UP Bar Reviewer 2013 Labor Law

TEACHERS, PIECE WORKERS, SEAFARERS, SEASONAL WORKERS, ETC. ........................................................................... 25 Fundamental Principles and Policies..................................... 1 CONSTITUTIONAL PROVISIONS ................................. 1 CIVIL CODE ................................................................. 2 LABOR CODE .............................................................. 3 Recruitment and Placement . 5 RECRUITMENT OF LOCAL AND MIGRANT WORKERS... 5 ILLEGAL RECRUITMENT ...................................................... 5 DIRECT HIRING ............................................................... 11 REGULATION AND ENFORCEMENT ........................... 11 SUSPENSION OR CANCELLATION OF LICENSE OR AUTHORITY ....... 11 REGULATORY AND VISITORIAL POWERS ................................. 11 REMITTANCE OF FOREIGN EXCHANGE EARNING ....................... 11 PROHIBITED ACTIVITIES .................................................... 11 Labor Standards ...................12 COVERAGE ................................................................12 GOVERNMENT EMPLOYEES ................................................12 MANAGERIAL EMPLOYEES .................................................12 FIELD PERSONNEL ...........................................................12 DEPENDENT FAMILY MEMBERS ........................................... 13 GOVERNMENT EMPLOYEES ................................................ 13 DOMESTIC HELPERS ......................................................... 13 PERSONS IN PERSONAL SERVICE OF ANOTHER ........................ 13 WORKERS PAID BY RESULT ................................................ 13 HOURS OF WORK ...................................................... 13 COVERAGE/EXCLUSIONS ................................................... 13 NORMAL HOURS OF WORK ................................................. 13 MEAL BREAK ..................................................................16 WAITING TIME ................................................................16 OVERTIME WORK, OVERTIME PAY ........................................ 17 NIGHT WORK, NIGHT SHIFT DIFFERENTIAL ............................ 18 PART-TIME WORK .......................................................... 18 CONTRACT FOR PIECE OF WORK ........................................ 18 WAGES ..................................................................... 18 GENERAL CONCEPT ......................................................... 18 WAGE VS. SALARY .......................................................... 19 MINIMUM WAGE............................................................. 19 MINIMUM WAGE OF WORKERS PAID BY RESULTS ..................... 20 COMMISSIONS ............................................................... 20 DEDUCTIONS FROM WAGES .............................................. 20 PART-TIME DEDUCTIONS FROM WAGES ............................... 20 NON-DIMINUTION OF BENEFITS ..........................................21 FACILITIES V. SUPPLEMENTS ..............................................21 WAGE DISTORTION/RECTIFICATION .....................................21 DIVISOR TO DETERMINE DAILY RATE .................................... 22 REST DAY ................................................................. 22 WEEKLY REST DAY .......................................................... 22 EMERGENCY REST DAY WORK ............................................ 22 HOLIDAY PAY/PREMIUM PAY ................................... 23 HOLIDAYS .................................................................... 23 COVERAGE ................................................................... 23 REGULAR HOLIDAYS........................................................ 23 HOLIDAY PAY COMPUTATION ............................................. 23 RIGHT TO HOLIDAY PAY .................................................... 24 LEAVES .................................................................... 26 SERVICE INCENTIVE LEAVE PAY .......................................... 26 MATERNITY LEAVE .......................................................... 26 PATERNITY LEAVE .......................................................... 27 PARENTAL LEAVE .......................................................... 27 LEAVES FOR VICTIMS OF VIOLENCE AGAINST WOMEN ............... 28 SERVICE CHARGES ................................................... 30 COVERAGE ................................................................... 30 EXCEPTIONS ................................................................. 30 DISTRIBUTION ............................................................... 30 INTEGRATION................................................................ 30 THIRTEENTH (13TH) MONTH PAY AND OTHER BONUSES ................................................................. 30 RATIONALE .................................................................. 30 COVERAGE ................................................................... 30 EXCLUSIONS/EXEMPTIONS FROM COVERAGE ......................... 30 NATURE OF THE 13TH MONTH PAY ....................................... 31 13THE MONTH PAY IN SPECIAL CASES ................................... 31 SEPARATION PAY ..................................................... 32 DEFINITION .................................................................. 32 GENERAL RULE .............................................................. 32 EXCEPTION ................................................................... 32 AMOUNT ...................................................................... 32 NOTICE OF TERMINATION ................................................. 32 BASIS OF SEPARATION PAY ............................................... 32 INCLUSION OF REGULAR ALLOWANCE IN THE COMPUTATION ...... 32 RETIREMENT PAY ..................................................... 32 RATIONALE .................................................................. 32 ELIGIBILITY ................................................................... 32 AMOUNT OF RETIREMENT PAY ........................................... 33 RETIREMENT BENEFITS OF WORKERS WHO ARE PAID BY RESULTS 33 RETIREMENT BENEFIT OF PART-TIME WORKERS ..................... 33 TAXABILITY................................................................... 33 WOMEN WORKERS ................................................... 34 PROVISIONS AGAINST DISCRIMINATION ................................ 34 STIPULATION AGAINST MARRIAGE ...................................... 34 PROHIBITED ACTS .......................................................... 34 ANTI-SEXUAL HARASSMENT ACT ........................................ 34 MINOR WORKERS .................................................... 35 CONSTITUTIONAL BASIS ................................................... 35 EMPLOYMENT OF CHILDREN FROM 15 TO 18 .......................... 36 REGULATION OF WORKING HOURS OF A CHILD ....................... 36 EMPLOYMENT OF HOUSEHELPERS .......................... 36 DEFINITION .................................................................. 36 BENEFITS ACCORDED HOUSEHELPERS.................................. 36 TERMINATION ............................................................... 37 EMPLOYMENT OF HOMEWORKERS .......................... 37 DEFINITION .................................................................. 37 RIGHTS AND BENEFITS ACCORDED HOMEWORKERS ................. 37 CONDITIONS FOR DEDUCTION FROM HOMEWORKER’S EARNINGS 37 APPRENTICES AND LEARNERS ................................. 38 APPRENTICES................................................................ 38 LEARNERS ................................................................... 39 HANDICAPPED WORKERS– DIFFERENTLY-ABLED WORKERS ................................................................ 40 DEFINITIONS ................................................................. 40 RIGHTS OF DISABLED WORKERS ......................................... 40 PROHIBITIONS ON DISCRIMINATION AGAINST DISABLED PERSON 41 INCENTIVES FOR EMPLOYERS ............................................ 42 Termination of Employment......................................... 42 EMPLOYER-EMPLOYEE RELATIONSHIP .................... 42 FOUR-FOLD TEST ........................................................... 42 ECONOMIC DEPENDENCE TEST ........................................... 43 KINDS OF EMPLOYMENT ................................................... 43 JOB CONTRACTING ......................................................... 47 DISMISSAL FROM EMPLOYMENT...............................51 SECURITY OF TENURE .......................................................51 CONFLICT WITH MANAGEMENT PREROGATIVES ...................... 52 JUST CAUSES ................................................................ 52 AUTHORIZED CAUSES ...................................................... 53 DUE PROCESS ............................................................... 56 RELIEFS FOR ILLEGAL DISMISSAL ............................ 57 REINSTATEMENT............................................................ 57 BACKWAGES ................................................................. 59 PREVENTIVE SUSPENSION ....................................... 59 DEFINITION .................................................................. 59 CONSTRUCTIVE DISMISSAL ...................................... 59 Management Prerogative 59 ...... DISCIPLINE ............................................................... 59 TRANSFER OF EMPLOYEES ...................................... 59 PRODUCTIVITY STANDARD ...................................... 59 GRANT OF BONUS .................................................... 60 CHANGE OF WORKING HOURS ................................. 60 RULES ON MARRIAGE BETWEEN EMPLOYEES OF COMPETITOR-EMPLOYERS ....................................... 60 POST-EMPLOYMENT BAN ......................................... 60 Social and Welfare Legislation ............................................................................. 60 SSS LAW ................................................................... 60 COVERAGE ................................................................... 60 EXCLUSIONS FROM COVERAGE ............................................61 BENEFITS ......................................................................61 BENEFICIARIES .............................................................. 62 GSIS.......................................................................... 62 COVERAGE ................................................................... 62 EXCLUSIONS FROM COVERAGE ........................................... 62 BENEFITS ..................................................................... 62 BENEFICIARIES .............................................................. 63 LIMITED PORTABILITY LAW ...................................... 63 COVERAGE ................................................................... 63 PROCESS ..................................................................... 63 WHY? ......................................................................... 63 EMPLOYEE’S COMPENSATION – COVERAGE AND WHEN COMPENSABLE .............................................. 63 COVERAGE ................................................................... 63 EFFECTIVITY.................................................................. 64 WHEN COMPENSABLE...................................................... 64 Labor Relations Law.................... 64 RIGHT TO SELF-ORGANIZATION ............................... 64 BASIS OF RIGHT TO SELF-ORGANIZATION .............................. 64 RIGHT TO SELF-ORGANIZATION: A FUNDAMENTAL RIGHT .......... 64 INFRINGEMENT OF THE RIGHT TO SELF-ORGANIZATION ............ 64 SCOPE OF RIGHT TO SELF-ORGANIZATION ............................. 64 WORKER QUALIFICATION.................................................. 65 DEFINITIONS ................................................................. 65 WHO MAY UNIONIZE FOR PURPOSES OF COLLECTIVE BARGAINING 65 WHO CANNOT FORM, JOIN, OR ASSIST LABOR ORGANIZATIONS .. 66 BARGAINING UNIT .......................................................... 67 VOLUNTARY RECOGNITION ............................................... 68 CERTIFICATION ELECTION ................................................. 69 RIGHT TO COLLECTIVE BARGAINING ........................ 75 DUTY TO BARGAIN COLLECTIVELY ....................................... 75 MANDATORY PROVISIONS OF CBA ....................................... 76 UNION SECURITY ............................................................ 79 UNFAIR LABOR PRACTICE IN COLLECTIVE BARGAINING ............. 80 UNFAIR LABOR PRACTICE (ULP) ......................................... 81 RIGHT TO PEACEFUL CONCERTED ACTIVITIES .......... 83 CONSTITUTIONAL BASIS ................................................... 83 STATUTORY BASIS .......................................................... 83 FORMS OF CONCERTED ACTIVITIES ...................................... 83 WHO MAY DECLARE A STRIKE OR LOCKOUT............................ 84 REQUISITES OF A VALID STRIKE .......................................... 84 REQUISITES OF A VALID LOCKOUT ....................................... 85 REQUISITES FOR LAWFUL PICKETING ................................... 86 ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY OR CERTIFICATION OF THE LABOR DISPUTE TO THE NLRC FOR COMPULSORY ARBITRATION ............................................. 87 NATURE OF ASSUMPTION ORDER OR CERTIFICATION ORDER ...... 87 EFFECT OF DEFIANCE OF ASSUMPTION OR CERTIFICATION ORDERS ................................................................................. 87 ILLEGAL STRIKE ............................................................. 88 INJUNCTIONS ................................................................ 89 Procedure and Jurisdiction 90 ... LABOR ARBITER ....................................................... 90 JURISDICTION ............................................................... 90 REINSTATEMENT PENDING APPEAL ..................................... 91 REQUIREMENTS TO PERFECT APPEAL TO NLRC ....................... 91 NATIONAL LABOR RELATIONS COMMISSION ........... 91 91 JURISDICTION ............................................................... EFFECT OF NLRC REVERSAL OF LABOR ARBITER’S ORDER OF REINSTATEMENT............................................................ REMEDIES .................................................................... CERTIFIED CASES ........................................................... 91 91 91 BUREAU OF LABOR RELATIONS (BLR) – MED ARBITERS ................................................................. 92 JURISDICTION (ORIGINAL AND APPELLATE) .......................... 92 NATIONAL CONCILIATION AND MEDIATION BOARD (NCMB) .................................................................... 92 NATURE OF PROCEEDINGS ................................................ 92 CONCILIATION VS. MEDIATION ........................................... 92 DOLE REGIONAL DIRECTORS ................................... 93 JURISDICTION ............................................................... 93 DOLE SECRETARY..................................................... 93 VISITORIAL AND ENFORCEMENT POWERS.............................. 93 POWER TO SUSPEND EFFECTS OF TERMINATION ..................... 93 ASSUMPTION OF JURISDICTION .......................................... 94 APPELLATE JURISDICTION ................................................ 94 VOLUNTARY ARBITRATION POWERS .................................... 94 GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATORS .......................................................... 94 SUBJECT MATTER OF GRIEVANCE ........................................ 94 VOLUNTARY ARBITRATOR................................................. 94 COURT OF APPEALS ................................................. 95 RULE 65, RULES OF COURT .............................................. 95 SUPREME COURT ..................................................... 95 RULE 45, RULES OF COURT .............................................. 95 PRESCRIPTION OF ACTIONS ..................................... 95 MONEY CLAIMS .............................................................. 95 ILLEGAL DISMISSAL......................................................... 96 UNFAIR LABOR PRACTICE ................................................. 96 OFFENSES PENALIZED BY THE LABOR CODE AND IRR ISSUED PURSUANT THERETO....................................................... 96 PRESCRIPTIVE PERIOD OF ILLEGAL RECRUITMENT CASES .......... 96 ANNEX A................................................................... 97 ANNEX B: COMPARISON BETWEEN SSS AND GSIS ... 99 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION economic growth; hence, the need to weigh and balance the rights and welfare of both the employee and employer. [Agabon vs. NLRC, 2004] Fundamental Principles and Policies Liberty of Contract/Laissez Faire The prohibition to impair the obligation of contracts is not absolute and unqualified. In spite of the constitutional prohibition and the fact that both parties are of full age and competent to contract, it does not necessarily deprive the State of the power to interfere where the parties do not stand upon an equality, or where the public health demands that one party to the contract shall be protected against himself. [Leyte Land Transportation Co. vs. Leyte Farmers & Workers Union, 1948] CONSTITUTIONAL PROVISIONS ARTICLE II, SECS. 9, 10, 11, 13, 14, 18, 20. Article II, Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all. Article II, Section 10. The State shall promote social justice in all phases of national development. The Constitution is primarily a document of social justice, and although it has recognized the importance of the private sector, it has not embraced fully the concept of laissez-faire or relied on pure market forces to govern the economy. [Employees Confederation of the Philippines vs. NWPC, 1991] General definition Social Justice is neither communism, nor despotism, nor atomism, nor anarchy, but the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. [Calalang vs. Williams, 1940] ARTICLE III, SECS. 1, 4, 8. Article III, Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws. Welfare State The welfare state concept is found in the constitutional clause on the promotion of social justice to ensure the well-being and economic security of all the people, and in the pledge of protection to labor with specific authority to regulate the relations between landowners and tenants and between labor and capital. [Alalayan vs. National Power Corporation, 1968] Due Process Due process requirements are two-fold – substantive [dismissal should be for a valid and authorized cause as provided by law] and procedural (due notice and hearing). [Salaw vs. NLRC, 1991] Labor as Property Right One’s employment is a property right, and the wrongful interference therewith is an actionable wrong. [Sibal vs. Notre Dame of Greater Manila, 1990] Article II, Section 11. The State values the dignity of every human person and guarantees full respect for human rights. Article III, Section 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances. Article II, Section 13. The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social wellbeing. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. Article III, Section 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. Article II, Section 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men. ART. XIII, SECS. 1, 2, 3, 13, 14. Article XIII, Section 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. Article II, Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. Article II, Section 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments. Limits of Social Justice Social justice should be used only to correct an injustice. It must be founded on the recognition of the necessity of interdependence among diverse units of a society, and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life. As partners in nation-building, labor and management need each other to foster productivity and Article XIII, Section 2. The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance. Article XIII, Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, PAGE 1 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to selforganization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. of the Labor Code. [University of Immaculate Concepcion Inc v Sec of Labor, 2005] The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. Article XIII, Section 14. The State shall protect working women by providing safe and healthful working conditions, taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation. Article II, Section 13. The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social wellbeing. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth. CIVIL CODE ARTICLE 19 Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Participation in Decision-Making Process Verily, a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of the employees. In treating the latter, management should see to it that its employees are at least properly informed of its decisions or modes action. Indeed, industrial peace cannot be achieved if the employees are denied their just participation in the discussion of matters affecting their rights. [Phil. Airlines Inc. vs. NLRC, 1993] ARTICLE 1700 Art. 1700. The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects. ARTICLE 1702 Management and the Constitution: Management Function/Prerogative The law in protecting the rights of the employees authorizes neither oppression nor self-destruction of the employer. It should be made clear that when the law tilts the scale of justice in favor of labor, it is but a recognition of the inherent economic inequality between labor and management. Never should the scale be so tilted if the result is an injustice to the employer. [Phil. Geothermal Inc. vs. NLRC, 1994] Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. Contracts Under the Civil Code, contracts of labor are explicitly subject to the police power of the state because they are not ordinary contracts but are impressed with public interest. Inasmuch as in this particular instance the contract in question would have been deemed in violation of pertinent labor laws, the provisions of said laws would prevail over the terms of the contract, and private respondent would still be entitled to overtime pay. [PAL Employees Savings And Loan Assn., Inc. vs. NLRC, 1996] This Court held that the employer’s right to conduct the affairs of his business according to its own discretion and judgment, is well-recognized. An employer has a free reign and enjoys wide latitude of discretion to regulate all aspects of employment. This is a management prerogative, where the free will of management to conduct its own affairs to achieve its purpose takes form. [Torreda vs. Toshiba, 2007] Liberal Construction While the terms and conditions of a CBA constitute the law between the parties, it is not however, an ordinary contract to which is applied the principles of law governing ordinary contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital, is not merely contractual in nature but impressed with public interest, thus, it must yield to the common good. As such, it must be construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve. [Cirtek Employees Labor Union-FFW v Cirtek Electronics, 2010] But, like other rights, there are limits thereto. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which the right is exercised. [Tinio vs. CA, 2007] This Court declared that it recognizes the exercise of management prerogatives and it often declines to interfere with the legitimate business decisions of the employer. xxx However, as expressed in PAL v NLRC, the privilege is not absolute, but subject to exceptions. One of these exceptions is when the Secretary of Labor assumes jurisdiction over labor disputes involving industries indispensable to the national interest under Article 263(g) PAGE 2 UP COLLEGE OF LAW LABOR LAW Fair treatment The right of an employer to dismiss an employee differs from and should not be confused with the manner in which such right is exercised. It must not be oppressive and abusive since it affects one's person and property. [General Bank and Trust Co. vs. CA, 1985] BAR OPERATIONS COMMISSION (c) To foster the free and voluntary organization of a strong and united labor movement; 7(d) To promote the enlightenment of workers concerning their rights and obligations as union members and as employees; (e) To provide an adequate administrative machinery for the expeditious settlement of labor or industrial disputes; (f) To ensure a stable but dynamic and just industrial peace; and (g) To ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare. To encourage a truly democratic method of regulating the relations between the employers and employees by means of agreements freely entered into through collective bargaining, no court or administrative agency or official shall have the power to set or fix wages, rates of pay, hours of work or other terms and conditions of employment, except as otherwise provided under this Code. [As amended by Section 3, Republic Act No. 6715, March 21, 1989] Mutual obligation The employer's obligation to give his workers just compensation and treatment carries with it the corollary right to expect from the workers adequate work, diligence and good conduct. [Firestone Tire And Rubber Co. vs. Lariosa, 1987] Compliance with law It is also important to emphasize that the return-to-work order not so much confers a right as it imposes a duty; and while as a right it may be waived, it must be discharged as a duty even against the worker's will. [Sarmiento vs. Tuico, 1988] Employee's compliance and obedience to employer's orders The lack of a written or formal designation should not be an excuse to disclaim any responsibility for any damage suffered by the employer due to his negligence. The measure of the responsibility of an employee is that if he performed his assigned task efficiently and according to the usual standards, then he may not be held personally liable for any damage arising therefrom. Failing in this, the employee must suffer the consequences of his negligence if not lack of due care in the performance of his duties. [PCIB vs. Jacinto, 1991] ARTICLE 212 Art. 212. Definitions. (a) "Commission" means the National Labor Relations Commission or any of its divisions, as the case may be, as provided under this Code. (b) "Bureau" means the Bureau of Labor Relations and/or the Labor Relations Divisions in the regional offices established under Presidential Decree No. 1, in the Department of Labor. LABOR CODE ARTICLE 3 Art. 3. Declaration of basic policy. The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. (c) "Board" means the National Conciliation and Mediation Board established under Executive Order No. 126. (d) "Council" means the Tripartite Voluntary Arbitration Advisory Council established under Executive Order No. 126, as amended. (e) "Employer" includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer. ARTICLE 4 Art. 4. Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor. (f) "Employee" includes any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment. ARTICLE 166 Art. 166. Policy. The State shall promote and develop a taxexempt employees’ compensation program whereby employees and their dependents, in the event of workconnected disability or death, may promptly secure adequate income benefit and medical related benefits. (g) "Labor organization" means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment. ARTICLE 211 Art. 211. Declaration of Policy. (A) It is the policy of the State: (a) To promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes; (b) To promote free trade unionism as an instrument for the enhancement of democracy and the promotion of social justice and development; (h) "Legitimate labor organization" means any labor organization duly registered with the Department of Labor and Employment, and includes any branch or local thereof. PAGE 3 UP COLLEGE OF LAW LABOR LAW (i) "Company union" means any labor organization whose formation, function or administration has been assisted by any act defined as unfair labor practice by this Code. BAR OPERATIONS COMMISSION as well as the immediate vicinity actually used by picketing strikers in moving to and fro before all points of entrance to and exit from said establishment. ARTICLE 255 (j) "Bargaining representative" means a legitimate labor organization whether or not employed by the employer. Art. 255. Exclusive bargaining representation and workers’ participation in policy and decision-making. The labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit shall be the exclusive representative of the employees in such unit for the purpose of collective bargaining. However, an individual employee or group of employees shall have the right at any time to present grievances to their employer. (k) "Unfair labor practice" means any unfair labor practice as expressly defined by the Code. (l) "Labor dispute" includes any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee. Any provision of law to the contrary notwithstanding, workers shall have the right, subject to such rules and regulations as the Secretary of Labor and Employment may promulgate, to participate in policy and decisionmaking processes of the establishment where they are employed insofar as said processes will directly affect their rights, benefits and welfare. For this purpose, workers and employers may form labor-management councils: Provided, That the representatives of the workers in such labor-management councils shall be elected by at least the majority of all employees in said establishment. [As amended by Section 22, Republic Act No. 6715, March 21, 1989] (m) "Managerial employee" is one who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. ARTICLE 277 Article 277. Miscellaneous provisions. (a) All unions are authorized to collect reasonable membership fees, union dues, assessments and fines and other contributions for labor education and research, mutual death and hospitalization benefits, welfare fund, strike fund and credit and cooperative undertakings. [As amended by Section 33, Republic Act No. 6715, March 21, 1989] (n) "Voluntary Arbitrator" means any person accredited by the Board as such or any person named or designated in the Collective Bargaining Agreement by the parties to act as their Voluntary Arbitrator, or one chosen with or without the assistance of the National Conciliation and Mediation Board, pursuant to a selection procedure agreed upon in the Collective Bargaining Agreement, or any official that may be authorized by the Secretary of Labor and Employment to act as Voluntary Arbitrator upon the written request and agreement of the parties to a labor dispute. (b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. The Secretary of the Department of Labor and Employment may suspend the effects of the termination pending resolution of the dispute in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom such dispute is pending that the termination may cause a serious labor dispute or is in implementation of a mass lay-off. [As amended by Section 33, Republic Act No. 6715, March 21, 1989] (o) "Strike" means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. (p) "Lockout" means any temporary refusal of an employer to furnish work as a result of an industrial or labor dispute. (q) "Internal union dispute" includes all disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by laws of a union, including any violation of the rights and conditions of union membership provided for in this Code. (r) "Strike-breaker" means any person who obstructs, impedes, or interferes with by force, violence, coercion, threats, or intimidation any peaceful picketing affecting wages, hours or conditions of work or in the exercise of the right of self-organization or collective bargaining. (s) "Strike area" means the establishment, warehouses, depots, plants or offices, including the sites or premises used as runaway shops, of the employer struck against, PAGE 4 UP COLLEGE OF LAW LABOR LAW (c) Any employee, whether employed for a definite period or not, shall, beginning on his first day of service, be considered as an employee for purposes of membership in any labor union. [As amended by Section 33, Republic Act] No. 6715] BAR OPERATIONS COMMISSION Code. [As amended by Section 33, Republic Act No. 6715, March 21, 1989] (i) To ensure speedy labor justice, the periods provided in this Code within which decisions or resolutions of labor relations cases or matters should be rendered shall be mandatory. For this purpose, a case or matter shall be deemed submitted for decision or resolution upon the filing of the last pleading or memorandum required by the rules of the Commission or by the Commission itself, or the Labor Arbiter, or the Director of the Bureau of Labor Relations or Med-Arbiter, or the Regional Director. (d) No docket fee shall be assessed in labor standards disputes. In all other disputes, docket fees may be assessed against the filing party, provided that in bargaining deadlock, such fees shall be shared equally by the negotiating parties. (e) The Minister of Labor and Employment and the Minister of the Budget shall cause to be created or reclassified in accordance with law such positions as may be necessary to carry out the objectives of this Code and cause the upgrading of the salaries of the personnel involved in the Labor Relations System of the Ministry. Funds needed for this purpose shall be provided out of the Special Activities Fund appropriated by Batas Pambansa Blg. 80 and from annual appropriations thereafter. [Incorporated by Batas Pambansa Bilang 130, August 21, 1981] Upon expiration of the corresponding period, a certification stating why a decision or resolution has not been rendered within the said period shall be issued forthwith by the Chairman of the Commission, the Executive Labor Arbiter, or the Director of the Bureau of Labor Relations or Med-Arbiter, or the Regional Director, as the case may be, and a copy thereof served upon the parties. Despite the expiration of the applicable mandatory period, the aforesaid officials shall, without prejudice to any liability which may have been incurred as a consequence thereof, see to it that the case or matter shall be decided or resolved without any further delay. [Incorporated by Section 33, Republic Act No. 6715, March 21, 1989] (f) A special Voluntary Arbitration Fund is hereby established in the Board to subsidize the cost of voluntary arbitration in cases involving the interpretation and implementation of the Collective Bargaining Agreement, including the Arbitrator’s fees, and for such other related purposes to promote and develop voluntary arbitration. The Board shall administer the Special Voluntary Arbitration Fund in accordance with the guidelines it may adopt upon the recommendation of the Council, which guidelines shall be subject to the approval of the Secretary of Labor and Employment. Continuing funds needed for this purpose in the initial yearly amount of fifteen million pesos (P15,000,000.00) shall be provided in the 1989 annual general appropriations acts. Recruitment and Placement RECRUITMENT OF LOCAL AND MIGRANT WORKERS ILLEGAL RECRUITMENT License vs. Authority A license is a document issued by the Department of Labor and Employment (DOLE) authorizing a person or entity to operate a private employment agency, while an authority is a document issued by the DOLE authorizing a person or association to engage in recruitment and placement activities as a private recruitment agency. [Art. 13(d) and (f), Labor Code] The amount of subsidy in appropriate cases shall be determined by the Board in accordance with established guidelines issued by it upon the recommendation of the Council. The Fund shall also be utilized for the operation of the Council, the training and education of Voluntary Arbitrators, and the Voluntary Arbitration Program. [As amended by Section 33, Republic Act No. 6715, March 21, 1989] License Authority Authorize an entity to Authorize an entity to operate as a private operate as a private employment agency recruitment entity (g) The Ministry shall help promote and gradually develop, with the agreement of labor organizations and employers, labor-management cooperation programs at appropriate levels of the enterprise based on the shared responsibility and mutual respect in order to ensure industrial peace and improvement in productivity, working conditions and the quality of working life. [Incorporated by Batas Pambansa Bilang 130, August 21, 1981] When a license is given, one Does not entitle a private is also authorized to collect recruitment entity to collect fees fees. Entities disqualified from being issued a license (1) Travel agencies and sales agencies of airline companies. [Art. 26] (2) Officers or members of the Board of any corporation or members in partnership engaged in the business of a travel agency. (3) Corporations and partnerships, when any of its officers, members of the board or partners, is also an officer, (h) In establishments where no legitimate labor organization exists, labor-management committees may be formed voluntarily by workers and employers for the purpose of promoting industrial peace. The Department of Labor and Employment shall endeavor to enlighten and educate the workers and employers on their rights and responsibilities through labor education with emphasis on the policy thrusts of this PAGE 5 UP COLLEGE OF LAW LABOR LAW member of the board of partner of a corporation or partnership engaged in the business of a travel agency. (4) Persons, partnerships or corporations which have derogatory records. (5) Any official or employee of the DOLE, POEA, OWWA, DFA and other government agencies directly involved in the implementation of R.A. 8042 as amended th and/or any of his/her relatives within the 4 civil degree of consanguinity and affinity. [POEA Rules of 2002]. indirectly, any fee Requires License And also includes (a) referrals, (b) contract services, (c) promising, or (d) advertising for employment, locally or abroad, whether for profit or not See: POEA Rules, Part II, Rule I, Sec. 1(a) Capitalization requirement All applicants for authority to hire or renewal of license to recruit are required to have such substantial capitalization as determined by the Secretary of Labor. [Art. 28, LC] Provided, That any person or entity which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement. [Labor Code, Art. 13 (b)] (a) Any of the acts mentioned above constitutes recruitment and placement. (b) The proviso provides for a presumption that a person or entity so described engages in recruitment and placement [See People v. Panis]. Based on POEA Rules the following are the substantial capital requirements: (1) Single proprietorships or partnerships with minimum capitalization of P2,000,000. (2) Corporations with minimum paid-up capital of P2,000,000. What constitutes recruitment The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of workers. Any of the acts mentioned in Article 13(b) will constitute recruitment and placement even if only one prospective worker is involved. The proviso merely lays down a rule of evidence that where a fee is collected in consideration of a promise or offer of employment to two or more prospective workers, the individual or entity dealing with them shall be presumed to be engaged in the act of recruitment and placement. [People v. Panis, 1988] Non-transferability of license or authority (1) No license or authority shall be used directly or indirectly by any person other than the one in whose favor it was issued or at any place other than that stated in the license or authority, (2) Nor may such license or authority be transferred, conveyed, or assigned to any other person or entity. Any transfer of business address, appointment or designation of any agent or representative including the establishment of additional offices anywhere shall be subject to the prior approval of the Department of Labor. [Art. 29, LC] Acts of referral The act of referral, which is included in recruitment, is "the act of passing along or forwarding of an applicant for employment after an initial interview of a selected applicant for employment to a selected employer, placement officer or bureau." Petitioner’s admission that she brought private complainants to the agency whose owner she knows and her acceptance of fees including those for processing betrays her guilt. [Rodolfo vs. People, 2006] SEE: POEA Rules Part II, Rule II, Sec. 7, 8, and 9. Enforceability of the license - Licensed agencies are prohibited from conducting any recruitment activities of any form outside of the address stated in the license, acknowledged branch or extension office, without securing prior authority from the POEA. [People vs. Buli-e, 2003] Duration of validity – 4 years [POEA Rules of 2002] Promising employment The Court finds that accused-appellant was engaged in unlawful recruitment and placement activities. The prosecution established that accused-appellant promised three complainants employment as factory workers and he asked them for money in order to process their papers and procure their passports. Relying completely upon such representations, complainants entrusted hard-earned money to accused-appellant in exchange for what they would later discover to be a vain hope of obtaining employment abroad. It is not disputed that accusedappellant is not authorized nor licensed by the DOLE to Private Employment Agency (PEA) v. Private Recruitment Entity (PRE) Private Recruitment Agency Definition Any person or entity engaged in recruitment and placement of workers for a fee Authority Essential elements of illegal recruitment Definition of recruitment and placement “Recruitment and placement" refers to any act of (C-E-CT-U-H) (a) canvassing, (b) enlisting, (c) contracting, (d) transporting, (e) utilizing, or (f) hiring procuring workers, Citizenship requirement (1) Only Filipino citizens or (2) Corporations, partnerships or entities at least seventyfive percent (75%) of the authorized and voting capital stock of which is owned and controlled by Filipino citizens shall be permitted to participate in the recruitment and placement of workers, locally or overseas. [Art. 27, LC] Private Employment Agency BAR OPERATIONS COMMISSION Any person or association engaged in the recruitment and placement of workers, locally or overseas, without charging, directly or PAGE 6 UP COLLEGE OF LAW LABOR LAW engage in recruitment and placement activities. The absence of the necessary license or authority renders all of accused-appellant’s recruitment activities criminal. [People vs. Saulo, 2000] BAR OPERATIONS COMMISSION (g) To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized representatives; (h) To fail to file reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor. (i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor; (j) To become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of a travel agency; and (k) To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under this Code and its implementing rules and regulations. [Art. 34, LC] Note: To determine which law applies, the place of work is the determining factor: (1) If in the Philippines: Labor Code (LC) applies (2) If abroad: Migrant Worker’s Act [R.A. 8042, as amended by R.A. 10022]. Illegal recruitment for local workers [governed by the labor code] Simple Illegal Recruitment Elements: (1) The person charged with the crime must have undertaken recruitment activities defined under Art. 13(b) or prohibited activities defined under Art. 34; and (2) The said person does not have a license or authority to do so. [Art. 38, LC] Profit or lack thereof is immaterial In 1996, LCL had no approved POEA license to recruit. C.F. Sharp’s accreditation as LCL’s new manning agency was still pending approval at that time. Yet it entertained applicants for LCL’s vessels, and conducted preparatory interviews. Based on Art. 13 (b), this is a recruitment activity. The fact that C.F. Sharp did not receive any payment during the interviews is of no moment. The act of recruitment may be "for profit or not." Notably, it is the lack of the necessary license or authority, not the fact of payment that renders the recruitment activity of LCL unlawful. [C.F. Sharp vs. Espanol, 2007] Offense involving Economic Sabotage (Large-Scale or by a Syndicate) Illegal recruitment is considered economic sabotage when the commission thereof is attended by the ff. qualifying circumstances: (1) By a syndicate - if carried out by a group of 3 or more persons conspiring and confederating with one another; (2) In large scale - if committed against 3 or more persons individually or as a group. [Art. 38(b), LC] Illegal recruitment by a syndicate (1) The offender undertakes either any activity within the meaning of "recruitment and placement" defined under Article 13(b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code; (2) He has no valid license or authority required by law to enable one to lawfully engage in recruitment and placement of workers; and (3) The illegal recruitment is committed by a group of three (4) or more persons conspiring or confederating with one another. [People v. Gallo, 2010] Accused must give the impression of ability to send complainant abroad It is well-settled that to prove illegal recruitment, it must be shown that appellant gave complainants the distinct impression that she had the power or ability to send complainants abroad for work such that the latter were convinced to part with their money in order to be employed. [People v. Ochoa, 2011] Prohibited practices It shall be unlawful for any individual, entity, licensee, or holder of authority: (a) To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay any amount greater than that actually received by him as a loan or advance; (b) To furnish or publish any false notice or information or document in relation to recruitment or employment; (c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under this Code. (d) To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment; (e) To influence or to attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency; (f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines; Illegal recruitment in large scale The acts committed by the accused constituted illegal recruitment in large scale, whose essential elements are the following: (1) The accused engages in acts of recruitment and placement of workers defined under Article 13(b) of the Labor Code or in any prohibited activities under Article 43 of the Labor Code; (2) The accused has not complied with the guidelines issued by the Secretary of Labor and Employment, particularly with respect to the securing of license or an authority to recruit and deploy workers, either locally or overseas; and (3) The accused commits the unlawful acts against three or more persons individually or as a group. Three or more complainants must be in a single case When the Labor Code speaks of illegal recruitment "committed against three (3) or more persons individually or as a group," it must be understood as referring to the number of complainants in each case who are complainants therein, otherwise, prosecutions for single PAGE 7 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION crimes of illegal recruitment can be cumulated to make out a case of large scale illegal recruitment. more persons shall be deemed so engaged. [Sec. 6, RA 8042 as amended] In other words, a conviction for large scale illegal recruitment must be based on a finding in each case of illegal recruitment of three or more persons whether individually or as a group. [People vs. Reyes, 1995] Other prohibited acts It shall likewise include the following acts, whether committed by any person, whether a non-licensee, nonholder, licensee or holder of authority: (a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay or acknowledge any amount greater than that actually received by him as a loan or advance; Illegal recruitment vs estafa Illegal recruitment and estafa are entirely different offenses and neither one necessarily includes or is necessarily included in the other. A person who is convicted of illegal recruitment may, in addition, be convicted of estafa by false pretenses or fraudulent acts under Article 315, paragraph 2(a) of the Revised Penal Code. In the same manner, a person acquitted of illegal recruitment may be held liable for estafa. Double jeopardy will not set in because illegal recruitment is malum prohibitum, in which there is no necessity to prove criminal intent, whereas estafa is malum in se, in the prosecution of which, proof of criminal intent is necessary. [Rosita Sy vs. People of the Philippines, 2010] (b) To furnish or publish any false notice or information or document in relation to recruitment or employment; (c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under the Labor Code, or for the purpose of documenting hired workers with the POEA, which include the act of reprocessing workers through a job order that pertains to nonexistent work, work different from the actual overseas work, or work with a different employer whether registered or not with the POEA; One convicted for IR may still be convicted of estafa In People v. Cortez the Court explained that: “In this jurisdiction, it is settled that a person who commits illegal recruitment may be charged and convicted separately of illegal recruitment under the Labor Code and estafa under par. 2(a) of Art. 315 of the Revised Penal Code. The offense of illegal recruitment is malum prohibitum where the criminal intent of the accused is not necessary for conviction, while estafa is malum in se where the criminal intent of the accused is crucial for conviction. Conviction for offenses under the Labor Code does not bar conviction for offenses punishable by other laws. Conversely, conviction for estafa under par. 2(a) of Art. 315 of the Revised Penal Code does not bar a conviction for illegal recruitment under the Labor Code. It follows that one's acquittal of the crime of estafa will not necessarily result in his acquittal of the crime of illegal recruitment in large scale, and vice versa.” [People v. Ochoa, 2011; People v. Ocden, 2011] (d) To include or attempt to induce a worker already employed to quit his employment in order to offer him another unless the transfer is designed to liberate a worker from oppressive terms and conditions of employment; (e) To influence or attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency or who has formed, joined or supported, or has contacted or is supported by any union or workers' organization; (f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines; Illegal recruitment for migrant workers [governed by RA 8042, as amended by, RA 10022] Simple Illegal Recruitment 1st type.— (1) Person charged undertakes any recruitment activity as defined in Art.13 (b) of the Labor Code; and (2) Said person does not have a license or authority to do so. (g) To fail to submit reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor and Employment; (h) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment; 2nd type.— (1) Person charged commits any of the enumerated acts under Sec. 6 of R.A. 8042, as amended by, R.A. 10022. (2) It is immaterial whether he is a holder or not of any license or authority (i) For an officer or agent of a recruitment or placement agency to become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of travel agency; Definition Illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by non-licensee or nonholder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That any such non-licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or (j) To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations, or for any other reasons, other than those authorized under the Labor Code and its implementing rules and regulations; PAGE 8 UP COLLEGE OF LAW LABOR LAW (k) Failure to actually deploy a contracted worker without valid reason as determined by the Department of Labor and Employment; BAR OPERATIONS COMMISSION penalties, especially for those that constitute economic sabotage. [People v. Ocden, 2011] Labor Code (l) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage; and RA 8042 as amended by RA 10022 Applicability Local Workers Migrant Workers Acts Punishable Art. 13(b) (m) To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency. Art. 34 Art. 13(b) Prohibited Labor Code acts in Sec. 6 Who can be Punished Non-licensee Non-licensee Non-licensee Licensee/Nonlicensee In addition to the acts enumerated above, it shall also be unlawful for any person or entity to commit the following prohibited acts: (1) Grant a loan to an overseas Filipino worker with interest exceeding eight percent (8%) per annum, which will be used for payment of legal and allowable placement fees and make the migrant worker issue, either personally or through a guarantor or accommodation party, postdated checks in relation to the said loan; Offense involving Economic Sabotage (Large-Scale or by a Syndicate) Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or as a group. Liabilities and penalties for illegal recruitment Illegal Recruitment Involving Local Workers.— The penalty of life imprisonment and a fine of One Hundred Thousand Pesos (P1000,000.00) shall be imposed if illegal recruitment constitutes economic sabotage as defined herein; (a) Any licensee or holder of authority found violating or causing another to violate any provision of this Title or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than two years nor more than five years or a fine of not less than P10,000 nor more than P50,000, or both such imprisonment and fine, at the discretion of the court; (2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to avail of a loan only from specifically designated institutions, entities or persons; (3) Refuse to condone or renegotiate a loan incurred by an overseas Filipino worker after the latter's employment contract has been prematurely terminated through no fault of his or her own; (4) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo health examinations only from specifically designated medical clinics, institutions, entities or persons, except in the case of a seafarer whose medical examination cost is shouldered by the principal/shipowner; (b) Any person who is neither a licensee nor a holder of authority under this Title found violating any provision thereof or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than four years nor more than eight years or a fine of not less than P20,000 nor more than P100,000 or both such imprisonment and fine, at the discretion of the court; (5) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo training, seminar, instruction or schooling of any kind only from specifically designated institutions, entities or persons, except for recommendatory trainings mandated by principals/shipowners where the latter shoulder the cost of such trainings; (c) If the offender is a corporation, partnership, association or entity, the penalty shall be imposed upon the officer or officers of the corporation, partnership, association or entity responsible for violation; and if such officer is an alien, he shall, in addition to the penalties herein prescribed, be deported without further proceedings; (6) For a suspended recruitment/manning agency to engage in any kind of recruitment activity including the processing of pending workers' applications; and (7) For a recruitment/manning agency or a foreign principal/employer to pass on the overseas Filipino worker or deduct from his or her salary the payment of the cost of insurance fees, premium or other insurance related charges, as provided under the compulsory worker's insurance coverage. [Sec. 6, RA 8042 as amended] In every case, conviction shall cause and carry the automatic revocation of the license or authority and all the permits and privileges granted to such person or entity under this Title, and the forfeiture of the cash and surety bonds in favor of the Overseas Employment Development Board or the National Seamen Board, as the case may be, both of which are authorized to use the same exclusively to promote their objectives. [Art. 39, LC] MWA expands the definition of illegal recruitment The amendments to the Labor Code introduced by Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, broadened the concept of illegal recruitment and provided stiffer PAGE 9 UP COLLEGE OF LAW LABOR LAW Illegal recruitment involving migrant workers.— (a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not less than twelve (12) years and one (1) day but not more than twenty (20) years and a fine of not less than One million pesos (P1,000,000.00) nor more than Two million pesos (P2,000,000.00). BAR OPERATIONS COMMISSION Exporter and Promotion, Inc. v. Spouses Cuaresma, G.R. 182978-79, April 7, 2009] (4) Foreign employer shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the contract, including but not limited to payment of wages, death and disability compensation and repatriation (b) The penalty of life imprisonment and a fine of not less than Two million pesos (P2,000,000.00) nor more than Five million pesos (P5,000,000.00) shall be imposed if illegal recruitment constitutes economic sabotage as defined therein. Provided, however, That the maximum penalty shall be imposed if the person illegally recruited is less than eighteen (18) years of age or committed by a non-licensee or non-holder of authority. Theory of imputed knowledge This is a doctrine in agency which states that the principal is chargeable with and bound by the knowledge of or notice to his agent received while the agent was acting as such. Simply put, notice to the agent is notice to the principal. Since the local employment agency is considered the agent of the foreign employer, the principal, knowledge of the former of existing labor and social legislation in the Philippines is binding on the latter. Consequently, notice to the former of any violation thereof is notice to the latter. (c) Any person found guilty of any of the prohibited acts shall suffer the penalty of imprisonment of not less than six (6) years and one (1) day but not more than twelve (12) years and a fine of not less than Five hundred thousand pesos (P500,000.00) nor more than One million pesos (P1,000,000.00). Joint and Several Liability of Agent and Principal Sec. 1. Requirements for Issuance of License.