.
It has to be a monetary value.
Wages vs. Salary
- Wages is remuneration received by
blue collar workers, while salary is
the remuneration received by white
collar workers.
*RA 6727
Basic wage- all the remuneration / earnings paid
by an employer to a worker for services rendered
on normal working days and hours.
The following are not included in the term wages:
6. Cost of living allowance(Cola):
7. Profit sharing payments
8. Premium payments;
9. Commission;
10. 13th month pay.
Cost of living allowance and commissions: COLA
and commissions are not deemed as part of wages
but they become part of wages when they are
integrated in to the basic wage.
Different Concept of wages:
4. Minimum wage rate
5. Statutory minimum wage
6. Regional minimum wage
Wage increase cannot be legislated. Wage increase
is done by wage fixing done by the Regional
Tripartite Wages and Productivity Board (RTWPB)
headed by the Regional Director of DOLE.
Is it still necessary on the part of the National
wages and productivity commission to review the
salary increase decided upon by the RTWPB before
it can become effective?
- NO. The National Wages and
Productivity Commission (NWPC)
does not have jurisdiction to review
the wage fixed by the RTWPB.
- NWPC’s jurisdiction will apply when
an appeal has been filed about a
wage order.
- Appeal should be filed by individual
employers. The effectivity of the
wage order is not suspended
however, when a bond is put up by
the employer who appeal the wage
order then it may be suspended.
There is no specific amount of bond.
- If the employees would like the order
to be implemented notwithstanding
the bond filed by the employer, the
employees must put up a counter-
bond.

*RA 8188
Double Indemnity - when a wage order has been
passed, and no appeal has been filed, all the
employers in the concern region must comply with
the wage order.
Is lack of financial capacity to comply in a wage
order a defense? No. It is not a defense.
If the employer is unable to pay the wages in
accordance with the new wage order. - th
employees has an option to file a complaint for
underpayment of salary.
-The workers must file their complaint for
underpayment of salary to the Regional
Director. →provided that the aggregate
money claims of each employee does not
exceed 5k. (Article 129).
- The 5k each claim will not have a bearing
if there is a claim for reinstatement or
severance of er-ee relationship.
If an employees has already been dismissed, he
can file simple money claims to Regional Director.
If the claim of each employee exceeds 5k each - the
employee must file before the Labor Arbiter
subject to the qualification that the workers should
not belong to a company that is organized (could
have a CBA which provides provision pertaining to
underpayment of salary).
Payment of double indemnity will not erase the
criminal liability of an employer.
Regional minimum wage rate - there are different
wage in every region.
Facilities - Includes articles, or services for the
benefit of the employee or his family but does not
include tools of the trade or articles, services
primarily for the benefit of the employer or
necessary to the conduct of employers business.
● Uniforms provided by security agencies
to the guards - considered as
supplements because they are for the
benefit of the employer primarily for the
conduct of its business operation.
● Barracks provided to construction
workers - considered as an expense on the
part of the management, and they are not
considered as supplements or facilities
because they are charged to project cost.
○ Our Haus Realty vs, Parian et al. -
Accomodations being charged to
project cost of the company.
Can facilities be added to wages?
- Yes. In Our haus Realty vs. Parian the SC
said that “There is no substantial distinction
between deducting and charging a facilities’
value from employees wage. The legal
requirement for creditability apply to both. ”
- Facilities cannot be granted unilaterally, it
has to be accepted by the employee.
Employee’s acceptance should not be
merely verbal or oral, it has to be in
writing.
- Payment of facilities must be
customary/regular/consistent.
- Must be given at a fair and reasonable
value. → facility evaluation conducted by
the RTWPB having jurisdiction over the
workplace →Facility evaluation order will
be issued by the Regional Director of the
DOLE as the chairperson of the RTWPB. →
Any party aggrieved by the Facility
Evaluation Order may appeal the same
within 10 days from receipt of the order
before the National Wages and
Productivity Commission. ( DO 126 s.
2013)
The following are the requirements for facilities to
be included as part of wages:
1. Must be customarily furnished by the
employer (there must be a company policy
which is observed for a considerable length
of time);
2. Deductibility or creditability must be
accepted voluntarily in writing by the
employees; and
3. Must be charged at a fair and reasonable
value.
Are meals provided by the employer to the
employees considered facilities or supplements?
- PURPOSE TEST → if the benefit or
privilege granted to an employee is clearly
for the employer’s convenient that cannot
be a facility.
- Supplements constitute extra-
remuneration, special privileges or perks
received by the worker over or above the
ordinary earnings or wages.
