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Merits of Voluntary Arbitration

The intrinsic merits of voluntary arbitration speak highly of the system itself. As a mode of labor
dispute settlement and resolution, it is very compatible and consistent with the private character
of collective bargaining. In fact, the grievance procedure with voluntary arbitration as the
terminal step is the heart and soul of every collective bargaining.

Thus, the entire collective bargaining process does not end with the conclusion and signing of a
collective bargaining agreement. It continues as a day-to-day process of implementing the CBA
in accordance with the letter and intent of its framers – the parties themselves. The entire
collective bargaining process calls for the mutual adjustment of grievances by the parties should
differences arise in the contract implementation and interpretation. Thus, without a carefully
formulated and workable grievance procedure and voluntary arbitration, the contract can be
reduced into a mere scrap of paper instead of being a source of stability in the relationship
between the contracting parties. It becomes a very rich source of complaints, grievances and
irritants.

Compared to litigation, the very private character of voluntary arbitration can make the
proceedings before voluntary arbitrators less technical. The method of selecting voluntary
arbitrators where trust and confidence of both parties on his competence, integrity and
impartiality becomes the key determinant, places the arbitrator in a highly influential position to
succeed in the last ditch effort to conciliate their differences. Should he fail, he can speed up the
proceedings by conducting very informal hearings and satisfy the due process requirement
without being saddled by the strict observance of the rules on evidence obtaining in regular
courts.

Because he is a private person, the voluntary arbitrator has the material time to attend to the
case that he handles and he can adopt his own procedures that would allow unnecessary delay
and dilatory tactics like resetting and postponement of hearings.

PRIMER ON GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION

Frequently Asked Questions

WHAT IS THE PRESENT NATIONAL POLICY ON LABOR DISPUTE

SETTLEMENT?

The present national policy on labor dispute settlement is enunciated in the following
instruments:

A. 1987 Constitution

Sec. 3, Article XIII provides:

“The State shall promote the principle of shared responsibility between

workers and employers and the preferential use of voluntary modes in
setting disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.”
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B. Labor Code, as amended by Republic Act 6715

Article 211 of the Code provides, among others: (a) “….It is the policy of the State… to
promote and emphasize the primacy of free collective bargaining and negotiations,
including voluntary arbitration, mediation and conciliation, as mode of settling labor or
industrial disputes.”
(b) “ To provide an adequate administrative machinery for the expeditious settlement of
labor or industrial disputes”.

WHAT IS A GRIEVANCE?

A grievance is defined as “any question by either the employer or the union regarding
the interpretation or application of the collective bargaining agreement or company
personnel policies or any claim by either party that the other party is in violation of any
provision of the CBA or company personnel olicies”.

WHAT IS THE GRIEVANCE REFERRED TO IN TITLE VII-A OF THE LABOR CODE?

The grievance referred to in the technical or restricted sense, is a dispute or

controversy between the employer and the collective bargaining agent arising from the
interpretation or implementation of their CBA and/or those arising from the
interpretation or enforcement of company personnel policies, for the adjustment or
resolution of which the parties have agreed to establish a machinery or a series of
steps commencing from the lowest level of decision-making in the management
hierarchy (usually between the shop steward of the employee or
employees aggrieved and the supervisor/foreman/manager which exercises control
and supervision over the grievants or who is responsible for executing the
management action that have given rise to the grievance) and usually terminating at
the highest official of the Company.

If such dispute remains unresolved after exhausting the grievance machinery or

procedure, it shall automatically be referred to voluntary arbitration prescribed in the
CBA.

WHAT IS THERE A GRIEVANCE?

In the technical or restricted sense, there is a grievance when a dispute or controversy

arises over the implementation or interpretation of a collective bargaining agreement or
from the implementation or enforcement of company personnel policies, and either the
union or the employer invokes the grievance machinery provision for the adjustment or
resolution of such dispute or controversy.

COULD THERE BE A GRIEVANCE WITHOUT A UNION OR A CBA?

If the term grievance is to be applied in the loose or genetic sense, any dispute or
controversy respecting terms and conditions of employment which an employee or
group of employees may present to the employer can be a grievance, even without a
union or CBA.