- Every applicant for license to operate a private employment agency or manning agency shall submit a written application together with the following requirements: (f) A verified undertaking stating that the applicant: xxx (2) Shall assume full and complete responsibility for all claims and liabilities which may arise in connection with the use of license; (3) Shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the contract, including but not limited to payment of wages, death and disability compensation and repatriation; (4) Shall guarantee compliance with the existing labor and social legislations of the Philippines and of the country of employment of recruited workers; and (5) Shall assume full and complete responsibility for all acts of its officials, employees and representatives done in connection with recruitment and placement; [POEA Rules, Book II, Rule II, Sec. 1 (f)] If the offender is an alien, he or she shall, in addition to the penalties herein prescribed, be deported without further proceedings. In every case, conviction shall cause and carry the automatic revocation of the license or registration of the recruitment/manning agency, lending institutions, training school or medical clinic. [Sec. 7, RA 8042 as amended by RA 10022] Common rules on liability (1) Employees of a company corporation engaged in illegal recruitment may be held liable as principal, together with his employer, if it is shown that he actively and consciously participated in illegal recruitment. E.g. In this case the appellant was both the APSC VicePresident-Treasurer and the Assistant General Manager. She was a high corporate officer who had direct participation in the management, administration, direction and control of the business of the corporation, and is thus liable under Sec. 6 of RA 8042. The terms “control, management or direction” broadly cover all phases of business operation, including the aspects of administration, marketing and finances, among others. [People vs. Sagayaga, 2004]. Common Rules on Illegal Recruitment [Local or Overseas] Venue: A criminal action arising from illegal recruitment shall be filed with the RTC of the province or city: (1) where the offense was committed or (2) where the offended party actually resides at the time of the commission of the offense. [Sec. 9, R.A. 8042 [this part was not amended by R.A. 10022]]. (2) Local Employment Agency is solidarily liable with foreign principal. Severance of relations between local agent and foreign principal does not affect liability of local recruiter. Private employment agencies are held jointly and severally liable with the foreign-based employer for any violation of the recruitment agreement or contract of employment. This joint and solidary liability imposed by law against recruitment agencies and foreign employers is meant to assure the aggrieved worker of immediate and sufficient payment of what is due him. [Becmen Service Exporter and Promotion, Inc. v. Spouses Cuaresma, G.R. 182978-79, April 7, 2009] Prescriptive Periods: (1) Simple Illegal Recruitment – 5 years (2) Illegal Recruitment involving Economic Sabotage – 20 years. [Sec. 12, R.A. 8042 (this part was not amended by R.A, 10022)]. Pre-Termination of Contract of Migrant Worker In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, or any unauthorized deductions from the migrant worker's salary, the worker shall be entitled to the full reimbursement of his placement fee and the deductions made with interest at twelve percent (12%) per annum, (3) If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. [Becmen Service PAGE 10 UP COLLEGE OF LAW LABOR LAW plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. [Sec. 10, R.A. 8042, as amended by R.A. 10022] BAR OPERATIONS COMMISSION Who can suspend or cancel the license? (1) DOLE Secretary (2) POEA Administrator The power to suspend or cancel any license or authority to recruit employees for overseas employment is concurrently vested with the POEA and the Secretary of Labor. [People v. Diaz, 259 SCRA 441 (1996)]. Rule before Serrano: 3-month salary rule applies The employment contract involved in the instant case covers a two-year period but the overseas contract worker actually worked for only 26 days prior to his illegal dismissal. Thus, the three months’ salary rule applies [Flourish Maritime Shipping v. Almanzor, G.R. No. 177948, March 14, 2008]. REGULATORY AND VISITORIAL POWERS OF THE DOLE SECRETARY See [Art. 35, LC] Serrano ruling: invalidated the 3-month salary cap The issue in this case is the constitutionality of the last clause of Sec.10 of RA 8042: Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. Regulatory powers The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this Title and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of this Title. [Art. 36, LC] Visitorial powers The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of accounts and records of any person or entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on violations of any provisions of this Title. [Art. 37, LC] The Court held that said clause is unconstitutional for being an invalid classification, in violation of the equal protection clause. [Serrano v. Gallant Maritime Services, Inc., G.R. No. 167614, March 24, 2009] REMITTANCE OF FOREIGN EXCHANGE EARNING It shall be mandatory for all Filipino workers abroad to remit a portion of their foreign earnings to their families, dependents, and/or beneficiaries in the country [Art. 22, LC] DIRECT HIRING General Rule: No employer may hire a Filipino worker for overseas employment except through the Boards and entities authorized by the Secretary of Labor. [Article 18 of the Labor Code]. Under Executive Order No. 857, the amount of one’s salary required to be remitted depends on the type or nature of work performed by the employee. The following are the percentages of foreign exchange remittance required from various kinds of migrant workers: (1) Seaman or mariner – 80% of their basic salary (2) Workers for Filipino contractors and construction companies – 70% (3) Doctors, engineers, teachers, nurses and other professional workers whose contract provide for free board and lodging – 70% (4) All other professional workers whose employment contracts do not provide for free board and lodging facilities – 50% (5) Domestic and other service workers – 50% (6) All other workers not falling under the aforementioned categories – 50% (7) Performing artists – 50% Exceptions: (1) Members of the diplomatic corps; (2) International organizations; (3) Such other employees as may be allowed by the Sec. of Labor; (4) Name hirees – those individuals who are able to secure contracts for overseas employment on their own efforts and representation without the assistance or participation of any agency. Their hiring, nonetheless, has to be processed through the POEA. [Part III, Rule III of the POEA Rules Governing Overseas Employment as amended in 2002] REGULATION AND ENFORCEMENT Note: See also 2002 POEA Rules Governing the Recruitment and Employment of Land-based Overseas Workers SUSPENSION OR CANCELLATION OF LICENSE OR AUTHORITY The following individuals, however, are exempted from the mandatory remittance requirement: (1) The immediate family members, dependents or beneficiaries of migrant workers residing with the latter abroad; (2) Filipino servicemen working within US military installations; (3) Immigrants and Filipino professionals working with the United Nations and its agencies or other specialized bodies. The Secretary of Labor shall have the power to suspend or cancel any license or authority to recruit employees for overseas employment for violation of rules and regulations issued by the Department of Labor, the Overseas Employment Development Board, and the National Seamen Board, or for violation of the provisions of this and other applicable laws, General Orders and Letters of Instructions. [Article 35, LC] The acts prohibited under Article 34 are grounds for suspension or cancellation of license. Note that they likewise constitute illegal recruitment under R.A. 8042 as amended by R.A. 10022. PROHIBITED ACTIVITIES It shall be unlawful for any individual, entity, licensee, or holder of authority: PAGE 11 UP COLLEGE OF LAW LABOR LAW (a) To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay any amount greater than that actually received by him as a loan or advance; (b) To furnish or publish any false notice or information or document in relation to recruitment or employment; (c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under this Code. (d) To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment; (e) To influence or to attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency; (f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines; (g) To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized representatives; (h) To fail to file reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor. (i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor; (j) To become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of a travel agency; and (k) To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under this Code and its implementing rules and regulations. [Art. 34, LC] BAR OPERATIONS COMMISSION government employees, including employees of GOCCs, are governed by the Civil Service rules and regulations, not by the Labor Code. But this exclusion DOES NOT refer to employees of government agencies and government corporations that are incorporated under the Corporation Code. MANAGERIAL EMPLOYEES Definition "Managerial Employees" – Refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff. [Art. 82, LC] Characteristics of managerial employees (b) Managerial employees are covered [by the exemption] if they have the following characteristics: (1) Their primary duty consists of the management of the establishment in which they are employed or of a department or sub-division thereof. (2) They customarily and regularly direct the work of two or more employees therein. (3) They have the authority to hire or fire employees of lower rank; or their suggestions and recommendations as to hiring and firing and as to the promotion or any other change of status of other employees, are given particular weight. Requisites for managerial staff to be covered under the exception Officers or members of a managerial staff if they perform the following duties and responsibilities: (1) The primary duty consists of the performance of work directly related to management policies of their employer; (2) Customarily and regularly exercise discretion and independent judgment; and (3) (a) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (b) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (c) execute, under general supervision, special assignments and tasks; and (4) Who do not devote more than 20 percent of their hours worked in a work week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2) and (3) above. [IRR, Bk III, Rule 1, Sec. 2 (b) & (c): Exemption] Labor Standards COVERAGE General rule: Shall apply to employees in all establishments and undertakings whether for profit or not. [Art. 82, LC] The definition of ‘managerial employees’ in Article 82 covers more people than that in Article 212 (m) as Article 82 also includes managerial staff. In effect, managerial employees in Article 82 includes supervisors, but Article 212(m) does not. Exceptions (NOT Covered) GMFF-DPR: (1) Government employees [Art. 82; Art. 76] (2) Managerial Employees including members of the managerial staff [Art. 82] (3) Field Personnel [Art. 82] (4) Members of the family of the employer who are dependent on him for support [Art. 82]; (5) Domestic helpers and persons in personal service of another [Art. 141] (6) Workers who paid by result as determined by DOLE regulation [Art. 82]. It follows that under Book V, supervisors are allowed to form, join or assist a labor union. Supervisors are not, however, entitled to the benefits under Book III Articles 83 through 96, being part of the exemption of managerial employees as defined in Article 82. [Azucena] FIELD PERSONNEL "Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and GOVERNMENT EMPLOYEES The terms and conditions of employment of all PAGE 12 UP COLLEGE OF LAW LABOR LAW whose actual hours of work in the field cannot be determined with reasonable certainty. [Art. 82, LC] BAR OPERATIONS COMMISSION Exclusivity of function required Note that the definition contemplates a domestic servant who is employed in the employer’s home to minister exclusively to the personal comfort and enjoyment of the employer’s family. [Azucena] Field Personnel – are those whose performance of their job/service is not supervised by the employer or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty. Thus, it has been held that the following personnel are NOT domestic employees: (1) House personnel hired by a ranking company official but paid by the company itself to maintain a staff house provided for the official. [Cadiz v. Philippine Sinter Corp, NLRC Case No. 7-1729, cited by Azucena] (2) A family cook, who is later assigned to work as a watcher and cleaner of the employer’s business establishment, becomes an industrial worker entitled to receive the wages and benefits flowing from such status. [Villa v. Zaragosa and Associates, OP Decision No. 0183, cited by Azucena]. Legal Test: Field personnel The clause "whose time and performance is unsupervised by the employer" did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." The former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an EE's actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such EE's time and performance is constantly supervised by the employer. [Union of Filipro Employees v. Vivar, 1992] WORKERS PAID BY RESULT The provisions of this Rule shall not apply to the following persons if they qualify for exemption under the conditions set forth herein: “Actual hours work in the field…” is to be read in conjunction with Rule IV, Book III of the Implementing Rules. Therefore field personnel are EEs whose time and performance is unsupervised by the employer. [Salazar v. NLRC, 1996] Workers who are paid by results, including those who are paid on piece-work, “takay,” “pakiao” or task basis, and other non-time work if their output rates are in accordance with the standards prescribed under Section 8, Rule VII, Book Three of these regulations, or where such rates have been fixed by the Secretary of Labor and Employment in accordance with the aforesaid Section. [Bk III, Rule 1, Sec. 2 (e) of the IRR] If required to be at specific places at specific times, employees including drivers cannot be said to be field personnel, despite the fact that they are performing work away from principal office of EE. [Auto Bus Transport Systems, Inc. v. Bautista, 2005] The philosophy underlying the exclusion of piece workers from the 8-hour law is that said workers are paid depending upon the work they do irrespective of the amount of time employed in doing said work. [Red vs. Coconut Products Ltd., v. CIR, 1966] The fishermen, although performing non-agricultural work away from petitioner’s business offices, the fact remains that throughout the duration of their work they are under the effective control and supervision of petitioner through the vessel’s patron or master. Hence, the fishermen are not “field personnel”. [Mercidar Fishing Corporation v. NLRC, 1998] HOURS OF WORK COVERAGE/EXCLUSIONS Note: Please see previous section (Coverage) which deals with the general rules of coverage and exclusions for the applicability of the Conditions of Employment provisions in Book III of the Labor Code. DEPENDENT FAMILY MEMBERS Workers who are family members of the employer, and who are dependent on him for their support, are outside the coverage of this Title on working conditions and rest periods. NORMAL HOURS OF WORK General Rule: 8-Hour Labor Law The normal hours of work of any employee shall not exceed eight (8) hours a day. [Art. 83, LC] DOMESTIC HELPERS "Domestic or household service" shall mean service in the employer’s home which is usually necessary or desirable for the maintenance and enjoyment thereof and includes ministering to the personal comfort and convenience of the members of the employer’s household, including services of family drivers. [Art. 141, LC] The law prescribes a maximum and not a minimum. Thus, part-time work, or a day’s work less than eight hours, is not prohibited. Exception to the 8-Hour Law: Work Hours of Health Personnel Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case, they shall be entitled to an additional compensation of at least thirty percent (30%) of their regular wage for work on the sixth day. PERSONS IN PERSONAL SERVICE OF ANOTHER The provisions of this Rule shall not apply to the following persons if they qualify for exemption under the conditions set forth herein: Domestic servants and persons in the personal service of another if they perform such services in the employer’s home which are usually necessary or desirable for the maintenance and enjoyment thereof, or minister to the personal comfort, convenience, or safety of the employer as well as the members of his employer’s household. [Bk III, Rule 1, Sec. 2(d) of the IRR: Exemption] For purposes of this Article, "health personnel" shall include resident physicians, nurses, nutritionists, dietitians, PAGE 13 UP COLLEGE OF LAW LABOR LAW pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. [Art. 38, LC] BAR OPERATIONS COMMISSION which states that "when the work is not continuous, the time during which the laborer is not working and can leave his working place and can rest completely shall not be counted", finds no application in the present case, where the laborer's work is continuous, and during the time that he is not working he cannot leave and completely rest owing to the place and nature of his work. [State Marine Corporation v. Cebu Seamen’s Association, 1963] Note: Medical secretaries are also considered clinic personnel. [Azucena] Compensable Hours of Work Hours worked shall include (a) all time during which an employee is required to be on duty or to be at a prescribed workplace; and (b) all time during which an employee is suffered or permitted to work. [Art. 84, LC] On call An employee who is required to remain on call in the employer’s premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose shall be considered as working while on call. General principles in determining if time is considered as hours worked According to Book III, Rule 1, Sec. 4, “the following principles shall govern in determining whether the time spent by an employee is considered hours worked for purposes of this Rule:” (1) All hours are hours worked which the employee is required to give his employer, regardless of whether or not such hours are spent in productive labor or involve physical or mental exertion. (2) An employee need not leave the premises of the work place in order that his rest period shall not be counted, it being enough that he stops working, may rest completely and may leave his work place to go elsewhere, whether within or outside the premises of his work place. (3) If the work performed was necessary, or it benefited the employer, or the employee could not abandon his work at the end of his normal working hours because he had no replacement, all time spent for such work shall be considered as hours worked, if the work was with the knowledge of his employer or immediate supervisor. (4) The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be considered working time either: (a) if the imminence of the resumption of work requires the employee’s presence at the place of work, or (b) if the interval is too brief to be utilized effectively and gainfully in the employee’s own interest. An employee who is not required to leave word at his home or with company officials where he may be reached is not working while on call. [IRR, Book III, Rule 1, Sec. 5(b)] Inactive due to work interruptions The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be considered working time either if the imminence of the resumption of work requires the employee's presence at the place of work or if the interval is too brief to be utilized effectively and gainfully in the employee's own interest. [IRR, Book III, Rule 1, Sec. 4(d)] Work interruption due to brownouts Brownouts of short duration, but not exceeding 20 minutes, shall be treated as hours worked, whether used productively by the employees or not. If they last more than 20 minutes, the time may not be treated as hours worked if the employees can leave their workplace or go elsewhere whether within or without the work premises; or the employees can use the time effectively for their own interest. In this case, the employer may extend the working hours beyond the regular schedule on that day to compensate for the loss of productive man-hours without being liable for overtime pay. [Policy Instruction No. 36, May 22, 1978] Note: The time during which an employee is inactive by reason of work interruptions beyond his control is considered working time, either if the imminence of the resumption of work requires the employee’s presence at the place of work or if the interval is too brief to be utilized effectively and gainfully in the employee’s own interest. [Book III, Rule 1 Sec. 4-c OR] Rest period – short duration or “coffee break” Rest periods of short duration during working hours shall be counted as hours worked. [Art. 84, par. 2, LC] Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time. [Bk III, Rule 1, Sec. 7, par. 2 of IRR] Work after normal hours If the work performed was necessary, or it benefited the employer, or the employee could not abandon his work at the end of his normal working hours because he had no replacement, all the time spent for such work shall be considered as hours worked if the work was with the knowledge of his employer or immediate supervisor. [IRR, Book III, Rule 1, Sec. 4(c)] Preliminary and Postliminary Activities Preliminary [before work] and postliminary [after work] activities are deemed performed during working hours if such activities are controlled or required by the employer and are pursued necessarily and primarily for the employer’s benefit. Rest period An employee need not leave the premises of the work place in order that his rest period shall not be counted, it being enough that he stops working, may rest completely and may leave his work place, to go elsewhere, whether within or outside the premises of his work place. [IRR Sec 4 (b)] Lectures, meetings, trainings Attendance at lectures, meetings, training programs, and other similar activities shall not be counted as working time if ALL of the following conditions are met: (1) Attendance is outside of the employee’s regular working hours; (2) Attendance is in fact voluntary; and (3) The employee does not perform any productive work during such attendance. [IRR, Book III, Rule 1, Sec. 6] Continuous work The provision of section 1 of Commonwealth Act No. 444, PAGE 14 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION the very nature of their duties, and it is for this reason that, in addition to their regular compensation, they are given free living quarters to be on board. It could not have been the purpose of the law to require their employers to pay them overtime pay even when they are not actually working. The correct criterion in determining whether or not sailors are entitled to overtime pay is not, therefore, whether they are on board and cannot leave ship beyond the regular eight working number of hours, but whether they actually rendered service in excess of said number of hours. [Cagampan, et. al. v. NLRC, G.R. Nos. 85122-24, March 2, 1991]. Note: (1) Attendance in lectures, meetings, and training periods sanctioned by the employer are considered hours worked. (2) Attendance in CBA negotiations or grievance meeting is compensable hours worked. (3) Attendance in hearings in cases filed by the employee is NOT compensable hours worked. (4) Participation in strikes is NOT compensable working time. Idle time The idle time that an employee may spend for resting & dining which he may leave the spot or place of work though not the premises of his employer, is not counted as working time only where the work is broken or is not continuous. [National Development Co. v. CIR, 1962] Hours worked: Proof of work Entitlement to overtime pay must first be established by proof that said overtime work was actually performed, before an employee may avail of said benefit. [Lagatic v. NLRC, 1998] A laborer need not leave the premises of the factory, shop or boat in order that his period of rest shall not be counted, it being enough that he "cease to work", may rest completely and leave or may leave at his will the spot where he actually stays while working, to go somewhere else, whether within or outside the premises of said factory, shop or boat. If these requisites are complied with, the period of such rest shall not be counted. [Luzon Stevedoring Co. v. Luzon Marine Department Union, 1957] Hours worked: Burden of Evidence When an employer alleges that his employee works less than the normal hours of employment as provided for in the law, he bears the burden of proving his allegation with clear and satisfactory evidence. [Prangan v. NLRC, et. al., G.R. No. 126529, April 15, 1998]. Compressed Work Week (CWW) Note: SEE DOLE Advisory No. 02, Series of 2004 Under the CWW scheme, the normal workday goes beyond eight hours without the corresponding overtime premium. Travel time (1) Travel from home to work – An employee who travels from home before his regular workday and returns to his home at the end of the workday is engaged in ordinary home-to-work travel which is NOT worktime except: (a) When called to travel during emergency; (b) When travel is done through a conveyance furnished by the employer; (c) Travel is done under vexing and dangerous circumstances; (d) Travel is done under the supervision and control of the employer. (2) Travel that is all in the day’s work – Time spent by an employee in travel from jobsite to jobsite during the workday, must be counted as hours worked. Where an employee is required to report at a meeting place to receive instructions or to perform other work there, the travel from the designated place to the workplace is part of the day’s work. Travel that keeps an (3) Travel away from home employee away from home overnight is travel away from home. Travel away from home is worktime when it cuts across the employee’s workday. The time is hours worked not only on regular working hours but also during the corresponding hours on non-working days. [Department of Labor Manual]. The total hours of work, however, shall not exceed 12 hours a day or 48 hours a week, or the employer is obliged to pay the worker the overtime premium in excess of said work hours. Conditions for CWW (1) The CWW scheme is undertaken as a result of an express and voluntary agreement of majority of the covered employees or their duly authorized representatives. This agreement may be expressed through collective bargaining or other legitimate workplace mechanisms of participation such as labor management councils, employee assemblies or referenda. (2) In firms using substances, chemicals and processes or operating under conditions where there are airborne contaminants, human carcinogens or noise prolonged exposure to which may pose hazards to employees’ health and safety, there must be a certification from an accredited health and safety organization or practitioner from the firm’s safety committee that work beyond eight hours is within threshold limits or tolerable levels of exposure, as set in the OSHS. (3) The employer shall notify DOLE, through the Regional Office having jurisdiction over the workplace, of the adoption of the CWW scheme. The notice shall be in DOLE CWW Report Form attached to this Advisory. [DOLE Advisory No. 02-04]. Semestral Break of Private School Teachers Regular full-time teachers are entitled to salary during semestral breaks. These semestral breaks are in the nature of work interruptions beyond the employees’ control. As such, these breaks cannot be considered as absences within the meaning of the law for which deductions may be made from monthly allowances. [University of the Pangasinan Faculty Union v. University of Pangasinan, No. L-63122, Feb. 20, 1984]. Effects of CWW (1) Unless there is a more favorable practice existing in the firm, work beyond eight hours will not be compensable by overtime premium provided the total number of hours worked per day shall not exceed twelve (12) hours. In any case, any work performed beyond 12 hours a day or 48 hours a week shall be subject to overtime premium. (2) Consistent with Art. 85 of the LC, employees under a Work Hours of Seamen Seamen are required to stay on board of their vessels by PAGE 15 UP COLLEGE OF LAW LABOR LAW CWW scheme are entitled to meal periods of not less than 60 minutes. There shall be no impairment of the right of the employees to rest days as well as to holiday pay, rest day pay or leaves in accordance with law or applicable collective bargaining agreement or company practice. (3) Adoption of the CWW scheme shall in no case result in diminution of existing benefits. Reversion to the normal eight-hour workday shall not constitute a diminution of benefits. BAR OPERATIONS COMMISSION Exception: It becomes compensable: (1) Where the lunch period or meal time is predominantly spent for the employer’s benefit. [Azucena citing 31 Am. Jur. 881; Duka, Labor Laws and Social Legislation] (2) Meal periods of 1 hour is deemed compensable when the employee is on continuous shift. [National Development Co. v. CIR, G.R. No. L-15422, Nov. 30, 1962]. (3) Shortened meal period of less than 1 hour (say, 30 minutes) must be compensable. [Sec. 7, Rule I, Book III of the IRR]. Rationale D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the employees will derive from the adoption of a compressed workweek scheme, thus: The compressed workweek scheme was originally conceived for establishments wishing to save on energy costs, promote greater work efficiency and lower the rate of employee absenteeism, among others. Workers favor the scheme considering that it would mean savings on the increasing cost of transportation fares for at least one (1) day a week; savings on meal and snack expenses; longer weekends, or an additional 52 off-days a year, that can be devoted to rest, leisure, family responsibilities, studies and other personal matters, and that it will spare them for at least another day in a week from certain inconveniences that are the normal incidents of employment, such as commuting to and from the workplace, travel time spent, exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5) days but prolonging the working hours from Monday to Friday without the employer being obliged for pay overtime premium compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits abovecited that will accrue to the employees. [Bisig Manggagawa sa Tryco v. NLRC, et al., 2008] Note: To shorten meal time to less than 20 minutes is not allowed. If the so-called meal time is less than 20 minutes, it becomes only a REST PERIOD and is considered working time. Exception to the Exemption: Shortened meal breaks upon the employees’ request – NOT compensable. The employees themselves may request that the meal period be shortened so that they can leave work earlier than the previously established schedule. [Drilon: Letter to Kodak Philippines, Nov. 27, 1989; also Cilindro: BWC-WHSD Opinion No. 197, s. 1998]. Conditions for shortened meal breaks upon employee’s request. (1) The employees voluntarily agree in writing to a shortened meal period of 30 minutes and are willing to waive the overtime pay for such shortened meal period; (2) There will be no diminution whatsoever in the salary and other fringe benefits of the employees existing before the effectivity of the shortened meal period; (3) The work of the employees does not involve strenuous physical exertion and they are provided with adequate “coffee breaks” in the morning and afternoon. (4) The value of the benefits derived by the employees from the proposed work arrangement is equal to or commensurate with the compensation due them for the shortened meal period as well as the overtime pay for 30 minutes as determined by the employees concerned; (5) The overtime pay of the employees will become due and demandable if ever they are permitted or made beyond 4:30pm; and (6) The effectivity of the proposed working time arrangement shall be of temporary duration as determined by the Secretary of Labor. MEAL BREAK Regular meal Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals. [Art. 85, LC] Every employer shall give his employees, regardless of sex, not less than one (1) hour time-off for regular meals. [IRR, Book III, Rule 1, Sec. 7] Shorter meal period when allowed (less than 1 hour, but not less than 20 min) A meal period of not less than twenty (20) minutes may be given by the employer provided that such shorter meal period is credited as compensable hours worked of the employee: (1) Where the work is non-manual work in nature or does not involve strenuous physical exertion; (2) Where the establishment regularly operates not less than sixteen (16) hours a day; (3) In case of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or installations to avoid serious loss which the employer would otherwise suffer; and (4) Where the work is necessary to prevent serious loss of perishable goods. [IRR, Book III, Rule 1, Sec. 7] Jurisprudence: (1) During meal period where the laborers are required to stand by for emergency work, or where said meal hour is not one of complete rest, such period is considered overtime. [Pan-American Airways v. Pan-American Employees Association, 1961] (2) The eight-hour work period does not include the meal break. Employees are not prohibited from going out of the premises as long as they return to their posts on time. [Phil. Airlines, Inc. v. NLRC, 1999] WAITING TIME Waiting time spent by an employee shall be considered as working time if waiting is an integral part of his work or the employee is required or engaged by the employer to wait.[IRR, Book III, Rule 1, Sec. 5(a)] (1) Waiting time spent by the employee shall be considered as working time if waiting is an integral part Synthesis of the Rules General Rule: Meal periods are NOT compensable. PAGE 16 UP COLLEGE OF LAW LABOR LAW of his work or the employee is required or engaged by the employer to wait. (2) An employee who is required to remain on call in the employer’s premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose shall be considered as working while on call. [Sec. 5, Rule I, Book III, Labor Code Implementing Rules and Regulation] BAR OPERATIONS COMMISSION (5) Where the completion or continuation of the work started before the eighth hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer. [Art. 89, LC] Overtime pay does not preclude night differential pay When the tour of duty of a laborer falls at nighttime [between 10:00pm and 6:00am], the receipt of overtime pay will not preclude the right to night differential pay. The latter is payment for work done during the night while the other is payment for the excess of the regular eight-hour work. [Naric v. Naric Workers Union, 1959]. Legal test: Whether waiting time constitutes working time depends upon the circumstances of each particular case. The facts may show that the employer was engaged or was waiting to be engaged. The controlling factor is whether waiting time spent in idleness is so spent predominantly for the employer’s benefit or for the employee’s. [Azucena citing Armour v. Wantock] Overtime Rate based on Regular Wage Base of Computation: Regular wage or – means regular base pay; it excludes money received in different concepts such as Christmas bonus and other fringe benefits. [Bisig ng Manggagawa ng Philippine Refining Co. v. Philippine Refining Co, G.R. No. L-27761, Sept. 30, 1981]. OVERTIME WORK, OVERTIME PAY Note: SEE ALSO: IRR of Labor Code, Sec. 7-10 Definition Overtime compensation is additional pay for service or work rendered or performed in excess of eight hours a day by employees or laborers covered by the Eight-hour Labor Law. [National Shipyard and Steel Corp. v. CIR, 1961]. BUT when the overtime work was performed on the employee’s rest day or on special days or regular holidays [Art. 93 and 94], the premium pay, must be included in the computation of the overtime pay. [See p. 19 of Handbook on Workers’ Statutory Monetary Benefits, issued by the Bureau of Working Conditions, 2006]. Rationale There can be no other reason than that he is made to work longer than what is commensurate with his agreed compensation for the statutorily fixed or voluntary agreed hours of labor he is supposed to do. [PNB v. PEMA, 1982]. Synthesis of Rules (1) Demandable only if the employer had knowledge and consented to the overtime work rendered by the employee. Exception: Express approval by a superior NOT a requisite to make overtime compensable: (a) If the work performed is necessary, or that it benefited the company; or (b) That the employee could not abandon his work at the end of his eight-hour work because there was no substitute ready to take his place. [Manila Railroad Co. v. CIR, G.R. No. L-4614, July 31, 1952]. Overtime on ordinary working day Overtime work. Work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime work, an additional compensation equivalent to his regular wage plus at least twenty-five percent (25%) thereof. [Art. 87, LC] Overtime work on holiday or rest day Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent (30%) thereof. [Art. 87, LC] Note: However, the Court has also ruled that a claim for overtime pay is NOT justified in the absence of a written authority to render overtime after office hours during Sundays and holidays. [Global Incorporated v. Atienza] Computation of additional compensation For purposes of computing overtime and other additional remuneration as required by this Chapter, the "regular wage" of an employee shall include the cash wage only, without deduction on account of facilities provided by the employer. [Art. 90, LC] (2) Compensation for work rendered in excess of the eight (8) normal working hours in a day. (a) For ordinary days, additional 25% of the basic hourly rate. (b) For rest day/special day/holiday, additional 30% of the basic hourly rate. (3) Not unless a day is a rest day, the given day is considered an ordinary day. (4) Undertime does NOT offset overtime Emergency or overtime Any employee may be required by the employer to perform overtime work in any of the following cases: (1) When the country is at war or when any other national or local emergency has been declared by the National Assembly or the Chief Executive; (2) When it is necessary to prevent loss of life or property or in case of imminent danger to public safety due to an actual or impending emergency in the locality caused by serious accidents, fire, flood, typhoon, earthquake, epidemic, or other disaster or calamity; (3) When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer or some other cause of similar nature; (4) When the work is necessary to prevent loss or damage to perishable goods; and Undertime work on any particular day shall not be offset by overtime work on any other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required in this Chapter. [Art. 88, LC] Jurisprudence: (1) NO waiver of overtime pay - The right to overtime pay cannot be waived. Labor Code [Art. 87] requires that an employee be paid all overtime compensation notwithstanding any agreement to work for a lesser wage. Consequently, such an agreement or "waiver" will not prevent an employee from recovering the PAGE 17 UP COLLEGE OF LAW LABOR LAW difference between the wages paid the employee and the overtime compensation he or she is entitled to receive. [Cruz v. Yee Sing, G.R. No. L-12046. Oct. 1959]. BAR OPERATIONS COMMISSION following midnight. The premium pay for the night shift also starts or ends at midnight. However, the employment contract, company policy or CBA may provide that in the case of night shift workers, days—including special days and regular holidays—shall begin on the night before a calendar day. Exception: When the waiver of overtime pay is in consideration of benefits and privileges which may be more than what will accrue to them in overtime pay, the waiver MAY be permitted. [Meralco Workers Union v. MERALCo, G.R. No. L-11876, May 29, 1959] PART-TIME WORK Definition A single, regular or voluntary form of employment with hours of work substantially shorter than those considered as normal in the establishment. [International Labor Organization] (2) Composite or Package Pay NOT per se illegal – Composite or “package pay” or “all-inclusive salary” is an arrangement where the employee’s salary includes the overtime pay. In other words, the overtime pay is built-in. This excludes those forms of employment which, although referred to as part-time work, are in particular, irregular, temporary or intermittent employment, or in cases where hours of work have been temporarily reduced for economic, technical or structural reasons. The conditions for validity of the arrangement are: (a) There is a clear written agreement knowingly and freely entered by the employee; and (b) The mathematical result shows that the agreed legal wage rate and the overtime pay, computed separately, are equal to or higher than the separate amounts legally due. [Damasco v. NLRC, G.R. No. 115755, December 4, 2000]. The wage and benefits of part-time worker are in proportion to the number of hours worked. CONTRACT FOR PIECE OF WORK A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work. [Article 1467, CC] NIGHT WORK, NIGHT SHIFT DIFFERENTIAL Note: See R.A. No. 10151 Night worker ‘Night worker’ means any employed person whose work requires performance of a substantial number of hours of night work which exceed a specified limit. This limit shall be fixed by the Sec of Labor after consulting the workers’ representatives/labor organizations and employers. [Art. 154, RA 10151] WAGES GENERAL CONCEPT Definition (1) It is the remuneration or earnings, however designated, capable of being expressed in terms of money, (2) whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, (3) which is payable by an employer to an employee (4) under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and (5) includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of board, lodging, or other facilities customarily furnished by the employer to the employee (6) Fair and reasonable value - shall not include any profit to the employer, or to any person affiliated with the employer. [Art. 97(f)] Night shift differential The additional compensation of 10% of an employees regular wage for each hour of work performed between 10pm and 6am. [Art. 86, LC] Coverage This Rule (On night shift differential) covers all employees except: (1) Those of the government and any of its political subdivisions, including government-owned and/or controlled corporations; (2) Those of retail and service establishments regularly employing not more than five (5) workers; (3) Domestic helpers and persons in the personal service of another; (4) Managerial employees as defined in Book Three of this Code; (5) Field personnel and other employees whose time and performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. “No work no pay” principle General Rule: a fair day’s wage for a fair day’s labor or no work no pay Exception: when the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed, or otherwise illegally prevented from working. [Sugue v Triumph International (2009) and Aklan Electric Cooperative, Inc. vs. NLRC (2000)] Rest days (night-off) Night shift employees are entitled to a weekly night-off [usually Saturday evening] or a weekly rest period of 24 hours beginning at the start of the night shift. “Equal Work for Equal Pay” Principle Employees working in the Philippines, if they are performing similar functions and responsibilities under similar working conditions should be paid equally. If an employer accords employees the same position and rank, the presumption is that these employees perform equal Work on special days Night shift employees are also entitled to the premium pay on special days and holidays. These days are reckoned as calendar days which start at midnight and end at the PAGE 18 UP COLLEGE OF LAW LABOR LAW work. [International School Alliance of Educators v. Hon. Quisumbing, G.R. No. 128845, June 1, 2000]. following may be exempted from the applicability of this Order: (1) Distressed establishments; (2) Retail/Service establishments regularly employing not more than 10 workers; (3) Establishments whose total assets including those arising from loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated, are not more than P3 Million; and, (4) Establishments adversely affected by natural calamities. [Sec. 7, Wage Order No. 17, 2012] Coverage/Exclusions (FHN-CCB) The Labor Code Title on wages shall not apply to the following: [Art. 98 and BOOK 3, RULE VII, Sec 3 of the IRR] (1) Farm tenancy or leasehold; (2) Household or domestic helpers, including family drivers and other persons in the personal service of another; (3) Homeworkers engaged in needlework; (4) Workers in registered cottage industries who actually work at home; (5) Workers in registered cooperatives when so recommended by the Bureau of Cooperative Development upon approval of the Secretary of Labor; (6) Workers in registered barangay micro business enterprise [RA 9178]. Basis The basis of the minimum wage rates prescribed by law shall be the normal working hours of 8 hours a day. [Sec 7, IRR of RA 6727] Freedom to bargain Despite the minimum wage order, employees are not prevented from bargaining for higher wages with their employers. WAGE VS. SALARY Wages and salary are in essence synonymous. [Songco v. NLRC, 1990] There are slight differences: Wage Criteria/Factors for Wage Setting Factors/Criteria in determining regional minimum wages: [Art. 124] (DXCN IS PREQ) (1) Demand for living wages; (2) Wage adjustment © the consumer price index; (3) Cost of living and changes or increases therein; (4) The needs of workers and their families; (5) The need to induce industries to invest in the countryside; (6) Improvements in standards of living; (7) Prevailing wage levels; (8) Fair return of the capital invested and capacity to pay of employers; (9) Effects in employment generation and family income; and (10)Equitable distribution of income and wealth along the imperatives of economic and social development. Salary Paid for skilled or unskilled Paid to white collar workers manual labor and denote a higher grade of employment Not subject to execution, garnishment or attachment except for debts related to necessities [Art. 1708 BAR OPERATIONS COMMISSION Not exempt from execution, garnishment or attachment[Gaa vs. CA, 1985] MINIMUM WAGE See: DOLE Bureau of Working Condition’s Handbook on Worker’s Statutory Monetary Benefits, 2010 Edition and Wage Order No. NCR-17, 2012 Procedure for Wage Fixing by Regional Board [Art. 123] (1) Investigate and study pertinent facts, based on criteria set in Art. 124 (2) Conduct public hearings or consultations with notice to employer and employee groups, provinces, city, municipal officials and other interested parties (3) Decide to ISSUE or NOT TO ISSUE a wage order Definition Statutory minimum wage is the lowest wage rate fixed by law that an ER can pay his workers. [IRR, RA 6727, (o)] Coverage General Rule: The wage increases prescribed under Wage Orders apply to all private sector workers and EEs receiving the daily minimum wage rates or those receiving up to a certain daily wage ceiling, where applicable, regardless of their position, designation, or status, and irrespective of the method by which their wages are paid. Frequency: Wage orders issued may not be disturbed for 12 months from effective date; this serves as a bar for petitions for wage hikes as well Except: when Congress passes a new law affecting wages or other supervening circumstances Effectivity: If it decides to ISSUE a wage order, the wage order takes effect after 15 days from complete publication in at least 1 newspaper of general circulation in the region (4) Appeal wage order to Commission within 10 calendar days; mandatory for the Commission to decide within 60 calendar days from filing Exception: (1) Househelpers, including family drivers and workers in the personal service of another whose conditions of work are prescribed in RA No. 7655; (2) Workers of registered barangay micro business enterprise with Certificates of Authority issued by the Office of the Municipal or City Treasurer. Filing of an appeal DOES NOT STAY order unless appellant files an undertaking with a surety, to guarantee payment of employees if the wage order is affirmed [as amended by RA 6727] Exemptions Upon application with and as determined by the Regional Tripartite Wages and Productivity Board, based on documentation and other requirements in accordance with applicable rules and regulations issued by the NWPC, the PAGE 19 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION wages. xxx While commissions are, indeed, incentives or forms of encouragement to inspire employees to put a little more industry on the jobs particularly assigned to them, still these commissions are direct remunerations for services rendered. MINIMUM WAGE OF WORKERS PAID BY RESULTS Workers paid by results All workers paid by results, including homeworkers and those who are paid on piece rate, takay, pakyaw, or task basis, shall receive not less than the prescribed minimum wage rates under the Regional Wage Orders for normal working hours which shall not exceed 8 hours a day, or a proportion thereof. Likewise, there is no law mandating that commissions be paid only after the minimum wage has been paid to the employee. Verily, the establishment of a minimum wage only sets a floor below which an employee’s remuneration cannot fall, not that commissions are excluded from wages in determining compliance with the minimum wage law. [Iran v. NLRC, 1998] The wage rates of workers who are paid by results shall continue to be established in accordance with Art. 101 of the LC, as amended, and its IRR. This will be done through: (1) Time and motion studies. (2) Consultation with representatives of ERs’ and workers’ organizations in a tripartite conference called by the DOLE Sec. DEDUCTIONS FROM WAGES [ART. 113, LC] General Rule: No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees. Request for the conduct of time and motion studies, to determine whether the nontime EEs in an enterprise are being paid fair and reasonable wage rates, may be filed with the proper Regional Office. Note: Learners employed in piece or incentive-rate jobs during the training period shall be paid in full for the work done. [Art. 76, LC] Exceptions: (1) Employee is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (2) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and (3) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment, such as: (a) Employee debt to employer is due and demandable [CC 1706]; (b) Attachment or execution in cases of debts incurred for necessities: food, shelter, clothing, medical attendance [CC 1708]; (c) Withholding tax; (d) Deductions of a legally established cooperative; rd (e) Payment to 3 parties upon written authority by employee; (f) Deductions for loss or damage; (g) SSS, Medicare, Pag-IBIG premiums; (h) Deduction for value meals and other facilities. The Secretary of Labor and Employment may authorize the hiring of apprentices without compensation whose training on the job is required by the school or training program curriculum or as requisite for graduation or board examination. [Art. 72, LC] It shall be unlawful to make any deduction from the wages of any Employee for the benefit of the Employer as consideration of a promise of employment or retention in employment. [Art. 117] or to retaliate against the Employee who filed a complaint. [Art. 118] Where the output rates established by the ER do not conform to the standards set under the foregoing methods for establishing output rates, the EE shall be entitled to the difference between the amount he/she is entitled to receive and the amount paid by the ER. The adjustment in the wage rates by reason of mandatory wage increase for workers paid by results shall be computed in accordance with the following steps: Minimum wage of apprentices and learners Wages of apprentices and learners shall in no case be less than 75% of the applicable minimum wage rates. [Art. 61 & 75, LC] Minimum wage of persons with disability A qualified disabled EE shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits or allowances as a qualified able-bodied persons. [Sec 5, RA 7277/the Magna Carta for Disabled Persons] With Employee’s consent in Writing Without Employee’s consent (1) SSS Payments (1) Worker’s insurance (2) PHILHEALTH payments acquired by the (3) Contributions to PAG-IBIG employer Fund (2) Union dues, where the (4) Value of meals and other right to check-off is facilities recognized by the (5) Payments to third persons employer [provided in with employee’s consent the CBA] (6) Deduction of absences Debts of the employee to Union dues, where check-off is the employer that have not provided in the CBA. become due and demandable COMMISSIONS Definition Commissions have been defined as the recompense, compensation or reward of an agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal. [Philippine Duplicator’s, Inc. v. NLRC, 1993] Commissions as part of minimum wage The Court held that the definition of “wage” under Art. 97 (f) of the LC explicitly includes commissions as part of Rationale: Prohibition seeks to protect the employee against unwarranted practices that would diminish his compensation without his knowledge and consent. [Radio PAGE 20 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION Communication of the Phil., Inc. v. Sec. of Labor, 1989] Purpose For the benefit of the For the benefit or employee and his family; for convenience of the employer their existence and subsistence NON-DIMINUTION OF BENEFITS General Rule: prohibition against elimination or diminution of benefits [Art. 100] No wage order issued by any regional board shall provide for wage rates lower than the statutory minimum wage rates prescribed by Congress. [Art. 127, as amended by Republic Act No. 6727, June 9, 1989] How Treated Part of wage deductible Requisites If the following are met, then the employer cannot remove or reduce benefits: (1) Ripened company policy: Benefit is founded on a policy which has ripened into a practice over a long period [Prubankers Assn. vs. Prudential Bank and Co., 1999] (2) Practice is consistent and deliberate and (3) Not due to error in the construction or application of a doubtful or difficult question of law. [Globe Mackay Cable vs. NLRC, 1988] (4) The diminution or discontinuance is done unilaterally by the employer. it is Independent of the Wage so not deductible Requirements for deducting value of facilities (1) Customarily furnished by the trade - "Customary" is founded on long-established and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering [Millares v. NLRC, 1999] (2) Voluntarily accepted in writing by the employee; and (3) Charged at fair and reasonable value. [Mabeza v. NLRC, 1997] WAGE DISTORTION/RECTIFICATION When not applicable: When at least one of the requisites is absent. (1) Mistake in the application of the law [Globe Mackay Cable v. NLRC, G.R. No. 74156, June 29, 1988] (2) Negotiated benefits [Azucena] (3) Reclassification of Positions – e.g. loss of some benefits by promotion. (4) Contingent or Conditional Benefits – the rule does not apply to a benefit whose grant depends on the existence of certain conditions, so that the benefit is not demandable if those preconditions are absent. Definition A situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation 4 Elements of wage distortion (ESES) (1) Existing hierarchy of positions with corresponding salary rates; (2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; (3) The elimination of the distinction between the two levels; and (4) The existence of the distortion in the same region of the country. [Prubankers Assn. v. Prudential Bank and Co., 1999] Note: Benefits initiated through negotiation between Employee and Employer, e.g. CBA, can only be eliminated or diminished bilaterally. FACILITIES V. SUPPLEMENTS The distinction between facilities and supplement is relevant because the former are wage-deductible while the latter is not. Simply put, a wage includes facilities. [Art. 97] The IRR definition [IRR Book III Rule 7-A Sec. 5] has 2 components: (1) Facilities are articles or services for the benefit of the st employee or his family. This 1 part defines facilities. (2) Facilities shall not include tools of the trade or articles or service primarily for the benefit of the employer or necessary to the conduct of the employer’s business. nd This 2 part is essentially defines what a supplement. How to Resolve (NGU) Organized Establishment [with bargaining representative] (1) Employer and the union shall negotiate to correct the distortions. (2) Disputes shall be resolved through the grievance procedure. (3) If still unresolved, voluntary arbitration. Grievance Procedure [under the CBA]  if unresolved  VOLUNTARY arbitration Criterion: In determining whether a privilege is a facility, the criterion is not so much its kind but it’s PURPOSE [Millares v NLRC & PICOP, 1999]. Facilities are items of expense necessary for the laborer’s and his family’s existence and subsistence. [States Marine Corp. v. Cebu Seamen's Assoc., Inc., 1963] Unorganized Establishment (1) ERs and Employees shall endeavor to correct such distortions. (2) Disputes shall be settled through the National Conciliation and Mediation Board. (3) If still unresolved after 10 calendar days of conciliation, it shall be referred to the appropriate branch of the NLRC – compulsory arbitration Comparison between Facilities and Supplements Facilities so Supplements What it is Both the employer and employee cannot use economic weapons. Articles or services/items of Extra remuneration or expense special benefits / articles or services / tools of the trade PAGE 21 UP COLLEGE OF LAW LABOR LAW (4) Employer cannot declare a lock-out; Employee cannot declare a strike because the law has provided for a procedure for settling (5) The salary or wage differential does not need to be maintained. [National Federation of Labor v. NLRC, 1994] Where 278 days = National Conciliation and Mediation Board  if unresolved  COMPULSORY arbitration by the NLRC REST DAY Note: See IRR of Labor Code Book III, Rule III Every employee regardless of the nature of his work is entitled to at least one whole day every week as his rest day. The rest day or day off shall be determined by the employer. However, in cases where the employee is required by his religious belief to rest on certain days, such belief shall be respected by the employer. DIVISOR TO DETERMINE DAILY RATE WEEKLY REST DAY It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest period of not less than twenty-four (24) consecutive hours after every six (6) consecutive normal work days. [Art. 91 (a)] For monthly-paid EEs: Monthly-paid employees are those who are paid every day of the month, including unworked rest days, special days, and regular holidays. Preference of the employee The employer shall determine and schedule the weekly rest day of his employees subject to collective bargaining agreement and to such rules and regulations as the Secretary of Labor and Employment may provide. However, the employer shall respect the preference of employees as to their weekly rest day when such preference is based on religious grounds. [Art. 94 (b)] 365 days/year ordinary working days rest days regular holidays special days For daily-paid EEs: Daily-paid employees are those who are paid on the days actually worked and on unworked regular holidays. (a) For those who are required to work every day including Sundays or rest days, special days and regular holidays: EMERGENCY REST DAY WORK When employer may require work on a rest day The employer may require his employees to work on any day: (a) In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic or other disaster or calamity to prevent loss of life and property, or imminent danger to public safety; (b) In cases of urgent work to be performed on the machinery, equipment, or installation, to avoid serious loss which the employer would otherwise suffer; (c) In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be expected to resort to other measures; (d) To prevent loss or damage to perishable goods; (e) Where the nature of the work requires continuous operations and the stoppage of work may result in irreparable injury or loss to the employer; and (f) Under other circumstances analogous or similar to the foregoing as determined by the Secretary of Labor and Employment. [Art. 92, LC] 394.1 days/year Where 394.10 days = 296 days – 24 days – 67.60 days – 6.50 days – ordinary working days 12 regular holidays x 200% 52 rest days x 130 % 5 special days x 130% (b) For those who do not work and are not considered paid on Sundays or rest days: 313 days/year Where 313 days = 296 days – 12 days – 5 days - ordinary working days regular holidays special days (if considered paid; if actually worked, this is equivalent to 6.5 days) Note: Under Proclamation No. 459 signed by Pres. Benigno Aquino on Aug. 16, 2012, there are 12 regular holidays and 5 special days. Suggested formula for computing the Estimated Equivalent Monthly Rate Estimated Equivalent Monthly Rate (EEMR)= Applicable Daily Rate (ADR) x days/year ------------------------------------------------12 296 days – 52 days – 12 days 5 days - 261 days – 12 days – 5 days - [Sec. 6, Rules Implementing RA 6727, 1989] CBA vis-à-vis Wage Orders – CBA creditability In determining an employee’s regular wage, the pertinent stipulations in the CBA are controlling, provided the result is not less than the statutory requirement [Philippine National Bank vs. PEMA, 115 SCRA 507] Where 365 days/year = BAR OPERATIONS COMMISSION ordinary working days regular holidays special days (if considered paid; if actually worked, this is equivalent to 6.5 days) Synthesis of the Rules (1) Rest day of not less than 24 consecutive hours after 6 consecutive days of work. (2) No work, no pay principle applies (3) If an employee works on his designated rest day, he is entitled to a premium pay. (4) Premium pay is additional 30% of the basic pay. (5) Employer selects the rest day of his employees (c) For those who do not work and are not considered paid on Saturdays and Sundays or rest days: 278 days/year PAGE 22 UP COLLEGE OF LAW LABOR LAW (6) However, employer must consider the religious reasons for the choice of a rest day. BAR OPERATIONS COMMISSION (6) Last Day of the Year - December 31 Special Holiday (for all schools) EDSA Revolution Anniversary – February 25 (Monday) HOLIDAY PAY/PREMIUM PAY HOLIDAYS Note: Art. 94 (c) was superseded by E.O. 203, which was subsequently amended by RA 9177, 9256, 9492, and Proclamation No. 459. P.D. 1083 [Code of Muslim Personal Laws] SEE: Arts. 169-173 Muslim Holidays Specifically for the Muslim Areas P.D. 1083, in its Book V, Title, recognizes five (5) Muslim Holidays, namely: Holiday pay is a one-day pay given by law to an employee even if he does not work on a regular holiday. This gift of a day’s pay is limited to each of the 12 regular holidays. (1) Amun Jadid (New Year) which falls on the first (1st) day of the lunar month of Muharram; (2) Mauli-un-Nabi (Birthday of the Prophet Muhammad) which falls on the twelfth (12th) day of the third (3rd) lunar month of Rabi-ul-Awwal; (3) Lailatul Isra Wal Mi Rai (Nocturnal Journey and Ascencion of the Prophet Muhammand) which falls on the twenty-seventh [27th] day of the seventh (7th) lunar month of Rajab; (4) Id-ul-Fitr (Hari Raja Pausa) which falls on the first (1st) day of the tenth (10th) lunar month of Shawwal commemorating the end of the fasting season; and (5) Id-ul-Adha (Hari Raha Haji) which falls on the tenth (10th) of the twelfth (12th) lunar month of Dhu’l-Hijja. COVERAGE General Rule: All employees Exceptions: (1) Those of the government and any of the political subdivision, including government-owned and controlled corporation; (2) Those of retail and service establishments regularly employing less than 10 workers; (3) Domestic helpers and persons in the personal service of another; (4) Managerial employees as defined in Book III (5) Field personnel and other employees whose time and performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. [Sec. 1, Rule IV of the IRR] Note: Id-ul-Fitr (Eid’l Fitr) and Id-ul-Adha (Eid’l Adha) have been added to the list of national legal holidays. There should be no distinction between Muslims & nonMuslims as regards to the payment of benefits for Muslim holidays. Wages & other emoluments granted by law to the working man are determined on the basis of the criteria laid down by laws & not on worker’s faith. Art. 3(3), PD 1083 states that nothing herein shall be construed to operate to the prejudice of a non-Muslim. [San Miguel Corp vs. CA, 2002] "Retail Establishment" is one principally engaged in the sale of goods to end-users for personal or household use; "Service Establishment" is one principally engaged in the sale of service to individuals for their own or household use and is generally recognized as such. [IRR of RA 6727/the Wage Rationalization Act] HOLIDAY PAY COMPUTATION See: Art. 94 Labor Code, Book III, Rule IV of IRR, RA 9424 and DOLE Memorandum Circular 1 Series of 2004 REGULAR HOLIDAYS Proclamation No. 459 signed by President Aquino on 16 August 2012, provides for the observance of the regular holidays and special [non-working] days for the year 2013 on the following dates: General Rule: An employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate. [Art. 94(b)] Regular Holidays (1) New year’s Day - January 1 (Tuesday) (2) Maundy Thursday – March 28 (3) Good Friday – March 29 (4) Araw ng Kagitingan – April 9 (Tuesday) (5) Labor Day – May 1 (Wednesday) (6) Independence Day – June 12 (Wednesday) (7) National Heroes Day – August 26 (Last Monday of August) (8) Bonifacio Day – November 30 (Saturday) (9) Christmas Day - December 25 (10) Rizal Day - December 30 (Monday) (11) Eid’l Fitr – date to be determined later (12) Eid’l Adha – date to be determined later According to the LC, IRR and Memo: Work on any regular holiday, 200% of regular daily wage not exceeding 8 hours Work on any regular holiday, 200% of regular daily wage st if it exceeds 8 (for the 1 8 hours) hours/overtime + 30% of hourly rate on said day Work on any regular holiday which falls on the scheduled rest