- In construction industry if the company
supply safe drinking water, the water
cannot be considered as facilities. It is an
obligation on the part of the employer.
- Adequate sanitary and washing
facilities- not deductible from wages.
- Sustainable living accommodations
- Necessary expenses on the
construction industry.
- Separate sanitary/ washing and
sleeping facilities for male and
female workers - part of project cost
and therefore are not deductible to
wages.
Are allowances part of wages?
 - Allowances as a rule are not part of wages,
however, regular allowances or those
integrated into the basic pay are considered
as part of wages.
● The Labor Arbiter ordered the payment of
backwages and reinstatement of an illegally
dismissed employee. What would be the
component of the backwages?
- If allowance is a regular part of
wages or is integrated into the basic
pay then it would be included in the
computation of backwages.
● Would wage increases be included in the
computation of backwages of an illegally
dismissed employee?
- NO. It should not be included.
Backwages are computed on the
basis of the latest salary received at
the time of the dismissal.
● Benefits provided for in CBA
- The employee is entitled if he is a
member of the appropriate
bargaining unit.
- If there are new benefits entered into
during the pendency of the illegal
dismissal case. → if he is no longer
covered by the CBA then the CBA
increases will no longer be a part of
the computation of his backwages.
● The general rule is that salary increases
should not be included in the computation
of backwages.
- Exception; Salary increases that
were withheld from the employee as
a consequence of an unfair labor
practice in the part of the employer.
“If the salary increase has been
withheld as a tool to commit unfair
labor practice such salary increase
shall be included in the computation
of backwages”.
- Wage Fixing (RTWPB)
Who are not covered by the Labor Code provisions
on Wages:
1. Those under farm tenancy or leasehold;
2. Those in domestic service;
3. Person working in their respective homes;
Legal Tender- Agreement of the parties has
paramount value and must be respected, subject
to the condition that said agreement is entered into
voluntarily and with full knowledge of the
implication.
● When shall wages be paid?
- It shall be paid at least once every 2
weeks or twice a month at intervals
not exceeding 16 days.
- Labor Advisory No. 11 s. 2014 and
DO No. 195 s. 2018 (Prohibitions
pertaining to wages)
- Non-interference in the disposal of
wages - good faith is not a valid
defense.
- Illegal deduction has a criminal
component.
- Labor Advisory No. 11:
- No deduction for uniforms /
cash deposits for damages.
- The only industry in the
Philippines that deduction
for losses or damages is
allowed is the Security
Agency Business.
- DO No. 195 s. 2018 - When the
deduction is with the written authorization
by the employee for the payment to the
employer. → provided that the latter does
not receive any pecuniary benefits directly /
indirectly from the transaction.
● As a general rule no employer may require
an employee to make deposits for damages
or losses.
- Exception: When the employer is
engaged in trade, business or any
form of occupation that deduction
for damages is in practice (there
must be a consent of the employees.
Without the consent it is
tantamount to illegal deduction)
Article 118, Labor Code.
- Form of unfair labor practice
(discriminatory unfair labor practice)
because an employer refuses to pay or
reduces the wages of an employee because
said employee is about to give a testimony
about the the violations of labor standards
committed by the employer.
- RA 6727.
→ To rationalize wage fixing, it is now done
on a regional basis;
→ To promote productivity and gain
sharing;
→ To guarantee the right of labor to just
share in the fruits of production; and
→ To enhance employment generation in
the countryside.
● What is the policy of the state with respect
to wage fixing?
- The state’s policy on wage fixing is
wage should be fixed by collective
bargaining. Only in the absence of a
collective bargaining agreement
shall there be wage fixing done by
the RTWPB.

Regional Wage Fixing vs. Legislated Wage Fixing
A uniform national wage structure is
antithetical to the purpose of RA 6727 which
rationalizes wage fixing.
● What is the basis of the minimum wage
rate?
- The basis of the minimum wage rate
is the normal working hours of 8
hours a days.
● What are the factors used for determining
regional wages?
1. Nature of industry;
2. The number of workers; and
3. Capitalization of enterprises
● Kinds of employees (how often are they paid
wages)
● Estimated equivalent of monthly rates of
different kinds of employees (Dept.
Advisory No. 01 s. 2010)
1. Monthly paid employees for
purposes of computing the
equivalent monthly rate.
Applicable daily rate x 365 /
12 months = equivalent
estimated monthly rate.
2. Daily paid employee who reports for
work for 7 days a week.
Applicable daily rate x goods and commodities.
393.50 days / 12 months.