Under this interpretation, any complaint, question or problem that an employee or

group of employees may wish to take up or discuss with the employer respecting terms
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and conditions of employment for the purpose of resolving or satisfying the same,
constitutes a grievance. The expansion of the original and exclusive jurisdiction of
voluntary arbitrators to include questions arising from the Interpretation and
enforcement of company personnel policies has the effect of widening the meaning and
interpretation of a grievance to include a situation where there is no collective
bargaining agent and no CBA.

ARE ALL GRIEVANCE ARISING FROM THE IMPLEMENTATION OR

INTERPRETATION OF THE COLLECTIVE BARGAINING AGREEMENT AND/OR
INTERPRETATION AND ENFORCEMENT OF COMPANY POLICIES COMPULSORY
SUBJECT TP TJE GRIEVANCE MACHINERY?

Yes. This is clear from Article 260 and Art. 261 of the Labor Code, as amended by
Republic Act 6715.

Art. 260 is emphatic on the duty of the parties to a collective bargaining agreement to
establish a machinery for the adjustment and resolution of grievances arising from the
interpretation and enforcement of the CBA and/or company personnel policies, and for
the mandatory use of the said machinery.

Art. 261, on the other hand, directs the NLRC, its Regional Arbitration Branches and
the Regional Directors of the Department of Labor and Employment not to entertain
disputes, grievances or matters under the exclusive and original jurisdiction of the
voluntary arbitrator or panel of voluntary arbitrators and to immediately dispose of and
refer the same t the grievance machinery or voluntary arbitration provided in the
collective bargaining agreement. Moreover, in Rule XI of the Implementing Rules of the
Code, the Regional Branches of the National Conciliation and Mediation Board are
enjoined, in case issues arising from the interpretation or implementation of the
collective bargaining agreements or those arising from the interpretation or
enforcement of Company personnel policies are raised in notices of strikes or lockouts
or requests for preventive mediation, to advise the parties to submit the issue/s to
voluntary arbitration.

WHAT USUAL PROVISIONS OF A COLLECTIVE BARGAINING AGREEMENT

WHOSE VIOLATTION/S ARISING FROM INTERPRETATION AND
IMPLEMENTATION, MAY CONSTITUTE GRIEVANCE/S OR THE SO-CALLED
RIGHTS DISPUTES?

Every collective agreement usually contains non-economic and economic provisions.

Non-economic provisions are those whose monetary cost can not be directly computed
such as no-strike-no-lockout, union security, management security, check-off clauses,
grievance procedures, etc. Economic provisions, on the other hand, are those which
have direct and measurable monetary cost consequences such as wage rates, paid
vacations, pensions, health and welfare plans, penalty premiums and other fringe
benefits. Any violation arising from rights established under collective agreements,
laws, rules and regulations and customary practices may constitute as grievance and is
often referred to as rights dispute.
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WHAT ARE PERSONNEL POLICIES AND WHAT ARE THE MATTERS USUALLY
COVERED BY SUCH POLICIES, WHOSE WRONG FROM ENFORCEMENT AND
INTERPRETATION MAY CONSTITUTE GRIEVANCE/S OR OTHER SOURCES OF
RIGHTS DISPUTE

Personnel policies are guiding principles stated in broad, long-range terms that express
the philosophy or beliefs of an organization’s top authority regarding personnel matter.

They deal with matters affecting efficiency and well being of employees and include,
among others, the procedures in the administration of wages, benefits, promotions,
transfers and other personnel movements which are usually not spelled out in the
collective agreement. The usual source of grievances , however, is the rules and
regulations governing disciplinary actions.

WHAT VIOLATIONS OF THE USUAL NORMS OF PERSONNEL OR BEHAVIOR OF

EMPLOYEES MAY CONSTITUTE GRIEVANCES OFTEN REFERRED TO AS
DISCIPLINE CASES?