day, not exceeding 8 hours 200% of regular daily wage + 30% of such amount Work on any regular holiday Regular holiday-on-rest day which falls on scheduled rest rate (200% of regular daily day, if it exceeds 8 wage plus 30% of such hours/overtime amount) + 30% of hourly rate on said day. Special (Non-Working Days) (1) Black Saturday – March 30 (2) Ninoy Aquino Day - August 21 (Wednesday) (3) All Saints Day - November 1 (Friday) (4) Additional special (Non-working) days – November 2 (Saturday) (5) December 24 (Tuesday) Work on special holiday not exceeding 8 hours PAGE 23 Regular daily wage + 30% thereof UP COLLEGE OF LAW Work on special holiday LABOR LAW BAR OPERATIONS COMMISSION (2) Furthermore as stated in the Wellington case [see below], a legal holiday falling on a Sunday does not create a legal obligation to pay extra, aside from the usual holiday pay, to monthly-paid employees [Azucena]. Regular daily wage + 50% thereof Note: (1) According to DOLE Memo Circular 1-04, a “special holiday”/”special day” includes the National Special Days, and declared special days such as Special Nonworking Holiday, Special Public Holiday and Special National Holiday. Such days are entitled to the rates prescribed above. These days are not the same as a special working holiday. (2) A special working holiday is considered an ordinary working day, so there is no premium pay. Holidays falling on a Sunday [Wellington Investment and Manufacturing Corporation vs. Trajano 1995]: (a) Supreme Court ruled that the Regional Director erred in saying that if a holiday fell on Sunday, an extra day of pay was created; thus, an employer should pay twice the amount of holiday pay on that day. (b) In fixing the salary, Wellington simply deducted 51 Sundays from the 365 days normally comprising a year and used the difference, 314, as divisor for determining the monthly salary. The monthly salary thus fixed actually covers payment for 314 days of the year, including regular and special holidays. (c) No provision of law requires any employer to make adjustments in the monthly salary rate set by him to take account of legal holidays falling on Sundays in a given year, otherwise to reckon a year at more than 365 days. Double holiday pay According to “DOLE Explanatory Bulletin on Worker’s Entitlement to Holiday Pay on 9 April 1993,” if two holidays fall on the same day: (1) If unworked, 200% of basic wage. (2) If worked, 300% of basic wage. [Azucena] Double Holiday Rule for Monthly-paid employees – For covered employees whose monthly salaries are computed based on 365 days and for those other employees who are paid using factor 314, or 262, or any other factor which already considers the payment for the 11 regular holidays, NO additional payment is due them. [BWC-WHSD Opinion No. 053, s. 1998]. Non-working/scheduled rest day Where the day immediately preceding the holiday is a nonworking day in the establishment or the scheduled rest day of the employee, he shall not be deemed to be on leave of absence on that day, in which case he shall be entitled to the holiday pay if he worked on the day immediately preceding the non-working day or rest day. [IRR, Book III, Rule V, Sec 6 (c)] Successive holiday pay According to IRR, Rule IV, Sec. 10, Employee entitled to holiday pay for both days, IF: (1) He is present on day immediately preceding first holiday; or (2) He works on first holiday, which entitles him to pay on second holiday. Example: If a holiday falls on Monday, and Sunday is a non-working day in the establishment or is the scheduled rest day of the employee, the employee shall be entitled to holiday pay if he worked on Saturday (which is the day immediately preceding Sunday, the non-working day or rest day). Note: SEE IRR Book III, Rule IV, Sec. 10 Divisors Divisor assumes important role in determining whether or not holiday pay is already computed. (1) Monthly paid employees are not entitled to the holiday pay if their total annual income is divided by 365 days resulting in a wage which is beyond the minimum wage per day because they are considered paid everyday of the year including holidays, rest days, and other nonworking days. The 365 days are as follows: 365 days = 296 days – ordinary days 52 days – rest days 12 days – regular holidays 5 days – special holidays (2) As a general rule, for a company with a 6-day working schedule, the divisor 313 already means that the legal holidays are included in the monthly pay of the employee. The divisor is arrived at by subtracting all Sundays from the total number of calendar days in a year. (3) As a general rule for a company with a 5-day working schedule, the divisor 278 means that the holiday pay is already included in the monthly salary of the employee. RIGHT TO HOLIDAY PAY In case of absences All covered employees shall be entitled to the benefit provided herein when they are on leave of absence with pay. Employees who are on leave of absence without pay on the day immediately preceding a regular holiday may not be paid the required holiday pay if he has not worked on such regular holiday. [IRR, Book III, Rule IV, Sec 6(a)] Note: (1) If an employee is on leave of absence with pay on the day immediately preceding a regular holiday, he is entitled to holiday pay. (2) If an employee is on leave of absence without pay on the day immediately preceding a regular holiday, he is not entitled to holiday pay unless he works on such regular holiday. In case of temporary cessation of work (a) In cases of temporary or periodic shutdown and temporary cessation of work of an establishment, as when a yearly inventory or when the repair or cleaning of machineries and equipment is undertaken, the regular holidays falling within the periods shall be compensated in accordance with this Rule. Sundays Letter of Instruction No. 1087: (1) When a holiday falls on a Sunday, the following Monday will not be considered a holiday unless a proclamation says so. PAGE 24 UP COLLEGE OF LAW LABOR LAW (b) The regular holiday during the cessation of operation of an enterprise due to business reverses as authorized by the Secretary of Labor may not be paid by the employer. [IRR, Book III, Rule IV, Sec 7] BAR OPERATIONS COMMISSION 11.C, Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels] Seasonal workers Seasonal workers who do not work during off-season are not entitled to pay for the regular holidays occurring during their off-season. Workers assigned to “skeleton crews” that work during the off-season have the right to be paid on regular holidays falling in that duration. An employee is entitled to holiday pay for the regular holidays falling within the period in cases of temporary shutdowns or cessation of work, when: (1) an annual inventory; or (2) repair or cleaning of machineries and equipment is undertaken. Premium Pay Definition Premium pay refers to the additional compensation for work performed within 8 hours on nonwork days, such as rest days and special days. The employer may not pay his employees for the regular holidays during the suspension of work if: the cessation of operation is due to business reverses, and is authorized by the Secretary of Labor. TEACHERS, PIECE WORKERS, SEAFARERS, SEASONAL WORKERS, ETC. Coverage General Rule: All employees Exceptions: (1) Those of the government and any of the political subdivision, including government-owned and controlled corporations; (2) Managerial employees as defined in Book III; (3) Househelpers and persons in the personal service of another; (4) Workers who are paid by results, including those who are paid on piece rate, takay, pakyaw, or task basis, and other noontime work, if their output rates are in accordance with the standards prescribed in the regulations, or where such rates have been fixed by the Secretary of Labor and Employment; (5) Field personnel, if they regularly perform their duties away from the principal or branch office or place of business of the ER and whose actual hours of work in the filed cannot be determined with reasonable certainty. (a) Private school teachers, including faculty members of colleges and universities, may not be paid for the regular holidays during semestral vacations. They shall, however, be paid for the regular holidays during Christmas vacation; (b) Where a covered employee, is paid by results or output, such as payment on piece work, his holiday pay shall not be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday; Provided, However, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate. (c) Seasonal workers may not be paid the required holiday pay during off-season when they are not at work (d) Workers who have no regular working days shall be entitled to the benefits provided in this Rule. [SECTION 8, Book III, Rule IV of IRR] Holiday Pay of Hourly-Paid Faculty Members (1) They are not entitled to payment of holiday pay because they are paid only for work actually done. Since regular holidays are known to both the school and faculty members as “no class day”; certainly the latter do not expect payment for said unworked holidays. (2) They are entitled to their hourly rate on days declared as special holidays. Be it noted that when a special public holiday is declared, the faculty member paid by the hour is deprived of expected income, and it does not matter that the school calendar is extended in view of the days or hours lost, for their income that could be earned from other sources is lost during the extended days. (3) Similarly, when classes are called off or shortened on account of typhoons, floods, rallies, and the like, these faculty members must likewise be paid, whether or not extensions are ordered. [Jose Rizal College v. NLRC, G.R. No. 65482, Dec. 1, 1987] Premium pay rates Note: SEE DOLE Memorandum Circular 1, Series of 2004. When Work Performed On scheduled rest day On Sunday ONLY ESTABLISHED rest day No regular work and rest days Premium Pay 30% of regular wage IF 30% of regular wage 30% of regular wage for work performed on Sundays and holidays On any special holiday/special 30% of regular wage day On any special holiday /special 50% of regular wage day falling on scheduled rest day On any regular holiday falling 230% of regular wage on scheduled rest day Piece workers Philosophy underlying the exclusion of piece workers from the 8-hour law is that said workers are paid depending upon the work they do irrespective of the amount of time employed in doing said work. [Red V Coconut Products Ltd., v. CIR, 1966] Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a higher premium pay than that prescribed under this Article, the employer shall pay such higher rate. [Art. 93 (d), LC] Seafarers Any hours of work or duty including hours of watchkeeping performed by the seafarer on designated rest days and holidays shall be paid rest day or holiday pay. [Section Nothing in this Rule shall justify an employer in reducing the compensation of his employees for the unworked Sundays, holidays, or other rest days which are considered PAGE 25 UP COLLEGE OF LAW LABOR LAW paid-off days or holidays by agreement or practice subsisting upon the effectivity of the Code. [IRR Book III, Rule III, Sec. 8] BAR OPERATIONS COMMISSION Entitlement The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any court or administrative action. [Art. 95 (c), LC] Nothing herein shall prevent the employer and his employees or their representatives in entering into any agreement with terms more favorable to the employees than those provided herein, or be used to diminish any benefit granted to the employees under existing laws, agreements, and voluntary employer practices. [Sec. 9, IRR Book III, Rule III] The service incentive leave shall be commutable to its money equivalent if not used or exhausted at the end of the year. [IRR Sec. 5, LC] The cause of action of an entitled employee to claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its commutation [into money]. Accordingly, if the employee wishes to accumulate his leave credits and opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or separation from employment. [Auto Bus Transport vs. NLRC, 2005] LEAVES SERVICE INCENTIVE LEAVE PAY Right to service incentive leave Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. [Art. 95, LC] SIL DOES NOT apply to the following employees: (1) Those of the government and any of its political subdivisions, including GOCCs; (2) Domestic helpers and persons in the personal service of another; (3) Managerial employees as defined in Book 3 of this Code; (4) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof; (5) Those who are already enjoying the benefit herein provided; (6) Those enjoying vacation leave with pay of at least 5 days; (7) Those employed in establishments regularly employing less than 10 employees. [Sec. 1, Rule V, Implementing Rules and Regulations]. Exclusions from coverage SIL shall not apply to those (1) who are already enjoying the benefit herein provided, (2) those enjoying vacation leave with pay of at least five days and (3) those employed in establishments regularly employing less than ten employees or (4) in establishments exempted from granting this benefit by the Secretary of Labor and Employment after considering the viability or financial condition of such establishment. [Art. 95, LC] Commutable nature of benefit They are not entitled to service incentive leave pay because as piece-rate workers being paid at a fixed amount for performing work irrespective of time consumed in the performance thereof, they fall under one of the exceptions stated in Section 1(d), Rule V, Book III, IRR of Labor Code. [Makati Haberdashery vs. NLRC, 1989] Jurisprudence: (1) Teachers of private school on contract basis are entitled to service incentive leave. [Cebu Institute of Technology v. Ople, 156 SCRA 531]. (2) Piece Rate Workers – In the case of Makati Haberdashery v. NLRC [G.R. No. 83380-81, Nov. 15, 1989] the Court ruled that piece-rate employees are not entitled to service incentive leave. However, in the case of Labor Congress of the Philippines v. NLRC [G.R. No. 123938, May 21, 1998], the Court held that petitioners are entitled to service incentive leave. The Court looked at several factors which led them to conclude that petitioners, although compensated on a per piece basis, were regular employees of private respondents. MATERNITY LEAVE Note: SEE Sec. 14-A of RA 1161 (Social Security Law) as amended by RA 7322 and RA 8282 Coverage Every woman in the private sector, whether married or unmarried, is entitled to the maternity leave benefits. Conditions to entitlement Requisites (1) Employment: A female employee employed at the time of delivery, miscarriage or abortion… (2) Contribution: …who has paid at least 3 monthly contributions in the 12-month period immediately preceding the semester of her childbirth, or miscarriage. (3) Notice: employee notified employer of her pregnancy and the probable date of her childbirth, which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide. Meaning of “1 year of service” The term "at least one-year service" shall mean service for not less than 12 months, whether continuous or broken, reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contract is less than 12 months, in which case said period shall be considered as one year. [IRR Book III, Rule V, Sec. 3] Benefit received A daily maternity benefit equivalent to 100% of her average daily salary credit for: (1) 60 days for normal delivery (2) 78 days for caesarean delivery PAGE 26 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION (4) His wife has given birth or suffered a miscarriage. This benefit shall NOT be included in the computation of th 13 month pay as it is granted to an employee in lieu of th wages which is the basis for computing 13 month. Application for paternity leave See number 4 under conditions for entitlement. Availment Other conditions: (1) Employer shall advance the payment subject to reimbursement by the SSS within 30 days from filing of leave application. (2) Availment shall be a bar to the recovery of sickness benefits provided by this Act for the same period for which daily maternity benefits have been received. (3) Employee may only avail of benefit for the first four (4) deliveries or miscarriages. (4) Sanction: That if an employee should give birth or suffer miscarriage (a) without the required contributions having been remitted for her by her ER to the SSS, or (b) without the latter having been previously notified by the ER of time of the pregnancy, then the employer shall pay to the SSS damages equivalent to the benefits which said employee member would otherwise have been entitled to. In case of miscarriage, prior application for paternity leave shall not be required. Nonconversion to cash In the event that the paternity leave is not availed of, it shall not be convertible to cash and shall not be cumulative. Crediting of existing benefits (1) If the existing paternity leave benefit under the CBA, contract, or company policy is greater than 7 calendar days as provided for in RA 8187, the greater benefit shall prevail. (2) If the existing paternity leave benefit is less than that provided in RA 8187, the ER shall adjust the existing benefit to cover the difference. Where a company policy, contract, or CBA provides for an emergency or contingency leave without specific provisions on paternity leave, the ER shall grant to the employee 7 calendar days of paternity leave. PATERNITY LEAVE Coverage and purpose Paternity leave is granted to all married male employees in the private and public sectors, regardless of their employment status (e.g. probationary, regular, contractual, project basis). The purpose of this benefit is to allow the husband to lend support to his wife during her period of recovery and/or in nursing her newborn child. PARENTAL LEAVE RA 8972 (Solo Parents’ Welfare Act of 2000) Definition Leave benefits granted to a solo parent to enable him/her to perform parental duties and responsibilities where physical presence is required. (Parental Leave for Solo Parents, RA 8972) Benefit It shall apply to the first 4 deliveries of the employee’s lawful wife with whom he is cohabiting. Coverage Any solo parent or individual who is left alone with the responsibility of parenthood due to: (1) Giving birth as a result of rape or, as used by the law, other crimes against chastity; (2) Death of spouse; (3) Spouse is detained or is serving sentence for a criminal conviction for at least one (1) year; (4) Physical and/or mental incapacity of spouse as certified by a public medical practitioner; (5) Legal separation or de facto separation from spouse for at least one (1) year: Provided that he/she is entrusted with the custody of the children; (6) Declaration of nullity or annulment of marriage as decreed by a court or by a church: Provided, that he/she is entrusted with the custody of the children; (7) Abandonment of spouse for at least one (1) year; (8) Unmarried father/mother who has preferred to keep and rear his/her child/children, instead of having others care for them or give them up to a welfare institution; (9) Any other person who solely provides parental care and support to a child or children: Provided, that he/she is duly licensed as a foster parent by the Department of Social Welfare and Development (DSWD) or duly appointed legal guardian by the court; and (10)Any family member who assumes the responsibility of head of family as a result of the death, abandonment, disappearance, or prolonged absence of the parents or solo parent: Provided, that such abandonment, disappearance, or prolonged absence lasts for at least one (1) year. It shall be for 7 calendar days, with full pay, consisting of basic salary and mandatory allowances fixed by the Regional Wage Board, if any, provided that his pay shall not be less than the mandated minimum wage. Note: Cohabiting means the obligation of the husband and wife to live together. If the spouses are not physically living together because of the workstation or occupation, the male employee is still entitled to the paternity leave benefit. Usage of the benefit Usage of the leave shall be after the delivery, without prejudice to an employer’s policy of allowing the employee to avail of the benefit before or during the delivery, provided that the total number of days shall not be more than 7 days for each covered delivery. Conditions for entitlement A married employee shall be entitled to paternity leave benefit provided that he has met the following conditions: (1) He is an employee at the time of the delivery of his child; (2) He is cohabiting with his spouse at the time that she gives birth or suffers a miscarriage; (3) He has applied for paternity leave with his ER within a reasonable period of time from the expected date of delivery by his pregnant spouse, or within such period as may be provided by company rules and regulations, or by CBA; and, PAGE 27 UP COLLEGE OF LAW LABOR LAW Conditions for entitlement A solo parent employee shall be entitled to the parental leave under the following conditions: (1) He/she has rendered at least one (1) year of service, whether continuous or broken; (2) He/she has notified his/her employer that he/she will avail himself/herself of it, within a reasonable period of time; and (3) He/she has presented to his/her employer a Solo Parent Identification Card, which may be obtained from the DSWD office of the city or municipality where he/she resides. BAR OPERATIONS COMMISSION the victim's body, forcing her/him to watch obscene publications and indecent shows or forcing the woman or her child to do indecent acts and/or make films thereof, forcing the wife and mistress/lover to live in the conjugal home or sleep together in the same room with the abuser; (b) acts causing or attempting to cause the victim to engage in any sexual activity by force, threat of force, physical or other harm or threat of physical or other harm or coercion; (c) Prostituting the woman or child. "Psychological violence" refers to acts or omissions causing or likely to cause mental or emotional suffering of the victim such as but not limited to intimidation, harassment, stalking, damage to property, public ridicule or humiliation, repeated verbal abuse and mental infidelity. It includes causing or allowing the victim to witness the physical, sexual or psychological abuse of a member of the family to which the victim belongs, or to witness pornography in any form or to witness abusive injury to pets or to unlawful or unwanted deprivation of the right to custody and/or visitation of common children. Availment The parental leave is an additional benefit which shall be for seven (7) working days every year, with full pay, consisting of basic salary and mandatory allowances. Grant of flexible work schedule The employer shall provide for a flexible working schedule for solo parents: Provided, That the same shall not affect individual and company productivity: Provided, further, That any employer may request exemption from the above requirements from the DOLE on certain meritorious grounds. [Section 6] "Economic abuse" refers to acts that make or attempt to make a woman financially dependent which includes, but is not limited to the following: (a) withdrawal of financial support or preventing the victim from engaging in any legitimate profession, occupation, business or activity, except in cases wherein the other spouse/partner objects on valid, serious and moral grounds as defined in Article 73 of the Family Code; (b) deprivation or threat of deprivation of financial resources and the right to the use and enjoyment of the conjugal, community or property owned in common; (c) destroying household property; (d) controlling the victims' own money or properties or solely controlling the conjugal money or properties. [Section 3, RA 9262] Protection against work discrimination No employer shall discriminate against any solo parent employee with respect to terms and conditions of employment on account of his/her status. [Section 7] Termination of the benefit A change in the status or circumstance of the parent claiming the benefit under the law, such that he/she is no longer left alone with the responsibility of parenthood, shall terminate his/her eligibility for this benefit. LEAVES FOR VICTIMS OF VIOLENCE AGAINST WOMEN [RA 9262] Coverage and purpose VAWC leave is granted to women employees who are victims of violence, as defined in RA 9262. The leave benefit covers the days that the women employee has to attend to medical or legal concerns. Requirement for entitlement To be entitled to the leave benefit, the only requirement is for the victim-employee to present to her employer a certification from the barangay chairman or barangay councilor or prosecutor or the Clerk of Court, as the case may be, that an action relative to the matter is pending. Definition of Terms "Violence against women and their children" refers to any act or a series of acts committed by any person against a woman who is his wife, former wife, or against a woman with whom the person has or had a sexual or dating relationship, or with whom he has a common child, or against her child whether legitimate or illegitimate, within or without the family abode, which result in or is likely to result in physical, sexual, psychological harm or suffering, or economic abuse including threats of such acts, battery, assault, coercion, harassment or arbitrary deprivation of liberty. Benefit In addition to other paid leaves under existing labor laws, company policies, and/or CBA, the qualified victimemployee shall be entitled to a leave of up to 10 days with full pay, consisting of basic salary and mandatory allowances fixed by the Regional Wage Board, if any. Usage of the benefit The usage of the 10-day leave shall be at the option of the woman employee. In the event that the leave benefit is not availed of, it shall not be convertible into cash and shall not be cumulative. VAWC includes, but is not limited to, the following acts: (1) “Physical Violence" refers to acts that include bodily or physical harm; (2) "Sexual violence" refers to an act which is sexual in nature, committed against a woman or her child. It includes, but is not limited to: (a) rape, sexual harassment, acts of lasciviousness, treating a woman or her child as a sex object, making demeaning and sexually suggestive remarks, physically attacking the sexual parts of A victim of VAWC who is employed shall be entitled to a paid leave of up to ten (10) days in addition to other paid leaves under the Labor Code and Civil Service Rules and Regulations and other existing laws and company policies: (1) At any time during the application of any protection order, investigation, prosecution and/or trial of the criminal case, extendible when the necessity arises as specified in the protection order. PAGE 28 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION (2) Upon the issuance of the Punong Barangay/kagawad or prosecutor or the Clerk of Court, as the case may be, of a certification [at no cost] to the woman that such an action is pending, and this is all that is required for the employer to comply with the 10- day paid leave. (3) For government employees, in addition to the aforementioned certification, the employee concerned must file an application for leave citing as basis R.A. 9262. Application after surgery Prior application for leave shall not be necessary in cases requiring emergency surgical procedure, provided that the employer shall be notified verbally or in written form within a reasonable period of time and provided further that after the surgery or appropriate recuperating period, the female employee shall immediately file her application using the prescribed form. Special Leave Benefits (SLB) For Women See RA 9710 [Magna Carta of Women] and its IRR, DOLE DO No. 112, Series of 2011 as amended by DO No. 112-A Series of 2012 Period of entitlement The 2 months special leave is the maximum period of leave with pay that a woman employee may avail of under RA 9710. Definitions Special leave benefit for women means a female employee’s leave entitlement of two (2) months with full pay from her employer based on her gross monthly compensation following surgery caused by gynecological disorders, provided that she has rendered continuous aggregate employment service of at least six (6) months for the last 12 months. For purposes of determining the period of leave with pay that will be allowed to a female employee, the certification of a competent physician as to the required period of recuperation shall be controlling. Gynecological disorders refers to disorders that would require surgical procedures such as, but not limited to, dilatation and curettage and those involving female reproductive organs such as the vagina, cervix, uterus, fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified by a competent physician. It shall also include hysterectomy, ovariectomy, and mastectomy. Frequency of availment A woman employee can avail of the SLB for every instance of surgery due to gynecological disorder for a maximum total period of 2 months per year. Availment The special leave shall be granted to the qualified employee after she has undergone surgery. Special leave benefit vis-à-vis SSS sickness benefit The SLB is different from the SSS sickness benefit. The former is granted by the employer in accordance with RA 9710. Gross monthly compensation means the monthly basic pay plus mandatory allowances fixed by the regional wage boards. It is granted to a woman employee who has undergone surgery due to gynecological disorder. The SSS sickness benefit, on the other hand, is administered and given by the SSS in accordance with RA 1161 as amended by RA 8282. At least six months continuous aggregate employment service for the last 12 months prior to surgery means that the woman employee should have been with the company for 12 months prior to surgery. An aggregate service of at least six (6) months within the said 12-month period is sufficient to entitle her to avail of the special leave benefit . Special leave benefit vis-à-vis existing statutory leaves The SLB cannot be taken from existing statutory leaves (i.e. 5-day SIL, leave for victims of VAWC, Parental leave for solo parents). The grant of SLB under the law is in recognition of the fact that patients with gynecological disorder needing surgery require a longer period of recovery. The benefit is considered an addition to the leave benefits granted under existing laws and should be added on top of said statutory leave entitlements. Employment service includes absences with pay such as use of other mandated leaves, company-granted leaves and maternity leaves Competent physician means a medical doctor preferably specializing in gynecological disorders or is in the position to determine the period of recuperation of the woman employee. If the SLB has already been exhausted, the company leave and other mandated leave benefits may be availed of by the woman employee. Conditions for entitlement of special leave Any female employee, regardless of age and civil status, shall be entitled to a special leave benefit, provided she has complied with the following conditions: (a) She has rendered at least 6 months continuous aggregate employment service for the last 12 months prior to surgery; (b) She has filed an application for special leave (c) She has undergone surgery due to gynecological disorders as certified by a competent physician. Special leave benefit vis-à-vis maternity leave benefit Where the woman employee had undergone surgery due to gynecological disorder during her maternity leave, she is entitled only to the difference between the SLB and maternity leave benefit. Crediting of existing or similar benefits If there are existing or similar benefits under a company policy, practice or CBA providing similar or equal benefits to what is mandated by law, the same shall be considered as compliance, unless the company policy, practice or CBA provides otherwise. Application for special leave Application before surgery The employee shall file her application for leave with her employer within a reasonable period of time from the expected date of surgery, or within such period as may be provided by company rules and regulations or by CBA. In the event the company policy, practice or CBA provides lesser benefits, the company shall grant the difference. PAGE 29 UP COLLEGE OF LAW LABOR LAW More liberal existing or similar benefits cannot be withdrawn or reduced by reason of the mandate of RA 9710. BAR OPERATIONS COMMISSION The basis of the amount to be integrated shall be the average monthly share of each employee for the past twelve (12) months immediately preceding the abolition of withdrawal of such charges. [Sec. 5, Rule VI, Book 3, sentence 2] The term “similar or equal benefits” refers to leave benefits which are of the same nature and purpose as that of the SLB. Synthesis of the Rules (1) Service charges must be pooled; (2) Where a restaurant or similar establishment does not collect service charges but has a practice or policy of monitoring and pooling tips given voluntarily by its customers to its employees, the pooled tips should be monitored, accounted for and distributed in the same manner as the services charges. [DOLE Handbook on Workers’ Statutory Monetary Benefits, 2006 ed., p. 27]. (3) The amount collected is divided between the company (15%) and employees (85%); (4) It shall be given twice a month with intervals of not more than 15 days; (5) If discontinued, removed, or stopped, the average share of the employees of their service charge or tips shall be integrated with their basic wage. Mode of payment The SLB is a leave privilege. The woman employee shall not report for work for the duration of the leave but she will still receive her salary covering said period. The employer, in its discretion, may allow said employee to receive her pay for the period covered by the approved leave before or during the surgery. The computation of her “pay” shall be based on her prevailing salary at the time of the surgery. Non-commutation of the benefit The SLB shall be non-cumulative and non-convertible to cash unless otherwise provided by a CBA SERVICE CHARGES COVERAGE TH THIRTEENTH (13 ) MONTH PAY AND OTHER BONUSES Revised Guidelines on the Implementation of the 13th Month Pay Law and PD 851 Employers This rule shall apply only to establishments which collect service charges such as: (1) Hotels, restaurants, lodging houses, night clubs, cocktail lounge, massage clinics, bars, casinos and gambling houses and similar enterprises (2) Including those entities operating primarily as private subsidiaries of the Government [Sec 1, Rule VI, Book 3] RATIONALE (1) To further protect the level of real wages from the ravage of world-wide inflation; (2) There has been no increase in the legal minimum wage rates since 1970; (3) The Christmas season is an opportune time for society to show its concern for the plight of the working masses so they may properly celebrate Christmas and New Year. Employees Shall apply to ALL employees of covered employers (1) Regardless of their positions, designations, or employment status, (2) Irrespective of the method by which their wages are paid. [Sec 2, Rule VI, Book 3] COVERAGE General Rule: ALL EMPLOYERS are hereby required to pay all their rank and file employees a 13th month pay not later than Dec 24 of every year, (a) Provided that they have worked for at least one (1) month during a calendar year. EXCEPTIONS Managerial employees – or one who is vested with powers or prerogatives to lay down and execute managerial policies and/or hire, transfer, suspend, layoff, recall, discharge, assign or discipline employees or to effectively recommend such managerial actions. All employees not falling within this definition shall be considered rank and file employees. EXCLUSIONS/EXEMPTIONS FROM COVERAGE Exempted Employers: (1) Government, its political subdivisions, including GOCCs except those operating essentially as private subsidiaries of the Government; (2) Employers already paying their employees a 13th month pay or more in a calendar year or its equivalent at the time of this issuance; (3) Employers of household helpers and persons in the personal service of another relation to such workers; and (4) Employers of those who are paid on purely commission, boundary or task basis and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof (except those workers who are paid on piecerate basis, in which case their employer shall grant th them 13 month pay). DISTRIBUTION Service charges are distributed in accordance with the following percentage of sharing: (1) Eighty-five percent (85%) for the employees to be distributed equally among them; and The shares shall be distributed to employees not less than once every 2 weeks or twice a month at intervals not exceeding 16 days. [Sec 4, Rule VI, Book 3] (2) Fifteen percent (15%) for the management to answer for losses and breakages and, at the discretion of the management, distribution to managerial employees. [Sec 3, Rule VI, Book 3] Note: The P2,000.00 salary ceiling for entitlement thereto is no longer applicable. Note: “Equivalent” includes: (a) Christmas bonus, mid-year bonus, cash bonuses (b) and other payments amounting to not less than 1/12 of INTEGRATION In case service charge is abolished: shares of covered employees shall be considered integrated in their wages. [Art 96, par. 2] PAGE 30 UP COLLEGE OF LAW LABOR LAW the basic salary (c) but shall NOT INCLUDE cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employee as well a non-monetary benefits. BAR OPERATIONS COMMISSION before the time for payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year up to the time of his resignation or termination from service. (6) Wage Difference: The difference between the minimum wage and the actual salary received by the Employee th cannot be deemed as his 13 month pay as such difference is not equivalent to or of the same import as the said benefit contemplated by law. [JPL Marketing Promotions vs. CA, 2005] (7) Terminated Employees: the payment of the 13th month pay may be demanded by the employee upon the cessation of employer-employee relationship. [Archilles Manufacturing Corp. vs. NLRC, 1995] Workers paid on a piece-rate basis Those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same. NATURE OF THE 13TH MONTH PAY Amount and Date of Payment Minimum Amount: 1/12 of the total basic salary earned by an employee within a calendar year for the year 1987 Additional Rules: (1) Commissions: If the commissions may be properly considered part of the basic salary, then they should be INCLUDED. If they are not an integral part of the basic salary, then they should be EXCLUDED. [Phil. Duplicators Inc. vs. NLRC, 1995] (2) Substitute Payment not allowed: benefits in the form of food or free electricity, assuming they were given, were not a proper substitute for the 13th month pay required by law. Neither may year-end rewards for loyalty and service be considered in lieu of 13th month pay. [Framanlis Farms, Inc. v. MOLE, 1989] th (3) 14 Month Pay is not mandated: Employers already paying their employees a 13th month pay or its equivalent are not covered by this Decree. [Kamaya Port Hotel v. NLRC, 1989] Base Amount, which is the basic salary shall include: (1) cost of living allowances (COLA) integrated into the basic salary of a covered employee pursuant to EO 178. (2) all remunerations or earnings paid by this employer for services rendered. (3) But not the allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of: (a) unused vacation and sick leave credits, (b) overtime, (c) premium, (d) night differential, (e) holiday pay and, and (f) cost-of-living allowances. Time of payment General Rule: paid not later than Dec 24 of each year. Commissions vis-à-vis 13th month pay The Rule on Productivity Bonuses. The so-called commissions “paid to or received by medical representatives of Boie-Takada Chemicals or by the rankand-file employees of Philippine Fuji Xerox Co., were excluded from the term “basic salary” because these were paid to the medical representatives and rank-and-file employees as “productivity bonuses.” These have no clear direct or necessary relation to the amount of work actually done by each individual employee. More generally, a bonus is an amount granted and paid ex gratia to an employee. If an employer cannot be compelled to pay a productivity bonus to its employees, it should follow that such productivity bonus, when given, should not be deemed to fall within the “basic salary” of employees when the time th comes to compute their 13 month pay [Boie Takada v de la Serna, 228 SCRA 329; 1993] Exception: ER may give to his employees half (½) of the required 13th Month Pay before the opening of the regular school year and the other half on or before the 24th of December every year. (a) The frequency of payment of this monetary benefit may be the subject of agreement between the employer and the recognized CBA of the employees. 13THE MONTH PAY IN SPECIAL CASES (1) Paid by Results: Employees who are paid on piece work basis are, by law, entitled to the 13th Month Pay. (2) Employees who are paid a fixed or guaranteed wage plus commission are entitled to 13th month pay [not purely commission]; the basis for computation shall be both their fixed or guaranteed wage and commission. (3) Those with Multiple Employers: Government Employees working part time in a private enterprise, including private educational institutions, as well as Employees working in two or more private firms, whether on full or part time bases, are entitled to the required 13th Month Pay from all their private Employers regardless of their total earnings from each or all their Employers. (4) Private School Teachers: Private school teachers, including faculty members of universities and colleges, are entitled to the required 13th month pay, regardless of the number of months they teach or are paid within a year, if they have rendered service for at least one (1) month within a year. (a) Overload pay is NOT included in the computation th for 13 month pay; overload is not overtime as it is additional work done within the normal shift [Letran Calamba Faculty vs. NLRC, 2008] (5) Resigned or Separated Employee: an Employee who has resigned or whose services were terminated at any time The decision in Boie Takada and the doctrine enunciated in this case in fact co-exist with the other. The two cases present quite different factual situations (although the same word “commissions” was used or invoked) the legal characterizations of which must accordingly differ. In the instant case, there is no question that the sales commission earned by the salesmen who make or close a sale of duplicating machines constitute part of the compensation or remuneration paid to salesmen for serving as salesmen, and hence as part of the “wage” or salary of petitioner’s salesmen. It appears that petitioner pays its salesmen a small fixed or guaranteed wage; the greater part of the salesmen’s wages or salaries being composed of the sales or incentive commissions earned on actual sales closed by them. The sales commissions were an integral part of the basic salary structure. They are not PAGE 31 UP COLLEGE OF LAW LABOR LAW overtime payments, or profit sharing payments or any other fringe benefit. [Phil. Duplicators vs. NLRC, 227 SCRA 747; 1995] BAR OPERATIONS COMMISSION (2) Redundancy, as when the position of the EE has been found to be excessive or unnecessary in the operation of the enterprise; (3) Impossible reinstatement of the EE to his/her former position or to a substantially equivalent position for reasons not attributable to the fault of the ER, as when the reinstatement ordered by a competent authority cannot be implemented due to closure of cessation of operations of the establishment/ER, or the position to which he/she is to be reinstated no longer exists and there is no substantially equivalent position in the establishment to which he/she can be assigned. [Gaco v. NLRC, 1994] CBA vis-à-vis 13th month pay th In order to exempt the employer from paying 13 month pay, a bonus stipulation in the CBA should be general in scope, applicable to all employees, not only a few, for the legal obligation benefits all employees regardless of their designation or employment status so long as they have worked at least one month during the calendar year. [Marcopper Mining Corp. vs. Ople] SEPARATION PAY [Art. 283 & 284, LC] From the DOLE Handbook on Worker’s Statutory Monetary Benefits, 2010] NOTICE OF TERMINATION The ER may terminate the employment of any EE due to the above-mentioned authorized causes by serving a written notice on the EE and the DOLE through its regional office having jurisdiction over the place of business at least 1 month before the intended date thereof. DEFINITION Separation pay is defined as the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during the period that he is looking for another employment. [A’ Prime Security Services v. NLRC, et al., 1993] BASIS OF SEPARATION PAY The computation of separation pay of an EE shall be based on his/her latest salary rate. INCLUSION OF REGULAR ALLOWANCE IN THE COMPUTATION In the computation of separation pay, it would be error not to integrate the allowance with the basic salary. The salary base properly used in computing the separation pay should include not just the basic salary but also the regular allowances that an EE has been receiving. [Planters’ Products, Inc. v. NLRC, 1989] GENERAL RULE The rule embodied in the Labor Code is that a person dismissed for cause as defined therein [see Art, 282] is not entitled to separation pay. [PLDT v. NLRC, 1988] EXCEPTION Considerations of equity as in the cases of Filipro, Inc. v. NLRC, Metro Drug Corp. v. NLRC, Engineering Equipment, Inc. v. NLRC, San Miguel Corp v. NLRC. RETIREMENT PAY RATIONALE RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer can respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor. There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time said employment contracts have started. [Enriquez Security Services, Inc. v. Cabotaje, 2006] An employee who voluntarily resigns is not entitled to separation unless stipulated in the employment contract, or the collective bargaining agreement, or is sanctioned by established practice or policy of the employer. [Phimco Industries v. NLRC, 1997; Hinatuan Mining Corp v. NLRC, 1997 cited in JPL Marketing Promotions v. CA, 2005] AMOUNT One-Half (1/2) Month Pay per Year of Service An EE is entitled to receive separation pay equivalent to ½ month pay for every year of service, a fraction of at least six (6) months being considered as one whole year, if his/her separation from the service is due to any of the following authorized causes: (1) Retrenchment to prevent losses [i.e. reduction of personnel effected by management to prevent losses]; (2) Closure or cessation of operation of an establishment not due to serious losses or financial reverses; and, (3) When the EE is suffering from a disease not curable within a period of six (6) months and his/her continued employment is prejudicial to his/her health or to the health of his/her co-employees In no case will an EE get less than one (1) month separation pay if the separation is due to the above stated causes and he/she has served for at least six (6) months. Pursuant thereto, this Court imposed two (2) essential requisites in order that R.A. 7641 may be given retroactive effect: (1) the claimant for retirement benefits was still in the employ of the employer at the time the statute took effect; and (2) the claimant had complied with the requirements for eligibility for such retirement benefits under the statute. [Universal Robina Sugar Milling Corp. v. Cabanella, 2008] ELIGIBILITY All employees in the private sector, regardless of their position, designation, or status, and irrespective of the method by which their wages are paid [Sec 1, RA 7641] One-Month Pay per Year of Service An EE is entitled to separation pay equivalent to his/her one-month pay for every year of service, a fraction of at least 6 months being considered as one whole year, if his/her separation from service is due to any of the following: (1) Installation by ER of labor-saving devices; The only exceptions are: (1) employees covered by the Civil Service Law; (2) domestic helpers and persons in the personal service of another, and PAGE 32 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION (3) employees in retail, service and agricultural establishments or operations regularly employing not more than ten employees every year of service, a fraction of at least six (6) months being considered as one whole year. The benefits under this law are other than those granted by the SSS or the GSIS. Exclusions from coverage R.A. No. 7641, otherwise known as "The Retirement Pay Law," only applies in a situation where (1) there is no collective bargaining agreement or other applicable employment contract providing for retirement benefits for an employee; or (2) there is a collective bargaining agreement or other applicable employment contract providing for retirement benefits for an employee, but it is below the requirements set for by law. The reason for the first situation is to prevent the absurd situation where an employee, who is otherwise deserving, is denied retirement benefits by the nefarious scheme of employers in not providing for retirement benefits for their employees. The reason for the second situation is expressed in the Latin maxim pacta privata juri publico derogare non possunt. Private contracts cannot derogate from the public law. [Oxales v. Unilab, 2008] Retirement Benefits under a CBA or Applicable Contract Any EE may retire or be retired by his/her ER upon reaching the age established in the CBA or other applicable agreement/contract and shall receive the retirement benefits granted therein; provided, however, that such retirement benefits shall not be less than the retirement pay required under RA 7641, and provided further that if such retirement benefits under the agreement are less, the ER shall pay the difference. Where both the ER and the EE contribute to a retirement fund pursuant to the applicable agreement, the ER’s total contributions and the accrued interest thereof should not be less than the total retirement benefits to which the EE would have been entitled had there been no such retirement benefits’ fund. If such total portion from the ER is less, the ER shall pay the deficiency. RETIREMENT BENEFITS OF WORKERS WHO ARE PAID BY RESULTS For covered workers who are paid by result and do not have a fixed monthly salary rate, the basis for the determination of the salary for 15 days shall be their average daily salary (ADS). The ADS is derived by dividing the total salary or earning for the last 12 months reckoned from the date of retirement by the number of actual working days in that particular period, provided that the determination of rates of payment by results are in accordance with established regulations Age of retirement EEs shall be retired upon reaching the age of 60 years or more but not beyond 65 years old (and have served the establishment for at least 5 years). Optional retirement – in the absence of a retirement plan or other applicable agreement providing for retirement benefits of EEs in an establishment, an EE may retire upon reaching the age of 60 or more if he has served for at least 5 years in said establishment. RETIREMENT BENEFIT OF PART-TIME WORKERS Compulsory retirement – in the absence of a retirement plan or other applicable agreement providing for retirement benefits of EEs in an establishment, an EE shall be retired at the age of 65 years. Part-time workers are also entitled to retirement pay of “one-month salary” for every year of service under RA 7641 after satisfying the following conditions precedent for optional retirement: (a) There’s no retirement plan between the ER and the EE; and, (b) The EE should have reached the age of 60 years, and should have rendered at least 5 years of service with the ER. AMOUNT OF RETIREMENT PAY The minimum retirement pay shall be equivalent to onehalf (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Applying the foregoing principle, the components of retirement benefit of part-time workers may likewise be computed at least in proportion to the salary and related benefits due them. For the purpose of computing retirement pay, “one-half month salary” shall include all of the following: (1) Fifteen (15) days salary based on the latest salary rate; (2) Cash equivalent of five (5) days of service incentive leave; th (3) One-twelfth (1/12) of the 13 month pay. (1/12 x 365/12 = .083 x 30.41 = 2.52) TAXABILITY [SEC. 1, RA 4917] Any provision of law to the contrary notwithstanding, the retirement benefits received by officials and employees of private firms, whether individual or corporate, in accordance with a reasonable private benefit plan maintained by the employer (1) shall be exempt from all taxes and (2) shall not be liable to attachment, garnishment, levy or seizure by or under any legal or equitable process whatsoever Thus, “one-half month salary” is equivalent to 22.5 days. [Capitol Wireless, Inc. v. Sec. Confesor, 1996] Other benefits may be included in the computation of the retirement pay upon agreement of the ER and the EE or if provided in the CBA. Exception Except to pay a debt of the official or employee concerned to the private benefit plan or that arising from liability imposed in a criminal action: Retirement pay under RA 7641 vis-à-vis retirement benefits under SSS and GSIS laws RA 7641 mandates payment of retirement benefits. All private sector employees regardless of their position, designation or status and irrespective of the method by which their wages are paid are entitled to retirement benefits upon compulsory retirement at the age of sixtyfive (65) or upon optional retirement at sixty (60) or more but not 65. The minimum retirement pay due covered employees shall be equivalent to one-half month salary for Additional conditions (1) That the retiring official or employee has been in the service of the same employer for at least ten (10) years and is not less than fifty years of age at the time of his retirement; PAGE 33 UP COLLEGE OF LAW LABOR LAW (2) That the retirement benefits shall be availed of by an official or employee only once; and, (3) That in case of separation of an official or employee from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee, any amount received by him or by his heirs from the employer as a consequence of such separation shall likewise be exempt as hereinabove provided. BAR OPERATIONS COMMISSION Discrimination [Art 135, RA 9710] See previous section Stipulation against marriage [Art 136] See previous section Discharge to prevent enjoyment of benefits [Art 137(a)(1)] To deny any woman employee the benefits provided for in this Chapter or to discharge any woman employed by him for the purpose of preventing her from enjoying any of the benefits provided under this Code. "Reasonable private benefit plan" means a pension, gratuity, stock bonus or profit sharing plan maintained by an employer for the benefit of some or all of his officials and employees, wherein contributions are made by such employer or officials and employees, or both, for the purpose of distributing to such officials and employees the earnings and principal of the fund thus accumulated, and wherein it is provided in said plan that at no time shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose other than for the exclusive benefit of the said officials and employees. Discharge on account of pregnancy [Art 137(a)(2)] To discharge such woman on account of her pregnancy, while on leave or in confinement due to her pregnancy. Discharge on account of testimony [Art 137(a)(3)] To discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant. [Book III, Rule XII, Sec 13(d)] It shall be unlawful for any employer: …to discharge any woman or child or any other employee for having filed a complaint or having testified or being about to testify under the Code WOMEN WORKERS PROVISIONS AGAINST DISCRIMINATION It shall be unlawful for any employer to discriminate against any woman employee with respect to terms and conditions of employment solely on account of her sex. Expulsion of Women faculty/ female student due to pregnancy outside of marriage [Sec 13c RA 9710 Magna Carta of Women] (c) Expulsion and non-readmission of women faculty due to pregnancy outside of marriage shall be outlawed. No school shall turn out or refuse admission to a female student solely on the account of her having contracted pregnancy outside of marriage during her term in school. The following are acts of discrimination: (1) Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a female employees as against a male employee, for work of equal value; and (2) Favoring a male employee over a female employee with respect to promotion, training opportunities, study and scholarship grants solely on account of their sexes. [Art. 135 LC] ANTI-SEXUAL HARASSMENT ACT [RA 7877] Note: SEE RA 7877: Anti-Sexual Harassment Act of 1995 STIPULATION AGAINST MARRIAGE Unlawful Forms of Sexual Harassment Employment or Work Related (1) The sexual favor is made as a condition (HFR) (a) in the hiring or in the employment, re-employment or continued employment of said individual or (b) in granting said individual favorable compensation, terms, conditions, promotions, or privileges, or (c) in the refusal to grant the sexual favor results in limiting, segregating or classifying the EE which in any way would discriminate, deprive or diminish employment opportunities or otherwise adversely affect said employee; (2) The above acts would either: (a) impair the employee’s rights or privileges under existing labor laws; or (b) result in an intimidating, hostile, or offensive environment for the employee. It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married a woman employee shall be deemed resigned or separated or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage. [Art. 136, LC] Bona fide occupational qualification exception When the employer can prove that the reasonable demands of the business require a distinction based on marital status and there is no better available or acceptable policy which would better accomplish the business purpose, an ER may discriminate against an EE based in the identity of the EE’s spouse. [Star Paper Corp. vs. Simbol, 2006] The Court sustained the validity of employer policy prohibiting an employee from having a personal or marital relationship with an employee of a competitor. The prohibition was reasonable under the circumstances because relationships of such nature might compromise the interests of the company. [Duncan Association of Detailmen vs. Glaxo Wellcome, 2004] Education or Training environment In an education or training environment, sexual harassment is committed: (CECI) (a) Against one who is under the care, custody or supervision of the offender (b) Against one whose education, training, apprenticeship or tutorship is entrusted to the offender; (c) When the sexual favor is made a condition to the giving of a passing grade, or the granting of honors and scholarships, or the payment of a stipend, allowance or other benefits, privileges, or considerations; or PROHIBITED ACTS [ART. 137, LC] Note: Nightwork/ Exception [Art 130-131] – No more nightwork prohibition under R.A. 10151. PAGE 34 UP COLLEGE OF LAW LABOR LAW (d) When the sexual advances result in an intimidating, hostile or offensive environment for the result, trainee or apprentice. BAR OPERATIONS COMMISSION employee, male or female, may rightfully cry "foul" provided the claim is well substantiated. Strictly speaking, there is no time period within which he or she is expected to complain through the proper channels. The time to do so may vary depending upon the needs, circumstances, and more importantly, the emotional threshold of the employee. Persons who may be liable (1) Any employer, employee, manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainer or any other person, regardless of whether the demand, request for requirement for submission is accepted by the object of said act having authority, influence or moral ascendancy over another in a work or training or education environment, who demands, requests or otherwise requires any sexual favor from another, (2) Any person who directs or induces another to commit any act of sexual harassment as herein defined. OR (3) Any person who cooperates in the commission by another without which it would NOT have been committed, shall also be held liable under this Act Not many women are made of the stuff that can endure the agony and trauma of a public, even corporate, scandal. If petitioner corporation had not issued the third memorandum that terminated the services of private respondent, we could only speculate how much longer she would keep her silence. Perhaps, to private respondent's mind, for as long as she could outwit her employer's ploys she would continue on her job and consider them as mere occupational hazards. [Phil. Aelous Automotive United Corp. v. NLRC, 2000] MINOR WORKERS [RA 7610, RA 9231] CONSTITUTIONAL BASIS Role of the employer or Head of Office The Employer or Head of Office shall have the duty: (1) to prevent the commission of such acts and (2) to lay down the procedure for the resolution, settlement or prosecution of committed acts. Art II, Sec. 13 of the 1987 Constitution (1) The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social wellbeing. (2) It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. He shall be solidarily liable for damages: (1) if he is informed of such acts by the offended party and (2) no immediate action is taken thereon. General Rule: Children below 15 shall NOT be employed Independent Action for Damages The victim of work, education or training-related sexual harassment can institute a separate and independent action for damages and other affirmative relief. Legal Basis: Art. 139(a) of the Labor Code and Sec. 12 to 16 of RA 7610 as amended by RA 7658 and RA 9231 Exceptions (1) Child works directly under the sole responsibility of his parents or legal guardian and where only members of the ER’s family are employed, provided: (2) his employment does NOT endanger his life, safety, health and morals, (3) nor impairs his normal development, and (a) the parent or legal guardian shall provide the said minor child with the prescribed primary and/or secondary education; [Sec. 12 of RA 7610 as amended by RA 7658] (4) child’s employment or participation in public entertainment or information through cinema, theater, radio or television is essential, provided that: [Sec. 12 of RA 7610 as amended by RA 7658] (a) employment does NOT involve ads or commercials promoting alcohol, tobacco