3. Daily paid workers who worked for 6
days a week
Applicable daily rate x 313
days / 12 months.
4. Those who work for 5 days a week
Applicable daily rate x 261
days / 12 months.
● What is the minimum wage of rate of
mobile workers (moves from one place to
another)?
- Workers who move from one place to
another shall receive the salary
being receive at the head office of
the company / domicile of the
company.
- A security guard posted in QC but
during the term of his employment
was brought to Malolos shall receive
the QC salary or salary of the
National Capital Region because
mere transfer does not mean that
you will no longer receive the salary
you have previously agreed on in the
contract of employment.
- The minimum wage rate of workers
working in branches are those
applicable to the place where they
work.
Wage Order
- An order issued by the RTWPB with respect
to wage fixing.
- Procedure in wage fixing:
1. Filing of petition for wage increase
(any person in interest can file a
petition, normally done by unions);
2. Once a petition is filed, the
employers as represented by the
employer’s federation of the
Philippines and other employer’s
group may file an opposition to the
petition;
3. There will be a public hearing and
consultation (mandatory, without
these the wage order can be
declared as null and void);
4. There will be an issuance of a wage
order (ideally it shall be done within
30 days after the conclusion of the
last hearing);
5. The wage order will be published in
a newspaper of general circulation
in the region and will be effective 15
days after the publication of the
order.
- The wage order shall not be touched for a
period of 12 months subject to the
exception of extraordinary inflation,
increase in the price of petroleum / basic
Grounds for the appeal of a wage order:
1. Non-conformity with the prescribe
guidelines/ procedure;
2. Question of law; and
3. Great abuse of discretion
- Filing of an appeal does not stop or suspend
the effectivity of a wage order. Unless, the
appellant has filed a bond or adequate
security satisfactory to the National Wages
and Productivity Commission.
Standards for wage fixing:
1. The needs of workers and their families;
2. Capacity of employer to pay;
3. Comparable wages and income in different
regions;
4. Requirements of economics and social
developments.
Different Methods of Wage Fixing:
1. Floor Wage Method - involves the fixing of
a determinate amount to be added to the
prevailing statutory minimum wage;
2. Salary Cap / Salary Ceiling - that up to
this level in this workplace, the employees
receiving this amount are the only
employees who will be affected by the wage
increase.
3. Across the Board Increase - highly
inflationary and not normally done because
 it has to give the increase to all the
employees in the company regardless of the
salary level. (Inflationary);
4. Two-tiered Wage fixing:
a. The minimum wage - the employee
gets the regional minimum wage.
b. Wage based on performance -
employee will get an additional pay
based on performance.
- employees in the same
company doing exactly the
same work will have different
salary because there is
productivity / performance
component.
* WAGE ORDER # 15 or the
RTWPB - first kind of two-
tiered wage fixing.
Wage Distortion
Element:
1. There is an existing hierarchy of positions with
corresponding salary rate;
2. There is a significant change in the salary of the
lower pay workers without an increase in the
salary of the higher pay workers;
3. There is an elimination of the distinction based
on quality or quantity;
4. The existence of the distortion is in the same
region.
- Distinction can be based on skills / length of
service or other logical basis.
- Wage distortion cannot be the subject of strike or
lockout.
-It can only be corrected if prescribe by law or wage
order.
-It cannot be corrected if it resulted from the
generosity on the part of the employer. (there can
be wage distortion but it cannot be corrected)
-wage distortion arising from collective bargaining
cannot be a subject of a complaint for wage
distortion.( agreement of the parties are important
in labor cases)
RA 8188 amended Section 12 or Ra 6727 - double
indemnity
- on the top of double indemnity an erring
employee can be assessed fine in amount of P
25,000 -P 100,000 and imprisonment of not less
than 2 years nor more than 4 years.
-payment of double indemnity shall not free the
employee from criminal liability.
- The Regional Director has the authority to impose
the penalty of double indemnity however in the
case of GR No. 178184 / Jan 29, 2014 --> "The
power can also be exercised by the Labor Arbiter of
the NLRC".
* Regional Director in the exercise of visitorial and
enforcement power; the Labor Arbiter in the
exercise of compulsory arbitration.
Articles 106-109
DO174
EO#51
Are all forms of Contracting and Subcontracting
prohibited in the Philippines?
No. Legitimate or Permissible Contracting is
allowed by law under Article 106, DO 18-02, DO
18-8, DO 174, DO 183.
What is illegal is labor only contracting or engaging
in prohibited activities in contracting.
The Secretary of Labor is given the power to
regulate contracting / subcontracting in the
Philippines in order to protect the workers.