Rules and regulations governing personnel discipline may contain the following
infractions covering the following subjects:
o
o AGAINST PERSON
o PHYSICAL INJURY, ASSAULT, HOMICIDE, MURDER
o
o AGAINST PROPERTY
o MIS-USE OF PROPERTY
o DAMAGE TO PROPERTY
o THEFT AND ROBBERY
o NEGLIGENCE IN THE USE OF PROPERTY
o
o ORDERLINESS/GOOD CONDUCT
o FIGHTING/QUARRELING
o VIOLATION OF RULES
o DISCOURTESY/DISRESPECT
o INTOXICATION WHILE AT WORK
o POSSESSION OF DRUGS/NARCOTICS/ALCOHOL DRINKS
o ILLEGAL STRIKE
o STRIKE VIOLATIONS/SABOTAGE
o FAILURE TO COOPERATE IN INVESTIGATIONS
o HYGIENE
o SAFETY
o UNION ACTIVITY
o MOONLIGHTING
o DEPORTMENT
o FINANCIAL INTEREST
o UNAUTHORIZED OUTSIDE WORK
o PERSONAL AFFAIRS
o ENTERTAINMENT OF VISITORS
o DISORDERLINESS, HORSEPLAY
o USE OF FOUL LANGUAGE
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o ATTENDANCE AND PUNCTUALITY
o TIMEKEEPING VIOLATIONS
o ABSENTEEISM
o TARDINESS
o AWOL

o MORALITY
o IMMORALITY
o SEXUAL HARASSMENT

o CONFLICT OF INTEREST
o CONFLICT OF INTEREST

o NON-PERFORMANCE
o INSUBORDINATION
o NEGLIGENCE OF DUTY
o INEFFICIENCY
o MALINGERING
o CARELESSNESS
o POOR QUALITY

Grievance Machinery

What is a Grievance?

A grievance is defined by the collective bargaining agreement.

Generally speaking, a grievance is any difference or dispute between an employee or
the union, and the employer with respect to the interpretation, application, or of
compliance with any terms and conditions of the contract.

Other authors defined Grievance as any dissatisfaction, complaint, irritation, or

misunderstanding (real or imagined) of an employee arising from his job, or his
relationship with his employer, any violation of the CBA or of the Labor Code that he
thinks or feels he is wronged or treated unfairly (Sison 1991).

In the broadest sense, grievance includes all dissatisfaction that arise in an

organization whether unionized or not.

If the term grievance is to be applied in the loose or generic sense, any dispute or
controversy respecting terms and conditions of employment which an employee or
group of employees may present to the employer can be a grievance, even without a
union or CBA.

Under this interpretation, any complaint, question or problem that an employee or

group of employees may wish to take up or discuss with the employer respecting terms
and conditions of employment for the purpose of resolving or satisfying the same,
constitutes a grievance. The expansion of original and exclusive jurisdiction of
voluntary arbitrators to include questions arising from the interpretation and
enforcement of company policies has the effect of widening the meaning and
interpretation of grievance to include a situation where there is no collective bargaining
agent and no CBA.
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The Grievance Machinery

Article 260 of the Labor Code requires parties to establish a grievance machinery for
the adjustment and resolution of grievances arising from the interpretation or
implementation of a collective bargaining agreement or the interpretation or
enforcement of company personnel policies.

Grievances submitted to the grievance machinery and not settled within seven
calendar days shall automatically be referred to voluntary arbitration.

The grievance procedure refers to the internal rules of procedures intended to resolve
all issues arising from the implementation and interpretation of the CBA.

Established by the parties in their CBA, this grievance procedure leads to voluntary
arbitration as the final step. It is part of the continuous process of collective bargaining,
which intended to promote friendly dialogue between labor and management as a
means of maintaining industrial peace.

It is an orderly process established in the CBA whereby the employer, the employee
and the union, present to each other a complaint or dissatisfaction, in the hope of
getting it settled quickly. Grievance machinery, which lays down a formal process for
settling complaints and stresses an employee’s right to air his gripes and expect
redress, is one of the chief tools of employee relations. It is designed to give
employees every opportunity to be heard. Its aim is to eliminate or reduce
dissatisfaction, misunderstanding, or complaint, which can affect the employee’s
morale and reduce efficiency. A good grievance procedure guarantees that individual
gripes will be fully heard and considered.

The law mandates no particular set-up for grievance machinery. Rather, Article 260 of
the Labor Code, as incorporated in RA 6715 provides for single grievance machinery in
the workplace.