and its by-products or violence [Sec. 14 of RA 7610] (b) the employment contract is concluded by the child’s parents or guardian, and approved by DOLE (c) The ER shall ensure the protection, health, safety and morals of the child (d) The ER shall institute measures to prevent the child’s exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time (e) The ER shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skills acquisition of the child. [Sec. 12 of RA 7610 as amended by RA 7658] Sanctions (1) Criminal: imprisonment of 1 month to mos. Or fine of P10k to P20k or both Prescription of such action is in 3 years. (2) Termination As a managerial employee, petitioner is bound by more exacting work ethics. When such moral perversity is perpetuated against his subordinate, he provides a justifiable ground for his dismissal for lack of trust and confidence. It is the right, nay the duty of every employer to protect its employees from oversexed superiors. [Libres v. NLRC, 1999] Cortez’s plant manager manifested a special liking for her, so much so that she was receiving special treatment from him who would oftentimes invite her "for a date," which she would as often refuse. On many occasions, he would make sexual advances touching her hands, putting his arms around her shoulders, running his fingers on her arms and telling her she looked beautiful. The special treatment and sexual advances continued during her employment for four (4) years but eventually, he made her understand that if she would not give in to his sexual advances he would cause her termination from the service; and he made good his threat when he started harassing her. Public respondent appears baffled why it took private respondent more than four years to expose William Chua's alleged sexual harassment. The gravamen of the offense in sexual harassment is not the violation of the employee's sexuality but the abuse of power by the employer. Any 15 TO 18 - allowed but restricted to non-hazardous undertakings. EMPLOYMENT OF CHILDREN FROM PAGE 35 UP COLLEGE OF LAW LABOR LAW cities and municipalities of Makati, San Juan, Mandaluyong, Muntinlupa, Navotas, Malabon, Parañaque, Las Piñas, Pasig, Marikina, Valenzuela, Taguig and Pateros in Metro Manila and in highly urbanized cities; (2) Six hundred fifty pesos (P650.00) a month for those in other chartered cities and first-class municipalities; and (3) Five hundred fifty pesos (P550.00) a month for those in other municipalities. The following are HAZARDOUS workplaces: (1) Nature of the work exposes the workers to dangerous environmental elements, contaminants or working conditions; (2) construction work, logging, fire-fighting, mining, quarrying, blasting, stevedoring, dock work, deep sea fishing, and mechanized farming; (3) manufacture or handling of explosives and other pyrotechnic products; (4) exposure to or use of heavy power-driven machinery or equipment; (5) exposure to or use of power-driven tools [IRR Book III Rule XII Sec. 3] Review of employment contract The employers shall review the employment contracts of their househelpers every three (3) years with the end in view of improving the terms and conditions thereof. SSS Membership Those househelpers who are receiving at least One thousand pesos (P1,000.00) shall be covered by the Social Security System (SSS) and be entitled to all the benefits provided thereunder. REGULATION OF WORKING HOURS OF A CHILD Quantity Age Bracket Daily Max Weekly Max Below 15 y 4 hours 20 hours 15 to below 18 8 hours Time and Manner of Payment: Wages shall be paid directly to the househelper to whom they are due at least once a month. No deductions therefrom shall be made by the employer unless authorized by the househelper himself or by existing laws. [Book III, Rule XIII, Sec. 9] 40 hours Night work prohibition Age Bracket Prohibited Hours Below 15 y 8 pm to 6 am (10 hrs) 15 to below 18 10 pm to 6 am (8 hrs) BAR OPERATIONS COMMISSION Right against assignment to non-household work at a wage rate lower than that mandated for agricultural or nonagricultural enterprises depending on the case. [Art 145] Opportunity for education if househelper is below 18 years [Art 146; NCC 1691] (1) ER shall provide for at least elementary education; (2) cost shall be part of the EE’s compensation UNLESS otherwise agreed upon. EMPLOYMENT OF HOUSEHELPERS DEFINITION "Domestic or household services" shall mean service in the ER's home, which is usually necessary or desirable for the maintenance and enjoyment thereof and includes ministering to the personal comfort and convenience of the members of the ER's household, including services of family drivers. [Art. 141, LC] Just and humane treatment [Art 147; NCC 1694] The employer shall treat the househelper in a just and humane manner. In no case shall physical violence be used upon the househelper [Art. 147] The term “househelper” as used herein is synonymous to the term “domestic servant” and shall refer to any person, whether male or female, who renders services in and about the employer’s home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employer’s family. [IRR Rule XII Sec.1(b)] Board, lodging and medical attendance shall be furnished by employer [Art 148; NCC 1690] Household work - Non-hazardous work for persons between 15-18 years old. [DO 4-99 Sec. 4] Contract for Domestic Service shall NOT exceed 2 years but renewable annually [Art 142; NCC1692] A househelper or a laundry woman, as well as a gardener, driver, or a houseboy who work in the staff house of a company are NOT househelpers. The criterion is not the nature of the work but the personal comfort and enjoyment of the family of the employer in the home of said employer. [Apex Mining Co. v. NLRC, 1991] Hours of Work - House helpers shall NOT be required to work more than ten hours a day. [NCC 1695] Vacation with Pay - Shall be allowed 4 paid vacation days per month [NCC 1695] Funeral Expenses In case of death of the house helper: (1) The head of the family shall bear the funeral expenses (2) If the house helper has no relatives in the place where the head of the family lives, with sufficient means. [NCC 1696] BENEFITS ACCORDED HOUSEHELPERS Compensation Minimum wage rates shall be equivalent to the basic cash wages plus lodging, food and medical attendance. [Art. 143-144; Civil Code Art. 1689] Minimum wage [Art. 143, as amended by RA 7655] Househelpers shall be paid the following minimum wage rates: (1) Eight hundred pesos (P800.00) a month for househelpers in Manila, Quezon, Pasay, and Caloocan Employment Certification ER shall give the househelper a written statement of the nature and duration of the service and his or her efficiency and conduct as househelper upon severance. [Art 151; NCC 1699] PAGE 36 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION RIGHTS AND BENEFITS ACCORDED HOMEWORKERS (1) Right to form, join or assist organizations [Sec 3, Rule XIV, Book III]. (2) Right to acquire legal personality and the rights and privileges granted by law to legitimate labor organizations upon issuance of the certification of registration [Sec 4, Rule XIV, Book III] (3) Immediate payment upon ER’s receipt of finished goods or articles [Sec 6, Rule XIV, Book III] (4) SSS, MEDICARE and ECC premium contributions shall be deducted from their pay and shall be remitted by ER/contractor/subcontractor to the SSS [Sec 6, Rule XIV, Book III] (5) ER may require homeworker to redo work improperly executed without additional pay [Sec 9a, Rule XIV, Book III] (6) ER need not pay homeworker for any work done on goods or articles not returned due to homeworker’s fault [Sec 9b, Rule XIV, Book III] (7) If subcontractor/contractor fails to pay homeworker, ER is jointly and severally liable with the former to the homeworker for his/her wage [Sec 11, Rule XIV, Book III] (8) ER shall assist the homeworkers in the maintenance of basic safe and healthful working conditions at the homeworkers’ place of work. [Sec 11, Rule XIV, Book III] (9) Homework prohibited in the ff: (a) explosives, fireworks and articles of like character; (b) drugs and poisons; and (c) other articles, the processing of which requires exposure to toxic substances. [Sec 13, Rule XIV, Book III] Employment Records The employer may keep such records as he may deem necessary to reflect the actual terms and conditions of employment of his househelper, which the latter shall authenticate by signature or thumbmark upon request of the employer. [Art 152] TERMINATION In case of termination Fixed - Security of tenure Termination prior to contract expiry must be for just cause, if the duration of the household service is NOT determined either by stipulation or by the nature of the service, the ER or the househelper may give notice to put an end to the relationship five days before the intended termination of the service. [Art 149; NCC 1697] If the period for household service is fixed, the house helper has a right against termination before the expiration of the term, except for a just cause. Not fixed- Indemnity for unjust termination of service [Art 150; NCC 1698] If the duration of the household service is not fixed either by stipulation or by the nature of the service, the employer or the house helper may give notice to end, the relationship five days before the intended termination. [Rule XII, Book III Sec. 10-17 IRR] Reliefs for unjust termination If unjustly dismissed, the house helper is entitled to be paid the compensation already earned plus that for 15 days by way of indemnity. Regional Office shall provide technical assistance to registered homeworkers’ organizations [Sec 14, Rule XIV, Book III] EMPLOYMENT OF HOMEWORKERS Note: DO 5, DOLE (February 4, 1992), is now Rule XIV, Book III of the IRR. CONDITIONS FOR DEDUCTION FROM HOMEWORKER’S EARNINGS Sec. 8, Rule XIV, Book III: Deduction – No deduction from the homeworker’s earnings for the value of materials lost, destroyed or damaged unless: (1) Homeworker is clearly shown to be responsible for loss or damage (2) Reasonable opportunity to be heard (3) Amount of deduction is fair and reasonable, and does not exceed actual loss or damage (4) Deduction does not exceed 20% of homeworker’s weekly earnings DEFINITION Homeworker applies to any person who performs industrial homework for an employer, contractor, or sub-contractor. [Sec. 1, Rule XIV, Book III] Industrial homework (1) Is a system of production under which work for an ER or contractor is carried out by a homeworker at his/her home. (2) Materials may or may not be furnished by the ER or contractor. (3) Decentralized form of production, where there is ordinarily very little supervision or regulation of methods of work. [Sec. 2(a), Rule XIV, Book III] APPRENTICES AND LEARNERS APPRENTICES Definition Note: Art. 58 has been superseded by Section 4 (j), (k), (l), (m) of RA 7796 quoted below: (j) "Apprenticeship" training within employment with compulsory related theoretical instruction involving a contract between an apprentice and an employer on an approved apprenticeable occupation. (k) “Apprentice" is a person undergoing training for an approved apprenticeable occupation during an apprenticeship agreement. (l) "Apprenticeship Agreement" is a contract wherein a prospective employer binds himself to train the apprentice who in turn accepts the terms of training for a recognized apprenticeable occupation emphasizing the rights, duties and responsibilities of each party. [RA 7796, Sec. 4] Definition of employer The employer means any person who (1) Acts as a contractor – delivers or causes to be delivered any goods, articles, or materials to be processed or fabricated in or about a home and thereafter to be returned or to be disposed of or distributed in accordance with ER’s direction; or (2) Sells any goods, articles, or materials to be processed or fabricated in or about a home and then rebuys them after. [Art. 155, LC] Note: Sec 2(d), Rule XIV, Book III is substantially similar to the above. PAGE 37 UP COLLEGE OF LAW LABOR LAW Apprenticeable occupation “Apprenticeable Occupation” is an occupation officially endorsed by a tripartite body and approved to be apprenticeable by the authority. [RA 7796, Sec. 4 (m)] BAR OPERATIONS COMMISSION Integrating both the abovementioned provisions then the qualifications of an apprentice are as follows: (1) At least 15 years of age [as amended by R.A. 7610], provided that if he is below 18 years, he shall not be eligible for hazardous occupation; (2) Possess vocational aptitude and capacity for appropriate tests; (3) Possess the ability to comprehend and follow oral and written instructions. [Art. 59 of the LC, as amended by R.A. 7610]. (4) Physically fit for occupation The act of filing the proposed apprenticeship program with the DOLE is a preliminary step towards its final approval, and does not instantaneously give rise to an employerapprentice relationship. It must be duly approved by the Minister of Labor and Employment. Hence, since the apprenticeship agreement between petitioner and respondent has no force and effect, respondent's assertion that he was hired not as an apprentice but as a delivery boy deserves credence. [Nitto Enterprises vs. NLRC, 1995] Allowed employment See: RA 7769, Sec. 4 (m) above Conditions under which children below 15 may be employed Children below fifteen (15) years of age shall not be employed except: (1) When a child works directly under the sole responsibility of his parents or legal guardian and where only members of the employer's family are employed: Provided, however, That his employment neither endangers his life, safety, health and morals, nor impairs his normal development: Provided, further, That the parent or legal guardian shall provide the said minor child with the prescribed primary and/or secondary education; or (2) Where a child's employment or participation in public entertainment or information through cinema, theater, radio or television is essential: Provided, The employment contract is concluded by the child's parents or legal guardian, with the express agreement of the child concerned, if possible, and approval of the Department of Labor and Employment: and Provided, That the following requirements in all instances are strictly complied with: (a) The employer shall ensure the protection, health, safety, morals and normal development of the child; (b) The employer institute measures to prevent the child's exploitation or discrimination taking into account the system and level of remuneration and the duration and arrangement of working time; and (c) The employer shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skills acquisition of the child. Employment of Apprentices: When applicable: (1) Only employers in highly technical industries may employ apprentices; and (2) Only in apprenticeable occupations approved by the Secretary of Labor. [Art. 60] Terms and conditions Apprenticeship agreements, including the wage rates of apprentices, shall conform to the rules issued by the Secretary of Labor and Employment. The period of apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below the legal minimum wage, which in no case shall start below 75 percent of the applicable minimum wage, may be entered into only in accordance with apprenticeship programs duly approved by the Secretary of Labor and Employment. [LC, Art. 61] The Secretary of Labor and Employment may authorize the hiring of apprentices without compensation whose training on the job is required by the school or training program curriculum or as requisite for graduation or board examination. [Art. 72, LC] Note: Wage Order No. NCR-17, May 17, 2012 also provides that the wages of apprentices and learners shall in no case be less than seventy-five percent (75%) of the applicable minimum wage rates. Enforcement No person shall institute any action for the enforcement of any apprenticeship agreement or damages for breach of any such agreement, unless he has exhausted all available administrative remedies. [Art. 67, LC] In the above exceptional cases where any such child may be employed, the employer shall first secure, before engaging child, a work permit from the Department of Labor and Employment which shall ensure observance of the above requirements. Incentives for employers An additional deduction from taxable income of one-half (1/2) of the value of labor training expenses incurred for developing the productivity and efficiency of apprentices shall be granted to the person or enterprise organizing an apprenticeship program: Provided, That such program is duly recognized by the Department of Labor and Employment: Provided, further, That such deduction shall not exceed ten (10%) percent of direct labor wage: and Provided, finally, That the person or enterprise who wishes to avail himself or itself of this incentive should pay his apprentices the minimum wage. [LC Art. 71] The Department of Labor and Employment shall promulgate rules and regulations necessary for the effective implementation of this Section. [RA 7160, Sec. 12 as amended by RA 7658, Sec. 1] Qualifications of apprentice (b) Possess vocational aptitude and capacity for appropriate tests; and (c) Possess the ability to comprehend and follow oral and written instructions. [Art. 59, LC] Summary of Rules: (1) The apprentice must be paid not less than 75% of the prescribed minimum salary [Art. 61]; PAGE 38 UP COLLEGE OF LAW LABOR LAW Exception: The employer MAY NOT pay any wage if the apprenticeship training is: (a) part of the school curriculum, (b) a requirement for graduation, or (c) a requirement for board examination [Art. 72] (2) The apprenticeship agreement must be approved by the DOLE Secretary (without such one shall be deemed a regular employee) [Nitto Enterprises v. NLRC, G.R. No. 114337, Sept. 29, 1995]; (3) The employer is not compelled to continue one’s employment upon termination of apprenticeship; (4) One-half (1/2) of the value of labor training expenses incurred for developing the productivity and efficiency of apprentices of the training cost is deducted from the employer’s income tax but it shall not exceed 10% of direct labor wage [Art. 71] BAR OPERATIONS COMMISSION (3) The wages or salary rates of the learners which shall begin at not less than seventy-five percent (75%) of the applicable minimum wage; and (4) A commitment to employ the learners if they so desire, as regular employees upon completion of the learnership. All learners who have been allowed or suffered to work during the first two (2) months shall be deemed regular employees if training is terminated by the employer before the end of the stipulated period through no fault of the learners. (5) The learnership agreement shall be subject to inspection by the Secretary of Labor and Employment or his duly authorized representative. [Art. 75, LC] Note: Learners employed in piece or incentive-rate jobs during the training period shall be paid in full for the work done. [Art. 76, LC] Requisites of the deduction: (a) Apprenticeship program must be duly approved by the DOLE; (b) Deduction shall NOT exceed 10% of direct labor wage; (c) Employer must pay his apprentices the minimum wage. Summary of Rules (1) The duration of learnership shall not exceed 3 months [Art. 73]; (2) If the learnership of 3 months is completed, the employer may be compelled to continue with the services of the learner as a regular employee [Art. 75(d)]; (3) There is a commitment from the employer to employ the learners if they so desire, as regular employees upon completion of the learnership [Art. 75(d)]; (4) If the learner is dismissed from service without just and valid cause and without due process after 2 months of service, he will be deemed as regular employee; and (5) The wages or salary rates of the learners which shall begin at not less than 75% of the applicable minimum wage. Working scholars – there is no employer-employee relationship between students on one hand, and schools, colleges or universities on the other, where there is written agreement between them under which the former agree to work for the latter in exchange for the privilege to study free of charge, provided, the students are given real opportunities, including such facilities as may be reasonable and necessary to finish their chosen courses under such agreement. [Sec. 14, Rule X, IRR] LEARNERS Definition "Learners" refers to persons hired as trainees in semiskilled and other industrial occupations which are nonapprenticeable. Learnership programs must be approved by the authority. [RA 7796, Sec. 4] Distinctions between Learnership and Apprenticeship Apprenticeship Learnership Highly technical industries Semi-skilled occupations industrial (Occupations) which may be learned through practical training on the job in a relatively short period of time which shall not exceed three (3) months. [Art. 73, sentence 2, LC] Practical training Practical training whether or supplemented by related not such practical training is theoretical instruction supplemented by theoretical instructions Allowed employment Learners may be employed when no experienced workers are available, the employment of learners is necessary to prevent curtailment of employment opportunities, and the employment does not create unfair competition in terms of labor costs or impair or lower working standards. [Art. 74, LC] Apprenticeable occupations Non-apprenticeable approved by the SOLE occupations Written apprentice agreement Learnership agreement ratified by the appropriate committees More than three months, shall Shall not exceed 3 months not exceed six months When learners may be hired (1) No experienced workers are available; (2) The employment of learners being necessary to prevent the curtailment of employment opportunities; and (3) The employment will neither create unfair competition in terms of labor costs nor impair working standards. (1) The person is at least (1) When no experienced fifteen (15) years of age, workers are available; provided those who are at (2) The employment of least fifteen (15) years of learners is necessary to age but less than prevent curtailment of eighteen (18) may be employment eligible for apprenticeship opportunities; and only in non-hazardous (3) The employment does not occupation; create unfair competition (2) The person is physically fit in terms of labor costs or for the occupation in impair or lower working which he desires to be standards. trained; (3) The person possesses vocational aptitude and Terms and conditions of employment Any employer desiring to employ learners shall enter into a learnership agreement with them, which agreement shall include: (1) The names and addresses of the learners; (2) The duration of the learnership period, which shall not exceed three (3) months; PAGE 39 UP COLLEGE OF LAW LABOR LAW RIGHTS OF DISABLED WORKERS capacity for the particular occupation as established through appropriate tests; and (4) The person is able to comprehend and follow oral and written instructions Equal opportunity for employment No disabled person shall be denied access to opportunities for suitable employment. A qualified disabled EE shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified ablebodied person. [Sec. 5 [par. 1], RA 7277] Wage rate shall begin at not less than 75% of the min wage (a) No compensation if SOLE authorizes, as OJT is required by the school Wage rate shall begin at not less than 75% of the min wage (a) Learners in piecework shall be paid in full for the work done. - (a) A commitment to employ the learners if they so desire, as regular employees upon completion of the learnership. (b) All learners who have been allowed or suffered to work during the first two (2) months shall be deemed regular employees if training is terminated by the employer before the end of the stipulated period through no fault of the learners. Deductibility of ½ of training costs incurred, provided: (a) Program is duly recognized by DOLE (b) Deduction shall not exceed 10% of direct labor wage (c) Payment of minimum wage to apprentices BAR OPERATIONS COMMISSION Reserved contractual positions 5% of all casual, emergency and contractual positions in the DSWD; DOH, DepEd; and other government agencies, offices or corporations engaged in social development shall be reserved for disabled persons. [Sec 5 [par. 2], RA 72777] Sheltered employment If suitable employment for disabled persons cannot be found through open employment as provided in the immediately preceding Section, the State shall endeavor to provide it by means of sheltered employment. In the placement of disabled persons in sheltered employment, it shall accord due regard to the individual qualities, vocational goals and inclinations to ensure a good working atmosphere and efficient production. [Sec 6, RA 7277] Apprenticeship opportunity Disabled persons shall be eligible as apprentices or learners: Provided, that their handicap is NOT as much as to effectively impede the performance of job operations in the particular occupation for which they are hired; provided, further, That after the lapse of the period of apprenticeship, if found satisfactory in the job performance, they shall be eligible for employment. [Sec. 7, RA 7277] - Full minimum wage All qualified handicapped workers shall receive the full amount of the minimum wage rate prescribed herein. [Sec 7, Wage Order No. NCR-17, May 17, 2012] HANDICAPPED WORKERS [RA 7277] – DIFFERENTLYABLED WORKERS In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled EE should be given the same terms and conditions of employment as a qualified able-bodied person. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus covered by Article 280 of the Labor Code. In the present case, the handicap of petitioners [deaf-mutes] is NOT a hindrance to their work. The eloquent proof of this statement is the repeated renewal of their employment contracts. [Bernardo v. NLRC, 1999] DEFINITIONS “Disabled Persons” are those suffering from restriction or different abilities, as a result of a mental, physical or sensory impairment, to perform an activity in the manner or within the range considered normal for a human being “Impairment” is any loss, diminution or aberration of psychological, physiological, or anatomical structure or function Discounts and other privileges (a) Persons with disability shall be entitled to the following: (b) At least 20% discount from all establishments relative to the utilization of all services in hotels and similar lodging establishments; restaurants and recreation centers for the exclusive use or enjoyment of persons with disability; (c) A minimum of 20% discount on admission fees charged by theaters, cinema houses, concert halls, circuses, carnivals and other places of culture, leisure and amusement for the exclusive use or enjoyment of persons with disability; “Disability” shall mean: (1) physical or mental impairment that substantially limits one or more psychological, physiological or anatomical function of an individual or activities of such individual; (2) a record of such an impairment; (3) or being regarded as having such an impairment “Handicap” refers to a disadvantage for a given individual, resulting from an impairment or a disability, that limits or prevents the function or activity, that is considered normal given the age and sex of the individual. PAGE 40 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION (d) At least 20% discount for the purchase of medicines in all drugstores for the exclusive use or enjoyment of persons with disability; (e) At least 20%% discount on medical and dental services including diagnostic and laboratory fees such as, but not limited to, x-rays, computerized tomography scans and blood tests, in all government facilities, subject to guidelines to be issued by the DOH in coordination with the PHILHEALTH. (f) At least 20% discount on medical and dental services including diagnostic and laboratory fees and professional fees of attending doctors in all private hospitals and medical facilities, in accordance with the rules and regulations to be issued by the DOH, in coordination with PHILHEALTH; (g) At least 20% discount on fare for domestic air and sea travel for the exclusive use or enjoyment of persons with disability; (h) At least 20% discount in public railways, skyways, and bus fare for the exclusive use and enjoyment of persons with disability. (i) Educational assistance to persons with disability, for them to pursue primary, secondary, tertiary, post tertiary, as well as vocational or technical education, in both public and private schools, through the provision of scholarships, grants, financial aids, subsidies and other incentives to qualified persons with disability, including support for books, learning materials and uniform allowance to the extent feasible; Provided, That persons with disability shall meet minimum admission requirements; (j) To the extent practicable and feasible, the continuance of the same benefits and privileges given by the GSIS, SSS, and PAG-IBIG, as the case may be, as are enjoyed by those in actual service; (k) To the extent possible, the government may grant special discounts in special programs for persons with disability on purchase of basic commodities, subject to guidelines to be issued for the purpose by the DTI and the DA; and (l) Provision of express lanes for persons with disability in all commercial and government establishments; in the absence thereof, priority shall be given to them. [Sec 32, RA 7277, as amended by RA 9442] employment. The following constitute acts of discrimination: (1) Limiting, segregating or classifying a disabled job applicant in such a manner that adversely affects his work opportunities (2) Using qualification standards, employment tests or other selection criteria that screen out or tend to screen out a disabled person unless such standards, tests or other selection criteria are shown to be related for the position in question and are consistent with business necessity; (3) Utilizing standards, criteria, or methods of administration that: (a) have the effect of discrimination on the basis of disability; or (b) perpetuate the discrimination of others who are the subject to common administrative control. (4) Providing less compensation, such as salary, wage or other forms of remuneration and fringe benefits, to qualified disabled employee, by reason of his disability, than the amount to which a non-disabled person performing the same work is entitled; (5) Favoring a non-disabled employee over a qualified disabled employee with respect to promotion, training opportunities, study and scholarship grants, solely on account of the latter's disability; (6) Re-assigning or transferring a disabled employee to a job or position he cannot perform by reason of his disability; (7) Dismissing or terminating the services of a disabled employee by reason of his disability unless the employer can prove that he impairs the satisfactory performance of the work involved to the prejudice of the business entity; Provided, however, That the employer first sought to provide reasonable accommodations for the disabled persons; (8) Failing to select or administer in the most effective manner employment tests which accurately reflect the skills, aptitude or other factor of the disabled applicant or employee that such test purports to measure, rather than the impaired sensory, manual or speaking skills of such applicant or employee, if any; and (9) Excluding disabled persons from membership in labor unions or similar organizations. Conditions for entitlement The privileges in Sec 32 are available only to persons with disability who are Filipino citizens upon submission of any of the following as proof of his/her entitlement thereto: (a) An identification card issued by the city or municipal mayor or the barangay captain of the place where the persons with disability reside; (b) The passport of the persons with disability concerned; or, (c) Transportation discount fare ID issued by the National Council for the Welfare of Disabled Persons (NCWDP). Employment Entrance Examination Upon an offer of employment, a disabled applicant may be subjected to medical examinations, on the following occasions: (a) all entering employees are subjected to such an examination regardless of disability; (b) Information obtained during the medical condition or history of the applicant is collected and maintained on separate forms and in separate medical files and is treated as a confidential medical record; Provided, however, That: (1) supervisors and managers may be informed regarding necessary restrictions on the work or duties of the employees and necessary accommodations: (2) first aid and safety personnel may be informed, when appropriate, if the disability might require emergency treatment; (3) government officials investigating compliance with this Act shall be provided relevant information on request; and (4) the results of such examination are used only in accordance with this Act. [Sec. 32, RA 7277] The privileges may not be claimed if the persons with disability claim a higher discount as may be granted by the commercial establishment and/or under other existing laws or in combination with other discount program/s. PROHIBITIONS ON DISCRIMINATION AGAINST DISABLED PERSONS Discrimination of Employment No entity, whether public or private shall discriminate against a qualified disabled person by reason of disability in regard to job application procedures, the hiring, promotion, or discharge of employees compensation, job training and other terms, conditions and privileges of PAGE 41 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION Prohibition on Verbal, Non-Verbal Ridicule and Vilification Against Persons with Disability Public Ridicule The act of making fun of or contemptuous imitating or making mockery of persons with disability whether in writing, or in words, or in action due to their impairments. [Sec. 39, RA 7277, as amended] Termination of Employment Prohibition No individual, group or community shall execute any of these acts of ridicule against persons with disability in any time and place which could intimidate or result in loss of self-esteem of the latter. The recognition of the existence of ER-EE relationship is not dependent upon the agreement of the parties. The characterization of the law prevails over that in the contract. In this sense, the existence of an EE-ER relationship is a matter of law. [Tabas et.al. v. California Manufacturing Co., et. Al., G.R. No. 80680, January 26, 1989]. EMPLOYER-EMPLOYEE RELATIONSHIP The existence or absence of ER-EE relationship is a question of law and a question of fact, each in its defined sense. Vilification includes: (a) The utterance of slanderous and abusive statements against a person with disability; and/or, (b) An activity in public which incites hatred towards, serious contempt for, or severe ridicule of persons with disability. [Sec. 41, RA 7277, as amended] The conclusion that an EE-ER relationship depends upon the facts of each case. In this sense, it is a question of fact. [SSS v. CA, G.R. No. 100388, Dec. 14, 2000]. FOUR-FOLD TEST The “four-fold test” is composed of four elements. This test is the yardstick to determine employer-employee relationship: (1) selection and engagement of the employee; (2) payment of wages; (3) power of dismissal; and (4) employer’s power to control the employee’s conduct with respect to the means and methods by which the work is to be accomplished. [Brotherhood Labor Unity Movement of the Philippines et. al. v. Zamora, G.R. No. 48645, Jan. 7, 1987]. Prohibition Any individual, group or community is hereby prohibited from vilifying any person with disability which could result into loss of self-esteem of the latter. INCENTIVES FOR EMPLOYERS Tax incentives for employment of disabled persons Private entities that employ disabled persons who meet the required skills or qualifications, either as regular employee, apprentice or learner, shall be entitled to an additional deduction, from their gross income, equivalent to 25% of the total amount paid as salaries and wages to disabled persons: Provided, however, That such entities present proof as certified by the Department of Labor and Employment and the Department of Health as to his disability, skills, and qualifications. [RA 7277, Sec. 8 (b)] Power to control is the most important element. [Sonza v. ABS-CBN Broadcasting Corp, G.R. No. 138051, June 10, 2004] The control test calls merely for the “existence” of the right to control and not the “actual exercise” of the right. [Zanotte Shoes v. NLRC, G.R. No. 100665, Feb. 13, 1995] Tax incentives for construction of disabled-friendly facilities Private entities that improve or modify their physical facilities in order to provide reasonable accommodation for disabled persons shall also be entitled to an additional deduction from their net taxable income, equivalent to 50% of the direct costs of the improvements or modifications. This Section, however, does NOT apply to improvements or modifications or facilities required under BP 344. [RA 7277, Sec. 8 (c)] Although no particular form of evidence is required to prove the existence of the relationship, and any competent and relevant evidence to prove the relationship may be admitted, a finding that the relationship exists must nonetheless rest on substantial evidence, which is that amount of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion. [Legend Hotel (Manila) v. Titanium Corp., G.R. No. 153511, 18 July 2012] Tax incentives for establishments giving discounts The establishments may claim the discounts granted in Sec. 32 (a), (b), (c), (e), (f) and (g) as tax deductions based on the net cost of the goods sold or services rendered; Provided, however, That the cost of the discount shall be allowed as deduction from gross income for the same taxable year that the discount is granted: Provided, further, That the total amount of the claimed tax deduction net of VAT if applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to proper documentation and to the provisions of the National Internal Revenue Code, as amended. [Sec. 32, RA 7277, as amended by RA 9442] Not every form of control will have the effect of establishing ER-EE relationship. The line should be drawn between: (1) Rules that merely serve as guidelines towards the achievement of mutually desired results without dictating the means or methods to be employed in attaining it. These aim only to promote the result. In such case, NO EE-ER relationship exists. (2) Rules that control or fix the methodology and bind or restrict the party hired to the use of such means. These address both the result and the means used to achieve it and hence, EE-ER relationship exists. [Insurance Life v. NLRC, G.R. No. 84484, Nov. 15, 1989] ECONOMIC DEPENDENCE TEST Two-tiered approach. (1) First Tier: Control Test (refer to the Four-Fold Test) (2) Second Tier: The underlying economic realities of the activity or relationship. [Sevilla v. Court of Appeals]. PAGE 42 UP COLLEGE OF LAW LABOR LAW The benchmark of economic reality in analyzing possible employment purposes ought to be the economic dependence of the worker on his employer. BAR OPERATIONS COMMISSION Indeed, the employer has the right or is at liberty to choose as to who will be hired and who will be declined. It is within the exercise of this right to select his employees that the employer may set or fix a probationary period within which the latter may test and observe the conduct of the former before hiring him permanently. The right of a laborer to sell his labor to such persons as he may choose is, in its essence, the same as the right of an employer to purchase labor from any person whom it chooses. The employer and the employee have thus an equality of right guaranteed by the Constitution. [Grand Motors Corp. vs. MOLE, 1984] The standard of “economic dependence” is whether the worker is dependent on the alleged employer for his continued employment in that line of business. [Orozco v. CA, GR No. 155207, 13 August 2008]. KINDS OF EMPLOYMENT Probationary Employment Legal basis Probationary employment shall not exceed 6 months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. [Art. 281, LC] Duration Generally, the probationary period of employment is limited to six (6) months. The exception to this general rule is when the parties to an employment contract may agree otherwise, such as when the same is established by company policy or when the same is required by the nature of work to be performed by the employee. In the latter case, there is recognition of the exercise of managerial prerogatives in requiring a longer period of probationary employment, such as in the present case where the probationary period was set for eighteen (18) months, i.e. from May, 1980 to October, 1981 inclusive, especially where the employee must learn a particular kind of work such as selling, or when the job requires certain qualifications, skills, experience or training. [Busier vs. Leogardo, 1984] In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as regular employee at the time of his engagement. Where no standards are made known to the employee at the time of engagement, he shall be deemed a regular employee. [IRR, Book VI, Rule 1, Sec. 6(d)] Honasan was certainly under observation during her threeweek on-the-job training. If her services proved unsatisfactory then, she could have been dropped as early as during that period. But she was not. On the contrary, her services were continued, presumably because they were acceptable, although she was formally placed this time on probation. Definition A probationary employee is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment [International Catholic Migration Comm. vs. NLRC, 1989] Even if it be supposed that the probation did not end with the three-week period of on-the-job training, there is still no reason why that period should not be included in the stipulated six-month period of probation. Honasan was accepted for on-the-job training on April 15, 1991. Assuming that her probation could be extended beyond that date, it nevertheless could continue only up to October 15, 1991, after the end of six months from the earlier date. Under this more lenient approach, she had become a regular employee of Holiday Inn and acquired full security of tenure as of October 15, 1991. [Holiday Inn Manila vs. NLRC, 1993] Termination - Can only be terminated for: (1) Just causes; or (2) Failure to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of engagement. Note: The probationary employee is entitled to substantial and procedural due process before termination. Limitations to termination (1) It must be exercised in accordance with the specific requirements of the contract (2) If a particular time is prescribed, the termination must be within such time and if formal notice is required, then that form must be used; (3) The employer’s dissatisfaction must be real and in good faith, not feigned so as to circumvent the contract or the law; (4) There must be no unlawful discrimination in the dismissal. [Manila Hotel Corporation v. NLRC, G.R. No. 53453, January 22, 1986]. Paras started reporting for work on May 27, 1996. The employers unanimously agreed that his performance was unsatisfactory. On November 26, 1996, he received a Notice of Termination dated November 25, 1996, Applying Article 13 of the Civil Code, the probationary period of six (6) months consists of one hundred eighty [180] days. As clearly provided for in the last paragraph of Article 13, in computing a period, the first day shall be excluded and the last day included. Thus, the one hundred eighty [180] days commenced on May 27, 1996, and ended on November 23, 1996. By the time Paras received the letter he was already a regular employee of the petitioner under Article 281 of the Labor Code. [Mitsubishi Motors vs. Chrysler Union, 2004] Purposes (1) Observance Period – for employer to determine if employee is qualified and for employee to demonstrate to the ER his skills (2) Restrictive- As long as the termination was made before the expiration of the six-month probationary period, the employer has a right to sever the employeremployee relationship PAGE 43 UP COLLEGE OF LAW LABOR LAW To reiterate, the rule on duration may be summarized as follows: General Rule: Probationary employment shall not exceed six (6) months from the date the employee started working. BAR OPERATIONS COMMISSION as the termination was made before the termination of the six-month probationary period, the employer was well within his rights to sever the employer-employee relationship. A contrary interpretation would defect the clear meaning of the term “probationary.” [De la Cruz, Jr. vs. NLRC, 2004] Exceptions: (1) When the parties to an agreement contract otherwise: (2) When the same is established by company policy; (3) When the s ame is required by the nature of the work performed by the employee; and (4) When it is covered by an apprenticeship agreement stipulating a longer period Private school teachers The provisions of Article 280 of the Labor Code are not applicable to the present case especially with respect to the issue of respondent's acquisition of security of tenure. It is settled that questions respecting a private school teacher’s entitlement to security of tenure are governed by the Manual of Regulations for Private Schools and not the Labor Code. [Paragraph 75 of the 1970 Manual] [Aklan College vs. Guarino, 2007] Agreement to extend probationary period If the extension was ex gratia, an act of liberality on the part of his employer affording him a second chance to make good after having initially failed to prove his worth as an employee. Such an act cannot now unjustly be turned against said employer’s account to compel it to keep on its payroll one who could not perform according to its work standards. [Mariwasa Manufacturing v. Leogardo, G.R. No. 74246, Jan. 26, 1989]. Regular employment Definition Regular employment is not synonymous with permanent employment, because there is no such thing as a permanent employment. Any employee may be terminated for just cause. Criteria for regularization must be disclosed In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular employee. Conversely, an employer is deemed to substantially comply with the rule on notification of standards if he apprises the employee that he will be subjected to a performance evaluation on a particular date after his hiring. [Alcira vs. NLRC, 2004] A regular employee is one who is engaged to perform activities which are necessary and desirable in the usual business or trade of the employer as against those which are undertaken for a specific project or are seasonal. There are two separate instances whereby it can be determined that an employment is regular: (1) if the particular activity performed by the employee is necessary or desirable in the usual business or trade of the employer; and, (2) if the employee has been performing the job for at least a year. [Pangilinan vs. Gen. Milling Corp., 2004] Regular Status after Probation When the bank renewed the contract after the lapse of the six-month probationary period, the employees thereby became regular employees. No employer is allowed to determine indefinitely the fitness of its employees. [Bernardo vs. NLRC, 1999] Standard of determination [Reasonable connection rule] The primary standard in determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. The repeated and continuing need for the performance of the job has been deemed sufficient evidence of the necessity, if not indispensability of the activity to the business. In the case at bar, continuous and repeated rehiring, some for nearly two decades, of these bill collectors indicate the necessity and desirability of their services, as well as the importance of the role of bill collectors in the MWSS. [Lopez vs. MWSS, 2005] Absorbed employees The private respondents could not be considered probationary employees because they were already welltrained in their respective functions. As stressed by the Solicitor General, while private respondents were still with the CCAS they were already clerks. Respondent Gelig had been a clerk for CCAS for more than ten (10) years, while respondent Quijano had slightly less than ten (10) years of service. They were, therefore, not novices in their jobs but experienced workers. [Cebu Stevedoring Co., Inc. vs. Regional Director, 1988] Hiring for an extended period Where the employment of project employees is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and considered regular employees. [Audion Electric Co., Inc. vs. NLRC, 1999] Double probation There is no basis for subjecting an employee to a new probationary or temporary employment where he had already become a regular employee when he was absorbed by a sister company. [A Prime Security Services, Inc. vs. NLRC, 2000] Repeated renewal of contract The petitioner cannot rightfully say that since the private respondent's employment hinged from contract to contract, it was "temporary", depending on the term of each agreement. Under the Labor Code, an employment may only be said to be "temporary" "where: (1) it has been fixed for a specific undertaking, the completion of or termination of which has been Termination and salary A probationary employee enjoys only a temporary employment status. This means that he is terminable at any time, permanent employment not having been attained in the meantime. The employer could well decide he no longer needed the probationary employee’s services or his performance fell short of expectations, etc. As long PAGE 44 UP COLLEGE OF LAW LABOR LAW determined at the time of the engagement of the employee or (2) where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. BAR OPERATIONS COMMISSION (4) The employee, while not employed and awaiting engagement, is free to offer his services to any other employer; (5) The termination of his employment in the particular project/undertaking is reported to the DOLE Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work, using the prescribed form on employees’ terminations /dismissals /suspensions; (6) An undertaking in the employment contract by the employer to pay completion bonus to the project employee as practiced by most construction companies. [Samson v. NLRC, G.R. No. 11366, Feb. 1, 1996]. Quite to the contrary, the private respondent's work, that of "typist-clerk" is far from being "specific" or "seasonal", but rather, one "where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business." And under the Code, where one performs such activities, he is a regular employee, "(t)he provisions of written agreement to the contrary notwithstanding …” It is true that in Biboso vs Victorias Milling Company, Inc. we recognized the validity of contractual stipulations as to the duration of employment. But we cannot apply it here because clearly, the contract-to-contract arrangement given to the private respondent was but an artifice to prevent her from acquiring security of tenure and to frustrate constitutional decrees. [Beta Electric Corp. vs. NLRC, 1990] See Policy No. 2 of 1997 and D.O. 19 of 1993 Samson vs. NLRC (1996): When the present action for regularization was filed on November 5, 1989 and during the entire period of petitioner's employment with private respondent prior to said date, the rule in force then was Policy Instruction No. 20, which required the employer company to report to the nearest Public Employment Office the fact of termination of a project employee as a result of the completion of the project or any phase in which he is employed. Length of time involved Length of time not controlling, merely serves as a badge of regular employment. [Maraguinot vs. NLRC, 1998] Furthermore, Department Order No. 19, which was issued on April 1, 1993, did not totally dispense with the notice requirement. Instead, it made provisions and considered it (i.e. the notice) as one of the "indicators" that a worker is a project employee. Project employment Employment fixed on a specific project or undertaking, completion or termination of which is determined at the time of engagement of the employee. Whether or not the project has a direct relation to the business of the ER is not important, BUT: (a) EE must be informed of the nature and duration of project (b) project and principal business of ER are two separate things (c) no attempt to deny security of tenure to the worker Work pool employee A project EE or a member of a work pool may acquire the status of a regular employee when the following concur: (1) There is a continuous rehiring of project employees even after cessation of a project; and (2) The tasks performed by the alleged “project employee” are vital, necessary, and indispensable to the usual business or trade of the employer. However, the length of time during which the EE was continuously rehired is not controlling, but merely serves as a badge of regular employment. Test of project employment The principal test for determining whether employees are properly characterized as "project employees," as distinguished from "regular employees," is whether or not the project employees were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at the time the employees were engaged for that project. As defined, project employees are those workers hired: (1) for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of the engagement of the employee. [PNOC Energy Dev’t Corp vs. NLRC, 2007] A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided, that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. [Maraguinot vs. NLRC, 1998] Members of a work pool from which a construction company draws its project employees, if considered employees of the construction company while in the work pool, are non-project employees, or employees for an indefinite period. If they are employed in a particular project, the completion of the project or any phase thereof will not mean severance of the employer-employee relationship. [Aguilar Corp. vs. NLRC, 1997] Indicators of project employment (1) The duration of the specific/identified undertaking for which the worker is engaged is reasonably determinable; (2) Such duration, as well as the specific work/service to be performed, is defined in an employment agreement and is made clear to the employee at the time of the hiring; (3) The work/service to be performed by the employee is in connection with the particular project/undertaking for which he is engaged; Rationale for project employment If a project has already been completed, it would be unjust to require the employer to maintain them in the payroll while they are doing absolutely nothing except waiting until another project is begun, if at all. In effect, these stand-by workers would be enjoying the status of PAGE 45 UP COLLEGE OF LAW LABOR LAW privileged retainers, collecting payment for work not done, to be disbursed by the employer from profits not earned. [De Ocampo vs. NLRC, 1990] BAR OPERATIONS COMMISSION Continuous rehiring Despite the insistence of petitioner that they were project employees, the facts show that as masons, carpenters and fine graders in petitioner’s various construction projects, they performed work which was usually necessary and desirable to petitioner’s business which involves construction of roads and bridges. It is not enough that an employee is hired for a specific project or phase of work. There must also be a determination of, or a clear agreement on, the completion or termination of the project at the time the employee was engaged. This second requirement was not met in this case. [Chua vs. Court of Appeals, 2004] Examples of project employment Private respondents, as well as the other 30 workers, were needed as additional hands for the renovation work and not for ordinary upkeep and maintenance. The erection of the fire escape and other small jobs after the renovation cannot be deemed maintenance but more of casual work. [Phil. Jai-Alai and Amusement Corp. vs. Clave, 1983] The corporation does not construct vessels for sale or otherwise which will demand continuous production of ships and will need regular workers. It merely accepts contracts for ship-building or for repair of vessels from third parties. It is only on occasion when it has work contract of this nature that it hires workers to do the job which, needless to say, lasts only for less than a year or longer. Completion of their work or project automatically terminates their employment. [Sandoval Shipyards, Inc. vs. NLRC, 1985] The fact that the workers have been employed with the company for several years on various projects, the longest being nine (9) years, did not automatically make them regular employees considering that the definition of regular employment in Article 280 of the Labor Code, makes specific exception with respect to project employment. The re-hiring of petitioners on a project-toproject basis did not confer upon them regular employment status. The practice was dictated by the practical consideration that experienced construction workers are more preferred. It did not change their status as project employees. [C.E. Construction Corp vs. Cioco, 2004] Petitioner was engaged to perform data encoding and keypunching, and her employment was fixed for a specific project or undertaking the completion or termination of which had been determined at the time of her engagement. This may be observed from the series of employment contracts between petitioner and private respondent, all of which contained a designation of the specific job contract and a specific period of employment. [Imbuido vs. NLRC, 2000] Seasonal employment Work or services to be performed are seasonal in nature, employment is for the duration of the season. No continuing need for the worker. Employer obligation to make standards known The law is clear that in all cases involving employees engaged on probationary' basis, the employer shall make known to the employee at the time he is hired, the standards by which he will qualify as a regular employee. “Regular Seasonal” Employees after One Season Regular seasonal employees are those called to work from time to time. The nature of their relationship with the employer is such that during off season they are temporarily laid off but during summer season they are reemployed, or when their services may be needed. They are not, strictly speaking, separated from the service but are merely considered as on leave of absence without pay until they are reemployed. Their employment relationship is never severed but only suspended. As such those employees can be considered as in the regular employment of the employer. [Manila Hotel Co. v. CIR, G.R. No. L-18875, Sept. 30, 1963]. Nowhere in the employment contract executed between petitioner and respondent Grulla is there a stipulation that the latter shall undergo a probationary period for three months before he can quality as a regular employee. There is also no evidence on record showing that the respondent Grulla had been apprised of his probationary status and the requirements which he should comply in order to be a regular employee. In the absence of these requisites, there is justification in concluding that respondent Grulla was a regular employee at the time he was dismissed by petitioner, and as such cannot be done without just and authorized cause. [A. M. Oreta and Co., Inc. vs. NLRC, 1989] For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have been employed only for the duration of one season. While the records sufficiently show that the respondents’ work in the hacienda was seasonal in nature, there was, however, no proof that they were hired for the duration of one season only. In fact, the payrolls, submitted in evidence by the petitioners, show that they availed the services of the respondents since 1991. Absent any proof to the contrary, the general rule of regular employment should, therefore, stand. Specified period The Court has upheld the legality of fixed-term employment. It ruled that the decisive determinant in term employment should not be the activities that the employee is called upon to perform but the day certain agreed upon by the parties for the commencement and termination of their employment relationship. But, this Court went on to say that where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and morals. [Purefoods Corp. vs. NLRC, 1987] The disparity in facts between the Mercado Sr., vs. NLRC case and the instant case is best exemplified by the fact that the farm laborers, work only for a definite period for a farm worker, after which they offer their services to other farm owners. In Mercado, although respondent constantly availed herself of the petitioners’ services from year to year, it was clear from the facts therein that they were not in her regular employ. In other words, they worked for PAGE 46 UP COLLEGE OF LAW LABOR LAW respondent, but were nevertheless free to contract their services with other farm owners. [Hacienda Bino vs. Cuenca, 2005] BAR OPERATIONS COMMISSION Requisites for validity This arrangement does NOT circumvent Security of Tenure when: (1) Knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure or any other circumstances vitiating his consent; OR (2) The employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter. Brent Doctrine [Brent School v. Zamora, 1990; Romares v. NLRC, 1998; Medenilla v. Phil. Veterans Bank, 2000] (3) If a contract is for a fixed term and the Employee is dismissed without just cause, he is entitled to the payment of his salaries corresponding to the unexpired portion of the employment contract. [Medenilla v. Phil. Veterans Bank, 2000] Casual employment When not regular, project or seasonal employee. Requirements to become Regular employee: (1) one (1) year service, continuous or broken (2) with respect to activity employed (3) employment shall continue while such activity exists Nature of work What determines regularity or casualness is not the employment contract, written or otherwise, but the nature of the job. If the job is usually necessary or desirable to the main business of the employer, then employment is regular. [A. M. Oreta and Co., Inc. vs. NLRC, 1989] JOB CONTRACTING One-year service The fact that the petitioners have been hired on a "temporary or seasonal" basis merely is no argument either. Article 106 to 109 of the Labor Code Article 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code. As held in Philippine Bank of Communications v. NLRC, a temporary or casual employee, under Article 281 of the Labor Code, becomes regular after service of one year, unless he has been contracted for a specific project. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. And we cannot say that merchandising is a specific project for the obvious reason that it is an activity related to the day-to-day operations of California. The records show that the petitioners had been given an initial six month contract, renewed for another six months. Accordingly, under Article 281 of the Code, they had become regular employees — of California — and had acquired a secure tenure. Hence, they cannot be separated without due process of law. [Tabas vs. California Marketing Co., Inc., 1989] The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. Fixed term employment Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a fixed period provided the same is entered into by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstance vitiating consent. (1) It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employee's duties. (2) It goes without saying that contracts or employment govern the relationship of the parties. In this case, private respondent's contract provided for a fixed term of nine (9) months, from June 1, 1991 to March 31, 1992. Such stipulation, not being contrary to law, morals, good customs, public order and public policy, is valid, binding and must be respected. [St. Theresa’s School vs. NLRC 1998] There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Article 107. Indirect employer. The provisions of the immediately preceding article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. However, the Court upholds the principle that where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be disregarded for being contrary to public policy. [Servidad vs. NLRC, 1999] Article 108. Posting of bond. An employer or indirect employer may require the contractor or subcontractor to furnish a bond equal to the cost of labor under contract, on PAGE 47 UP COLLEGE OF LAW LABOR LAW condition that the bond will answer for the wages due the employees should the contractor or subcontractor, as the case may be, fail to pay the same. BAR OPERATIONS COMMISSION purported contractor [service or manpower placement agency], assumes the act of paying the wage. The contract also provides that “any personnel found to be inefficient, troublesome, uncooperative and not observing the rules and regulations set forth by Burlingame shall be reported to F. Garil and may be replaced upon request.” Corollary to this circumstance would be the exercise of control and supervision by Burlingame over workers supplied by F. Garil in order to establish the nature of undesirable personnel. Article 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. Department Order No. 18-A, Series of 2011: Rules Implementing Articles 106 to 109 of the LC, as amended (14 November 2011) Coverage This shall apply to: (1) all parties of contracting and subcontracting arrangements where ER-EE relationships exist (2) cooperatives engaging in contracting or subcontracting arrangements Examples Aboitiz Haulers vs. Dimapatoi (2006): The allegation of petitioner that Grigio is an independent job contractor is without basis. The respondents, as checkers, were employed to check and inspect cargo, a task which is clearly necessary for the petitioner’s business of forwarding and distributing cargo. Grigio did not undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal. Contractors and subcontractors referred to in these rules are prohibited from engaging in recruitment and placement activities as defined in Art. 13(b) of the LC whether for local or overseas employment. The work activities, shifts, and schedules of the respondents, including time allowed for "recess" were set under the Written Contract of Services. This clearly indicates that these matters, which consist of the means and methods by which the work is to be accomplished, were not within the absolute control of Grigio. Definition of terms Cabo – a persons or group of persons or a labor groups which, in the guise of a labor organization, cooperative or any entity, supplies workers to an employer, with or without any monetary or other consideration, whether in the capacity of an agent of the employer or as an ostensible independent contractor. Petitioner’s allegation that Grigio retained control by providing supervisors to monitor the performance of the respondents cannot be given much weight. Instead of exercising their own discretion or referring the matter to the officers of Grigio, its supervisors were obligated to refer to petitioner’s supervisors any discrepancy in the performance of the respondents. Contracting or subcontracting – an arrangement whereby a principal agrees to put out or farm out with a contractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. Lastly, the law casts the burden on the contractor to prove that it has substantial capital, investment, tools etc. In this case, neither Grigio nor the petitioner was able to present any proof that Grigio had substantial capital. Contractor – any person or entity, including a cooperative, engaged in a legitimate contracting or subcontracting arrangement providing either services, skilled worker, temporary workers or a combination of services to a principal under a Service Agreement. Lakas vs. Burlingame (2007): No proof was adduced to show F. Garil’s capitalization. The work of the promo-girls was marketing and selling, and thus directly related to the principal business or operation of Burlingame. Contractor’s employee – includes one employed by a contractor to perform or complete a job, work, or service pursuant to a Service Agreement with a principal. Finally, F. Garil did not undertake the performance of its service contract according to its own manner and method, free from the control and supervision of Burlingame. Based on the contract, F. Garil was responsible in the hiring process only with respect to the screening, testing and preselection of the personnel it provided to Burlingame. Actual hiring itself was done through the deployment of personnel to establishments by Burlingame. It shall also refer to regular EEs of the contractor whose functions are not dependent on the performance or completion of a specific job, work or service within a definite period of time i.e. administrative staff. In-house agency – a contractor which is owned,, managed, or controlled directly or indirectly by the principal or one where the principal owns/represents any share of stock, and which operates solely or mainly for the principal. The contract also stipulated that Burlingame shall pay F. Garil a certain sum per worker. F. Garil merely served as conduit in the payment of wages to the personnel. The interpretation would have been different if the payment was for the job, project, or services rendered during the month and not on a per worker basis. Net Financial Contracting Capacity (NFCC) – refers to the formula to determine the financial capacity of the contractor to carry out the job, work or services sought to be undertaken under a Service Agreement. The Court has taken judicial notice of the practice of employers who do not issue payslips directly to employees. Under current practice, a third person, usually the PAGE 48 UP COLLEGE OF LAW LABOR LAW Formula: NFCC = (current assets - current liabilities) x (K – value of all outstanding or ongoing projects including contracts to be started) BAR OPERATIONS COMMISSION activities, regardless of whether such activity is peripheral or core in nature. However, in order for such outsourcing to be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only contracting. K stands for contract duration equivalent to: (a) 10 for one year or less (b) 15 for more than 1 year up to 2 years (c) 20 for more than 2 years Factors to determine existence of independent contractor relationship (1) Whether the contractor is carrying on an independent business (2) Whether the work is part of the employer’s general business. (3) The nature and extend of the work. (4) The skill required. (5) The terms and duration of the relationship. (6) The right to assign the performance of the work to another. (7) The control and supervision of the work and the employer’s powers with respect to the hiring, firing and payment of salaries. (8) The duty to supply premises, tools, and appliances. [Mafinco vs. Ople, 1976] Principal – any ER, whether a person or entity, including government agencies and GOCCs, who/which puts out or farms out a job, service or work to a contractor. Right to control – the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. Substantial capital – refers to paid-up capital stocks/shares of at least P3,000,000 in the case of corporations, partnerships and cooperatives; in case of single proprietorship, a net worth of at least P3,000,000. [Sec 3, D.O. 18-A-11] Prohibition against labor-only contracting Labor only contracting is prohibited. There is labor-only contracting where: (a) The contractor does not have substantial capital or investments in the form of tools, equipment, machineries, work premises, among others, and the employees recruited and places are performing activities which are usually necessary or desirable to the operation of the company, or directly related to the main business of the principal within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal; or (b) The contractor does not exercise the right to control the performance of the work of the employee. Service agreement – refers to the contract between the principal and contractor containing the terms and conditions governing the performance or completion of a specific job, work or service being farmed out for a definite or predetermined period. Legitimate contracting or subcontracting Contracting or subcontracting shall be legitimate if all the following circumstances occur: (a) The contractor must be registered in accordance with these rules and carries a distinct and independent business and undertakes to perform the job, work or service on its own responsibility, according to its own manner and method, and free from control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; (b) The contractor has substantial capital and/or investment; and, (c) The Service Agreement ensures compliance with all the rights and benefits under Labor laws. Other prohibitions (A) Contracting out of jobs, works or services when not done in good faith and not justified by the exigencies of the business such as the following: (1) Contracting out of jobs, works or services when the same results in the termination or reduction of regular EEs and reduction of work hours or reduction or splitting of the bargaining unit. (2) Contracting out of work with a Cabo (3) Taking undue advantage of the economic situation or lack of bargaining strength of the contractor’s EEs, or undermining their security of tenure or basic rights, or circumventing the provisions of regular employment in any of the following instances: (a) Requiring them to perform functions which are currently being performed by the regular EEs of the principal; and, (b) Requiring them to sign, as a precondition to employment or continued employment, an antedated resignation letter; a blank payroll; a waiver of labor standards including minimum wages and social or welfare benefits; or a quitclaim releasing the principal, contractor or from any liability as to payment of future claims. (4) Contracting out of a job, work or service through an in-house agency. (5) Contracting out of a job, work or service that is necessary or desirable or directly related to the Job contracting is permissible only if the following conditions are met: (1) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) the contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of the business. [Lakas vs. Burlingame Corp., 2007] In the case of Aliviado v. Protecter & Gamble Philippines, Inc., (G.R. No. 160506, 9 March 2010), the SC conceded that the law and its implementing rules allow contracting arrangements for the performance of specific jobs, works, or services. Indeed, it is management prerogative to farm out any of its PAGE 49 UP COLLEGE OF LAW LABOR LAW business or operation of the principal by reason of a strike or lockout whether actual or imminent. (6) Contracting out of a job, work or service being performed by union members when such will interfere with, restrain or coerce EEs in the exercise of their rights to self-organization as provided in Art. 248(c) of the LC, as amended. (7) Repeated hiring of EEs under an employment contract of short duration or under a Service Agreement of short duration with the same or different contractors, which circumvents the LC provisions on Security of Tenure. (8) Requiring EEs under a subcontracting arrangement to sign a contract fixing the period of employment to a term shorter than the term of the Service Agreement, unless the contract is divisible into phases for which substantially different skills are required and this is made known to the EE at the time of the engagements. (9) Refusal to provide a copy of the Service Agreement and the employment contracts between the contractor and the EEs deployed to work in the bargaining unit of the principal’s certified bargaining agent to the sole and exclusive bargaining agents. (10)Engaging or maintaining by the principal of subcontracted EEs in excess of those provided in the applicable CBA or as set by the Industry Tripartite Council. (B) Contracting out of jobs, works, or services analogous to the above when not done in good faith and not justified by the exigencies of the business. BAR OPERATIONS COMMISSION is co-terminus with the service agreement, or for a specific job, work, or service, or phase thereof. Effect of termination of employment The termination of the contractor EE prior to the expiration of the Service Agreement shall be governed by Arts. 282284 of the LC. In case the termination is caused by the pre-termination of the Service Agreement not due to authorized causes under Art. 283, the right of the contractor EE to unpaid wages and other unpaid benefits including unremitted legal mandatory contributions, e.g., SSS, Philhealth, Pag-ibig, ECC, shall be borne by the party at fault, without prejudice to the solidary liability of the parties to the Service Agreement. Where the termination result from the expiration of the Service Agreement, or from the completion of the phase of the job, work or service for which the EE is engaged, the latter may opt for payment of separation benefits as may be provided by law or the Service Agreement, without prejudice to his/her entitlement to the completion bonuses or other emoluments, including retirement benefits whenever applicable. Mandatory registration It shall be mandatory for all persons or entities, including cooperative, acting as contractors, to register with the Regional Office of the DOLE where it principally operates. Failure to register shall give rise to the presumption that the contractor is engaged in labor-only contracting. Mafinco vs. Ople (1976): When an independent contractor and not an employee: We recognize that contracting out is not unlimited; rather, it is a prerogative that management enjoys subject to well-defined legal limitations. As we have previously held, the company can determine in its best business judgment whether it should contract out the performance of some of its work for as long as the employer is motivated by good faith, and (1) the contracting out must not have been resorted to to circumvent the law or (2) must not have been the result of malicious or arbitrary action. [Manila Electric Co. v. Quisumbing, 1999] Contracting or subcontracting arrangements in the Construction and other industries Contracting or subcontracting arrangements in the Construction Industry, under the licensing coverage of the Philippine Construction Accreditation Board (PCAB), shall be covered by the applicable provisions of these Rules and shall continue to be governed by Dept Order No. 19, Series of 1993 [Guidelines Governing the Employment of Workers in the Construction Industry] Dept. Order No 13, Series of 1998 [Guidelines Governing the Occupational Safety and Health in the Construction Industry]; DOLE-DPWH-DILG-DTI and PCAB Memorandum of Agreement-Joint Administrative Order No. 1, Series of 2011 on coordination and harmonization of policies and programs on occupational safety and health in the construction industry. We perceive at the outset the disposition of the NLRC that janitorial services are necessary and desirable to the trade or business of petitioner Coca-Cola. But this is inconsistent with our pronouncement in Kimberly Independent Labor Union v. Drilon where the Court took judicial notice of the practice adopted in several government and private institutions and industries of hiring janitorial services on an “independent contractor basis.” In this respect, although janitorial services may be considered directly related to the principal business of an employer, as with every business, we deem them unnecessary in the conduct of the employer’s principal business. [Coca-Cola Bottlers Phil. Inc. vs. NLRC, 1999] Department Circular No. 01, Series of 2012: Clarifying the Applicability of DO No. 18-A, 2011 to Business Processing Outsourcing (BPO)/Knowledge Process Outsourcing (KPO) and the Construction Industry Applicability to BPO DO 18-A speaks of a trilateral relationship that characterizes the covered contracting/sub-contracting arrangement. Thus, vendor-vendee relationship for entire business processes covered by the applicable provisions of the Civil Code on Contracts is excluded. Rights of contractor’s EEs All contractor’s EEs, whether deployed or assigned ass reliever, seasonal, week-ender, temporary, or promo jobbers, shall be entitled to all the rights and privileges as provided for in the LC, as amended. DO 18-A contemplates generic or focused singular activity in one contract between the principal and the contractor (for example, janitorial, security, merchandising, specific production work) and does not contemplate information technology-enabled services involving an entire process (for example, BPO, KPO, legal process outsourcing, hardware and/or software support, medical transcription, animation services, back office operations/support). These Security of tenure of contractor’s EEs It is understood that all contractor’s EEs enjoy security of tenure regardless of whether the contract of employment PAGE 50 UP COLLEGE OF LAW LABOR LAW companies engaged in BPOs may hire employees in accordance with applicable laws, and maintain these EEs based on business requirements, which may or may not be for different clients of the BPOs at different periods of the EE’s employment. BAR OPERATIONS COMMISSION respect to this right of reimbursement that petitioners can find support in the aforecited contractual stipulation. Trilateral Relationship in contracting arrangements There are three parties involved: (1) Principal – who decides to farm out a job, work or service to a contractor; (2) Contractor – who has the capacity to independently undertake the performance of the job, work, or service; and (3) Contractual workers – engaged by the contractor to accomplish the job, work or service. [Sec. 3 D.O. 18-A-11] Applicability to the Construction Industry Licensing and the exercise of regulatory powers over the construction industry is lodged with PCAB which is under the Construction Industry Authority of the Philippines and not with the DOLE or any of its regional offices. Thus, the DOLE, through its regional offices shall not require contractors licensed by PCAB in the Construction Industry to register under DO 18-A. Moreover, findings of violation/s on labor standards and occupational health and safety standards shall be coordinated with PCAB for its appropriate action, including the possible cancellation/suspension of the contractor’s license. In legitimate contracting there exists: (1) An ER-EE relationship between the contractor and the employees it engaged to perform the specific job, work or service being contracted (2) A contractual relationship between the principal and the contractor as governed by the provisions of the CC. Effects of finding that there is labor-only contracting A finding by a competent authority of labor-only contracting shall render the principal jointly and severally liable with the contractor to the latter’s EEs, in the same manner and extent that the principal is liable to EEs directly hired by him/her. Note: In the event of any violation of any provisions of the LC (including failure to pay wages) there exists a solidary liability on the part of the principal and the contractor for purposes of enforcing the provisions of the LC and other social legislation, to the extent of the worked performed under the employment contract. [Sec. 5, D.O. 18-A-11] A finding of commission of any of the prohibited activities in Sec. 7 or violation of either Secs. 8 or 9 hereof, shall render the principal the direct ER of the EEs of the contractor or subcontractor. [Sec. 27, DO 18-A, 2011] DISMISSAL FROM EMPLOYMENT Art. 279: in case of regular employment, the employer shall not terminate the services of an employee except for (a) just cause [Art. 282] (b) authorized cause [Art. 283-284] If found to be labor-only contractor, it is equivalent to finding that there exists an employer-employee relationship between the owner of the project and the employees of the ‘labor-only’ contractor since that relationship is defined and prescribed by the law itself. [Industrial Timber Corporation vs. NLRC, 1997] SECURITY OF TENURE Definition Right not be removed from one’s job without valid cause and valid procedure. [Kiamco v. NLRC, 1999] In legitimate job contracting, no employer-employee relation exists between the principal and the job contractor's employees. The principal is responsible to the job contractor's employees only for the proper payment of wages. But in labor-only contracting, an employeremployee relation is created by law between the principal and the labor-only contractor's employees, such that the former is responsible to such employees, as if he or she had directly employed them. [PAL vs. NLRC, 1998] Nature It is a constitutionally protected right [Art. XIII Sec. 3, 1987 Constitution]; it cannot be blotted out by an employment contract. It does not give the Employee an absolute right to his position; when a transfer is not unreasonable, nor inconvenient, nor prejudicial to an employee; and it does not involve a demotion in rank or diminution of his pay, benefits, and other privileges, the employee may not complain that it amounts to constructive dismissal. [Lanzadares vs. Amethyst Security, 2003] The only time the indirect employer may be made solidarily liable with the contractor is when the contractor fails to pay his employees their wages and other benefits claimed. [Landazares vs. Amethyst Security, 2003] Coverage (1) 1987 Constitution: all workers [Art. XIII Sec. 3] (2) Labor Code: regular employees [Art. 279] in all establishments or undertakings, whether for profit or not [Art. 278], except government and its political subdivisions including government owned or controlled corporations or GOCCs [IRR Book VI Rule I Sec. 1] (3) Security of tenure extends to non regular Employees [Kiamco vs. NLRC, 1999] (4) Contract Employees – limited extent; secured during the period their respective contracts of employment remain in effect. [Labajo vs. Alejandro, 1988] (5) Probationary Employees – limited extent; additional limitations on power of Employer to terminate: (a) must be exercised in accordance with the specific requirements of the contract; Eparwa Security, Inc. vs Liceo de Cagayan University (2006): Citing Eagle Security Agency vs. NLRC--In the case at bar, it is beyond dispute that the security guards are the employees of EAGLE (contractor). That they were assigned to guard the premises of PTSI (principal) pursuant to the latter’s contract with EAGLE and that neither of these two entities paid their wage and allowance increases under the subject wage orders are also admitted. Thus, the application of the aforecited provisions of the Labor Code on joint and several liability of the principal and contractor is appropriate. The solidary liability of PTSI and EAGLE, however, does not preclude the right of reimbursement from his co-debtor by the one who paid [See Article 1217, Civil Code]. It is with PAGE 51 UP COLLEGE OF LAW (6) (7) (8) (9) LABOR LAW (b) dissatisfaction of the Employer must be real and in good faith, not feigned so as to circumvent the contract or the law; Project/seasonal Employees – limited extent; secured for the duration of the limited period of their employment Managerial Employees – may be dismissed upon loss of confidence; entitled to security of tenure [Maglutac vs. NLRC, 1990]. An employee cannot be arbitrarily dismissed at any time, and without cause as reasonably established in an appropriate investigation. [Inter Orient Maritime Enterprises, Inc. vs. NLRC, 1994] Fixed-period Employees / Term Employment: this arrangement does NOT circumvent Security of Tenure when: (a) knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure or any other circumstances vitiating his consent; OR (b) Brent Doctrine: the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter. [Brent School v. Zamora, 1990; Romares v. NLRC, 1998; Medenilla v. Phil. Veterans Bank, 2000] (c) If a contract is for a fixed term and the Employee is dismissed without just cause, he is entitled to the payment of his salaries corresponding to the unexpired portion of the employment contract. [Medenilla v. Phil. Veterans Bank, 2000] BAR OPERATIONS COMMISSION (b) in connection with the employee's work. [Lakpue Drug, Inc. vs. Belga, 2005] (2) Shows that the Employee has become unfit to continue working for the Employer. [Philippine Aeolus Automotive United Corp. vs. NLRC] Willful disobedience: Requisites: (1) The employee’s assailed conduct has been willful or intentional, the willfulness being characterized by a “wrongful and perverse attitude”; and (2) The order violated must have been: (a) Reasonable and lawful; (b) Made known to the employee; and (c) In connection to the duties which he has been engaged to discharge. [Acesite Corp. v. NLRC, G.R. No. 152308, January 26, 2005]. Gross and habitual neglect of duties Gross negligence is want of even slight care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally with a conscious indifference to consequences insofar as other persons may be affected. [Tres Reyes v. Maxim's Tea House, 2003] Habitual neglect implies repeated failure to perform one's duties for a period of time, depending upon the circumstances. [Chua v. NLRC, 2005] Requisites (1) Neglect of duty must be both gross and (2) Habitual CONFLICT WITH MANAGEMENT PREROGATIVES Management prerogatives (1) Discipline [San Miguel v. NLRC, 1980] (2) Right to dismiss or otherwise impose disciplinary sanctions upon an employee for just and valid cause, pertains in the first place to the employer, as well as the authority to determine the existence of said cause in accordance with the norms of due process. [Makati Haberdashery, Inc. v. NLRC, 1989] (3) To Demote [Petrophil vs. NLRC, 1986] (4) To Dismiss – it is a measure of self protection [Reyes vs. Ministry of Labor, 1989] Fraud or willful breach of trust [loss of trust and confidence] Requisites (AWWT) (1) Committed against the Employer or his representative; (2) willful since fraud implies wrongful intent; (3) EE concerned holds a position of trust and confidence; and [Mabeza vs. NLRC, 1997] (4) Act complained of must be work-related i.e. it must show the employee concerned to be unfit to continue working for the employer. Requisites for the validity of management prerogative affecting security of tenure (1) Exercised in good faith for the advancement of the Employer's interest, and (2) NOT for the purpose of defeating or circumventing the rights of the Employees under special laws or under valid agreements [San Miguel vs. Ople, 1989] Proof beyond reasonable doubt not necessary Uniwide Sales Warehouse Club v. NLRC (2008) (1) It is sufficient that there is some basis for such loss of confidence such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct; (2) And the nature of his participation therein renders him unworthy of the trust and confidence demanded of his position JUST CAUSES Loss of confidence: managerial/confidential vs. rank-and-file employees No written notice to employer required Serious misconduct or willful disobedience Misconduct (a) improper or wrongful conduct (b) transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. [Dept of Labor Manual, Sec. 4343.01; Hayuan Restaurant vs. NLRC, 2006] Managerial Rank-and-file Substantial evidence – reasonable ground to believe Employee’s guilt; mere existence of a basis for the belief [Etcuban vs. Sulpicio Lines, 2005] Proof of involvement in the alleged events in question required; mere uncorroborated assertions and accusations are not enough [Etcuban vs. Sulpicio Lines, 2005] Employment for a long time is counted against the Employee [Salvador v. Phil. Mining Service Corp., 2003] Requisites (1) Serious – to be serious, misconduct must be: (a) of such grave and aggravated character PAGE 52 UP COLLEGE OF LAW General rule: “trust and confidence” is restricted to MANAGERIAL Employees [Fujitsu Computer Products Corp. v. CA, 2005] LABOR LAW BAR OPERATIONS COMMISSION (d) expiry of term employment period, (e) completion of project, (f) failure in probation, etc Except: when rank-and-file position is reposed with trust and confidence [Coca-Cola vs. NLRC, 1989] e.g. care and custody of property Redundancy, retrenchment and closure Redundancy Dusit School Nikko v. NUWHRAIN (2005): (1) [redundancy] exists where the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business enterprise; (2) a reasonably redundant position is one rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product line previously manufactured by the company, or phasing out of service activity previously undertaken by the business Abandonment of employment; elements that must concur Abandonment is the deliberate and unjustified refusal of an Employee to resume his employment. [Nueva Ecija Electric Cooperative v. NLRC, 2005] Requisites: (1) Failure to report to work or absence w/o valid reason; (2) Clear intent to sever the employer-employee relationship via overt acts [Floren Hotel v. NLRC, 2005] (a) Cannot be lightly inferred, much less legally presumed from certain equivocal acts such as interim employment [Hacienda Dapdap v. NLRC, 1998] Redundancy does not refer to duplication of work. That no other person was holding the same position which the dismissed employee held prior to the termination of his services does not show that his position had not become redundant. [Escareal v. NLRC, 1992] Termination of employment pursuant to a union security clause Art. 283 and 284 are not exhaustive; other authorized causes are: (a) total and permanent disability, (b) disease incurable in 6 mos, (c) valid application of union security clause, (d) expiry of term employment period, (e) completion of project, (f) failure in probation, etc Financial loss is not a requisite. [Escareal v. NLRC, 1992] Creation of positions with functions related or similar to those of the abolished functions does not necessarily invalidate the declaration of redundancy—the old and new positions were different and the declaration was not maliciously motivated. [Santos v. CA, 2001] Employer’s good faith in implementing a redundancy program is not necessarily put in doubt by the availment of services of an independent contractor. [Asian Alcohol Corp. v. NLRC, 1999] Totality of infractions doctrine The totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring employee. The offenses committed by petitioner should not be taken singly and separately. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct and ability separate and independent of each other. While it may be true that petitioner was penalized for his previous infractions, this does not and should not mean that his employment record would be wiped clean of his infractions. After all, the record of an employee is a relevant consideration in determining the penalty that should be meted out since an employee's past misconduct and present behavior must be taken together in determining the proper imposable penalty. [Merin v. NLRC, 2008] Separation pay entitlement. — Employee is entitled to separation pay of 1 month pay or 1 month pay per year of service, whichever is higher Retrenchment Retrenchment is the termination of employment effected by management during periods of business recession, industrial depressions, seasonal fluctuations, lack of work or considerable reduction in the volume of the employer’s business. [AMA Computer College v. Ely Garcia, 2008] General standards for when retrenchment is preventive rather than curative (SINS). — (a) Losses expected are (s)ubstantial and not merely de minimis in extent; (b) Apprehended losses are reasonably (i)mminent, can be perceived objectively and in good faith; (c) Retrenchment must be reasonably (n)ecessary to prevent the expected losses—measure of last resort; and (d) Expected or actual losses must be proved by (s)ufficient and convincing evidence. [Lopez Sugar Corp. v. Federation of Free Workers, 1990] AUTHORIZED CAUSES Recognized right The law recognizes the right of every business entity to reduce its workforce if the same is made necessary by compelling economic factors which would endanger its existence or stability. The fundamental law itself guarantees, even during the process of tilting the scales of social justice towards workers and employees, “the right of enterprises to reasonable returns of investment and to expansion and growth.” [Uichico v. NLRC, 1997] Reduction of work days may be considered constructive retrenchment [International Hardware v. NLRC, 1989] Temporary retrenchment or temporary cessation or suspension of operations [Art. 286] Art. 283 and 284 are not exhaustive; other authorized causes are: (a) total and permanent disability, (b) disease incurable in 6 mos, (c) valid application of union security clause, A specific period that employees may remain temporarily laid-off or in floating status. The temporary lay-off or bona fide suspension of operations of a business or undertaking PAGE 53 UP COLLEGE OF LAW LABOR LAW wherein the employees likewise cease to work should not last longer than 6 months. After 6 months, the employees should either be recalled to work or permanently entrenched following the requirements of the law, and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal. [International Hardware v. NLRC, 1989] BAR OPERATIONS COMMISSION (5) financial hardship, or (6) seniority. [Asian Alcohol Corp. v. NLRC, 1999] Standards to be followed Table: Comparison of Retrenchment, Redundancy and Closure Retrenchment Redundancy Closure Reduction of personnel usually due to poor financial returns so as to cut down on costs of operations in terms of salaries and wages Separation pay entitlement. — Employee is entitled to separation pay of 1 month pay or 1/2 month pay per year of service, whichever is higher Closure Employer may close or cease his business operations or undertaking even if he is not suffering from serious business losses or financial reverses, as long as he pays his employees their termination pay in the amount corresponding to their length of service. [Catatista v. NLRC, 1995] The service of an Employee is in excess of what is required by an enterprise The reversal of the fortune of the employer whereby there is a complete cessation of business operations and/or actual locking-up of the doors of the establishment, usually due to financial losses Resorted to To save production Aims to prevent primarily to avoid or costs further financial minimize business drain upon the losses Employer It includes both the complete cessation of all business operations and the cessation of only part of a company’s business [Coca-Cola Bottlers, Inc. v. NLRC, 1991] Requirements. — Must de bona fide or in good faith Disease or illness Separation pay entitlement Employee is entitled to separation pay of 1 month pay or ½ month pay per year of service, whichever is higher Procedural steps required At least 1 month before the intended date of termination, Employer is to serve written notice to: (1) Affected employees; and (2) DOLE [Art. 283] Requisites (1) Employee has been found to be suffering from any disease; (2) His continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees; (3) Payment of separation pay; (4) A medical certification by a competent public health authority that the disease cannot be cured w/in 6 months even with proper medical treatment [IRR Book VI. Rule I. Sec. 8] (a) Medical certification cannot be dispensed with [Manlyl Express, Inc. v. Payong, 2005] (b) It must be issued by a competent public health authority and not the company physician [Cebu Royal Plant v. Deputy Minister of Labor, 1987] Requirements for valid retrenchment/redundancy.— Requisites: Redundancy (1) Written notice served on both the Employees and the DOLE at least 1 month prior to the intended date; (2) Payment of separation pay equivalent to one month pay or one month pay for every year of service, whichever is higher; (3) Good faith in abolishing the redundant positions; and (4) Fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. The following are usually considered in redundancy: position itself, nature of the services performed by the employee, and necessity of such position. [Edge Apparel v. NLRC, 1998] Requisites: Retrenchment (a) Necessary to prevent or minimize losses and such losses are proven; (b) There must be 1 month written notice to the DOLE and the employee; (c) Separation pay is paid; (d) Exercised in good faith – the prerogative was exercised for the advancement of the employer’s interest and not to defeat or circumvent the employee’s right to security of tenure; and (e) Fair and reasonable criteria in ascertaining who will be affected Just Causes Requisites Serious Misconduct Serious (a) Grave and aggravated character, (b) In connection with work; and Shows that Employee is unfit to work for Employer. Willful Disobedience Criteria in selecting employees for dismissal. — Fair and reasonable criteria in ascertaining who will be affected: (1) preferred status [e.g. temporary, casual or regular Employees], (2) efficiency (3) physical fitness, (4) age, Willful conduct – wrongful and perverse attitude; and Order violated must be: (a) Reasonable, (b) Lawful, (c) Sufficiently known to Employee, (d) In connection to the duties. Gross and Habitual Neglect must be both gross and Neglect habitual. Fraud or Willful Breach of Trust PAGE 54 Loss of Confidence (a) Committed against the Employer or his representative [direct]; UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION (b) willful since fraud implies wrongful intent; (c) EE concerned holds a position of trust and confidence [Mabeza vs. NLRC, 1997]; (d) Act complained of must be workrelated. ascertaining who will be affected (a) preferred status (e.g. temporary, casual or regular Employees) (b) efficiency, (c) physical fitness, (d) age, (e) financial hardship, or (f) seniority. [Asian Alcohol Corp. v. NLRC, 1999] Additional Guidelines (a) NOT simulated; (b) NOT used as a subterfuge; (c) NOT arbitrarily asserted; and (d) genuine, NOT a mere afterthought [Vitarich v. NLRC, 1999; Coca-Cola Bottlers, Phils., Inc. v. Kapisanan ng Malayang Manggagawa sa CocaCola, 2005] Commission of a crime or offense against Employer Crime against the (a) Employer, (b) Immediate member of employer’s family, or (c) Employer’s duly authorized representative; and Conviction or prosecution NOT required. Analogous causes Due to a voluntary and/or willful act or omission by Employee [Nadura vs. Benguet Consolidated, 1962] Authorized Causes Closure or Cessation of Operations (a) Must be done in good faith [bona fide] (b) 1 month written notice to DOLE and Employee (c) Separation pay equivalent to one month pay or 1/2 month pay for every year of service, whichever is higher. Disease (a) Employee is suffering from any disease; (b) His continued employment is prohibited by law or is prejudicial to his health as well as as to the health of his co-employees. [Art. 284] (c) Separation pay equivalent to at least one month pay or at least 1/2 month pay for every year of service, whichever is higher; and (d) Medical certification by a competent public health authority that the disease cannot be cured within 6 mos even with proper medical treatment. [IRR Book VI Rule I Sec. 8] Requisites Installation of Labor Saving Devices (a) 1 month written notice to DOLE and Employee (b) separation pay equivalent to one month pay or one month pay for every year of service, whichever is higher Redundancy (a) 1 month written notice to DOLE and Employee (b) separation pay equivalent to one month pay or one month pay for every year of service, whichever is higher; (c) Good faith in abolishing the redundant positions; and (d) Fair and reasonable criteria in choosing those affected [Asian Alcohol Corp. v. NLRC, 1999], such as but not limited to: (e) preferred status [e.g. temporary, (f) casual or regular Employees]efficiency, or (g) seniority. [Panlilio v. NLRC, 1997; Golden Thread Knitting Industries, Inc. v. NLRC, 1999] Retrenchment General Standards: (SINS – for when retrenchment is preventive rather than curative (a) Losses expected are substantial and not merely de minimis in extent; (b) Apprehended losses are reasonably imminent; (c) Retrenchment must be reasonably necessary to prevent the expected losses; and (d) Expected or actual losses must be proved by sufficient and convincing evidence. [Lopez Sugar Corp. vs. Federation of Free Workers, 1990] DUE PROCESS Substantive Due Process Dismissal for any of the just or authorized causes under Arts. 282 – 284 Right to counsel A very basic requirement of substantive due process; it has to be observed. Indeed, the rights to counsel and to due process of law are two of the fundamental rights guaranteed by the 1987 Constitution to any person under investigation, be the proceeding administrative, civil, or criminal. [Salaw v. NLRC, 1991] Basic Requisites: (NNSGF) (1) Necessary to prevent or minimize losses and such losses are proven (2) 1 month written notice to DOLE and the Employees (3) Separation pay equivalent to at least one month pay or at least 1/2 month pay for every year of service, whichever is higher; (4) Exercise is in good faith; and (5) Fair and reasonable criteria in Procedural Due Process Employee must be given notice with adequate opportunity to be heard before he/she is notified of his/her actual dismissal for Cause. [Fujitsu v. CA, 2005] PAGE 55 UP COLLEGE OF LAW LABOR LAW ER may NOT substitute the required prior notice & opportunity to be heard with the mere payment of 30 days' salary. [PNB v. Cabanag, 2005] Summary proceeding may be conducted; written explanations, affidavits, position papers or other pleadings may be used as well; what is essential is the ample opportunity to be heard. [Homeowners Savings and Loan Assoc. Inc. vs. NLRC, 1996] Twin-notice requirement First notice – notice specifying the grounds for which dismissal is sought No formal hearing necessary when the Employee already admitted his responsibility for the act he was accused of. [Magos v. NLRC, 1998] Second notice – notice of the decision to dismiss Procedure to be observed in termination cases. — Basis for termination Requirements Just cause – Art. 282 (1) Notice specifying the grounds for which dismissal is sought (2) Hearing or opportunity to be heard (3) Notice of the decision to dismiss [Art. 277(b)] Authorized Cause – Arts. 283 & 284 Notice to: (1) Employee, and (2) DOLE at least 1 month prior to the effectivity of the separation In the leading case of Perez v. Philippine Telegraph and Telephone Co., G.R. No. 152048, April 7, 2009, the Supreme Court, in an en banc decision, held that relative to the hearing requirement in termination cases, a formal hearing or conference becomes mandatory only in the following instances: (1) when requested by the employee in writing; (2) when substantial evidentiary disputes exist; or (3) when a company rule or practice requires it. Coming now to the period of time within which the employee should submit his reply to the show-cause memo, King of Kings Transport v. Mamac, 526 SCRA 116 (2007), tells us that an employee under investigation for a violation of company rules is entitled to a “reasonable time” so that he can “prepare adequately for his defense.” Under King of Kings, “reasonable opportunity” has been construed to mean “at least five (5) calendar days from receipt of the notice to give the (employee) an opportunity to study the accusation against him, consult a union official or lawyer, gather data and evidence, and decide on the defenses he will raise against the complainant.” Requisites (a) Notice not needed when Employee consented to the retrenchment or voluntarily applied for one. [International Hardware Inc. vs. NLRC, 1989] (b) Notice must be individual, not collective. [Shoppers Gain Supermart vs. NLRC, 1996]; (c) Voluntary arbitration satisfies notice requirement for authorized causes [Revidad vs. NLRC, 1995] Consequences for non-compliance. — Situation Effect What the law requires, as held in De Leon v. NLRC, cited by petitioners, is for the employer to inform the employee of the specific charges against him and to hear his side or defenses. This does not however mean a full adversarial proceeding. Litigants may be heard thru: (1) pleadings, written explanations, position papers, memorandum; (2) oral argument. In both instances, the employer plays an active role — he must provide the employee the opportunity to present his side and answer the charges, in substantial compliance with due process. Actual adversarial proceeding becomes necessary only for clarification or when there is a need to propound searching questions to unclear witnesses. This is a procedural right which the employee must, however, ask for it is not an inherent right, and summary proceedings may be conducted. This is to correct the common but mistaken perception that procedural due process entails lengthy oral arguments. Hearing in administrative proceedings and before quasi-judicial agencies are neither oratorical contests nor debating skirmishes where cross examination skills are displayed. Non-verbal devices such as written explanations, affidavits, position papers or other pleadings can establish just as clearly and concisely aggrieved parties' predicament or defense. What is essential is ample opportunity to be heard, meaning, every kind of assistance that management must accord the employee to prepare adequately for his defense. [as cited in Manggagawa ng Komunikasyon sa Pilipinas v. NLRC, 1992] Liability of ER Just or Authorized Dismissal valid Cause + Due Process No liability * separation pay if for authorized cause No Just or Dismissal invalid Authorized Cause + Due Process Reinstatement + Full Backwages * if reinstatement NOT possible = separation pay No Just or Dismissal invalid Authorized Cause + No Due Process Reinstatement + Full Backwages * if reinstatement NOT possible = separation pay Just or Authorized Dismissal valid Cause + No Due Process Liable for damages due to non-compliance with procedural req'ts *separation pay if for authorized cause BAR OPERATIONS COMMISSION Hearing; meaning of opportunity to be heard A formal or trial type hearing is not at all times and in all instances essential to due process; it is enough to that the parties are afforded fair and reasonable opportunity to explain their side of the controversy. [Mendoza vs. NLRC, 1991] Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an employee must be given "ample opportunity to be heard and to defend himself." Thus, the opportunity to be heard afforded by law to the employee is qualified by the word "ample" which ordinarily means "considerably more than adequate or PAGE 56 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION 21 sufficient." In this regard, the phrase "ample opportunity to be heard" can be reasonably interpreted as extensive enough to cover actual hearing or conference. [Perez v. Philippine Telegraph and telephone Company, 2009] General Rule: reinstatement is a matter of right to an illegally dismissed Employee. Burden of Proof. — Upon the employer. Employer must comply with due process requirements before any termination is done. [Gothong Lines, Inc. v. NLRC, 1999] (a) Unsubstantiated suspicions and baseless conclusions by employers are not legal justification for dismissing employees. [Maranaw Hotel and Resort Corp. v. NLRC, 1999] Exceptions: (a) Closure of business [Retuya vs. Dumarpa, 2003] (b) Economic business conditions: The reinstatement remedy must always be adapted to economic-business conditions. [Union of Supervisors, etc. v. Sec. of Labor, 1984] (c) EE’s unsuitability [Divine World High School vs. NLRC, 1986] (d) EE’s Retirement/Coverage [Espejo vs. NLRC, 1996] Degree of Proof. — Substantial evidence; proof beyond reasonable doubt not required. [Manila Electric Co., Inc. v. NLRC, 1991] Agabon doctrine. — Prior to 1989 Prescription Period An action for reinstatement by reason of illegal dismissal is one based on an injury which may be brought within 4 years from the time of dismissal. [Art. 1146 of the Civil Code] Reinstatement pending appeal Art. 223 is clear that an award for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. Illegal dismissal Wenphil Corp. v. NLRC, Dismissal is valid (NO 1989 reinstatement and backwages) - Belated Due Process Rule BUT Employer to indemnify Employee for damages Serrano v. NLRC, 2000 Reinstatement ordered by Labor Arbiter is self-executory; reinstatement ordered by NLRC is not and, though immediately executory, still requires writ of execution. [Panuncillo vs. CAP Phil. Inc., 2007] Dismissal is valid. EE is entitled to the payment of full backwages - Computed from the time of dismissal until the Court finds the dismissal to be for just cause. Separation pay in lieu of Reinstatement Strained Relation rule If reinstatement is not feasible, expedient, or practical, as where there is strained relations between the parties, particularly where the illegally dismissed employee held a managerial or key position [Quijano v. Mercury Drug Corp. 1998] Current rule: Agabon v. Dismissal is valid (NO NLRC, 2004 reinstatement and backwages) BUT Employer to indemnify Employee in the form of nominal damages (a) indemnity stiffer than Wenphil Corp. vs. NLRC to discourage the practice of “dismiss now, pay later”. Quijano v. Mercury Drug Corp. (1998) (a) Where reinstatement is not feasible, expedient or practical, (b) As where reinstatement would only exacerbate the tension and strained relations between the parties (c) Or where the relationship between the employer and employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company (d) It would be more prudent to order payment of separation pay instead of reinstatement RELIEFS FOR ILLEGAL DISMISSAL A finding of illegal dismissal entitles the Employee to: (1) reinstatement without loss of seniority rights and privileges, and (2) full backwages inclusive of allowances and to benefits or their monetary equivalent from the time withheld up to actual reinstatement [Art. 279] REINSTATEMENT Kinds (1) SP as a statutory requirement for authorized causes (2) SP as financial assistance found in the next section (3) SP in lieu of reinstatement where reinstatement is not feasible; and (4) SP as a benefit in the CBA or company policy It is the restoration of an employee who was unjustly dismissed to the position from which he was removed, that is, to his status quo ante dismissal [Santos vs. NLRC, 1987] Note: An offer by Employer to re-employ the Employee did not cure the vice of earlier arbitrary dismissal. [Ranara v. NLRC, 1992] Computation SP as a statutory requirement is computed by integrating the basic salary with regular allowances employee has been receiving [Planters Products Inc. v. NLRC, 1989]; allowances include transportation and emergency living allowances [Santos v. NLRC, 1987] An order for reinstatement must be specifically declared and cannot be presumed; like back wages, it is a separate and distinct relief given to an illegally dismissed employee. [Gold City Integrated Port Service, Inc. v. NLRC, 1995] Alternative In lieu of reinstatement, Employee is entitled to separation pay of 1 month pay per year of service. [Gaco vs. NLRC, 1994] Commissions may not be included since they must be earned by actual market transactions by employee [Soriano v. NLRC, 1989] PAGE 57 UP COLLEGE OF LAW LABOR LAW A dismissed employee who has accepted separation pay is not necessarily estopped from challenging the validity of his or her dismissal. Neither does it relieve the employer of legal obligations. [Anino v. NLRC, 1998] BAR OPERATIONS COMMISSION had served the employer company for 21 years, it was her first offense, and her leave to study the French language would ultimately benefit the employer who no longer had to spend for translation services. The Court awarded the said employee backwages limited to a period of two years, given that the employer acted without malice or bad faith in terminating the employee’s services. BACKWAGES Definition (1) According to St. Theresa’s School of Novaliches Foundation v. NLRC (1998): earnings lost by a worker due to his illegal dismissal; a form of relief that restores the income lost by reason of such unlawful dismissal; (2) it is not private compensation or damages; nor is it a redress of a private right; (3) but, rather, in the nature of a command to the employer to make a public reparation for illegally dismissing an employee. (2) Delay of the EE in filing the case for illegal dismissal Mercury Drug Co., Inc. v. CIR (1974) The employee filed his ULP charge with reinstatement and back wages about two years and fifteen days after his separation on April 10, 1961. The shortest prescriptive period for the filing of all other actions for which the statute of limitations does not fix a period, is four years. The period of delay in instituting this ULP charge with claim for reinstatement and back wages, although within the prescriptive period, should be deducted from the liability of the employer to him for back wages. In order that the employee however should be relieved from proving his income during the period he was out of the service and the employer from submitting counter-proofs, which may delay the execution of the decision, the employer was directed to the employee back wages equivalent to one year, eleven months, and fifteen days without further disqualifications. Effect of failure to order backwages A “plain error” which may be rectified, even if employee did not bring an appeal regarding the matter [Aurora Land v. NLRC, 1997] Computation (1) Without deduction for their earnings elsewhere during the layoff [Bustamante v. NLRC, 1996] (2) Awards including salary differentials are not allowed [Insular Life Assurance Co. v. NLRC, 1987] (3) The salary base properly used should be the basic salary rate at the time of dismissal plus the regular allowances; allowances include: (a) Emergency cost of living allowances (ECOLA), th transportation allowances, 13 month pay [Paramount Vinyl Product Corp. v. NLRC, 1990] (b) Also included are vacation leaves, service incentive leaves, and sick leaves (4) The effects of extraordinary inflation are not to be applied without an official declaration thereof by competent authorities [Lantion v. NLRC, 1990] Rationale Feati University Club vs. Feati University (1974) adopted a consensus policy of pegging the amount of backwages to their total equivalent for three years (depending on the circumstances) without deduction or qualification. The rationale for the policy was stated in the following words: As has been noted, this formula of awarding reasonable net backwages without deduction or qualification relieves the employees from proving or disproving their earnings during their lay-off and the employers from submitting counterproofs, and obviates the twin evils of Idleness on the part of the employee who would "with folded arms, remain inactive in the expectation that a windfall would come to him" [Itogon Suyoc Mines, Inc. vs. Sangilo-Itogon Workers Union (1968), as cited in Diwa ng Pagkakaisa vs. Filtex International Corp. (1972)] and attrition and protracted delay in satisfying such award on the part of unscrupulous employers who have seized upon the further proceedings to determine the actual earnings of the wrongfully dismissed or laid-off employees to hold unduly extended hearings for each and every employee awarded backwages and thereby render practically nugatory such award and compel the employees to agree to unconscionable settlements of their backwages award in order to satisfy their dire need. [See La Campana Food Products, Inc. vs. CIR, (1969) and Kaisahan ng Mga Manggagawa vs. La Campana Food Products, Inc., (1970)]. Limited backwages General rule: An illegally dismissed employee is entitled to full backwages. Exceptions (1) The Court awarded limited backwages where the employee was illegally dismissed but the employer was found to be in good faith. Jurisprudence San Miguel Corporation v. Javate, Jr. (1992) The Court affirmed the consistent findings and conclusions of the Labor Arbiter, (NLRC), and CA that the employee was illegally dismissed since he was still fit to resume his work; but the employer’s liability was mitigated by its evident good faith in terminating the employee’s services based on the terms of its Health, Welfare and Retirement Plan. Hence, the employee was ordered reinstated to his former position without loss of seniority and other privileges appertaining to him prior to his dismissal, but the award of backwages was limited to only one year considering the mitigating circumstance of good faith attributed to the employer. PREVENTIVE SUSPENSION DEFINITION It is a disciplinary measure for the protection of the company's property pending investigation of any alleged malfeasance or misfeasance committed by the employee. The employer may place the worker concerned under preventive suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or of his co-workers. [PAL v. NLRC, 1998] Dolores v. NLRC (1992) The employee was terminated for her continuous absence without permission. Although the Court found that the employee was indeed guilty of breach of trust and violation of company rules, it still declared the employee’s dismissal illegal as it was too severe a penalty considering that she PAGE 58 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION As held in PNB v. Velasco, 564 SCRA 512 (2008), the employer has the right to preventively suspend an employee during the pendency of the administrative case against the latter as a measure of self-protection. In PAL v. NLRC, 292 SCRA 40 (1998), the Court explained that preventive suspension, by itself, does not signify that the employer has already adjudged the employee guilty of the charges for which he was asked to answer and explain. Such disciplinary measure is resorted to for the protection of the company’s property or the life of the employer or of the co-employees pending investigation of any alleged malfeasance or misfeasance committed by the employee. the employees must always be fair and reasonable and the corresponding penalties, when prescribed, commensurate to the offense involved and to the degree of the infraction. [Consolidated Food Corporation vs. NRLC, 1999] [St. Michael’s Institute vs. Santos, 2001] Preventive suspension is limited to 30 days; any more than that amounts to constructive dismissal. [Pido vs. NLRC, 2007] TRANSFER OF EMPLOYEES Westin Phil. Plaza Hotel v. NLRC (1999): (1) An Employee’s right to security of tenure does not give him such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he will be most useful. (2) The Employer has the right to transfer or assign Employees from one area of operation to another, or one office to another or in pursuit of its legitimate business interest, (3) provided there is no demotion in rank or diminution of salary, benefits and other privileges and not motivated by discrimination or made in bad faith, or effected as a form of punishment or demotion without sufficient cause. Right to dismiss or otherwise impose disciplinary sanctions upon an employee for just and valid cause, pertains in the first place to the employer, as well as the authority to determine the existence of said cause in accordance with the norms of due process. [Makati Haberdashery, Inc. v. NLRC, 1989] In Valenzuela v. Caltex Phil., Inc., G.R. No. 169965-66, August 15, 2010, it was held that after 30 days of preventive suspension, the employer shall reinstate the worker in his former position or substantially equivalent position. The employer may also extend the period of suspension provided that during the said period, he shall pay the wages and other benefits due to the worker. CONSTRUCTIVE DISMISSAL The following constitute constructive dismissal: (1) Bona fide suspension of the operation of a business or undertaking exceeding 6 months [Valdez v. NLRC, 1998] (2) Floating status of more than 6 months [Agro Commercial Security Services v. NLRC, 1989] Bisig ng Manggagawa sa TRYCO v. NLRC (2008) This prerogrative extends to the management’s right to regulate, according to its own discretion and judgment, all aspects of employment, including the freedom to transfer and reassign employees from one are to another in order to meet the requirements of the business is, therefore, not general constitutive of constructive dismissal. Thus, the consequent transfer of Tryco’s personnel, assigned to the Production Department was well within the scope of its management prerogative. An involuntary resignation is resorted to 1) when continued employment is rendered impossible, unreasonable, or unlikely; 2) when there is a demotion in rank and/or a diminution in pay; 3) or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. [Phil. Wireless, Inc. v. NLRC, 1998] If an employee was forced to remain without work or assignment for a period exceeding 6 months, then he is in effect constructively dismissed [Valdez v. NLRC, 1998] When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demonition in rank or diminution of salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal. Management Prerogative PRODUCTIVITY STANDARD The employer has the right to demote and transfer an employee who has failed to observe proper diligence in his work and incurred habitual tardiness and absences and indolence in his assigned work. [Petrophil Corporation vs. NLRC, 1986] This Court held that the employer’s right to conduct the affairs of his business, according to its own discretion and judgment, is well-recognized. An employer has a free reign and enjoys wide latitude of discretion to regulate all aspects of employment. This is a management prerogative, where the free will of management to conduct its own affairs to achieve its purpose takes form. [Torreda vs. Toshiba, 2007] In the consolidated cases of Leonardo vs. NLRC [G. R. No. 125303, June 16, 2000] and