What is the evil of contracting / subcontracting?
- The security of tenure of the workers are put in
peril.
When is Contracting Legal or Permissible?
Do 174:
1. A contractor is deemed engage in legal /
permissible contracting if that contractor is
registered with the DOLE. --> Registration with
DOLE only prevents the presumption that the
contractor is only labor only contractor. -->
Registration is just a requirement for legitimacy
but not an indicator of legitimacy.
2. The contractor must carry out a distinct and
independent business. --> it must be distinct and
independent from the business of the principal
who has secured the services of the contractor.
*In the case of Coca-Cola Bottlers, Coca-cola has
secured contractual workers from different
contractors, these different contractors do not have
any business to attend to other than to provide
workers to Coca-Cola. --> In this case the
contractors are only engage in labor only
contracting because they do not have a separate
and independent business from the employer.
3. The contractor must undertake to perform the
job contracted in accordance to his own means and
methods and not based on the discretion of the
principal.
4. The contractor's employees must be free from
the control of the principal.
5. The contractor must also have a substantial
capital.
* Net financial Contracting Capacity - in addition to
substantial capital, the contractor has capital to
sustain the monthly operations of the business,
including payment of salaries of the contractual
workers.
*The contractor may have sufficient capital but if
that contractor does not have net financial
capacity, the contractor may still be engaged in
labor only contracting.
6. The contractual employees must not perform
work necessary and desirable to the principal
business of the principal.
* In the case of Alebiago vs. Proctor and Gamble,
the Supreme court said that "it is not necessary
that the contractual workers be limited to
functions which are not directly related to the main
business of the employer". The Court categorized
the functions being done by the workers in a work
place into core (directly related to the main or
principal business of the employer) and non-core
(not directly related but are useful to the main
business) functions.
--> The supreme court made a categorical ruling
"that even core functions can be contracted out,
subject to the following conditions:
1. there is a genuine business need (employer has
the burden of proof);
2. the arrangement is temporary in nature;
3. the employment of contractual workers will not
curtail the employment opportunities of regular
workers
4 the hiring of contractual worker should not be a
dismissal in disguise of regular workers or should
not be an unfair labor practice in disguise."
--> without said conditions contracting out for core
functions cannot be done.
7. The Service agreement between the contractor
and the subcontractor must insure compliance
with laws.
What kinds of contracting are prohibited?
1. Labor only contracting
- A prohibited type of contracting.
- The contractor does not have a substantial
capital or sufficient investment in tools/ equipment
/machinery, and the workers supplied by these
contractors are performing work necessary and
desirable to the main business of the employer.
2. Illicit forms employment agreements/
arrangements
a) Farming out work to a kabo (who supplies union
workers to different employers, a kabo is someone
who does not have capital);
b) Contracting out of job to an in-house agency;
c) contracting out of job to an in-house
cooperative;
d) contracting out of work by reason of strike /
lockout;
e) contracting out of job being performed by union
members (unfair labor practice);
f) contracting out of work being performed by the
regular employees of the principal.
3. Contracting undertaken to circumvent the
worker's rights
Two kinds of contracting / subcontracting
being done in the Philippines:
1. Trilateral contracting;
2. Bilateral Contracting (more pernicious; in case
of perpetual contractual workers directly hired by
employer but being asked to sign a contract of
employment which is renewed in a month to
month basis.)
TRILATERAL CONTRACTING
*Legitimate Contracting
If the contractor was not able to pay the labor
standards benefits of the contractual employees,
the triangle will shift, and the principal will be an
indirect employer. By operation of law, the
principal will substitute the contractor / sub-
contractor in paying the contractual employees
their labor standards benefits.
If the contractor / sub-contractor terminated their
services of the contractual employees may file a
case for illegal dismissal. The employees will
implead the contractor / sub- contractor.
- If the complaint is for illegal dismissal and money
claims --> implead both the principal and
contractor / sub-contractor, contractor /sub
contractor's liability will be both for illegal
dismissal and non-compliance with labor
standards. The principal will only be liable for
noncompliance with labor standards.
In Indirect employment the nature of contractor
/sub-contractor and principal's relationship is
solidary. The employees may proceed against the
principal and the principal may ask for
reimbursement.
*Labor Only Contracting Triangle
In this case the contractor / sub-contractor has no
substantial capital, or investment in tools,
machinery, equipment etc. or the worker performs
work necessary and desirable to the principal's
business.
If the employee is dismissed by the contractor,
employee must file a complaint against the
contractor and principal. Their liability is solidary.