Reasons for Establishing Grievance Machinery

Generally, the grievance procedure:

1. Provides for peaceful resolution of disputes;

2. Provides a systematic way to resolve problems through fact finding
3. Provides a method of interpreting the contract
4. Protects the integrity of the contractual agreement
5. Improves the efficiency of the organization
6. Can improve labor-management relations
7. Identifies problems in plant operations or the contract itself
8. Keeps the lines of communication between the parties open during the life of the
contract
9. It gives employees an opportunity to voice their concerns
10. Provides the individual union member with the ability to appeal a decision and ultimately
allows the member to resolve the problem through exhausting his/her rights under the
grievance procedure, or possibly by overturning the decision of management through
arbitration
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Typical Steps in the Grievance Process

Essentially, the grievance process involves union and management addressing the
grievance and attempting to reach an acceptable resolution. The specifics of the
grievance process will be spelled out in the labor agreement.

Typically, the contract outlines the specific steps in grievance handling, specifying time
limits for both sides. The ramifications of not adhering to these time limits are usually
identified as well, e.g., the grievance may be considered waived or settled or may
automatically move on to the next step.

Step 1. Shop floor level. Presentation by the employee problems to the foreman or
supervisor who would listen to the employee and record the facts of the problem. The
supervisor should settle the problem within three (3) days. If the employee is not
satisfied, proceed to step 2.

Step 2. Plant level. Discussion of the problem between the employee, the supervisor,
and the department manager takes place. If no satisfactory solution within seven days,
proceed to step 3.

Step 3. Top level. Discussion of the problem between the supervisors, the department
manager, the complainant, and top management (President or General Manager). If no
satisfactory solution within ten (10) days, proceed to step 4.

Step 4. Arbitrator’s level. The problem or case may be taken to voluntary arbitration
for final decision.

Characteristics of Effective Grievance Machinery

1. The successive steps in the procedure, the method of presenting grievances or disputes,
and the method of taking an appeal from one step to another should be so clearly stated
in the agreement as to be readily understood by all employees, union officials and
management representatives.

2. The procedure should be adaptable to the handling of various types of grievances and
disputes, which come under the terms of the agreement.

3. The procedure should be designed to facilitate the settlement of grievances and disputes
as soon as possible after the arise. To this end:

• The agreement should provide adequate stated time limits for the presentation of
grievances and disputes, thus rendering of decisions, and the taking of appeals.

• Issues should be clearly formulated at the earliest possible moment. In all cases, which
cannot be settled in the first informal discussions, the positions of both sides should be
reduced to writing.

• Management and union should encourage their representatives to settle at the lower
steps grievances, which do not involve broad questions or policy, or of contract
interpretation and should delegate sufficient authority to them to accomplish this end.
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• Provision should be made for priority handling of grievances involving discharge,

suspension, or other disciplinary action.

4. The procedure should be open to the submission of grievances by all parties to the
agreement.

Cost of voluntary arbitration and voluntary arbitrator’s fee.

Under 262-B of the Labor Code, as amended, the parties to a collective bargaining
agreement shall provide therein a proportionate sharing scheme on the cost of voluntary
arbitration including the voluntary arbitrator’s fee. The fixing of fee of voluntary arbitrator
or panel of voluntary arbitrators, whether shouldered wholly by the parties or subsidized
by the Special Voluntary Arbitration Fund, shall take into account the following factors:

(a) Nature of the case;

(b) Time consumed in hearing the case;

(c) Professional standing of the voluntary arbitrator;

(d) Capacity to pay of the parties; and

(e) Fees provided for in the Revised Rules of Court.

Unless the parties agree otherwise, the cost of voluntary arbitration proceedings and
voluntary arbitrator’s fee shall be shared equally by the parties

Parties are encouraged to set aside funds to answer for the cost of voluntary arbitration
proceedings including voluntary arbitrator’s fee. In the event the said funds are not
sufficient to cover such expenses, an amount by way of subsidy taken out of the Special
Voluntary Arbitration Fund may be availed of by either or both parties subject to the
guidelines on voluntary arbitration to be issued by the Secretary.