Fuerte vs. Aquino [G. R. No. 126937, June 16, 2000], the employer claimed that the employee was demoted pursuant to a company policy intended to foster competition among its employees. Under this scheme, its employees are required to comply with a monthly sales quota. Should a supervisor such as the employee fail to meet his quota for several consecutive months, he will be demoted, whereupon his supervisor’s allowance will be withdrawn and be given to the individual who takes his place. When the employee concerned succeeds in meeting the quota again, he is re-appointed supervisor and his allowance is restored. The Supreme Court held that this arrangement is an allowable exercise of company rights since an employer is entitled to impose DISCIPLINE The employer’s right to conduct the affairs of his business, according to its own discretion and judgment, includes the prerogative to instill discipline in its employees and to impose penalties, including dismissal, upon erring employees. This is a management prerogative where the free will of management to conduct its own affairs to achieve its purpose takes form. The only criterion to guide the exercise of its management prerogative is that the policies, rules and regulations on work-related activities of PAGE 59 56 UP COLLEGE OF LAW LABOR LAW productivity standards for its workers. In fact, noncompliance may be visited with a penalty even more severe than demotion. BAR OPERATIONS COMMISSION In Tiu v. Platinum Plan Phils., Inc., 517 SCRA 101 (2007), the Supreme Court decided a case involving a restrictive covenant contained in an employment agreement prohibiting the employee from working for a competitor to protect its interest. The Court ruled in favor of the employer, saying that the non-compete or noninvolvement clause has a time limit: two years from the time the employee’s employment with the company ended. The restriction was also limited since it only prohibits the employee from engaging in any pre-need business akin to the employer’s. GRANT OF BONUS A bonus is "a gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right" [Aragon vs. Cebu Portland Cement Co., 61 O.G. 4597]. "It is something given in addition to what is ordinarily received by or strictly due the recipient." The granting of a bonus is basically a management prerogative which cannot be forced upon the employer "who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee's basic salaries or wages" … [Kamaya Point Hotel vs. National Labor Relations Commission, Federation of Free Workers and Nemia Quiambao, G.R. No. 75289, August 31, 1989]. [Traders Royal Bank vs. NLRC, 1990] Social and Welfare Legislation [PD 626] With regard to the private respondents’ claim for the midyear bonus, it is settled doctrine that a grant of a bonus is a prerogative, not an obligation of the employer. The matter of giving a bonus over and above the worker’s lawful salaries and allowances is entirely dependent on the financial capability of the employer to give it. [KimberlyClark Philippines, Inc. vs. Dimayuga, 2009] SSS LAW [RA 8282] COVERAGE Compulsory (1) Employers as defined above; (2) Employees not over 60 years including domestic helpers with at least P1,000 monthly pay; and (3) Self-employed as may be determined by the Commission, but not limited to: (a) Self-employed professionals (b) Partners and single proprietors of businesses (c) Actors and actresses, directors, scriptwriters, and news correspondents who do not fall within the definition of the term “employee” under Section 8 (d) (d) Professional athletes, coaches, trainers and jockeys (e) Individual farmers and fishermen CHANGE OF WORKING HOURS Further, management retains the prerogative, whenever exigencies of the service so require, to change the working hours of its employees. So long as such prerogative is exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold such exercise. [Sime Darby Pilipinas Inc. v. NLRC, 1998] Voluntary (1) Spouses who devote full time to managing household and family affairs, unless they are also engaged in other vocation or employment (which is subject of compulsory coverage); (2) OFWs recruited by foreign-based employers; (3) Employees (previously under compulsory coverage) already separated from employment or those selfemployed (also under compulsory coverage) with no realized income for a given month, who chose to continue with contributions to maintain right to full benefit. RULES ON MARRIAGE BETWEEN EMPLOYEES OF COMPETITOR-EMPLOYERS In the recent case of Duncan Association of DetailmanPTGWO and Pedro Tecson v. Glaxo Wellcome Philippines, Inc., we passed on the validity of the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company. We held that Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors. We considered the prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s employees reasonable under the circumstances because relationships of that nature might compromise the interests of Glaxo. In laying down the assailed company policy, we recognized that Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. [Star Paper Corp. vs. Simbol, 2006] Note: Foreign governments, international organizations or their wholly owned instrumentality employing workers in the Philippines may enter into an agreement with the Philippine government to include their employees in the SSS except those already covered by their civil service retirement system. EXCLUSIONS FROM COVERAGE (1) Employment purely casual and not for the purpose of occupation or business of the employer; (2) Service performed on or in connection with an alien vessel by an employee if he is employed when such vessel is outside the Philippines; (3) Service performed in the employ of the Philippine Government or instrumentality or agency thereof; (4) Service performed in the employ of a foreign government or international organization, or their wholly-owned instrumentalities; and (5) Services performed by temporary and other employees which may be excluded by SSS regulation. Employees POST-EMPLOYMENT BAN In cases where an employee assails a contract containing a provision prohibiting him or her from accepting competitive employment as against public policy, the employer has to adduce evidence to prove that the restriction is reasonable and not greater than necessary to protect the employer’s legitimate business interests. The restraint may not be unduly harsh or oppressive in curtailing the employee’s legitimate efforts to earn a livelihood and must be reasonable in light of sound public policy. [Rivera v Solidbank, 2006] PAGE 60 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION then 25/75 + 50/75 = 100% so treated as if it were permanent total disability.) of bona fide independent contractors shall not be deemed employees of the employer engaging the services of said contractors. Death benefits Eligibility requirement: 36 monthly contributions prior to the semester of death. BENEFITS Monthly pension Computation of monthly pension: the monthly pension shall be the highest of the following amounts: (1) P300 + [20% x (ave. monthly credit)] + [2% x (ave. monthy credit) x (# of cash credited years of service in excess of 10 years)]; or (2) 40% x [ave. monthly credit]; or (3) P1,000; provided, that the monthly pension shall in no case be paid for an aggregate amount of less than 60 months. (4) Notwithstanding the abovementioned, minimum pension is P1,200 for members with at least 10 years credit service, P2,400 for those with 20 years. Benefit – monthly pension to primary or secondary beneficiaries. To those ineligible – lump sum benefit which shall be the higher between the two: (a) (monthly pension) x 12; or (b) (monthly pension) x (# of monthly contributions) Funeral benefits P12,000 in cash or in kind, upon death of member Loan. — Social Security Commission Resolution No. 669. Moreover, several SSS-issued circulars such as Circular No. 21-P and No. 52 pertain to the treatment of salary loans, sometimes providing for more flexible payment terms or condonation for delinquent payers; Santiago v. CA and SSS, GR # L-39949 (1984) resolved an issue involving the treatment of salary loan repayments; SSS website also shows loans Dependents’ pension (a) Paid when member dies, retires or with permanent total disability; (b) Paid to each child conceived on or prior to contingency, but not exceeding 5, beginning with the youngest and preferring the legitimate; (c) Amount is either P250 or 10% of the monthly pension as computed above, whichever is higher. Sickness benefits Eligibility requirements and other conditions (1) Inability to work due to sickness or injury (2) Confined for at least 4 days either in a hospital or elsewhere with SSS approval; (3) At least 3 months of contributions in the 12 month period immediately before the semester of sickness or injury has been paid; (4) All company sick leaves with pay for the current year has been used up; (5) Maximum of 120 days per 1 calendar year [so maximum permissible for the same sickness and confinement is 240 days for 2 consecutive years]; (6) The employer has been notified, or, if a separated, voluntary or self-employed member, the SSS directly notified within 5 days of confinement; (7) Notice to employer or SSS not needed when confinement is in a hospital; notice to employer not required as well when Employee became sick or injured while working or within premises of the employer. Retirement benefits Eligibility requirements (1) 120 monthly contributions; (2) Age (a) 65 years old; or (b) a member who has reached 60 years may also avail if he is already separated from employ-ment or has ceased to be self-employed. Benefit – entitlement to monthly pension from retirement until death. Lump Sum Alternative Member may opt to receive his first 18 monthly pensions in lump sum but such is discounted at a preferential rate of interest. To those ineligible – to the 60 year old with less than 120 monthly contributions who is no longer employed or selfemployed, and who is not continuing contributions independently, he is entitled to a lump sum equal to his total contributions paid. Benefit: daily cash allowance paid for the number of days a member is unable to work due to sickness or injury equivalent to 90% x (average daily salary credit) Permanent disability benefits (a) Eligibility requirement: 36 monthly contributions prior to the semester of disability; same as death benefit; only difference is that the pension is paid directly to the member. (b) In case the permanently disabled member dies, it would be given the same treatment as a retiree dying. (c) For permanent partial disability, the pension is not lifetime. (e.g. loss of thumb entitles member to only 10 months of pension, while loss of arm 50 months). (1) It shall be paid in lump sum if the period is less than 12 months. (2) For multiple partial disabilities, they shall be additive when related or deteriorating – the percentage shall be equal to the number of months the partial disability is entitled to divided by 75 months. (e.g. loss of sight in one eye  25/75; loss of arm  50/75; if both occur due to same cause, Maternity leave benefits. — deliveries or miscarriage) (limited only to first four Note: All of these benefits are tax-exempt. BENEFICIARIES Primary (a) Dependent spouse – until remarriage (see above); (b) Dependent children (legitimate, legitimated, legally adopted, and illegitimate) (see above); illegitimate children are entitled only to 50% of the share of legitimate children unless there are no legitimate children, in which case, they get 100%. Secondary – shall only receive when the primary beneficiaries are absent (a) Dependent parents PAGE 61 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION (4) Brain injury resulting in incurable imbecility, insanity, or other irreversible conditions Others – shall only receive when the primary and secondary beneficiaries are absent (a) Any other person designated by member as his/her secondary beneficiary. Benefit for Permanent Total Disability Monthly income benefit for life equal to basic monthly pension – This is effective from date of disability; (1) If member is in service at the time of disability and he has paid at least 180 monthly contributions, in addition to the monthly income benefit, he shall receive an additional cash payment of 18 times basic monthly pension. GSIS [RA 8291] COVERAGE All public sector employees below the compulsory retirement age of 65, irrespective of employment status. EXCLUSIONS FROM COVERAGE (a) AFP and PNP; (b) Members of the Judiciary and Constitutional Commissions who are covered only by life insurance as they have separate retirement schemes; (c) Contractual employees with no employer-employee relationship with the agency they serve. To the ineligible If member has rendered at least 3 years of service, then he shall receive cash payment equal to 100% of ave. monthly compensation for each year of service (essentially total amount of contributions made) or P12,000 whichever is higher. BENEFITS Partial Disability Injuries deemed as Permanent Partial Disability Complete and permanent loss of the use of: any one finger, any toe, one arm, one hand, one foot, one leg, one or both ears, sight of one eye or such other cases as may be determined by the GSIS Monthly pension The amount shall be: (a) 37.5% x (revalued ave. monthly compensation) (b) Plus 2.5 x (revalued ave. monthly compensation) x [years in service in excess of 15 years]. Computation of benefits (1) If member is in the service, benefit is: (1) The monthly pension shall not exceed 90% of the average monthly compensation. (2) It shall not be less than P2,400 for those with 20 years of service and not less than P1,300 for everyone else. Cash payment (CP) = Basic Monthly Pension (BMP) X nos. of Permanent Partial Disability (PPD) months as recommended by the GSIS medical evaluator Retirement benefits Eligibility requirements (1) 15 years service; (2) 60 years of age; and (3) Not receiving pension benefit from permanent total disability. (2) If the member is separated from the service but has paid 36 monthly contributions within the last 5 years immediately preceding the disability or has paid at least 180 monthly contributions, benefit is: CP = BMP X nos. of PPD months as recommended by the GSIS medical evaluator Note: Retirement is compulsory for employees 65 years of age who have rendered at least 15 years of service; if employee has less than 15 years of service, he may be allowed to continue in accordance with civil service laws. Death Benefits When member dies, the primary beneficiaries are entitled to only one of the following: (a) Survivorship pension (check G.1 above) (1) If he was in the service when he died; or (2) Even if separated from the service, he has at least 3 years of service and has paid 36 monthly contributions within the 5 years immediately preceding death; or (3) Even if separated from the service, he has paid 180 monthly contributions prior to death. (b) Survivorship pension plus cash payment of 100% ave. monthly compensation for every year of service [so essentially, pension plus total contributions made] (1) If he was in the service when he died; and (2) With 3 years of service. (c) Cash payment equivalent to 100% ave. monthly compensation for each year of service he paid contributions or P12,000 whichever is higher (1) With 3 years of service; and (2) He has failed to qualify in the prior 2 schemes. Benefit: choice between (a) 60 x [basic monthly pension] lump sum payment at the time of retirement plus basic monthly pension payable monthly for life after expiry of the 5-year guaranteed period which is already covered by the lump sum; or (b) Cash payment equivalent to 18 x [basic monthly pension] plus monthly pension for life immediately but with no 5-year guarantee Permanent disability benefits Eligibility requirements for Permanent Total Disability (1) Disability not due to employee’s own grave misconduct, notorious negligence, habitual intoxication, or willful intention to kill himself or another; (2) Employee is: in service at the time of disability; or b] even if separated, he has paid at least 36 monthly contributions within the 5-year period immediately prior to disability or has paid a total of at least 180 monthly contributions prior to disability; and (3) Member is not enjoying old-age retirement benefit. Funeral benefits Fixed by GSIS rules and regulations (currently at P20,000) Injuries deemed as Permanent Total Disability (1) Complete loss of sight of both eyes (2) Loss of two limbs at one or above the anke or wrist (3) Permanent complete paralysis of two limbs Entitled to this are the following: (1) Active member; PAGE 62 UP COLLEGE OF LAW LABOR LAW (2) Member separated from service but still entitled to funeral benefit; (3) Pensioner; (4) Retiree who at the time of retirement was of pensionable age but opted to retire under RA 1616. BAR OPERATIONS COMMISSION BENEFICIARIES Primary (a) Dependent spouse – until remarriage; (b) Dependent children (legitimate, legitimated, legally adopted, and illegitimate) – but RA 8291 does not distinguish share of legitimate and illegitimate children. Loan – GSIS website provides for this Secondary – shall only receive when the primary beneficiaries are absent (a) Dependent parents (b) Legitimate descendants, subject to the restrictions on dependent children. Temporary disability benefits (similar to sickness) Eligibility requirements and other conditions: (5) Employee must be (a) in service at the time of disability; or (b) if separated, he has rendered at least 3 years of service and paid at least 6 monthly contributions in the 12 month period immediately prior to disability; (6) All sick leave credits including CBA sick leaves for the current year has been used up; and (7) Maximum of 120 days per 1 calendar year (so maximum permissible for the same sickness and confinement is 240 days for 2 consecutive years). [See Annex B for Comparison between the SSS law and the GSIS Law] LIMITED PORTABILITY LAW [RA 7699] COVERAGE (1) Workers who transfer employment from one sector to another; or (2) Those employed in both sectors (public and private). Benefit 75% of the current daily compensation for every day or fraction thereof of disability or P70 whichever is higher. PROCESS The covered worker shall have his credible services or contributions in both Systems credited to his service or contribution record in each of the Systems and shall be totalized for purposes of old-age, disability, survivorship and other benefits in case the covered member does not qualify for such benefits in either or both systems without totalization: Provided, however, That overlapping periods of membership shall be credited only once for purposes of totalization [Sec. 3] Separation benefits Eligibility requirements (1) 60 years of age, or separation from service with at least 3 years but not over 15 years served (2) Below 60 years of age, but at least 15 years of service rendered. Benefit (1) For 60 years of age or separated from service with 3 to 15 years of service: cash payment of 100% of ave. monthly compensation for each year of service (so essentially, the total amount of all contributions paid) or P12,000 whichever is higher. (2) Below 60 years of age and at least 15 years of service: cash payment equivalent to 18 x (monthly pension) at the time of resignation or separation plus an old-age pension benefit equal to basic monthly pension. “Totalization” shall refer to the process of adding up the periods of creditable services or contributions under each of the Systems, for purposes of eligibility and computation of benefits [Sec. 2e]. Note: Overlapping periods of membership in case of those employed in both sectors at once are to be counted only ONCE for purposes of totalization. Unemployment benefits – Sec 11 WHY? To be able to satisfy eligibility requirements of benefits provided for by either SSS or GSIS. Eligibility requirements (a) Employee separated from service due to abolition of his office or position; and (b) Employee has been paying integrated contributions for at least 1 year prior to separation. EMPLOYEE’S COMPENSATION – COVERAGE AND WHEN COMPENSABLE COVERAGE (a) Every employer shall be covered. (b) Every employee not over sixty (60) years of age shall be covered. (c) An employee over sixty (60) years of age shall be covered if he had been paying contributions to the System prior to age sixty (60) and has not been compulsorily retired. (d) An employee who is coverable by both the GSIS and SSS shall be compulsorily covered by both Systems. [Sec. 2, IRR of Title II, Book IV of LC] (e) Filipinos working abroad in the service of an employer as defined in Section 3 hereof shall be covered by the System, and entitled to the same benefits as are provided for employees working in the Philippines. [Sec. 5, IRR of Title II, Book IV of LC] Benefit Monthly cash payments of 50% of average monthly compensation for a duration which is proportional to years rendered, ranging from 2 months to 6 months. Survivorship benefits Beneficiaries are entitled to the following: (a) Basic survivorship pension which is 50% of basic monthly pension; and (b) Dependent children’s pension not exceeding 50% of the basic monthly pension. Life insurance benefits Note: Judiciary and Constitutional Commissions are entitled to life insurance only. PAGE 63 60 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION Self-organization is a fundamental right guaranteed by the Philippine Constitution and the Labor Code. Employees have the right to form, join or assist labor organizations for the purpose of collective bargaining or for their mutual aid and protection. Whether employed for a definite period or not, any employee shall be considered as such, beginning on his first day of service, for purposes of membership in a labor union. [UST Faculty Union v Bitonio] EFFECTIVITY Coverage of employees shall take effect on the first day of employment. [Sec. 6] WHEN COMPENSABLE Grounds: (1) For the injury and the resulting disability or death to be compensable, the injury must be the result of accident arising out of and in the course of the employment. (2) For the sickness and the resulting disability or death to be compensable, the sickness must be the result of an occupational disease listed under Annex “A” of these Rules with the conditions set therein satisfied, otherwise, proof must be shown that the risk of contracting the disease is increased by the working conditions. INFRINGEMENT OF THE RIGHT TO SELF-ORGANIZATION It shall be unlawful for any person to restrain, coerce, discriminate against or unduly interfere with employees and workers in their exercise of the right to selforganization. [ART. 246] The BLR correctly observed that the :recognition of the tenets of the (INC) sect xxx should not infringe on the basic right to self-organization granted by the constitution to workers, regardless of religious affiliation. [Kapatiran sa Meat and Canning Division v Calleja, 1988] Limitation: No compensation shall be allowed to the employee or his dependents when the injury, sickness, disability, or death was occasioned by any of the following: (1) his intoxication; (2) his willful intention to injure or kill himself or another; or (3) his notorious negligence (4) As otherwise provided by law. SCOPE OF RIGHT TO SELF-ORGANIZATION The right to self-organization shall also include: (1) Right to form, join and assist labor organizations of their own choosing for the purpose of collective bargaining through representatives [Art. 246]; (2) Right to engage in lawful concerted activities for the same purpose or for their mutual aid and protection [Art. 246]; (3) Right not to exercise it: the right NOT to join, affiliate with, or assist any union, and to disaffiliate or resign from a labor organization, is subsumed in the right to join, affiliate with, or assist any union, and to maintain membership therein. It is self-evident that just as no one should be denied the exercise of a right granted by law, so also, no one should be compelled to exercise such a conferred right [Reyes v. Trajano, 1992] Labor Relations Law RIGHT TO SELF-ORGANIZATION BASIS OF RIGHT TO SELF-ORGANIZATION 1987 Constitution [Art. III Sec 8, Art. XIII Sec 3] Art. III Sec. 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. Subsumed in the right to join, affiliate with, or assist any union is the right NOT to join, affiliate with, or assist any union; or to leave a union and join another one. [Heritage Hotel Manila v. PIGLAS-Heritage, 2009] Art. XIII Sec. 3. The state shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. The right of the employees to self-organization is a compelling reason why their withdrawal from the cooperative must be allowed. As pointed out by the union, the resignation of the member-employees is an expression of their preference for union membership over that of membership in the cooperative [Central Negros Electric Cooperative v. Sec. of Labor, 1991] Labor Code [Art. 243, 244, LC] Art. 243. Coverage and Employees’ Right to SelfOrganization (8) All persons employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions, whether operating for profit or not, shall have the right to self-organization and to form, join, or assist labor organizations of their own choosing for purposes of collective bargaining. (9) Ambulant, intermittent, and itinerant workers, selfemployed people, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. WORKER QUALIFICATION Any employee, whether employed for a definite period or not, shall, beginning on his first day of service, be considered as an employee for purposes of membership in any labor union. [Art. 277 (c)] Whether employed for a definite period or not, any employee shall be considered as such, beginning on his first day of service, for purposes of membership in a labor union. To become a union member, an employee must, as a rule, not only signify the intent to become one, but also take some positive steps to realize that intent. [UST Faculty Union v. Bitonio , 1999] Art. 244. Right of Employees in the Public Service Employees of government corporations established under the corporation code shall have the right to organize and to bargain collectively with their respective employers. DEFINITIONS Employee “Employee” includes: (3) Any person in the employ of an employer. RIGHT TO SELF-ORGANIZATION: A FUNDAMENTAL RIGHT PAGE 64 UP COLLEGE OF LAW LABOR LAW (4) The term shall not be limited to the employees of a particular employer, unless this code explicitly states. (5) It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment [Art 212(f)] BAR OPERATIONS COMMISSION other employees in the civil service shall have the right to form associations for purposes not contrary to law. [Art. 244] All government employees can form, join, or assist employees’ organizations of their own choosing for the furtherance and protection of their interests. They can also form, in conjunction with appropriate government authorities, labor-management committees, work councils and other forms of workers’ participation schemes to achieve the same objectives. [EO 180 Section 2] Employer "Employer" includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer. [Art 212 (e)] Supervisory Employees Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. [Art. 212 (m)] Rank-and-file employees “Rank-and-File Employee” refers to an employee whose functions are neither managerial nor supervisory in nature. [Book V Rule I Sec. 1 (nn)] Supervisory Employees Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. [Art. 212 (m)] Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. [Art 245, second sentence] Rationale for segregation – conflict of interest Supervisory employees, while in the performance of supervisory functions, become the alter ego of the management in the making and the implementing of key decisions. It would be difficult to find unity or mutuality of interests in a bargaining unit consisting of a mixture of rank-and-file and supervisory employees. [Toyota Motor Phil. Corp. v Toyota Motor Phil. Corp. Labor Union, 1997] Managerial employees A managerial employee is one who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. [Art 212(m)] Worker's association A workers’ association means any group of workers, including ambulant, intermittent, self-employed, rural workers and those without definite employers, organized for mutual aid and protection of its members or for any legitimate purpose other than collective bargaining. [Art. 243] Effect of Mixed Membership The inclusion as union members of employees outside the bargaining unit shall not be a ground for the cancellation of the registration of the union. Said employees are automatically deemed removed from the list of membership of said union. [Art. 245-A] Membership in the same federation or national union The rank and file union and the supervisors’ union operating the same establishment may join the same federation or national union. [Art. 245] WHO MAY UNIONIZE FOR PURPOSES OF COLLECTIVE BARGAINING [COVERED EMPLOYEES/WORKERS] (a) All employees (general rule) (b) Government employees in civil service and of government corporations under the Corporation Code (c) Supervisors (d) Aliens with valid working permits (e) Security personnel Aliens General rule: aliens are strictly prohibited from engaging directly or indirectly in all forms of trade union activities. Exception: (1) they have valid working permits issued by the DOLE; AND (2) they are nationals of a country which grants the same or similar rights to Filipino workers [principle of reciprocity]. [Art 269] All Employees [General Rule] Right to Self-Organization: Coverage General Rule: ALL employees of all kind of employers – public or private, profit or non-profit, commercial or religious. [Art. 243] The DFA provides the certification on the requirement of reciprocity. [Book V, Rule II, Sec. 2, Par. 1, 3rd sentence] Art. 244 now allows employees of non-profit organizations to join, form and/or assist labor organizations. [FEU-Dr. Nicanor Reyes Medical Foundation Inc. v. Trajano, 1992] Security Guards The security guards and other personnel employed by the security service contractor shall have the right: (a) To form, join, or assist in the formation of a labor organization of their own choosing for purposes of collective bargaining and (b) To engage in concerned activities which are not contrary to law including the right to strike. [D.O. No. 14 Series of 2001 Guidelines Governing the Employment and Working Conditions of Security Guards and Similar Government Corporate Employees [Corporations created under the Corporation Code] The right to self-organization shall not be denied to government employees. [1987 Constitution, Art. IX-B, Sec. 2 (5)] Employees of government corporations established under the Corporation Code shall have the right to organize and to bargain collectively with their respective employers. All PAGE 65 UP COLLEGE OF LAW LABOR LAW Personnel in the Private Security Industry] assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly confidential records. [Standard Chartered Bank Employees Union v SCB, 2008] In Dec 1986, President Aquino issued EO No. 111 which eliminated the provision on the disqualification of security guards and with that security guards were thus free to join a rank and file organization. Under the old rule, security guards were barred from joining labor organizations of the rank-and-file but under RA 6715, they may now freely join a labor organization with the rank-and-file or the supervisory union, depending on their rank. [Manila Electric Co. v.Sec. of Labor, 1991] Nomenclature not Controlling: Function Test The mere fact that an employee is designated “manager” does not ipso facto make him one. Designation should be reconciled with the actual job description of the employee. [Paper Indurstries Corp. of the Philippines. v. Laguesma ,2000] Non-Employees Since the persons involved are not employees of the company, they are not entitled to the constitutional right to join or form a labor organization for purposes of collective bargaining. [Republic Planters v Laguesma , 1996] WHO CANNOT FORM, JOIN, OR ASSIST LABOR ORGANIZATIONS (1) (2) (3) (4) (5) (6) (7) BAR OPERATIONS COMMISSION Managerial employees Confidential employees Non-employees Member-employee of a cooperative Employees of international organizations High-level government employees Members of the AFP, police officers, policemen, firemen and jail guards Respondents are found not to be employees of the Company, they are not entitled to the constitutional right to join or form a labor organization for purposes of collective bargaining. Citing La Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor Relations the court here reiterated, “The question of whether employeremployee relationship exists is a primordial consideration before extending labor benefits under the workmen's compensation, social security, medicare, termination pay and labor relations law. Failure to establish this juridical relationship between the union members and the employer affects the legality of the union itself. [Singer Sewing Machine Co. v. Drilon , 1993] Managerial Employees A managerial employee is one who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. [Art 212(m)] Managerial employees are not eligible to join, assist or form any labor organization. [Art. 245] Employee-Member of Cooperative The right to collective bargaining is not available to an employee of a cooperative who at the same time is a member and co-owner thereof. Confidential Employees Confidential employees are those who: (1) assist or act in a confidential capacity [integral part of the job] (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. (Nature of Access Test) Exclusion: Fact of Ownership Controlling The fact of ownership of the cooperative and not the involvement in the management thereof disqualifies a member from joining any labor organization within the cooperative. The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee – that is, the confidential relationship must exist between the employees and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. [San Miguel Supervisors and Exempt Union v. Laguesma, 1997] Exclusion: Rationale They cannot invoke the right to collective bargaining for "certainly an owner cannot bargain with himself or his coowners." [Benguet Electric Cooperative v. Ferrer-Calleja] BUT Employees who withdrew their membership from the cooperative are entitled to form or join a labor union for the negotiations of a CBA. [CENECO v DOLE, 1991] Rationale of Exclusion of Confidential Employees Employees should not be placed in a position involving a potential conflict of interests. By the very nature of their functions, they assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. (Thus there is a fiduciary and confidential relationship between manager and employer.) It is not far-fetched that in the course of CB, they might jeopardize that interest which they are duty bound to protect. [Metrolab Industries Inc. v. Roldan-Confessor, 1996] Employees of International Organizations International organizations are endowed with some degree of international legal personality. They are granted jurisdictional immunity. A certification election cannot be conducted in an international organization which the Phil. Government has granted immunity from local jurisdiction. [International Catholic Migration Commission v. Calleja, 1990] The disqualification of managerial and confidential employees from joining a bargaining unit for rank and file employees is already well-entrenched in jurisprudence. While Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to High-level or managerial government employees [E.O. 180, Sec. 3] High-level Employee: Definition Is one whose functions are normally considered policy determining, managerial or one whose duties are highly confidential in nature. PAGE 66 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION union agreed upon by the corporation with the previous bargaining representatives can never bind subsequent federations [General Rubber & Footwear Corp. v BLR, 1987] Managerial Functions (1) Effectively recommend managerial actions; (2) Formulate or execute management policies and decisions; or (3) Hire, transfer, suspend, lay-off, recall, dismiss, assign or discipline employees. RATIONALE: It is a curtailment of the right to selforganization. During the freedom period, the parties may not only renew the existing collective bargaining agreement but may also propose and discuss modifications or amendments thereto. [DLSU v. DLSUEA, 2000] Members of the Armed Forces of the Philippines, Policemen, Police Officers, Firemen and Jail Guards [E.O. 180, Sec. 4] Test to determine the constituency of an appropriate bargaining unit (WAPE) (1) Will of the Employees (Globe Doctrine) (2) Affinity & unity (Community) of Employees interest, such as substantial similarity of works and duties or similarity of compensation & working conditions (3) Prior CB history (4) Employment status i.e. temporary, seasonal, & probationary. [UP v. Ferrer-Calleja, 1992 citing Democratic Labor Assoc v. Cebu Stevedoring Co.] BARGAINING UNIT Definitions “Bargaining Unit” refers to a group of employees sharing mutual interests within a given employer unit, comprised of all or less than all of the entire body of employees in the employer unit or any specific occupational or geographical grouping within such employer unit. [Book V, Rule 1, Sec1(d)] Appropriate Bargaining Unit A group of employees of a given employer comprised of all or less than all of the entire body of employees, which the collective interests of all the employees indicate to be best suited to serve reciprocal rights and duties of the parties consistent with equity to the employer. [Belyca Corp. vs Calleja, 1988] Other factors: (1) Geography and location (2) Policy of avoiding fragmentation of the bargaining unit Unit Severance and Globe Doctrine Globe Doctrine: Concept (a) practice designated as the "Globe doctrine," which sanctions the holding of a series of elections, not for the purpose of allowing the group receiving an over all majority of votes to represent all employees, but for the specific purpose of permitting the employees in each of the several categories to select the group which each chooses as a bargaining unit. [Kapisanan ng mga Manggagawa sa Manila Road Co. v. Yard Crew Union , 1960] Function of an Appropriate Bargaining Unit (a) An ELECTORAL DISTRICT. – It marks the boundaries of those who may participate in a certification election. (b) An ECONOMIC UNIT. – They are a group of employees with community of interests. (c) A SOVEREIGN BODY. – It selects the sole and exclusive bargaining agent. Role of a bargaining unit General rule: The labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit shall be the exclusive representative of the employees in such a unit for the purpose of collective bargaining. Rationale for the Globe Doctrine Highly skilled or specialized technical workers may choose to form their own bargaining unit because they may be in better position to bargain with the employer considering the market value of their skills. Exception: However, an individual employee or group of employees shall have the right at any time to present grievances to their employer. Any provision of law to the contrary notwithstanding, workers shall have the right, to participate in the policy and decision-making processes of the establishment where they are employed insofar as said processes will directly affect their rights, benefits and welfare. For this purpose, workers and employers may form labor-management councils: Provided, that the representatives of the workers in such labor-management councils shall be elected by at least the majority of all employees in said establishment. [Art. 255, LC] Community or Mutuality of Interests Fundamental Test: (t)he basic test of an asserted bargaining unit’s ACCEPTABILITY is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their CB rights. This is related to the policy of the law in ensuring the right to collective bargain. [UP v. Ferrer-Calleja, 1992] Rationale There are greater chances of success for the collective bargaining process. The bargaining unit is designed to maintain the mutuality of interest among the employees in such unit. CBA Coverage When there has been a factual determination by the Labor Arbiter that the petitioners were regular employees, said employees shall fall within the coverage of the bargaining unit and are therefore entitled to CBA benefits as a matter of law and contract. [Farley Fulache, et a. v ABS-CBN, 2010] Reason to dissolve, change or expand a certain bargaining unit: When THE INTEREST BETWEEN GROUPS HAS CHANGED OVER TIME Prior Collective Bargaining History The existence of a prior collective bargaining history is neither decisive nor conclusive in the determination of what constitutes an appropriate bargaining unit. [San Miguel Corp. v. Laguesma, 1994] Effect of Prior Agreement Prior agreement as to the inclusion or exclusion of workers in a bargaining unit or prohibition from forming their own PAGE 67 UP COLLEGE OF LAW LABOR LAW Geography – Location Geography and location only play a significant role if: (1) The separation between the camps and the different kinds of work in each all militate in favor of the system of separate bargaining units; (2) When the problems and interests of the workers are peculiar in each camp or department; (3) The system of having one collective bargaining unit in each camp has operated satisfactorily in the past. [Benguet Consolidated Inc. and Balatok Mining Co. v. Bobok Lumberjack Assn.,1958] BAR OPERATIONS COMMISSION other company and the physical plants, offices and facilities are in the same compound are NOT sufficient to justify piercing the corporate veil. In Umali vs CA, legal corporate entity is disregarded only if it is sought to hold the officers and stockholders directly liable for a corporate debt or obligation. Spun-off corporations The transformation of companies is a management prerogative and business judgment which the courts cannot look into unless it is contrary to law, public policy or morals. If, considering the spin-offs, the companies would consequently have their respective and distinctive concerns in terms of nature of work, wages, hours of work and other conditions of employment. The nature of their products and scales of business may require different skills, volumes of work, and working conditions which must necessarily be commensurate by different compensation packages. [San Miguel Union v Confesor, 1996] Policy of avoiding fragmentation of the bargaining unit It bears noting that the goal of the DOLE is geared towards "a single employer wide unit which is more to the broader and greater benefit of the employees working force." The philosophy is to avoid fragmentation of the bargaining unit so as to strengthen the employees’ bargaining power with the management. To veer away from such goal would be contrary, inimical and repugnant to the objectives of a strong and dynamic unionism. [Phil. Diamond Hotel and Resort Inc v Manila Diamond Hotel and Employees Union, 2006] VOLUNTARY RECOGNITION Definition “Voluntary Recognition” refers to the process by which a legitimate labor union is recognized by the employer as the exclusive bargaining representative or agent in a bargaining unit, reported with the Regional office in accordance to Rule VII, Sec 2 of these Rules. [Book V, Rule 1, Sec 1 [bbb] Since the confidential employees are very few in number and are by practice and tradition identified with the supervisors in their role as representatives of management vis-à-vis the rank and file employees, such identity of interest has allowed their inclusion in the bargaining of supervisors for purposes of collective bargaining in turn as employees in relation to the company as their employer. This identity of interest logically calls for their inclusion in the same bargaining unit and at the same time fulfills the law’s objective of insuring to them the full benefit of their right to self organization and to collective bargaining, which could hardly be accomplished if the respondent association’s membership were to be broken up into five separate ineffective tiny units. Creating fragmentary units would not serve the interest of industrial peace. The breaking up of bargaining units into tiny units will greatly impair their organizational value. [Filoil Refinery Corp. v Filoil Supervisory and Confidential Employees Union, 1972] Substantial Requirements (1) Unorganized establishment; (2) Only one union asking for recognition; (3) The members of the bargaining unit did not object to the projected recognition of the union. Procedural Requirements The notice of voluntary recognition shall be accompanied by the original copy and two (2) duplicate copies of the following documents: (1) A joint statement under oath of voluntary recognition attesting to the fact of voluntary recognition (2) Certificate of posting of the joint statement of voluntary recognition for fifteen (15) consecutive days in at least two (2) conspicuous places in the establishment or bargaining unit where the union seeks to operate; (3) The approximate number of employees in the bargaining unit, accompanied by the names of those who support the voluntary recognition comprising at least a majority of the members of the bargaining unit; and (4) A statement that the labor union is the only legitimate labor organization operating within the bargaining unit. Corporate Entities GENERAL RULE: Two companies having separate juridical personalities shall NOT be treated as a single bargaining unit. EXCEPTION: Pervasive Unitary Aspect of Management Doctrine. – The cross-linking of the agencies command, control, and communication systems indicate their unitary corporate personality. [Philippine Scouts Veterans v. Torres] Principles in determining whether to establish separate bargaining units: [Indophil Textile Mills Workers Union v. Calica, 1992; Diatagon Labor Federation v. Ople, 1980] (1) The existence of a bonafide business relationship between the 2 companies is not proof of being a single corporate entity, especially when the services provided by the other company are merely auxiliary. (2) The fact that there are as many bargaining units as there are companies in a conglomeration of companies is a positive proof that a corporation is endowed with a legal personality DISTINCTLY ITS OWN, independent and separate from other corporations. (3) Separate legitimate purposes militate against treating one corporation as an adjunct or alter ego of the other. (4) The fact that the businesses are related, that some of the employees are the same persons working in the All accompanying documents of the notice for voluntary recognition shall be certified under oath by the employer representative and president of the recognized labor union. [Book V Rule VII Sec 2] The employer may voluntarily recognize the representation status of a union in unorganized establishments. In this case, however, the company (SLECC) was not an unorganized establishment when it voluntarily recognized SMSLEC as its exclusive bargaining representative. Prior to the voluntary recognition, another union (CLUP-SLECC) has already filed a petition for certification election. Thus, the company’s voluntary recognition of SMSLEC is void. [SLECC v Sec. of Labor, 2009] PAGE 68 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION Implications “Technical rules and objections should not hamper the correct ascertainment of the labor union that has the support and confidence of the majority of the workers and is thus entitled to represent them in bargaining for the terms and conditions of their employment.” [Port Workers Union v. DOLE, 1992] CERTIFICATION ELECTION Definition Certification election is the process of determining, through secret ballot, the sole and exclusive bargaining agent of the employees in an appropriate bargaining unit, for purposes of collective bargaining. [Book V Rule I Section 1 [x]] The certification election is the best method of determining the will of the workers on the crucial question of who shall represent them in their negotiations with the management for a collective bargaining agreement that will best protect and promote their interests. It is essential that there be no collusion against this objective between an unscrupulous management and a union covertly supporting it while professing its loyalty to labor, or at least that the hopes of labor be not frustrated because of its representation by a union that does not enjoy its approval and support. It is therefore sound policy that any doubt regarding the real representation of the workers be resolved in favor of the holding of the certification election. This is preferable to the suppression of the voice of the workers through the prissy observance of technical rules that will exalt procedure over substantial justice. [Port Workers Union of the Philippines v Laguesma, 1992] Thus it should not be circumvented. There should be no obstacle in conducting the Certification election. [George & Peter Lines, Inc. v. Associated Labor Union, 1985] Who may vote? All employees whether union members or not, as long as they belong to the appropriate bargaining unit can vote. Who may file a petition for certification election (1) Legitimate labor organization (registered w/ DOLE) (2) Unregistered local chapter with charter certificate from national union or federation (3) National union or federation in behalf of its local/chapter (4) Employer (when requested to bargain collectively and no existing CBA) Legitimate labor organization "Legitimate labor organization" means any labor organization duly registered with the Department of Labor and Employment, and includes any branch or local thereof. [Art 212 (f)] Purpose The purpose of a certification election is precisely the ascertainment of the wishes of the majority of the employees in the appropriate bargaining unit: to be or not to be represented by a labor organization, and in the affirmative case, by which particular labor organization. [Reyes v Trajano, 1992] Unregistered local/chapter with charter certificate A duly registered federation or national union may directly create a local chapter by issuing a charter certificate indicating the establishment of the local chapter. The chapter shall acquire legal personality only for purposes of filing a petition for certification election from the date it was issued a charter certificate. [Art 234-A, introduced by RA 9481] Nature of proceeding It is not litigation, but a mere investigation of a nonadversary character. The object of the proceedings is merely the determination of proper bargaining units and the ascertainment of the will and choice of the employees in respect of the selection of the bargaining representative. The determination of the proceeding does not entail the entry of remedial orders or redress of rights, but culmination solely in an official designation of bargaining units and an affirmation of the employees expressed choice of bargaining agent. [Young Men Labor Union Stevedores v CIR, 1965] National union/federation A national union of federation filing a petition in behalf of its local/chapter shall not be required to disclose the names of the local/chapter’s officers and members, but shall attach to the petition the charter certificate issued to its local/chapter. [Art. 257] Employer The employer may file a petition for certification election only when he is requested by a labor organization to bargain. [Art 258 paragraph 1] It is the most DEMOCRATIC and most efficacious/ effective way of determining the will of the bargaining unit. [Samahang Manggagawa sa Permex v Sec. of Labor, 1998] It is a STATUTORY POLICY. [Belyca Corp. v. Ferrer-Calleja, 1998] Bystander rule. The employer shall not be considered a party in the petition with a concomitant right to oppose a petition for certification election. The employer’s participation shall be limited to: (1) being notified or informed of petitions of such nature (2) submitting the list of employees during the preelection conference should the Med-arbiter act favorably on the petition [Art 258-A introduced by RA 9481] A certification election is different from a union election. In a union election, the objective is to elect union officers. Therefore, only union members may vote in a union election while every member of an appropriate bargaining unit can vote in a certification election. Certification election is the fairest and most effective way of determining which labor organization can truly represent the working force. It is a fundamental postulate that the will of the majority given expression in an honest election with freedom on the part of the voters to make their choice, is controlling. [PLUM Federation of Industrial and Agrarian Workers v Noriel, 1978] A company’s interference in the CE creates a suspicion that it intends to establish a company union. [Oriental Tin Can Labor Union v. Secretary of Labor, 1998] The employer is not a party to a certification election, which is the sole or exclusive concern of the workers. The only instance when the employer may be involved in that PAGE 69 UP COLLEGE OF LAW LABOR LAW process is when it is obliged to file a petition for certification election on its workers’ request to bargain collectively pursuant to Art. 258. [Hercules Industries, Inc. v Sec. of Labor, 1992] BAR OPERATIONS COMMISSION determining whether or not a certification election must be conducted. [Scout Albano Memorial College v. Noriel, 1978] Effect of withdrawal of signatures The employees’ withdrawal from a labor union made before the filing of the petition for certification election is presumed voluntary, while withdrawal after the filing of such petition is considered to be involuntary and does not affect the petition. [S.S. Ventures International vs. S.S. Ventures Labor Union] Employer is a TOTAL STRANGER in the process of Certification Election. Employer has NO STANDING to file a MOTION TO DISMISS. [PT&T v Laguesma, 1993] Venue for filing the petition BLR Regional Office which issued the petitioning union’s certificate of registration or certificate of creation of chartered local. If performed after the filing of the petition, the withdrawal is presumed to be involuntary and that it was procured through duress, coercion, or for a valuable consideration. [Oriental Tin Can Labor Union v. Secretary of Labor and Employment, 1998] Certification election in an unorganized establishment [Art. 257] Procedure (a) A petition for certification shall be filed by a legitimate labor organization. (b) Upon filing of the petition, the Med- Arbiter shall automatically conduct a certification election. Incumbent as forced intervenor The incumbent bargaining agent shall automatically be one of the choices in the certification election as forced intervenor. [Book V Rule VIII sec. 7.] Substantial support not necessary in intervention The requisite written consent representing substantial support of the workers in the bargaining unit [as required in Art. 256 applies to petitioners for certification only, and not to motions for intervention. [PAFLU v Calleja, 1989] Filing of petition is by A LEGITIMATE labor organization. It cannot be an unregistered labor organization. This is best read in relation to Art. 242 which enumerates the rights granted to a legitimate labor organization and one of those rights is the right to be chosen as the exclusive bargaining representative. This is one way the law encourages union registration. Appeal from order of Med-Arbiter holding certification election Appeal to Secretary of Labor on the ground that the rules and regulations or parts established by the Secretary of Labor for the conduct of election have been violated. [Art. 259] Venue: BLR Regional Office which issued the petitioning union’s certificate of registration or certificate of creation of chartered local. Certification election in an organized establishment [Art. 256] Procedure (1) A verified petition questioning the majority status shall be filed by a legitimate labor organization (2) It must be filed within the 60-day period before expiration of CBA (freedom period) (3) Supported by written consent of at least 25% of ALL employees in the bargaining unit (substantial support) Organized v. Unorganized Establishment Art. 256: Organized Art. 257: Unorganized Bargaining Agent Existing, has one None Petition Filed Has to be a VERIFIED petition Substantial support rule In organized establishments, the incumbent sole bargaining agent should not be easily replaced for that would disturb industrial peace. To justify the disturbance, it must appear that at least a substantial number (25% requirement) seeks to have a new exclusive bargaining unit. No need to be verified Freedom Period No petition for Certification Not applicable. election EXCEPT within 60 days before the expiration of No freedom period. the collective bargaining Can file petition anytime. agreement [See Art. 253 & 253-A] Note: A union that is merely filing a MOTION FOR INTERVENTION in a CE filed by another union need NOT present substantial support. The substantial support is only needed when filing for a petition for certification election. [Port Workers Union v DOLE, 1992] Take note interpreted “WITHIN”. how SC the term What is the rationale of freedom period in Organized establishments, why is there none in unorganized establishments? It has something to do with industrial peace Double majority requirement (voters, valid votes) To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. [Art. 256] Discretionary rule If the petition does not comply with the substantial support requirement, the BLR may exercise its discretion in Substantial Support Rule Must be duly supported by NO substantial support rule. PAGE 70 69 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION Contract Bar Rule While a valid and registered CBA is subsisting, the BLR is not allowed to entertain any petition for certification election or any other action which may disturb the administration of the duly registered existing collective bargaining agreements affecting the parties except under Articles 253, 253-A and 256 of this Code. [Art 232] 25% of ALL THE MEMBERS WHY? OF THE APPROPRIATE Intention of law is to bring in BARGAINING UNIT. the union, to implement policy behind Art. 211a. all Percentage base: members of an appropriate bargaining unit. What is intent and purpose of law for requiring the substantial support rule? Law wants to know the intention of the employees. If they really want a CE, since they already have a bargaining agent. The contract bar rule shall not apply: (a) When the petition is filed during the freedom period in Articles 253, 253-A, and 256. (b) When the CBA is incomplete (c) When the CBA is substandard (d) When the CBA is prematurely renewed (e) When the CBA is unregistered Notice Note: No petition for certification election may be filed after the lapse of the freedom period. The old CBA is extended until a new one is agreed upon by the parties. [Colegio de San Juan de Letran v. Assoc, 2000] Client need not be notified to Client and adverse party need make it effective to notified to make it effective Applicability May be exercised before Generally, it is exercisable only judgment or execution, or when the attorney had already regardless thereof secured a favorable judgment for his client Freedom Period.—The last 60 days in a Collective Bargaining Agreement (CBA) is referred to as the “freedom period” when rival union representation can be entertained during the existence of a CBA. It is during this particular period when the majority status of the incumbent bargaining agent can be challenged. [Tanduay Distillery Labor Union v. NLRC, 1987] Bars to certification election (1) One year bar rule (2) Negotiation bar rule (3) Deadlock bar rule (4) Contract bar rule The purpose of the prohibition against the filing of a petition for certification election outside the so-called freedom period is to ensure industrial peace between the employer and its employees during the existence of the CBA. [Republic Planters Bank Union v. Laguesma, 1996] One year bar rule No certification election may be held within 1 year from the fact that voluntary recognition has been entered, or a valid certification, consent or run-off election has been conducted within the bargaining unit. [Book V, Rule VIII, Sec 3 (a)] The premature renewal of a CBA cannot bar the holding of a certification election by virtue of a bona fide petition filed within the freedom period if the clear intention was to frustrate the constitutional right of the employees to selforganization. [Associated Labor Union v. Calleja, 1989] If appealed, the reckoning period is the date when the decision becomes final and executory. Premature renewal of CBA cannot bar.— The premature renewal of a CBA cannot bar the holding of a certification election by virtue of a bona fide petition filed within the freedom period if the clear intention was to frustrate the constitutional right of the employees to self-organization. [Associated Labor Union v. Calleja, 1989] Negotiation bar rule A petition for certification election may be filed anytime EXCEPT: (a) When the duly certified union has commenced and sustained negotiations in good faith with the employer (b) In accordance with Art. 250 of the Labor Code (c) Within one year period prior to the filing of the filing of the petition for certification election. [Book V, Rule VIII, Sec 3 (b)] Petition for cancellation of union registration does not bar certification election.— Certification election can be conducted despite pendency of a petition to cancel the union registration certificate. For the fact is that at the time the union, whose registration certificate is sought to be cancelled, filed its petition for certification, it still had legal personality to perform such act absent an order directing its cancellation. [Samahan ng mga Manggagawa v Laguesma, 1997] Deadlock bar rule A petition for certification election may be filed anytime, EXCEPT: xxx when a bargaining deadlock to which an incumbent or certified bargaining agent is a party had been submitted to conciliation or arbitration or had become the subject of a valid notice of strike or lockout; [Book V, Rule VIII, Sec. 3 (c)] Suspension of Election: Prejudicial Question Rule Formal charge of ULP against the employer for establishing a company union triggers suspension. [B.F. Goodrich Phils. Marikina v. B.F. Goodrich Confidential and Salaried Employees Union] A “deadlock” is defined as the “counteraction of things producing entire stoppage; a state of inaction or of neutralization caused by the opposition of persons or of factions [as in government or voting body]; standstill.” [Divine World University v Sec of Labor and Employment, 1992] Note: The ONLY party who could ask for the suspension of the CE is the labor union which filed a complaint for ULP against the employer. PAGE 71 UP COLLEGE OF LAW LABOR LAW Suspension of Election: Rationale If there is a union dominated by the company, to which some of the workers belong, an election among workers and employees of the company would not reflect the true sentiment and wishes of the said workers and employees because the votes of the members of the dominated union would not be free. Such charge of company domination is a prejudicial question that until decided, shall suspend or bar proceedings for certification election. BAR OPERATIONS COMMISSION administrative rule or precedent prescribes forfeiture of the right to vote by reason of neglect to exercise the right in past cases. [Reyes v. Trajano, 1992] Challenge Voter An employer has no standing to question a certification election since this is the sole concern of the workers but may question the inclusion of any disqualified employee in the certification election during the exclusion-inclusion proceedings before the representation officer. [Phil. Telephone & Telegraph Co. v Laguesma, 1993] If it were a labor organization objecting to the participation in a certification election of a company-dominated union, as a result of which a complaint for an unfair labor practice case against the employer was filed, and when the court finds that said union is employer-dominated in the unfair labor practice case, the union selected would be decertified and the whole election proceedings would be rendered useless and nugatory.' There would be an impairment of the integrity of the collective bargaining process if a company-dominated union were allowed to participate in a certification election. [United CMC Textile Worker’s Union v. BLR, 1984] Voting Day The election shall be set on a regular business day. [IRR, Book V Rule IX Sec. 2] Run-off election.— "Run-Off" refers to an election between the labor unions receiving the two (2) higher number of voters when a certification election which provides for three (3) or more choices results in no choice receiving a majority of the valid votes cast, where the total number of votes for all contending unions is at least fifty percent (50%) of the number of votes cast. Certification Election MECHANICS Posting of Notice Who: Election Officer shall cause the posting What: notice of election Where: 2 conspicuous places in company premises When: at least 10 days before actual election Requirements (1) majority of the bargaining unit voted (first majority of the double majority rule) (2) three or more choices (note: “no union” is a choice) (3) not one of the choices receives a majority of the valid votes cast (4) total number of votes for all contending unions is at least 50% of the total number of votes cast [this means that at least 50% of the bargaining unit wants to have a union] (5) the run-off election shall be conducted between the labor unions receiving the two highest number of votes Contents of Notice: (a) Date and Time of election; (b) Names of all contending unions; (c) Description of the bargaining unit (d) List of eligible and challenged Voters. The posting of the notice of election, the information required to be included therein and the duration of the posting cannot be waived by the contending unions or the employer. [Book V Rule IX Sec 6, IRR] Illustration The CBU has 100 members and eighty of which voted. Union “A”= 30; Union “B”= 15; Union “C”=15 and No Union= 20. There were no invalid votes. Since none got the majority of the 80 valid votes and the contending unions obtained 60 votes, which even exceed one-half (½), a runoff election is proper. The run-off will be between the labor unions receiving “the two highest number of votes.” The rematch is NOT between two unions but between “two highest votes”. Thus the run-off will be among Union “A”, “B” and “C”. [Azucena] Voting List and Voters The basis of determining voters may be agreed upon by the parties (i.e. the use of payroll). [Acoje Workers Union v NAMAWU, 1963] All Employees entitled to vote All rank-and-file employees in the appropriate bargaining unit. The Code makes no distinction as to their employment status. All they need to be eligible to support the petition is to belong to a bargaining unit. [Airtime Specialists, Inc. v Director of BLR, 1990] At the expiration of the freedom period, the employer shall continue to recognize the majority status of incumbent bargaining agent where no petition for certification election is filed. Employees who have been improperly laid off but who have a present, unabandoned right to or expectation of reemployment, are eligible to vote in certification elections. If the dismissal is under question, employees concerned could still qualify to vote in the elections. [Philippine Fruits v Torres, 1992] Re-run election.— A motion for the immediate holding of another certification or consent election can be filed within six (6) months from the date of the declaration of failure of election. [Book V, Rule IX sec 18] Rationale for Non-Distinction Policy Collective bargaining covers all aspects of the employment relation and the resultant CBA binds all employees in the bargaining unit. All rank and file employees, probationary or permanent, have a substantial interest in the selection of the bargaining representative. [Reyes v. Trajano , 1992] Consent election.— "Consent Election" means the election voluntarily agreed upon by the parties to determine the issue of majority representation of all the workers in the appropriate collective bargaining unit. The contending unions may agree to the holding of an election. In which case, it shall be called a consent election. The Med-Arbiter shall forthwith call for the consent election reflecting the parties’ agreement and the Effect of Non-participation in previous election Failure to take part in previous elections is no bar to the right to participate in future elections. No law, PAGE 72 UP COLLEGE OF LAW LABOR LAW call in the minutes of the conference. [Book V RVIII Sec 10 [as amended by DO 40-F-03 Series of 2008, Nov 8, 2008]] interests. Admittedly, there are times when without succor and support local unions may find it hard, unaided by other support groups, to secure justice for themselves. [Phil Skylanders v. NLRC, 2002] Certification Election v. Consent Election Certification Election Consent Election Nature of Relationship (Agency) The mother union, acting for and in behalf of its affiliate, had the status of an agent while the local remained the basic unit of the association, free to serve the common interest of all its members, subject only to restraints imposed by the constitution and by the by-laws of the association. The same is true even if the local is not a legitimate labor organization. [Filipino Pipe and Foundry Corp v. NLRC, 1998] Purpose Aimed at determining the sole and exclusive bargaining agent of all employees in an appropriate bargaining unit for the purpose of collective bargaining Merely to determine the issue of majority representation of all the workers in the appropriate collective bargaining unit 1st Level of Choice: Yes Union or No Union Effect of Affiliation Locals remain the basic units of association, free to serve their own and the common interest of all. Inclusion of FFW in the registration is merely to stress that they are its affiliates at the time of registrations. It does not mean that said local unions cannot stand on their own. Affiliation does not mean they lost their own legal personality. [Adamson v. CIR, 1984] 2nd Level of Choice: If “Yes Union” wins, WHICH union. [UST Faculty Union v. Bitonio, 1999] Conduct Ordered by the DOLE BAR OPERATIONS COMMISSION Note: A rank-and-file union and a supervisory union may be affiliated with the same federation. Voluntarily agreed upon by the parties, with or w/o intervention from DOLE Disaffiliation General rule: Local unions may disaffiliate from the mother union. Affiliation and disaffiliation of local union to mother union. — Definitions Affiliate. – An affiliate is an independent union affiliated with a federated, national union or a chartered local which was subsequently granted independent registration but did not disaffiliate from its federation, reported to the Regional Office and the Bureau in accordance with Rule III Secs. 6 and 7 of the IRR. [Book V Rule 1 Sec. 1 (a)] Limitations: Terms of the affiliation agreement (e.g. agreement may require 2/3 vote to disaffiliate instead of a majority) [Phil. Skylanders v. NLRC] A local union, being a separate and voluntary association, is free to serve the interests of all its members. It has the right to disaffiliate or declare its autonomy from the federation to which it belongs when circumstances warrant, in accordance with the constitutional guarantee of freedom of association, and such disaffiliation cannot be considered disloyalty. [Malayang Samahan ng mga Manggagawa vs. Ramos, 2000] Independent Union. – A labor organization operating at the enterprise level that required legal personality through independent registration under Art. 234 of the Labor Code and Rule III Sec. 2-A of the IRR. [Book V Rule 1 Sec. 1 [w]] The locals are separate and distinct units primarily designed to secure and maintain an equality of bargaining power between the employer and their employeemembers; and the association of the locals into the national union was in furtherance of the same end. These associations are consensual entities capable of entering into such legal relations with their member. The essential purpose was the affiliation of the local unions into a common enterprise to increase by collective action the common bargaining power in respect of the terms and conditions of labor. [Tropical Hut Employees Union vs. Tropical Hut Food Market, Inc ,1990] Chartered Local [Local Chapter] – a labor organization in the private sector operating at the enterprise level that acquired legal personality through the issuance of a charter certificate by a duly registered federation or national union, and reported to the Regional Office in accordance with Rule III Sec. 2-E of the IRR. [Book V Rule 1 Sec. 1 (i)] National Union or Federation – a group of legitimate labor unions in a private establishment organized for collective bargaining or for dealing with employers concerning terms and conditions of employment for their member union or for participating in the formulation of social and employment policies, standards and programs, registered with the BLR in accordance with Rule III Sec. 2-B of the IRR. [Book V Rule 1 Sec. 1 [kk]] Disaffiliation Must be by a Majority Decision Disaffiliation is a major policy question. Thus, it shall be made by a majority decision of the entire membership, after due deliberation, by secret ballot, unless, the nature of the organization or force majeure renders such secret ballot impractical, in which case, the board of directors of the organization may make the decision. [Art. 241(d)] Purpose of affiliation To foster the free and voluntary organization of a strong and united labor movement [Art 211, LC] Effect of disaffiliation A registered independent union retains its legal personality while a chartered local loses its legal personality unless it registers itself. The sole essence of affiliation is to increase, by collective action, the common bargaining power of local unions for the effective enhancement and protection of their PAGE 73 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION Attorney’s fees, negotiation fees, and similar charges. – Attorney’s fees, negotiation fees or similar charges of any kind arising from any collective bargaining negotiations or conclusion of the collective agreement shall not be imposed on individual member of contracting union, but may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void. [Art. 222 (b)] Substitutionary doctrine The "substitutionary" doctrine provides that the employees cannot revoke the validly executed collective bargaining contract with their employer by the simple expedient of changing their bargaining agent. And it is in the light of this that the phrase "said new agent would have to respect said contract" must be understood. It only means that the employees, thru their new bargaining agent, cannot renege on their collective bargaining contract, except of course to negotiate with management for the shortening thereof. [Benguet Consolidated v. BCI Employees and Workers Union-PAFLU, 1968] The general rule is that attorney’s fees, negotiation fees, and similar charges should be charged against the union funds and not as a special assessment. However, if a special assessment is required to pay such fees, then the requirements above must be satisfied. Conditions for the doctrine to apply (1) change of bargaining agent [through affiliation, disaffiliation, or other means] (2) existing CBA with the previous bargaining agent Strict compliance for special assessment There must be strict and full compliance with the requisites. Substantial compliance is not enough. [Palacol v. Ferrer-Calleja] Effects of the doctrine (1) new bargaining agent cannot revoke and must respect the existing CBA (2) it may negotiate with management to shorten the existing CBA’s lifetime Jurisdiction over Check-off disputes The Bureau of Labor Relations has jurisdiction to hear, decide and to mete out punishment any reported violation under Article 241 Union dues and special assessments. — Union dues. – Union dues are payments to meet the union’s general and current obligations. The payment must be regular, periodic, and uniform. [Azucena] Note: Sec of Labor or his duly authorized representative may inquire into financial activities of legitimate labor orgs – UPON filing of complaint under oath and supported by written consent of at least 20% of total membership, Provided, such inquiry shall not be conducted during (60)day freedom period nor within the thirty (30) days immediately preceding the date of election of union officials [Art. 274]. Every payment of fees, dues or other contributions by a member shall be evidenced by a receipt signed by the officer or agent making the collection and entered into the record of the organization to be kept and maintained for the purpose. [Art 241 (h)] Special assessments. — Special assessments are payments for a special purpose, especially if required only for a limited time. [Azucena] Agency fees. — [Agency fee] is an amount, equivalent to union dues, which a non-union member pays to the union because he benefits from the CBA negotiated by the union. [Azucena] No special assessment or other extraordinary fees may be levied upon the members of a labor organization unless authorized by a written resolution of a majority of all the members of a general membership meeting duly called for the purpose. [Art. 241 (n)] Legal basis Employees of an appropriate bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non-union members accept the benefits under the collective bargaining agreement: Provided, that the individual authorization required under Article 242, paragraph (o) of this Code shall not apply to the non-members of the recognized collective bargaining agent [Art. 248 (e)] Other than for mandatory activities under the Code, no special assessments, attorney’s fees, negotiation fees or any other extraordinary fees may be checked off from any amount due to an employee without an individual written authorization duly signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deduction. [Art. 241 (o)] Rationale for allowing agency fees Avoiding unjust enrichment on the part of non-union members who benefit from the union's efforts without paying any fee therefor, unlike the members of the bargaining agent. Requirements for validity of check off (1) Authorization by written resolution of majority of ALL the members at the general membership meeting called for that purpose (2) Secretary’s record of the minutes of the meetings attested to by the president. (3) Individual written authorization for check-off duly signed by the employees concerned. RIGHT TO COLLECTIVE BARGAINING DUTY TO BARGAIN COLLECTIVELY Legal Basis The State shall guarantee the rights of workers to collective bargaining and negotiations. The State shall promote the principle of shared responsibilities between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual Check-off.— A check-off is a process or device whereby the employer, on agreement with the Union, recognized as the proper bargaining representative, or on prior authorization from the employees, deducts union dues or agency fees from the latter’s wages and remits them directly to the Union. [Marino v Gamilla, 2009] PAGE 74 76 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION compliance therewith to foster industrial peace. [1987 Constitution, Art. XIII, Sec. 3] collectively in accordance with the provisions of this Code. [Art. 251] 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 modes of setting labor or industrial disputes. [Labor Code, Art 211 A] When there exists a collective bargaining agreement The duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. Exception: during the freedom period (60 days prior to expiration of CBA) where either party may serve a written notice to terminate or modify the agreement. The existing CBA continues in full force and effect during the freedom period and/or until a new agreement is reached by the parties. [Art. 253] It is the policy of the State to promote and emphasize the primacy of free and responsible exercise of the right to self-organization and collective bargaining, either through single enterprise level negotiations or through the creation of a mechanism by which different employers and recognized certified labor unions in their establishments bargain collectively. [Book V Rule XVI Sec. 1. Policy] Rights of the parties during bargaining The exclusive bargaining agent has the right to be furnished by the employer, upon written request, with its annual audited financial statements, including the balance sheet and the profit and loss statement. [Art. 242 (c)] Definition Collective bargaining, which is defined as negotiations towards a collective agreement, is one of the democratic frameworks under the New Labor Code, designed to stabilize the relation between labor and management and to create a climate of sound and stable industrial peace. It is a mutual responsibility of the employer and the Union and is characterized as a legal obligation. The parties may agree to make available such up-to-date financial information which is normally submitted to relevant government agencies material and necessary for meaningful negotiations. They may also agree to the condition that the information be kept confidential. [Book V Rule XVI Sec 2] So much so that Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an employer to refuse "to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work, and all other terms and conditions of employment. [Kiok Loy v. NLRC, 1986] Bargaining Procedure: [Book V, Rule XVI] Private Procedure The parties may provide for their own procedures in collective bargaining. The law only requires that these procedures be more expeditious than the procedure in Art. 250. [Art 251] Nature and Purpose of Collective Bargaining The institution of collective bargaining is a prime manifestation of industrial democracy at work. The two parties to the relationship, labor and management, make their own rules by coming to terms to govern themselves in matters that really count. [United Employees Union of Gelmart Industries v. Noriel, 1975] Rationale. — It is the policy of the state to promote the primacy of free collective bargaining [Art. 211 (a)] Labor Code Procedure [Art. 250] (1) Written notice and statement of proposals. When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of its proposals. (2) Reply. The other party shall make a reply thereto not later than ten (10) calendar days from receipt of such notice. (3) Conference. Should differences arise on the basis of such notice and reply, either party may request for a conference which shall begin not later than ten (10) calendar days from the date of request. (4) Board intervention and conciliation. If the dispute is not settled, the Board shall intervene upon request of either or both parties or at its own initiative and immediately call the parties to conciliation meetings. The Board shall have the power to issue subpoenas requiring the attendance of the parties to such meetings. It shall be the duty of the parties to participate fully and promptly in the conciliation meetings the Board may call; (5) Voluntary arbitration. The Board shall exert all efforts to settle disputes amicably and encourage the parties to submit their case to a voluntary arbitrator. (6) Prohibition against disruptive acts. During the conciliation proceedings in the Board, the parties are prohibited from doing any act which may disrupt or impede the early settlement of the disputes. When employers may be compelled to bargain collectively (1) Majority representation by the representative labor organization [exclusive bargaining agent] (2) Demand by the labor organization [Art. 250 par(a)] An employer asked by a labor organization to bargain collectively may file a petition for certification election to ascertain the will of the bargaining unit or it may voluntarily recognize the labor organization in proper circumstances. Waiver of right to collectively bargain The right to free collective bargaining includes the right to suspend it. [Rivera v. Espiritu, 2000] Meaning of the duty to bargain collectively It is the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. However, the duty does not compel any party to agree to a proposal or to make any concession. [Art. 252] When there is no CBA In the absence of an agreement or other voluntary arrangement providing for a more expeditious manner of collective bargaining, it shall be the duty of employer and the representatives of the employees to bargain Period to reply; bad faith. — The period to reply is merely procedural, and non-compliance cannot be automatically PAGE 75 UP COLLEGE OF LAW LABOR LAW deemed to be an act of ULP. [National Union of Restaurant Workers vs. CIR, 1964] BAR OPERATIONS COMMISSION Test for Mandatory Bargainable Issues: NEXUS Between the Nature of Employment and the Nature of the Demand. — The “other terms and conditions of employment” to become a mandatory bargainable issue must have a connection between the proposal and the nature of the work. Compare with. — More than a month after the proposals were submitted, the employer has not made any counterproposals. The company’s refusal to make a counterproposal to the union’s proposed CBA is an indication of its bad faith. Where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively. The employer’s actuations show a lack of sincere desire to negotiate, rendering it guilty of unfair labor practice. [Colegio de San Juan de Letran vs. Association, 2000] Importance of determining whether an issue is a mandatory bargaining issue or only a permissive bargaining issue. — "The question as to what are mandatory and what are merely permissive subjects of collective bargaining is of significance on the right of a party to insist on his position to the point of stalemate. A party may refuse to enter into a collective bargaining contract unless it includes a desired provision as to a matter which is a mandatory subject of collective bargaining. But a refusal to contract unless the agreement covers a matter which is not a mandatory subject is in substance a refusal to bargain about matters which are mandatory subjects of collective bargaining; and it is no answer to the charge of refusal to bargain in good faith that the insistence on the disputed clause was not the sole cause of the failure to agree or that agreement was not reached with respect to other disputed clauses.” [Samahang Manggagawa sa Top Form v. NLRC, 1998] Failure to reply as indicia of bad faith. — GMC’s failure to make a timely reply to the proposal sent by the union is indicative of its utter lack of interest in bargaining with the union. Its excuse that it felt the union no longer represented the workers was mainly dilatory as it turned out to be utterly baseless. GMC’s refusal to make a counter-proposal is an indication of its bad faith. Where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively. It is guilty of ULP. [General Milling Corp. vs. CA , 2004] Such refusal will not be deemed as an unfair labor practice. However, if a party refuses to contract based on an issue which is not a mandatory bargainable issue, the party will be guilty of ULP. Conciliation / Preventive Mediation – Privileged communication. — Information and statements made at conciliation proceedings shall be treated as privileged communication and shall not be used as evidence in the Commission. MANDATORY PROVISIONS OF CBA General Concepts Collective bargaining Agreement (CBA) A collective bargaining agreement refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit, including mandatory provisions for grievances and arbitration machineries. [Book V Rule I Section 1(j)] Conciliators and similar officials shall not testify in any court or body regarding any matters taken up at conciliation proceedings conducted by them. [Art. 233] Rationale.— (a) a person is entitled to ‘buy his or her peace’ without danger of being prejudiced in case his or her efforts fail (b) offers for compromise are irrelevant because they are not intended as admissions by the parties making them [Pentagon Steel v. CA, 2009] CBA impressed with public policy A CBA, as a labor contract within the contemplation of Article 1700 Civil Code which governs the relations between labor and capital, is not merely contractual in nature but impressed with public interest, thus, it must yield to the common good. [Davao Integrated Port Stevedoring Services v. Abarquez, 1993] Mandatory bargainable issues. — (1) Wages (2) Hours of work (3) All other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such agreement [Art. 252] The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects. [Art. 1700, Civil Code] Permissive Issues. — Unilateral benefits extended by the employer [cf., Union of Filipro Employees-Drug v. Nestle, 2008] A collective bargaining agreement refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit, including mandatory provisions for grievances and arbitration machineries. As in all other contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided they are not contrary to law, morals, good customs, public order or public policy. [Manila Fashions v. NLRC, 1996] Substandard CBA A CBA that falls below the minimum standards required by law is prohibited. Nonetheless, RA 9481 removed substandard CBAs as a ground for the cancellation of registration of union registration. A substandard CBA cannot bar a petition for certification election under the contract-bar rule. Confidentiality of registered CBA or parts thereof General rule: CBA is not confidential PAGE 76 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION It should be remembered that a grievance procedure is part of the continuous process of collective bargaining. It is intended to promote a friendly dialogue between labor and management as a means of maintaining industrial peace. [Master Iron Labor Union v. NLRC, 1993] Exceptions: (1) confidentiality authorized by Secretary of Labor (2) when it is at issue in any judicial litigation (3) public interest or national security requires [Art. 231] Effect of unregistered CBA An unregistered CBA is binding upon the parties but cannot serve as a bar to a petition for certification election under the contract-bar rule. No particular setup for a grievance machinery is required by law. Art. 260 of, as incorporated by R.A. 6715, only mandates that the parties to the CBA establish a machinery to settle problems arising from "interpretation or implementation of their collective bargaining agreement and those arising from the interpretation or enforcement of company personnel policies." [Caltex Refinery Employees Association v. Brillantes, 1997] Beneficiaries of the CBA The CBA benefits all workers in a collective bargaining unit. When a collective bargaining contract is entered into by the union representing the employees and the employer, even the non-member employees are entitled to the benefits of the contract. [New Pacific Timber and Supply v. NLRC, 2000] Voluntary Arbitration Constitutional basis. — The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. [Art. XIII Section 3] To accord its benefits only to members of the union without any valid reason would constitute undue discrimination against non-members. Nature of Contract and Contract Interpretation The terms and conditions of a collective bargaining contract constitute the law between the parties. [Mactan Workers Union vs. Aboitiz 1972] Automatic referral if grievance machinery fails.—All grievances submitted to the grievance machinery which are not settled within 7 calendar days from the date of its submission shall automatically be referred to voluntary arbitration prescribed in the CBA. [Art. 260 (3)] Those who are entitled to its benefits can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved party has the right to go to court for redress. [Babcock-Hitachi (Phils.) v. BabcockHitachi, 2005] Voluntary arbitration provision in the CBA.— (1) Parties to a CBA shall: (b) Name and designate in advance a Voluntary Arbitrator or panel of Voluntary Arbitrators, OR (c) Include in the agreement a procedure for the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators preferably from the listing of qualified Voluntary Arbitrators duly accredited by the Board. (2) In case the parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be necessary, pursuant to the selection Voluntary Arbitrator or panel of 8Arbitrators 0 procedure agreed upon in the CBA, which shall act with the same force and effect as if the has been selected by the parties as described above. [Art. 260] Contract Interpretation: Interpretation Tools A CBA, just like any other contract, is respected as the law between the contracting parties and compliance in good faith is mandated. Similarly, the rules embodied in the Civil Code [Art. 1700] on the proper interpretation of contracts can very well govern. GENERAL RULE: If the terms of the contract are clear, the literal meaning of the stipulations shall control. EXCEPTION: If the words appear to be contrary to the evident intention of the parties, the latter shall prevail over the former. [Kimberly Clark Phils. V. Lorredo, 1993] Mandatory provisions Grievance Procedure The parties to a Collective Bargaining Agreement shall include therein: (2) Provisions that will ensure the mutual observance of its terms and conditions. (3) A machinery for the adjustment and resolution of grievances arising from: (g) the interpretation or implementation of their CBA; and (h) those arising from the interpretation or enforcement of company personnel policies. (4) All grievances submitted to the grievance machinery which are not settled within 7 calendar days from the date of its submission shall be automatically referred to voluntary arbitration prescribed in the CBA. [Art. 260] Voluntary arbitration as a condition precedent. —The stipulation to refer all future disputes to an arbitrator or to submit an ongoing dispute to one is valid. Being part of a contract between the parties, it is binding and enforceable in court in case one of them neglects, fails or refuses to arbitrate. Going a step further, in the event that they declare their intention to refer their differences to arbitration first before taking court action, this constitutes a condition precedent, such that where a suit has been instituted prematurely, the court shall suspend the same and the parties shall be directed forthwith to proceed to arbitration. A court action may likewise be proper where the arbitrator has not been selected by the parties. [Chung Fu Industries v. CA, 1992] Arbitrable issues. — (1) interpretation or implementation of the CBA [Art. 261] (2) interpretation or enforcement of company personnel policies [Art. 261] Grievances arising from the interpretation or implementation of the CBA are subjects of the grievance procedure. [Navarro III v. Damasco, 1995] PAGE 77 UP COLLEGE OF LAW LABOR LAW (3) gross violations of CBA provision [flagrant/malicious refusal to comply with the economic provisions of the CBA [Art. 261] (4) all other labor disputes including ULP and bargaining deadlock, if the parties agree [Art. 262] BAR OPERATIONS COMMISSION Labor Management Council The council is formed by workers and employers for the purpose of the worker's participation in policy and decision-making processes of the establishment where they are employed insofar as said processes will directly affect their rights, benefits and welfare as guaranteed by the constitution subject to the rules and regulations as the Secretary of Labor and Employment may promulgate. The representatives of the workers in such labor-management councils shall be elected by at least the majority of all employees in said establishment. [Art. 255] Powers of the voluntary arbitrators.— (1) hold hearings (2) receive evidence (3) take whatever action is necessary to resolve the issue or issues subject of dispute, including efforts to effect a voluntary settlement between parties (4) determine attendance of any third parties (5) determine exclusion of any witness (6) issue writ of execution for sheriff of NLRC or regular courts to execute the final decision, order, or award [Art 262-A] Duration Political Aspect [representation]: 5 years. This refers to the identity and majority status of the collective bargaining agent that negotiated the CBA. Non-political aspect: 3 years. This refers to other provisions in the CBA, economic or otherwise other than representational or political. Finality of the final decision, order, or award.— Award or decision of the voluntary arbitrator shall be final and executory after 10 days from receipt of the copy of the award or decision by the parties. [Art 262-A] Freedom period. .— No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the DOLE outside of the sixty-day period immediately before the date of the expiry of such five year term of the Collective Bargaining Agreement. [Contractbar rule] No motion for reconsideration.— The voluntary arbitrator lost jurisdiction over the case submitted to him the moment he rendered his decision. Therefore, he could no longer entertain a motion for reconsideration of the decision for its reversal or modification. [Solidbank v. BLR] Appeal.— While there is an express mode of appeal from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to an appeal from the decision of a voluntary arbitrator. CBA Effectivity.— (1) If it is the first ever CBA, the effectivity date is whatever date the parties agree on. (2) If it is renegotiated CBA, the effectivity date depends upon the duration of conclusion. (a) If it is concluded within 6 months from the expiry date, the new CBA will retroact to the date following the expiry date [Illustration: expiry date: December 13; effectivity date: December 14]. (b) If the renegotiated CBA is concluded beyond 6 months from the expiry date, the matter of retroaction and effectivity is left with the parties. Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly be considered as a quasi-judicial agency, board or commission, still both he and the panel are comprehended within the concept of a "quasi-judicial instrumentality." A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable to the Court of Appeals. [Luzon Development Bank v. Assoc of Luzon Dev’t Employees, 1995] Art. 253-A serves as the guide in determining when the CBA at bar is to take effect. It provides that the representation aspect of the CBA is to be for a term of 5 years. All other provisions of the CBA shall be renegotiated not later than 3 years after its execution. Any agreement on such other provision of the CBA entered into within 6 months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement shall retroact to the day immediately following such date. If such agreement is entered into beyond 6 months, the parties shall agree on the duration of the effectivity thereof. If no agreement is reached within 6 months from the expiry date of the 3 years that follow the CBA execution, the law expressly gives the parties — not anybody else — the discretion to fix the effectivity of the agreement. The law does not specifically cover the situation where 6 months have elapsed but no agreement has been reached with respect to effectivity. In this eventuality, any provision of law should then apply. [Manila Electric Co. v. Quisumbing, 1999] Costs.— The parties to a Collective Bargaining Agreement shall provide therein a proportionate sharing scheme on the cost of the voluntary arbitration including the Voluntary Arbitrators fee. [Art. 262-B] Voluntary arbitrator's fee.— The fixing of the fee of the Voluntary Arbitrators, whether shouldered wholly by the parties or subsidized by the special voluntary arbitration fund, shall take into account the following factors: (1) nature of the case (2) time consumed in hearing the case (3) professional standing of the voluntary arbitrator (4) capacity to pay of the parties. No Strike-No Lockout Clause A "no strike, no lock-out" provision in the CBA is a valid stipulation although the clause may be invoked by an employer only when the strike is economic in nature or one which is conducted to force wage or other concessions from the employer that are not mandated to be granted by the law itself. It would be inapplicable to prevent a strike which is grounded on unfair labor practice. [Panay Electric Co. v. NLRC, 1995; Malayang Samahan ng mga Manggagawa sa Greenfield v. Ramos , 2000] Hold Over Principle.—In the absence of a new CBA, the parties must maintain the status quo and must continue in full force and effect the terms and conditions of the existing agreement during the sixty (60) day period and/or until a new agreement is reached. PAGE 78 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION qualified separated employees in the filling of vacancies in the facilities of the purchaser. [Manlimos v. NLRC, 1995] In this manner, the law prevents the existence of a gap in the relationship between the collective bargaining parties. [Art. 253] UNION SECURITY Union security is any form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. [GMC v. Casio, 2010] The last sentence of Article 253, which provides for automatic renewal pertains only to the economic provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute a bar to a filing of petition for certification election. When there is a representational issue, the status quo provision insofar as the need to await the creation of a new agreement will not apply. Otherwise, it will create an absurd situation where the union members will be forced to maintain membership by virtue of the union security clause existing under the CBA and, thereafter, support another union when filing a petition for certification election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise their right to self-organization. The holding of a certification election is a statutory policy that should not be circumvented, or compromised. [PICOP Resources, Inc. v. Taneca et. al., 2010] Legal basis Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. [Art. 248 (e)] Purpose To safeguard and ensure the existence of the union and thus, promote unionism in general as a state policy. Limitation to union security clauses Employees who are already members of another union at the time of the signing of the collective bargaining agreement may not be compelled by any union security clause to join any union. [Art. 248 (e)] Arbitrated CBA.— In the absence of an agreement between the parties, an arbitrated CBA takes on the nature of any judicial or quasi-judicial award. It operates and may be executed only prospectively unless there are legal justifications for its retroactive application. [Manila Electric Company vs. Quisumbing, 1999] Types of union security clauses (1) Closed shop (2) Maintenance of membership shop (3) Union shop (4) Modified union shop (5) Agency shop CBA in this case, on the other hand, is part of an arbitral award. As such, it may be made retroactive to the date of expiration of the previous agreement. Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Art. 263(g), the latter is deemed vested with plenary and discretionary powers to determine the effectivity thereof. [Manila Central Line Corp. v. Manila Central Line Free Workers Union, 1998] Closed shop A closed shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part. [GMC v. Casio, 2010] CBA and 3rd Party Applicability.— Labor contracts such as employment contracts and CBAs are not enforceable against a transferee of an enterprise, labor contracts being in personam, is binding only between the parties. As a general rule, there is no law requiring a bona fide purchaser of the assets of an on-going concern to absorb in its employ the employees of the latter. However, although the purchaser of the assets or enterprise is not legally bound to absorb in its employ the employees of the seller of such assets or enterprise, the parties are liable to the employees if the transaction between the parties is colored or clothed with bad faith. [Sundowner Dev’t. Corp. v Drilon, 1989] Only union members can be hired by the company and they must remain as members to retain employment in the company. [Azucena] Due process in termination under closed shop provision. .— The requirements laid down by the law in determining whether or not an employee was validly terminated must still be followed even if it is based on a closed-shop provision of a CBA, i.e. the substantive as well as the procedural due process requirements. [Del Monte v. Saldivar, 2007] General Rule: An innocent transferee of a business establishment has no liability to the employees of the transferor to continue employing them. Nor is the transferee liable for past unfair labor practices of the previous owner. The employer, however, is not bound to immediately terminate the employment of a worker who has lost his union membership pursuant to a union security clause in the CBA. In General Milling Corp. v. Casio, 615 SCRA 13 (2010), the Supreme Court held that when asked by the union to terminate an employee under the union security clause of the CBA, the employer must conduct his own “separate and independent investigation” to determine the sufficiency of the evidence supporting the expulsion of the employee. The employer cannot straight away accede to the demand of the union to dismiss the employee. Exception: (1) when the liability therefore is assumed by the new employer under the contract of sale, or (2) when liability arises because of the new owner's participation in thwarting or defeating the rights of the employees. The most that the transferee may do, for reasons of public policy and social justice, is to give preference to the PAGE 79 UP COLLEGE OF LAW LABOR LAW Construction. .— The closed shop provision is the most prized achievement of unionism. However it can also be a potent weapon wielded by the union against the workers whom the union is supposed to protect in the first place. Hence, any doubt as to the existence of a closed shop provision in the CBA will be resolved in favor of the nonexistence of the closed shop provision. BAR OPERATIONS COMMISSION Refusal to bargain Implied refusal. The school is guilty of unfair labor practice when it failed to make a timely reply to the proposals of the union more than one month after the same were submitted by the union. In explaining its failure to reply, the school merely offered a feeble excuse that its Board of Trustees had not yet convened to discuss the matter. Clearly, its actuation showed a lack of sincere desire to negotiate. [Colegio de San Juan de Letran v. Association , 2000] Maintenance of membership shop There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit or the agreement is terminated. [GMC v. Casio, 2010] Individual bargaining It is an unfair labor practice for an employer operating under a CBA to negotiate with his employees individually. That constitutes interference because the company is still under obligation to bargain with the union as the bargaining representative. [The Insular Life Assurance Co. Ltd., Employees Assn. v. Insular Life Assurance Co. Ltd, 1971] No employee is compelled to join the union, but all present or future must, as a condition of employment, remain in good standing in the union. [Azucena] Individual bargaining contemplates a situation where the employer bargains with the union through the employees instead of the employees through the union. Union shop There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. [GMC v. Casio, 2010] Blue sky bargaining Blue-Sky Bargaining is defined as "unrealistic and unreasonable demands in negotiations by either or both labor and management, where neither concedes anything and demands the impossible." It actually is not collective bargaining at all. Non-members may be hired, but to retain employment, they must become union members after a certain period. The requirement applies to present and future employees. [Azucena] Source: Harold S. Roberts, Robert’s Dictionary of Industrial Relations [Revised Edition, 1971, p. 51] – footnote in [Standard Bank Chartered Employees Union v. Confesor, 2004] Modified union shop Employees who are not union members at the time of signing the contract need not join the union, but all hired workers thereafter must join. [Azucena] Surface bargaining Surface bargaining is defined as "going through the motions of negotiating," without any real intent to reach an agreement. It violates the Act's requirement that parties negotiate in "good faith." It is prohibited because, as one commentator explained: The bargaining status of a union can be destroyed by going through the motions of negotiating almost as easily as by bluntly withholding recognition… As long as there are unions weak enough to be talked to death, there will be employers who are tempted to engage in the forms of collective bargaining without the substance. [K-MART Corporation v NLRB, 1980 626 F.2d 704] Agency shop An agreement whereby employees must either join the union or pay to the union as exclusive bargaining agent a sum equal to that paid by the members. [Azucena] Check-off, Union dues, Agency fees Please see previous UNFAIR LABOR PRACTICE IN COLLECTIVE BARGAINING Both employers and labor organizations can commit acts of unfair labor practices in collective bargaining. However, the labor organization must be the representative of the employees before any act it does may be considered as a violation of the duty to bargain collectively (ULP). [Art. 248 (g) and Art. 249 (c)] UNFAIR LABOR PRACTICE (ULP) Unfair labor practices violate the constitutional right of workers and employees to self-organization. [Art. 247] Examples of ULP in collective bargaining (1) bargaining in bad faith (2) refusal to bargaining (3) individual bargaining (4) blue sky bargaining (5) surface bargaining Definition Unfair labor practice refers to acts that violate the workers’ right to organize. The prohibited acts are related to the workers’ right to self-organization and to the observance of a CBA. Without that element, the acts, no matter how unfair, are not unfair labor practices. The only exception is Art. 248 (f) (i.e. to dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code). [Philcom Employees Union v. Phil. Global, 2006] Bargaining in bad faith GMC’s refusal to make a counter-proposal to the union’s proposal for CBA negotiation on the excuse that it felt the union no longer represented the workers is an indication of bad faith. xxx Failing to comply with the mandatory obligation to submit a reply to the union’s proposals, GMC violated its duty to bargain collectively, making it liable for unfair labor practice. [GMC v. CA, 2004] Nature of ULP (1) inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect PAGE 80 UP COLLEGE OF LAW LABOR LAW (2) disrupt industrial peace (3) hinder the promotion of healthy and stable labormanagement relations (4) violations of the civil rights of both labor and management but are also criminal offenses [Art. 247] BAR OPERATIONS COMMISSION (e) Purpose of the policy against ULPs Protection of right to self-organization and/or collective bargaining: (1) The employee is not only protected from the employer but also from labor organizations. (2) Employer is also protected from ULP committed by a labor organization. (3) The public is also protected because it has an interest in continuing industrial peace. Employer-employee relationship required; exception An unfair labor practice may be committed only within the context of an employer-employee relationship [American President Lines v. Clave, 1982] Exception: “yellow dog” condition: to require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs. [Art 248 (b)] (f) (g) Parties not estopped from raising ULP by eventual signing of the CBA The eventual signing of the CBA does not operate to estop the parties from raising unfair labor practice charges against each other. [Standard Chartered Bank Union v. Confesor, 2004] (h) (i) organization, including the giving of financial or other support to it or its organizers or supporters; To discriminate in regard to wages, hours of work and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. Employees of an appropriate bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such nonunion members accept the benefits under the collective bargaining agreement: Provided, that the individual authorization required under Article 242, paragraph (o) of this Code shall not apply to the nonmembers of the recognized collective bargaining agent. To dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code; To violate the duty to bargain collectively as prescribed by this Code; To pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute; or To violate a collective bargaining agreement. The provisions of the preceding paragraph notwithstanding, only the officers and agents of corporations, associations or partnerships who have actually participated in, authorized or ratified unfair labor practices shall be held criminally liable. [Art. 248] ULP: Statutory Construction The Labor Code does not undertake the impossible task of specifying in precise and unmistakable language each incident which constitutes an unfair labor practice. Rather, it leaves to the court the work of applying the law's general prohibitory language in light of infinite combinations of events which may be charged as violative of its terms. [HSBC Employee Union V. NLRC , 1997] Interference/ Restraint/ Coercion The act of ULP must interfere with, restrain or coerce employees in the exercise of their right to self-organization. ULP of Employers (1) Interference, restraint, and coercion (2) Yellow-dog contracts (3) Contracting out (4) Company union (5) Discrimination (6) Testimony (7) Violation of duty to bargain collectively (8) Payment of negotiation or attorney's fees (9) Violation of the CBA Interrogation.— General rule: employer may interrogate its employees regarding their union affiliation for legitimate purposes and with the assurance that no reprisals would be taken against the unionists. Exception: when interrogation interferes with or restrains employees' right to self-organization. [Phil. Steam Navigation Co. v. Phil. Marine Officer’s Guild, 1965] Speech.— The subjection by the company of union to vilification and its participation in soliciting membership for a competing union is also ULP act. [Phil. Steam Navigation Co. v. Phil. Marine Officer’s Guild, 1965] Legal basis [Art. 248] Unfair labor practices of employers. – It shall be unlawful for an employer to commit any of the following unfair labor practice: (a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization; (b) To require as a condition of employment that a person or an employee shall not join a labor organization or shall with-draw from one to which he belongs; (c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization; (d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor Employer may not send letters containing promises or benefits, nor of threats of obtaining replacements to individual workers while the employees are on strike due to a bargaining deadlock. This is tantamount to interference and is not protected by the Constitution as free speech. [Insular Life Assurance Co. Employees Assn. v. Insular Life Assurance Co. Ltd, 1971] Espionage.— Espionage and/or surveillance by the employer of union activities are instances of interference, restraint or coercion of employees in connection with their right to organize, form and join unions as to constitute PAGE 81 UP COLLEGE OF LAW LABOR LAW unfair labor practice. xxx The information obtained by means of espionage is invaluable to the employer and can be used in a variety of cases to break a union. [Insular Life Assurance Co. Employees Assn. v. Insular Life Assurance Co. Ltd, 1971] BAR OPERATIONS COMMISSION Payment of negotiation or attorney's fees Sweetheart contracts Sweetheart contracts are favorable both to the union and the employer at the expense of the employees. The settlement of bargaining issues must be made by fair bargaining in good faith, and not through the payment of negotiation or attorney's fees which will ultimately lead to sweetheart contracts. Yellow dog contracts Yellow dog contracts require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs. To violate a collective bargaining agreement Flagrant and/or malicious refusal required Violations of collective bargaining agreements, except flagrant and/or malicious refusal to comply with its economic provisions, shall not be considered unfair labor practice and shall not be strikeable. [IRR] Examples.— (a) a representation by the employee that he is not a member of a labor organization (b) a promise by the employee that he will not join a union (c) a promise by the employee that upon joining a labor organization, he will quit his employment ULP of Labor Organizations (1) restraint, coercion (2) discrimination (3) violation of duty to bargain collectively (4) featherbedding [exaction] (5) asking or accepting negotiation or attorney's fees (6) violation of collective bargaining agreement Contracting out General rule: contracting out is not ULP Exception: (1) contracted-out services or functions are performed by union members AND (2) contracting out will interfere with, restrain, or coerce employees in the exercise of their right to selforganization. [Art. 248 (c)] Legal basis Unfair labor practices of labor organizations. - It shall be unfair labor practice for a labor organization, its officers, agents or representatives: (a) To restrain or coerce employees in the exercise of their right to self- organization. However, a labor organization shall have the right to prescribe its own rules with respect to the acquisition or retention of membership; (b) To cause or attempt to cause an employer to discriminate against an employee, including discrimination against an employee with respect to whom membership in such organization has been denied or to terminate an employee on any ground other than the usual terms and conditions under which membership or continuation of membership is made available to other members; (c) To violate the duty, or refuse to bargain collectively with the employer, provided it is the representative of the employees; (d) To cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or other things of value, in the nature of an exaction, for services which are not performed or not to be performed, including the demand for fee for union negotiations; (e) To ask for or accept negotiation or attorney’s fees from employers as part of the settlement of any issue in collective bargaining or any other dispute; or (f) To violate a collective bargaining agreement. Company union "Company union" means any labor organization whose formation, function or administration has been assisted by any act defined as unfair labor practice by this Code. [Art. 212(i)] The employer commits ULP if it initiates, dominates, or otherwise interferes with the formation or administration of any labor organization. Example: giving out financial aid to any union's supporters or organizers. Discrimination – Encourage/Discourage Unionism General rule: it is ULP to discriminate in regard to wages, hours of work and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Exception [union security clause]: Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment. Exception to exception: Those employees who are already members of another union at the time of the signing of the collective bargaining agreement. [Art. 248 (e)] The provisions of the preceding paragraph notwithstanding, only the officers, members of governing boards, representatives or agents or members of labor associations or organizations who have actually participated in, authorized or ratified unfair labor practices shall be held criminally liable. [Art. 249] Refer to Union Security Clauses Testimony It is an act of ULP by an employer to dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code [Art. 248 (f)] Restraint, or coercion “Interfere” is not included in Art. 249 simply because any act of a labor organization amounts to interference to the right of self-organization. Violate duty to bargain collectively Please refer to section on Unfair Labor Practice In Collective Bargaining for some examples. Discrimination Encourage/Discourage Unionism General rule: it is ULP for a labor organization to cause an employer to discriminate against an employee PAGE 82 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION to protect. [Batangas Laguna Tayabas Bus Co. v NLRC, G.R. No. 101858, Aug. 21, 1992] Exception: provisions of a valid union security clause and other company policies applicable to all employees. FORMS OF CONCERTED ACTIVITIES Violate duty to bargain or the CBA Please refer to section of ULP for some examples. (a) Strike (b) Picketing Exaction (Featherbedding) Featherbedding or “make-work” by the union is the practice of the union asking [exacting] for money or other things of value from the employer in return for services which are not performed or are not to be performed. Employer's economic weapon (1) Lockout Strike A strike is any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. [Art. 212 (o)] Asking or accepting negotiation and other attorney's fees See counterpart in ULP by employers (sweetheart contracts). Strikes not limited to work stoppages The term “strike” shall comprise not only concerted work stoppages, but also slowdowns, mass leaves, sit-downs, attempts to damage, destroy or sabotage plant equipment and facilities, and similar activities. [Samahang Manggagawa v. Sulpicio Lines, 2004] Violate a collective bargaining agreement Flagrant and/or malicious refusal required Violations of collective bargaining agreements, except flagrant and/or malicious refusal to comply with its economic provisions, shall not be considered unfair labor practice and shall not be strikeable. [IRR] As coercive measure by employees A strike is a coercive measure resorted to by laborers to enforce their demands. The idea behind a strike is that a company engaged in a profitable business cannot afford to have its production or activities interrupted, much less, paralyzed. [Phil. Can Co. v. CIR, 1950] RIGHT TO PEACEFUL CONCERTED ACTIVITIES A concerted activity is one undertaken by two or more employees to improve their terms and conditions of work. CONSTITUTIONAL BASIS No severance of employer-employee relationship during lawful strike Although during a strike the worker renders no work or service and receives no compensation, yet his relationship as an employee with his employer is not severed or dissolved. [Elizalde Rope Factory, Inc. v. SSS, 1972] The state shall guarantee the rights of all workers to xxx peaceful concerted activities, including the right to strike in accordance with law. [Art. XIII Section 3] STATUTORY BASIS Workers shall have the right to engage in concerted activities for purposes of collective bargaining or for their mutual benefit and protection. The right of legitimate labor organizations to strike and picket and of employers to lockout, consistent with the national interest, shall continue to be recognized and respected. However, no labor union may strike and no employer may declare a lockout on grounds involving inter-union and intra-union disputes. [Art. 263] Payment of wages during lawful strikes General rule: Striking employees are not entitled to the payment of wages for un-worked days during the period of the strike pursuant to the “no work-no pay” principle. Exception: Agreement to the contrary. Reinstatement after a lawful strike When strikers abandon the strike and apply for reinstatement despite the existence of valid grounds but the employer either: (a) refuses to reinstate them or (b) imposes upon their reinstatement new conditions then the employer commits an act of ULP. Right to self-organization includes the right to engage in lawful concerted activities and may not be abridged It shall be unlawful for any person to restrain, coerce, discriminate against or unduly interfere with employees and workers in their exercise of the right to selforganization. Such right shall include the right to form, join, or assist labor organizations for the purpose of collective bargaining through representatives of their own choosing and to engage in lawful concerted activities for the same purpose or for their mutual aid and protection, subject to the provisions of Article 264 of this Code. [Art. 246] The strikers who refuse to accept the new conditions and are consequently refused reinstatement are entitled to the losses of pay they may have suffered by reason of the employer’s discriminatory acts from the time they were refused reinstatement. Reason why concerted activities, particularly strikes, must be in accordance with law The strike is a powerful weapon of the working class. Precisely because of this, it must be handled carefully, like a sensitive explosive, lest it blow up in the workers’ own hands. Thus, it must be declared only after the most thoughtful consultation among them, conducted in the only way allowed, that is, peacefully, and in every case conformably to reasonable regulation. Any violation of the legal requirements and strictures will render the strike illegal, to the detriment of the very workers it is supposed Forms of strikes As to legality (a) Legal strike – one called for a valid purpose and conducted through means allowed by law. (b) Illegal strike – one staged for a purpose not recognized by law, or if for a valid purpose, conducted through means not sanctioned by law. As to grounds (a) Economic strike – one staged by workers to force wage or other economic concessions from the employer which he is not required by law to grant [Consolidated PAGE 83 UP COLLEGE OF LAW LABOR LAW Labor Association of the Phil. v. Marsman and Company 1964] (b) ULP strike – called against a company's unfair labor practice to force the employer to desist from committing such practices. BAR OPERATIONS COMMISSION (2) any legitimate labor organization in the absence of #1, but only on grounds of ULP Who may declare a lockout [Book V, Rule XXII, Sec. 6] (1) employer As to how committed (a) Slowdown strike – one by which workers, without a complete stoppage of work, retard production or their performance of duties and functions to compel management to grant their demands [Ilaw at Buklod ng Manggagawa v. NLRC, 1991] REQUISITES OF A VALID STRIKE A valid strike must have a lawful ground and must conform to the procedural requirements set by law. Grounds [Art. 263 (c)] A strike or lockout may be declared in cases of: (a) Bargaining deadlocks (b) ULP A slowdown is inherently illicit and unjustifiable because while the employees continue to work, they, at the same time, select what part of their duties they perform. In essence, they work on their own terms. [Ilaw at Buklod ng Manggagawa (IBM) v. NLRC, 1991] When violations of collective bargaining strikeable as ULP Violations of collective bargaining agreements must be flagrant and/or there must be malicious refusal to comply with its economic provisions. (b) Wild-cat strike – one declared and staged without filing the required notice of strike and without the majority approval of the recognized bargaining agent. When no lawful strike can be declared (1) Ground is an inter-union or intra-union dispute (2) No notice of strike (3) No lock-out vote obtained and reported to the NCMB (4) After assumption or certification by the Secretary of Labor (c) Sit-down strike – one wherein workers take over possession of the property of such business to cease production and to refuse access to owners. (d) Sympathetic strike– one in which the striking workers have no demands of their own, but strike to make common cause with other strikers in other establishments. Procedural requirements (1) Effort to bargain (2) Filing and service of notice of strike (3) Observance of cooling-off period (4) Strike vote (5) Strike vote report (6) Observance of the waiting period Conversion from economic to ULP strike It is possible for a strike to change its character from an economic to a ULP strike. In the instant case, initially, the strike staged by the Union was meant to compel the Company to grant it certain economic benefits set forth in its proposal for collective bargaining. However, the strike changed its character from the time the Company refused to reinstate complainants because of their union activities after it had offered to admit all the strikers and in fact did readmit the others. It was then converted into an unfair labor practice strike. [Consolidated Labor Assoc. of the Phil. v. Marsman and Company, 1964] Effort to bargain No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book. [Art. 264 (a)] Filing and service of notice of strike Bargaining deadlocks.— The duly certified or recognized bargaining agent may file a notice of strike or the employer may file a notice of lockout with the Department at least 30 days before the intended date thereof. [Art. 263(c)] Strike cannot be converted to a lockout by a return to work offer A strike cannot be converted into a pure and simple lockout by the mere expedient filing before the trial court a notice of offer to return to work during the pendency of the labor dispute between the union and the employer. [Rizal Cement Workers Union v. CIR, 1962] Unfair labor practice; union busting.—In cases of unfair labor practice, the period to file notice of strike shall be 15 days. However, in cases of union busting [dismissal of duly elected union officers from employment], the cooling period shall not apply. [Art. 263 (c)] Note: the notice must be served to the employer. Failure to do so will constitute noncompliance with the procedural requirements and will result to an illegal strike. Rationale: due process. [IRR] Picketing Picketing is the right of workers to peacefully march to and fro before an establishment involved in a labor dispute generally accompanied by the carrying and display of signs, placards and banners intended to inform the public about the dispute. [NCMB Manual, Sec. 1] Contents of notice of strike [Book V Rule XXII Sec. 8]. – (1) Names and addresses of the employer and the union involved (2) Nature of the industry to which the employer belongs (3) Number of union members and of workers in the bargaining unit (4) Such other relevant data as may facilitate the settlement of the dispute. Legal basis The right of legitimate labor organizations to strike and picket and of employers to lockout, consistent with the national interest, shall continue to be recognized and respected. [Art 263 (b)] WHO MAY DECLARE A STRIKE OR LOCKOUT Who may declare a strike [Book V, Rule XXII, Sec. 6] (1) certified or duly recognized bargaining representative PAGE 84 95 UP COLLEGE OF LAW LABOR LAW Additional Requirements. – In cases of bargaining deadlocks (1) Statement of Unresolved issues in the bargaining negotiations (2) Written Proposals of the union (3) Counterproposals of the employer (4) Proof of a request for conference to settle the differences. BAR OPERATIONS COMMISSION Observance of the waiting period The waiting period, on the other hand, is intended to provide opportunity for the members of the union or the management to take the appropriate remedy in case the strike or lockout vote report is false or inaccurate. [National Federation of Sugar Workers vs. Ovejera, 1982] Compliance with both cooling-off and waiting periods; rationale. – The observance of both periods must be complied with, although a labor union may take a strike vote and report the same within the statutory cooling-off period. The cooling-off and 7-day strike ban provisions of law constitute a valid exercise of police power of the State. [National Federation of Sugar Workers vs. Ovejera, 1982] In cases of ULP. – (1) Statement of Acts complained of (2) Efforts taken to resolve the dispute amicably. Action on notice [Book V Rule XXII Sec. 9] (a) Upon receipt of a valid notice of strike or lockout, the NCMB, through its Conciliator-Mediators, shall call the parties to a conference the soonest possible time in order to actively assist them to explore all possibilities for amicable settlement. (b) The Conciliator-Mediator may suggest/offer proposals as an alternative avenue for the resolution of their disagreement/conflict which may not necessarily bind the parties. (c) If conciliation/mediation fails, the parties shall be encouraged to submit their dispute for voluntary arbitration. Strike-vote reported within the cooling-off period. – When the strike-vote is reported within the cooling-off period, the phrase “at least 7 days before the intended strike or lockout, subject to the cooling-off period herein provided.” in Article 263 (f) admits two interpretations: (1) Mutually exclusive periods [used in the NCMB Manual]. The cooling off period and the 7-day period are mutually exclusive. Thus, in the case of Capitol Medical Center v. NLRC, the Court held that when the strike vote is conducted within the cooling-off period, the 7day requirement shall be counted from the day following the expiration of the cooling off period. (2) Coexistent periods. The cooling-off period and the 7day requirement may coexist. After all, the purpose of the 7-day requirement is to give time for the DOLE to verify if the projected strike is supported by the majority. There is no reason to add it to the cooling-off period. Observance of cooling-off periods Cooling off periods (1) bargaining deadlock – 30 days (2) ULP but not union busting – 15 days (3) ULP and union busting – no cooling-off period Purpose of cooling-off period.— During the cooling-off period, it shall be the duty of the Ministry to exert all efforts at mediation and conciliation to effect a voluntary settlement. Should the dispute remain unsettled until the lapse of the requisite number of days from the mandatory filing of the notice, the labor union may strike or the employer may declare a lockout. [Art. 263(e)] REQUISITES OF A VALID LOCKOUT Lockout by the employer Lockout is the temporary refusal of an employer to furnish work as a result of an industrial or labor dispute. [Art. 212(p)] No lockout based on intra or inter union disputes No labor union may strike and no employer may declare a lockout on grounds involving inter-union and intra-union disputes. [Art. 263 (b)] The purpose of the cooling-off period is to provide an opportunity for mediation and conciliation. [National Federation of Sugar Workers vs. Ovejera, 1982] Strike vote [Art. 263 (f)] Requirements for a declaration of a strike in a strike vote.— (1) approval by a majority of the total union membership in the ABU (2) approval is obtained by secret ballot in a meeting/referendum called for the purpose Grounds Similar to a strike, the proper grounds for a lockout are (1) bargaining deadlock (2) ULP by labor organizations Requisites (a) Effort to bargain (b) Filing and service of notice of lockout (c) Observance of cooling-off period (d) Lockout vote (e) Report of lockout vote (f) Observance of the waiting period Duration of the validity of the strike-vote.—The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. Department of Labor and Employment intervention.—The Department may, at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. Effort to bargain No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book. [Art. 264 (a)] Strike Vote Report [Art. 263(f)] In every case, the union or the employer shall furnish the Department the results of the voting at least 7 days before the intended strike or lockout, subject to the cooling-off period herein provided. Filing and service of notice of lockout Bargaining deadlock The notice of lockout may be filed by the employer at least 30 days before the intended date thereof. [Art. 263(c)] PAGE 85 UP COLLEGE OF LAW LABOR LAW ULP.—In cases of unfair labor practice, the period of notice shall be 15 days. [Art. 263(c)] BAR OPERATIONS COMMISSION Effect of Illegal Lockout.—Any worker whose employment has been terminated as a consequence of any unlawful lockout shall be entitled to reinstatement with full backwages. [Art. 264 (a), par. 3, 1st sentence] Note: the notice must be served to the employees through the representative union. REQUISITES FOR LAWFUL PICKETING Contents of notice.— (a) Names and addresses of the employer and the union involved (b) Nature of the industry to which the employer belongs (c) Number of union members and of workers in the bargaining unit (d) Such other relevant data as may facilitate the settlement of the dispute. Prohibited activities in picketing [Art. 264] (1) By any person. No person shall obstruct, impede, or interfere with, by force, violence, coercion, threats or intimidation, any peaceful picketing by employees during any labor controversy or in the exercise of the right to self-organization or collective bargaining, or shall aid or abet such obstruction or interference. [Art. 264 (b)] (2) By police force. The police force shall keep out of the picket lines unless actual violence or other criminal acts occur therein: Provided, That nothing herein shall be interpreted to prevent any public officer from taking any measure necessary to maintain peace and order, protect life and property, and/or enforce the law and legal order. [Art. 264 (d)] (3) By person engaged in picketing. No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer’s premises for lawful purposes, or obstruct public thoroughfares. [Art. 264 (e)] Additional Requirements.— In cases of bargaining deadlocks (1) Statement of unresolved issues in the bargaining negotiations (2) Written proposals of the union (3) Counterproposals of the employer (4) Proof of a request for conference to settle the differences. In cases of ULP (1) Statement of acts complained of (2) Efforts taken to resolve the dispute amicably. Picketing as part of freedom of speech/expression; limitations General rule: picketing enjoys constitutional protection as part of freedom of speech and/or expression. Action on notice.— (a) Upon receipt of a valid notice of strike or lockout, the NCMB, through its Conciliator-Mediators, shall call the parties to a conference the soonest possible time in order to actively assist them to explore all possibilities for amicable settlement. (b) The Conciliator-Mediator may suggest/offer proposals as an alternative avenue for the resolution of their disagreement/conflict which may not necessarily bind the parties. (c) If conciliation/mediation fails, the parties shall be encouraged to submit their dispute for voluntary arbitration. [Book V Rule XXII Sec. 9] Exceptions/limitations: (1) when picketing is coercive rather than persuasive [Security Bank Employees Union v. Security Bank] (2) when picketing is achieved through illegal means [Mortera v. CIR] (3) courts may confine the communication/demonstration to the parties to the labor dispute [PCIB v. Philnabank Employees Association] (4) Innocent bystander rule. Courts may insulate establishments or persons with no industrial connection or having interest totally foreign to the context of the dispute [PCIB v. Philnabank Employees Association] Observance of cooling-off periods Lockout cooling-off periods: (a) based on bargaining deadlock – 30 days (b) based on ULP – 15 days Innocent bystander rule; test An "innocent bystander," who seeks to enjoin a labor strike, must satisfy the court that aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different from, without any connection whatsoever to, either party to the dispute and, its interests are totally foreign to the context thereof. [MSF Tire and Rubber Inc. v. CA, 1999] Lockout vote A decision to declare a lockout must be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. [Art. 263(f)] Duration of the validity of the lockout vote.—The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. [Art. 263(f)] Picketing and libel Libel laws are not applied strictly considering that there is emotional tension in the picket lines and expected discourteous and impolite exchanges between the employees and the employer. [PCIB v. Philnabank Employees Association, 1981] Report of lockout vote In every case, the union or the employer shall furnish the Ministry the results of the voting at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided. [Art. 263(f)] Peaceful picketing is legal even in the absence of employeremployee relationship Picketing, peacefully carried out, is not illegal even in the absence of employer-employee relationship, for peaceful picketing is a part of the freedom of speech guaranteed by the Constitution. [De Leon v. National Labor Union, 1957] Observance of waiting period (7 days) See notes under strike. PAGE 86 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY OR CERTIFICATION OF THE LABOR DISPUTE TO THE NLRC FOR COMPULSORY ARBITRATION is not even considered violative of the right against involuntary servitude. [Kaisahan ng Mga Manggagawa sa Kahoy v. Gotamco Sawmills, 1948] Conditions for the assumption/certification powers (1) labor dispute in an industry indispensable to the national interest (2) such dispute is causing or is likely to cause a strike or lockout Immediately executory The assumption and certification orders are executory in character and must be strictly complied with by the parties. [Allied Banking v. NLRC, 1996] Powers of the Secretary of Labor (alternative) (1) Assumption of jurisdiction. The Secretary of Labor will decide the labor dispute himself/herself. (2) Certification for compulsory arbitration. The Secretary of Labor will certify the labor dispute to the NLRC for compulsory arbitration. Strikes and lockouts in hospitals, clinics and similar medical institutions [Art. 263 (g)] Skeletal workforce requirement It shall be the duty of the striking union or locking-out employer to provide and maintain an effective skeletal workforce of medical and other health personnel, whose movement and services shall be unhampered and unrestricted, as are necessary to insure the proper and adequate protection of the life and health of its patients, most especially emergency cases, for the duration of the strike or lockout. Powers of the President (not precluded by the powers of the Secretary of Labor) (1) determine the industries indispensable to the national interest (2) assume jurisdiction over any such labor dispute to settle or terminate such dispute Immediate assumption/certification by the Secretary of Labor In such cases, therefore, the Secretary of Labor and Employment may immediately assume, within twenty four (24) hours from knowledge of the occurrence of such a strike or lockout, jurisdiction over the same or certify it to the Commission for compulsory arbitration. Who determines industries indispensable to the national interest It is in the discretion of the Secretary of Labor to determine which industries are indispensable to the national interest. However, the President may determine such industries himself: Rationale Highest respect accorded to the right of patients to life and health. The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining the industries that, in his opinion, are indispensable to the national interest, and from intervening at any time and assuming jurisdiction over any such labor dispute in order to settle or terminate the same. [Art. 263 (g), last sentence] EFFECT OF DEFIANCE OF ASSUMPTION OR CERTIFICATION ORDERS Defiance results in a prohibited activity under Art. 264 No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout. [Art. 264] NATURE OF ASSUMPTION ORDER OR CERTIFICATION ORDER (1) Automatic injunction (2) Return-to-work and admission (3) Immediately executory Strike/lockout becomes illegal A strike undertaken despite the issuance by the Secretary of Labor of an assumption or certification order becomes a prohibited activity and thus, illegal, pursuant to Article 264 (a) of the Labor Code. [Allied Banking v. NLRC, 1996] Automatic injunction of intended of impending strike or lockout Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification nd order. [Art. 263 (g), 2 sentence] See notes on liabilities of employer, union officers, and ordinary workers under illegal strike. Return-to-work and readmission if strike or lockout has already taken place If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return-to-work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the rd strike or lockout. [Art. 263 (g), 3 sentence] Summary of liabilities of participants in an illegal strike/lockout [Art. 264] Employer in an illegal lockout – workers terminated due to illegal lockout shall be entitled to reinstatement plus full backwages. Union officers who participated in illegal strike – deemed to have lost their employment Nature of return-to-work order It is also important to emphasize that the return-to-work order not so much confers a right as it imposes a duty; and while as a right it may be waived, it must be discharged as a duty even against the worker's will. Returning to work in this situation is not a matter of option or voluntariness but of obligation. The worker must return to his job together with his co-workers so the operations of the company can be resumed and it can continue serving the public and promoting its interest. That is the real reason such return can be compelled. So imperative is the order in fact that it Union officers who participated in illegal acts during a lawful strike – deemed to have lost their employment. Ordinary workers – deemed to have lost their employment only if they participated in illegal acts. PAGE 87 UP COLLEGE OF LAW LABOR LAW Stricter penalties for non-compliance with orders, prohibitions, and/or injunctions issued by the Secretary of Labor in strikes involving hospitals, clinics, and similar medical institutions (1) immediate disciplinary action against both union and employer (2) dismissal/loss of employment for members of the striking union (3) payment by employer of backwages, damages, and other affirmative relief (4) criminal prosecution against either or both the union and employer Unlawful means and methods Purpose and means test There must be concurrence between the validity of the purpose of the strike and the means of conducting it. A strike is a legitimate weapon in the universal struggle for existence. It is considered as the most effective weapon in protecting the rights of the employees to improve the terms and conditions of their employment. But to be valid, a strike must be pursued within legal bounds. The right to strike as a means for the attainment of social justice is never meant to oppress or destroy the employer. The law provides limits for its exercise. Among such limits are the prohibited activities under Art. 264, particularly paragraph (e), which states that no person engaged in picketing shall: (a) commit any act of violence, coercion, or intimidation or (b) obstruct the free ingress to or egress from the employer's premises for lawful purposes or (c) obstruct public thoroughfares. [Association of Independent Unions in the Philippines (AIUP), et. al. v NLRC, 1999] ILLEGAL STRIKE (1) (2) (3) (4) (5) (6) BAR OPERATIONS COMMISSION Prohibited by law Improper grounds Noncompliance with procedural requirements Unlawful means and methods Violation of injunction order No strike/lockout provisions in the CBA Prohibited by law Government employees. While the Constitution guarantees the right of government employees to organize, they are otherwise not allowed to strike. A legal strike may turn into an illegal strike Even if the strike is valid because its objective or purpose is lawful, the strike may still be declared invalid where the means employed are illegal. [Phil. Diamond Hotel and Resort, Inc. v. Manila Diamond Hotel Employees Union, 2006] Improper grounds A legal strike must be based on a bargaining deadlock and/or a ULP act only. Examples of unlawful means and methods (1) Acts of violence and terrorism (2) Destruction of property Intra-union and inter-union disputes are not proper grounds to strike. Good faith strike Good faith may be used as a defense if the strike is held on the basis of an act of ULP by the employer even if it turned out that there was no act of ULP. However, the mandatory procedural requirements cannot be dispensed with [notice of strike, cooling-off period, strike vote, strike vote report]. [Grand Boulevard Hotel v. GLOWHRAIN, 2003] Guidelines and Balancing of Interest (1) A strike otherwise valid, if violent in character, may be placed beyond the pale. (2) Care is to be taken especially where an unfair labor practice is involved, to avoid stamping it with illegality just because it is tainted by such acts. To avoid rendering illusory the recognition of the right to strike, responsibility in such a case should be individual and not collective. (3) A different conclusion would be called for if the existence of force while the strike lasts is pervasive and widespread, consistently and deliberately resorted to as a matter of policy. It could be reasonably concluded then that even if justified as to ends, it becomes illegal because of the means employed'. (4) This is not by any means to condone the utilization of force by labor to attain its objectives. It is only to show awareness that in labor conflicts, the tension that fills the air as well as the feeling of frustration and bitterness could break out in sporadic acts of violence. Good faith strike requires rational basis A mere claim of good faith would not justify the holding of a strike under the aforesaid exception as, in addition thereto, the circumstances must have warranted such belief. It is, therefore, not enough that the union believed that the employer committed acts of ULP when the circumstances clearly negate even a prima facie showing to sustain such belief. [Interwood Employees Assoc. v. Int’l Hardwood, 1956] Noncompliance with procedural requirements See notes under procedural requirements of a valid strike. A strike which does not strictly comply with the procedural requirements set by law and the rules is an unlawful/illegal strike. If there be in this case a weighing of interests in the balance, the ban the law imposes on unfair labor practices by management that could provoke a strike and its requirement that it be conducted peaceably, it would be, to repeat, unjustified, considering all the facts disclosed, to stamp the strike with illegality. It is enough that individual liability be incurred by those guilty of such acts of violence that call for loss of employee status. Such an approach is reflected in our recent decisions. [Shell Oil Workers Union v. Shell Co. of the Phils, 1971] Good faith strike must still comply with procedural requirements Even if the union acted in good faith in the belief that the company was committing an unfair labor practice, if no notice of strike and a strike vote were conducted, the said strike is illegal. [Grand Boulevard Hotel v. GLOWHRAIN, 2003] PAGE 88 UP COLLEGE OF LAW LABOR LAW Violation of injunction order An automatic injunction under Article 263 (g) or a valid injunction order under the exceptions to Article 254 must be complied with. Otherwise, the strike becomes illegal. BAR OPERATIONS COMMISSION However, as regards the strikers who decided to pursue with the case, as in the case of the 114 strikers herein, the employer could not be deemed to have condoned their strike, because they had not shown any willingness to normalize relations with it. [Philippine Inter-Fashion, Inc. v. NLRC, 1982] See notes under labor injunctions. No strike/lockout provisions in the CBA A “no strike, no lock-out” is a valid provision in the CBA. However, it only applies to economic provisions. It cannot prevent a strike which is grounded on unfair labor practice. [Malayang Samahan ng mga Manggagawa sa Greenfield v. Ramos , 2000] Considering the terms of the compromise agreement (the parties merely agreed to maintain the status quo before the commencement of the complaints filed by them without prejudice to the resolution by the Labor Arbiter), it cannot thereby be concluded that the petitioner waived its right to assail the illegality of the strike staged by the respondent and defend the validity of its termination of the employment of the members of the respondent who staged a strike. It must be underscored that a waiver to be valid and effective must be couched in clear and unequivocal terms which leave no doubt as to the intention of a party to give up a right or benefit which legally pertains to him. [Filcon Manufacturing Corp v. Lakas Manggagawa sa Filcon-Lakas Manggagawa Labor Center (LMF-LMLC)] Liability of union officers Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status. Note: Mere participation in an illegal strike by a union officer is sufficient ground to terminate his employment. In case of a lawful strike, the union officer must commit illegal acts during a strike for him to be terminated. INJUNCTIONS General rule: injunction prohibited No temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity, except as otherwise provided in Articles 218 and 264 of this Code. [Art. 254] Liability of ordinary workers General rule: Participation by a worker in a lawful strike is not ground for termination of his employment. Exception: When the worker participated in illegal acts during the strike. Requisites for labor injunctions The general rule is that injunctions are prohibited in labor disputes. The exceptions are provided in Art. 218 in connection with Art. 264 of the Labor Code. When the strike is or becomes illegal, the workers who participate in it are not deemed to have lost their employment status by express omission in the second sentence of the third paragraph of Art. 264. Only the union officers are deemed to have lost their employment status. Requisites for injunction to issue [Art. 218(e) – Powers of the NLRC] (a) actual or threatened commission of a prohibited or unlawful act OR requirement of performance of a particular act in a labor dispute (b) if unrestrained or unperformed, the act will cause grave or irreparable damage to any party OR render ineffectual any decision in favor of such party Liability of employer Any worker whose employment has been terminated as a consequence of any unlawful lockout shall be entitled to reinstatement with full backwages. Waiver of illegality of strike When defense of illegality of strike is deemed waived.—In this case, the Company alleged that the strike was illegal as the notice of intention to strike was not sent directly to it. However, it reinstated its striking workers who expressed their desire to return to work. On the illegality of the strike, the Court declared: xxx it is claimed that the strike was illegal. Admitting for the sake of argument that the strike was illegal for being premature, this defense was waived by the Bisaya Land Transportation Company, when it voluntarily agreed to reinstate the radio operators. [Bisaya Land Transportation Co., Inc. v. CIR, 1957] Prohibited activities [Art.264] (a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding Article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry. No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout. When defense of illegality of strike is not deemed waived.— The ruling cited in the Bisaya case that the employer waives his defense of illegality of the strike upon reinstatement of strikers is applicable only to strikers who signified their intention to return to work and were accepted back ... Any worker whose employment has been terminated as a consequence of any unlawful lockout shall be entitled to reinstatement with full backwages. Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement Truly, it is more logical and reasonable for condonation to apply only to strikers who signified their intention to return and did return to work. The reason is obvious. These strikers took the initiative in normalizing relations with their employer and thus helped promote industrial peace. PAGE 89 UP COLLEGE OF LAW LABOR LAW had been hired by the employer during such lawful strike. BAR OPERATIONS COMMISSION (5) Cases arising from any violation of Art. 264 of this Code, including questions involving the legality of strikes and lockouts; (6) Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000) regardless of whether accompanied with a claim for reinstatement. [Art. 217] (7) Money claims arising out of employer-employee relationship or by virtue of any law or contract, involving claims for actual, moral, exemplary an other forms of damages, as well as employment termination of OFWs; (8) Wage distortion disputes in unorganized establishments not voluntarily settled by the parties. [Art. 124] (9) Enforcement of compromise agreements when there is non-compliance by any of the parties. [Art. 227] (10)Other cases as may be provided by law. (b) No person shall obstruct, impede, or interfere with, by force, violence, coercion, threats or intimidation, any peaceful picketing by employees during any labor controversy or in the exercise of the right to selforganization or collective bargaining, or shall aid or abet such obstruction or interference. (c) No employer shall use or employ any strike-breaker, nor shall any person be employed as a strike-breaker. (d) No public official or employee, including officers and personnel of the New Armed Forces of the Philippines or the Integrated National Police, or armed person, shall bring in, introduce or escort in any manner, any individual who seeks to replace strikers in entering or leaving the premises of a strike area, or work in place of the strikers. The police force shall keep out of the picket lines unless actual violence or other criminal acts occur therein: Provided, That nothing herein shall be interpreted to prevent any public officer from taking any measure necessary to maintain peace and order, protect life and property, and/or enforce the law and legal order. “Exclusive and Original” Jurisdiction subject to Articles 261 and 262. A case under Art 217 may be lodged instead with a voluntary arbitrator. The policy of the law is to give primacy to voluntary modes of settling dispute. (e) No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer’s premises for lawful purposes, or obstruct public thoroughfares. Jurisdiction on Money Claims (Labor Arbiter vs. Regional Director) A money claim arising from employer-employee relations, except SSS, ECC/Medicare claims, is within the jurisdiction of a labor arbiter if: (1) The claim, regardless of amount, is accompanied with a claim of reinstatement; or (2) The claim exceeds P5,000, whether or not there is a claim for reinstatement. “Innocent bystander rule” An innocent by-stander is entitled to injunction if it is affected by the activities of a picketing union where no connection or interest exists between the union and the innocent by-stander. The Regional Director has jurisdiction if: (1) the money claim is not accompanied by reinstatement AND (2) the claim does not exceed P5,000 The right [to picket] may be regulated at the instance of third parties or `innocent bystanders' if it appears that the inevitable result of its exercise is to create an impression that a labor dispute with which they have no connection or interest exists between them and the picketing union or constitute an invasion of their rights. [Liwayway Publishing v. Permanent Concrete Worker's Union, 1981] Notes: (1) The money claim must arise from law or contracts other than CBA. (2) Money arising from an implementation of the CBA – Voluntary Arbitrator or Panel of Voluntary Arbitrators have jurisdiction (3) Money claims which does not arise from ER-EE relations – Regular Courts have jurisdiction. (4) Nature of Proceeding: Non-litigious. The Labor Arbiter is not bound by the technical rules of procedure. (5) The Labor Arbiter shall use every and all reasonable means to ascertain the facts in each speedily and objectively. [Art. 221] (6) Employer-employee relationship is a jurisdictional requisite, absent of which, the NLRC has no jurisdiction to hear and decide the case. [Hawaiian-Philippine Company v. Gulmatico] (7) Venue: Regional Arbitration Branch (RAB) having jurisdiction over the workplace of the complainant or petitioner. (8) Workplace – place or locality where the employee is regularly assigned at the time the cause of action arose. (9) In the case of field employees, ambulant or itinerant workers, their workplace is (a) where they are regularly Also, see notes on picketing. Procedure and Jurisdiction LABOR ARBITER JURISDICTION Except as otherwise provided under the Code the Labor Arbiters shall original and exclusive jurisdiction to hear and decide: (1) Unfair labor practices cases; (2) Termination disputes; (3) If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; (4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; PAGE 90 UP COLLEGE OF LAW LABOR LAW assigned or (b) where they are supposed to regularly receive their salaries and wages or work instructions from, and report the results of their assignment to their employers. BAR OPERATIONS COMMISSION EFFECT OF NLRC REVERSAL OF LABOR ARBITER’S ORDER OF REINSTATEMENT Even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. Some Rules on Venue (1) Exclusion. Where 2 or more Regional Arbitration Branches have jurisdiction over the workplace of the complainant, that first which acquired jurisdiction over the case shall exclude others. (2) Waiver. When venue is not objected to before the filing of position papers, such issue shall be deemed waived. (3) Transfer. Venue of an action may be transferred to a different Regional Arbitration Branch upon written agreement of the parties or upon order of the LA in meritorious cases and on motion of the proper party. (4) OFW Cases. Cases involving overseas Filipino workers may be filed before the RAB having jurisdiction over the place where the complainant resides or where the principal office of any of the respondents is situated. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. [Garcia v. Philippine Airlines, Inc., 2009] REMEDIES Requisites for Perfection of Appeal to the Court of Appeals [Rule 43] (1) The appeal shall be: (a) Filed within the reglementary period; (b) Verified by the appellant himself in accordance with Section 4, Rule 7 of the Rules of Court; (c) In the form of a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof, the relief prayed for, and with a statement of the date the appellant received the appealed decision, resolution or order; (d) In three (3) legibly typewritten or printed copies; and (e) Accompanied by (a) proof of payment of the required appeal fee; (b) posting of a cash or surety bond as provided in Section 6 of the 2005 NLRC Rules, (c) a certificate of non-forum shopping; and (d) proof of service upon the other parties. (2) A mere notice of appeal without complying with the other requisites aforestated shall not stop the running of the period for perfecting an appeal. (3) The appellee may file with the Regional Arbitration Branch or Regional Office where the appeal was filed, his answer or reply to appellant’s memorandum of appeal, not later than 10 calendar days from receipt thereof. Failure on the part of the appellee who was properly furnished with a copy of the appeal to file his answer or reply within the said period may be construed as a waiver on his part to file the same. (4) Subject to the provisions of Article 218 of the Labor Code, once the appeal is perfected in accordance with these Rules, the Commission shall limit itself to reviewing and deciding only the specific issues that were elevated on appeal. REINSTATEMENT PENDING APPEAL An order for reinstatement entitles an employee to receive his accrued backwages from the moment the reinstatement order was issued up to the date when the same was reversed by a higher court without fear of refunding what he had received. [Garcia v. Philippine Airlines, Inc., G.R. No.164856, January 20, 2009] REQUIREMENTS TO PERFECT APPEAL TO NLRC (1) The appeal should be filed within the reglementary period; (2) The Memorandum of Appeal should be under oath; (3) The appeal fee should be paid; (4) There should be posting of cash or surety bond, if judgment involves monetary award; and (5) There should be proof of service to the adverse party. NATIONAL LABOR RELATIONS COMMISSION (NLRC) JURISDICTION NLRC divisions (a) Original Jurisdiction: Over petitions for injunction or temporary restraining order under Art. 218 (e). (b) Exclusive Appellate Jurisdiction: over all cases decided by labor arbiters [Art 217(b)] and the DOLE regional directors under Art 129. Period of Appeal [2005 NLRC Rules of Procedure] From Labor Arbiter to NLRC: Decisions and resolutions of the Labor Arbiter shall be final and executory unless appealed to the Commission by any or both parties within (10) calendar days from receipt thereof From Regional Director to NLRC pursuant to Art. 129: Decisions and resolutions of the Regional Director shall be final and executory unless appealed within 5 days from receipt thereof. CERTIFIED CASES Definition Certified labor disputes are cases certified to the Commission for compulsory arbitration under Art. 263 (g) of the Labor Code. [Sec. 2, The 2011 NLRC Rules and Procedures] Note: If the 5th or 10th day falls on a Saturday, Sunday, or a holiday, the last day shall be the next working day. When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. [Art. 263] Grounds of Appeal (1) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter or Regional Director; (2) If the decision, resolution or order was secured through fraud or coercion, including graft and corruption; (3) If made purely on questions of law; and/or (4) If serious errors in the findings of fact are raised which, if not corrected, would cause grave or irreparable injury to the appellant PAGE 91 UP COLLEGE OF LAW LABOR LAW Function of the NLRC When sitting in a compulsory arbitration certified to by the Secretary of Labor, the NLRC is not sitting as a judicial court but as an administrative body charged with the duty to implement the order of the Secretary. Its function only is to formulate the terms and conditions of the CBA and cannot go beyond the scope of the order. Moreover, the Commission is further tasked to act within the earliest time possible and with the end in view that its action would not only serve the interests of the parties alone, but would also have favorable implications to the community and to the economy as a whole. This is the clear intention of the legislative body in enacting Art. 263 paragraph (g) of the Labor Code, as amended by Section 27 of R.A. 6175 [Union of Filipro Employees v. NLRC, 1990] BAR OPERATIONS COMMISSION at a peaceful and speedy solution to labor disputes, without jeopardizing national interests." [Union of Filipro Employees vs. Nestlé Philippines, 1990] Procedure in certified cases (a) When there is no need to conduct a clarificatory hearing, the Commission shall resolve all certified cases within 30 calendar days from receipt by the assigned Commissioner of the complete records, which shall include the position papers of the parties and the order of the SOLE denying the motion for reconsideration of the certification order, if any. (b) Where a clarificatory hearing is needed, the Commission shall, within 5 calendar days from receipt of the records, issue a notice to be served on the parties through the fastest means available, requiring them to appear and submit additional evidence, if any. All certified cases shall be resolved by the Commission within 60 calendar days from receipt of the complete records by the assigned Commissioner. (c) No motion for extension or postponement shall be entertained. [Sec. 5, 2011 NLRC Rules and Procedures] Effects of Certification (1) Upon certification, the intended or impending strike or lockout is automatically enjoined, notwithstanding the filing of any motion for reconsideration of the certification order nor the non-resolution of any such motion which may have been duly submitted to the Office of the Secretary of Labor and Employment. (2) If a work stoppage has already taken place at the time of the certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. (3) All cases between the same parties, except where the certification order specifies otherwise the issues submitted for arbitration which are already filed or may be filed, and are relevant to or are proper incidents of the certified case, shall be considered subsumed or absorbed by the certified case, and shall be decided by the appropriate Division of the Commission. (4) The parties to a certified case, under pain of contempt, shall inform their counsels and the Division concerned of all cases pending with the Regional Arbitration Branches and the Voluntary Arbitrators relative or incident to the certified case before it. (5) When a certified labor dispute involves a business entity with several workplaces located in different regions, the Division having territorial jurisdiction over the principal office of the company shall acquire jurisdiction to decide such labor dispute; unless the certification order provides otherwise. [Section 3, 2011 NLRC Rules and Procedures] Execution of judgment Upon issuance of the entry of judgment, the Commission motu proprio or upon motion by the proper party, may cause the execution of the judgment in the certified case. [Sec. 6, 2011 NLRC Rules and Procedures] BUREAU OF LABOR RELATIONS (BLR) – MED ARBITERS JURISDICTION (ORIGINAL AND APPELLATE) The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the Department of Labor and Employment shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces whether agricultural or non-agricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration. [Art. 226] The Bureau shall have fifteen (15) calendar days to act on labor cases before it, subject to extension by agreement of the parties. Effects of Defiance Non-compliance with the certification order of the SOLE shall be considered as an illegal act committed in the course of the strike or lockout and shall authorize the Commission to enforce the same under pain of immediate disciplinary action, including dismissal or loss of employment status or payment by the locking-out employer of backwages, damages and/or other affirmative relief, even criminal prosecution against the liable parties. Appellate Jurisdiction (1) BLR has the power to review the decision of the Regional Director (2) Decisions rendered through its appellate power are final and executory. Hence, the remedy of the aggrieved party is to seasonably avail of the special civil action of certiorari under Rule 65 of the Rules of Court. NATIONAL CONCILIATION AND MEDIATION BOARD (NCMB) The Commission may also seek the assistance of law enforcement agencies to ensure compliance and enforcement of its orders and resolutions. [Sec. 4, 2011 NLRC Rules and Procedures] NATURE OF PROCEEDINGS Conciliation and mediation is non-litigious/nonadversarial, less expensive, and expeditious. Under this informal set-up, the parties find it more expedient to fully ventilate their respective positions without running around with legal technicalities and, in the course thereof, afford them wider latitude of possible approaches to the problem. The Secretary's assumption and certification orders being executory in character are to be strictly complied with by the parties even during the pendency of a petition questioning their validity for this extraordinary authority given by law to the Secretary of Labor is "aimed at arriving PAGE 92 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION CONCILIATION VS. MEDIATION DOLE SECRETARY Conciliation A mild form of intervention by a neutral third party, the Conciliator-Mediator, relying on his persuasive expertise, takes an active role in assisting parties by trying to keep disputants talking, facilitating other procedural niceties, carrying messages back and forth between the parties, and generally being a good fellow who tries to keep things calm and forward-looking in a tense situation. VISITORIAL AND ENFORCEMENT POWERS The Secretary of Labor and Employment or his duly authorized representatives, including labor regulation officers, shall have access to employer’s records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto. Mediation A mild intervention by a neutral third party, the Conciliator-Mediator, wherein the CM advises the parties or offers solutions or alternatives to the problems with the end in view of assisting them towards voluntarily reaching their own mutually acceptable settlement of the dispute. Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. [Article 128, LC, As amended by Republic Act No. 7730, June 2, 1994] Preventive Mediation Preventive mediation case — refers to the potential or brewing labor dispute which is the subject of a formal or informal request for conciliation and mediation assistance sought by either or both parties in order to remedy, contain or prevent its degeneration into a full blown dispute through amicable settlement. DOLE REGIONAL DIRECTORS JURISDICTION Small money claims Art. 129. Recovery of wages, simple money claims and other benefits. — Upon complaint of any interested party, the Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of the Department is empowered, through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an employee or person employed in domestic or household service or househelper under this Code, arising from employer-employee relations: Provided, That such complaint does not include a claim for reinstatement: Provided, further, That the aggregate money claims of each employee or househelper do not exceed five thousand pesos (P5,000). The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of accounts and records of any person or entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on violation of any provisions of this Title. [Article 37, LC] The Secretary of Labor and Employment or his duly authorized representative is hereby empowered to inquire into the financial activities of legitimate labor organizations upon the filing of a complaint under oath and duly supported by the written consent of at least twenty percent (20%) of the total membership of the labor organization concerned and to examine their books of accounts and other records to determine compliance or non-compliance with the law and to prosecute any violations of the law and the union constitution and bylaws: Provided, That such inquiry or examination shall not be conducted during the sixty (60)-day freedom period nor within the thirty (30) days immediately preceding the date of election of union officials. [Article 274, LC, As amended by Section 31, Republic Act No. 6715, March 21, 1989] The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the filing of the same. (a) Any sum thus recovered on behalf of any employee or househelper pursuant to this Article shall be held in a special deposit account by, and shall be paid, on order of the Secretary of Labor and Employment or the Regional Director directly to the employee or househelper concerned. (b) Any such sum not paid to the employee or househelper, because he cannot be located after diligent and reasonable effort to locate him within a period of three (3) years, shall be held as a special fund of the Department of Labor and Employment to be used exclusively for the amelioration and benefit of workers. xxx The Secretary of Labor and Employment or his duly authorized representative may supervise the payment of unpaid wages and other monetary claims and benefits, including legal interest, found owing to any employee or househelper under this Code. POWER TO SUSPEND EFFECTS OF TERMINATION The Secretary of the Department of Labor and Employment may suspend the effects of the termination pending resolution of the dispute in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom such dispute is pending that the termination may cause a serious labor dispute or is in the implementation of a mass lay-off. [Article 277 (b)] ASSUMPTION OF JURISDICTION When in his opinion, there exist a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the SOLE may assume jurisdiction over the dispute and decide it or certify PAGE 93 UP COLLEGE OF LAW LABOR LAW the same to the Commission for compulsory arbitration. [Art. 263] BAR OPERATIONS COMMISSION Procedure [Rule XI, Book V of the IRR] Hearing All parties to the dispute shall be entitled to attend the arbitration proceedings. The attendance of any third party or the exclusion of any witness from the proceedings shall be determined by the VA or panel of Vas. Hearing may be adjourned for cause or upon agreement by the parites. APPELLATE JURISDICTION (a) Orders issued by the duly authorized representative of the SOLE under Art. 128 may be appealed to the latter. (b) Denial of application for union registration or cancellation of union registration originally rendered by the BLR may be appealed to the SOLE (if originally rendered by the Regional Office, appeal should be made to the BLR) (c) Decisions of the Med-Arbiter in certification election cases are appealable to the SOLE (decisions of medarbiters in intra-union disputes are appealable to the BLR) [Art. 259] Days to render an award/decision Unless the parties agree otherwise, it shall be mandatory for the VA or panel of Vas to render an award or decision within 20 calendar days from the date of submission of the dispute to voluntary arbitration. Form of award/decision The award or decision of the VA or panel of Vas must state in clear, concise and definite terms the facts, the law and/contract upon which it is based. VOLUNTARY ARBITRATION POWERS Before or at any stage of the compulsory arbitration process, the parties may opt to submit their dispute to voluntary arbitration. Finality It shall be final and executory after 10 calendar days from the receipt of the copy of the award or decision by the parties. The Secretary of Labor and Employment, xxx shall decide or resolve the dispute xxx. [Art. 263, LC] GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATORS Execution of award/decision Upon motion of any interested party, the Voluntary Arbitrator or panel of Voluntary Arbitrators or the Labor Arbiter in the region where the movant resides, in case of the absence or incapacity of the Voluntary Arbitrator or panel of Voluntary Arbitrators, for any reason, may issue a writ of execution requiring either the sheriff of the Commission or regular courts or any public official whom the parties may designate in the submission agreement to execute the final decision, order or award. [Art, 262-A, LC] SUBJECT MATTER OF GRIEVANCE Grievance is any question by either the ER or the union regarding the interpretation or application of the CBA or company personnel policies or any claim by either party that the other party is violating any provisions of the CBA or company personnel policies. It is a complaint or dissatisfaction arising from the interpretation or implementation of the CBA and those arising from interpretation or enforcement of personnel policies Remedies Rule 43, Rules of Court. – The decision of a Voluntary Arbitrator or panel of Voluntary Arbitrators is appealable by ordinary appeal under Rule 43 of the Rules of Civil Procedure directly to the Court of Appeals. [see Sec. 1, Rule 43, ROC] Grievance machinery It refers to the mechanism for the adjustment and resolution of grievances. It is part of the continuing process of collective bargaining. Note: Department Order No. 40-03 (2003) of the DOLE in Section 7, Rule XIX thereof, and the Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings (2005) in Rule VII, Sections 6 and 7 thereof, both provide that the decision of the Voluntary Arbitrator shall become final and executory after 10 calendar days from receipt of a copy of the decision by the parties and that the decision shall not be subject of a motion for reconsideration. In short, the remedy is for the aggrieved party to elevate the case to the Court of Appeals on a petition for review under Rule 43 of the Rules of Court. The Court of Appeals, in two cases involving Malayan Insurance Co., Inc. (2005 and 2006), upheld the aforementioned issuances and declared that a motion for reconsideration is a prohibited pleading. But in Teng v. Pahagac, G.R. No. 169704, November 17, 2010, the Supreme Court held that a party aggrieved by the Voluntary Arbitrator’s decision must first file a Motion for Reconsideration before going up to the Court of Appeals. It did not, however, say that Department Order No. 40-03 and the Revised Procedural Guidelines are unlawful or illegal insofar as they proscribe the filing of a Motion for Reconsideration. This, notwithstanding that the parties squarely raised the question concerning the validity thereof before the Court. VOLUNTARY ARBITRATOR Jurisdiction Exclusive and original jurisdiction over grievances The VA or panel of VAs shall have original and exclusive jurisdiction to hear and decide all unresolved grievances (see definition). Violations of a CBA, except those which are gross in character, shall no longer be treated as ULP and shall be resolved as grievances under the CBA. Note: Gross violations of CBA shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the DOLE shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the VA or panel of Vas and shall immediately dispose and refer the same to the grievance machinery or Voluntary Arbitration provided in the CBA. [Art. 261, LC] Other labor disputes The VA or panel of Vas, upon agreement of the parties, shall also hear and decide all other labor disputes including ULP and bargaining deadlocks. [Art. 262, LC] PAGE 94 UP COLLEGE OF LAW LABOR LAW COURT OF APPEALS RULE 65, RULES OF COURT Section 1. Petition for certiorari. — When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require. BAR OPERATIONS COMMISSION the doctrine on the hierarchy of courts as the appropriate forum for the relief desired. [St. Martin Funeral Home vs. NLRC, 1998] RULE 45, RULES OF COURT Section 1. Filing of petition with Supreme Court. — A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth. (1a, 2a) The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as provided in the third paragraph of section 3, Rule 46. (1a) Appeal from CA to SC should be under Rule 45 (Petition for Review on Certiorari) and not Rule 65 (Special Civil Action for Certiorari). [Sea Power Shipping Enterprises, Inc. vs. CA, G. R. No. 138270, June 28, 2001] Since the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged errors committed by it in the exercise of its jurisdiction would be errors of judgment which are reviewable by timely appeal and not by a special civil action of certiorari. If the aggrieved party fails to do so within the reglementary period, and the decision accordingly becomes final and executory, he cannot avail himself of the writ of certiorari, his predicament being the effect of his deliberate inaction. [Tirazona v Phil EDS Techno-Service Inc, 2009] Section 2. Petition for prohibition. — When the proceedings of any tribunal, corporation, board, officer or person, whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent to desist from further proceedings in the action or matter specified therein, or otherwise granting such incidental reliefs as law and justice may require. PRESCRIPTION OF ACTIONS No claim for compensation shall be given due course unless said claim is filed with the System within three (3) years from the time the cause of action accrued. [Article 201, as amended by Section 5, Presidential Decree No. 1921] The petition shall likewise be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of nonforum shopping as provided in the third paragraph of section 3, Rule 46. (2a) MONEY CLAIMS Section 3. Petition for mandamus. — When any tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent, immediately or at some other time to be specified by the court, to do the act required to be done to protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the respondent. All money claims accruing prior to the effectivity of this Code shall be filed with the appropriate entities established under this Code within one (1) year from the date of effectivity, and shall be processed or determined in accordance with the implementing rules and regulations of the Code; otherwise, they shall be forever barred. Art. 291. Money claims. – All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred. Workmen's compensation claims accruing prior to the effectivity of this Code and during the period from November 1, 1974 up to December 31, 1974, shall be filed with the appropriate regional offices of the Department of Labor not later than March 31, 1975; otherwise, they shall forever be barred. The claims shall be processed and adjudicated in accordance with the law and rules at the time their causes of action accrued. The Labor Code has no specific provision on when a monetary claim accrues. Thus, again the general law on prescription applies. Article 1150 of the Civil Code provides that – SUPREME COURT Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65. Consequently, all such petitions should hence forth be initially filed in the Court of Appeals in strict observance of Article 1150. The time for prescription for all kinds of actions, when there is no special provision which ordains PAGE 95 UP COLLEGE OF LAW LABOR LAW otherwise, shall be counted from the day they may be brought. BAR OPERATIONS COMMISSION shall prescribe in three (3) years. All unfair labor practice arising from Book V shall be filed with the appropriate agency within one (1) year from accrual of such unfair labor practice; otherwise, they shall be forever barred. The day the action may be brought is the day a claim started as a legal possibility. In the present case, the day came when petitioner learned of Asiakonstrukt’s deduction from his salary of the amount of advances he had received but had, by his claim, been settled, the same having been reflected in his payslips, hence, it is assumed that he learned of it at the time he received his monthly paychecks. [Anabe v Asian Const, et al., 2009] Article 247. Concept of unfair labor practice and procedure for prosecution thereof. [last par.] No criminal prosecution under this Title may be instituted without a final judgment finding that an unfair labor practice was committed, having been first obtained in the preceding paragraph. During the pendency of such administrative proceeding, the running of the period of prescription of the criminal offense herein penalized shall be considered interrupted: Provided, however, that the final judgment in the administrative proceedings shall not be binding in the criminal case nor be considered as evidence of guilt but merely as proof of compliance of the requirements therein set forth. [As amended by Batas Pambansa Bilang 70, May 1, 1980 and later further amended by Section 19, Republic Act No. 6715, March 21, 1989] ILLEGAL DISMISSAL In illegal dismissal cases, the employee concerned is given a period of four years from the time of his dismissal within which to institute a complaint. This is based on Article 1146 of the New Civil Code which states that actions based upon an injury to the rights of the plaintiff must be brought within four years. [Victory Liner, Inc. v Race, 2007] Article 1146. The following actions must be instituted within four years: (1) Upon an injury to the rights of the plaintiff; (2) Upon a quasi-delict; OFFENSES PENALIZED BY THE LABOR CODE AND IRR ISSUED PURSUANT THERETO Art. 290. Offenses. – Offenses penalized under this Code and the rules and regulations issued pursuant thereto shall prescribe in three (3) years. However, when the action arises from or out of any act, activity, or conduct of any public officer involving the exercise of powers or authority arising from Martial Law including the arrest, detention and/or trial of the plaintiff, the same must be brought within one (1) year. [As amended by PD No. 1755, Dec. 24, 1980.] PRESCRIPTIVE PERIOD OF ILLEGAL RECRUITMENT CASES Section 7. Prescription. Illegal recruitment cases under this Rule shall prescribe in five (5) years; Provided, however, that illegal recruitment cases involving economic sabotage shall prescribed in twenty (20) years. [RA 8042] UNFAIR LABOR PRACTICE Art. 290. Offenses. – Offenses penalized under this Code and the rules and regulations issued pursuant thereto PAGE 96 ANNEX A Cause Terminable Examples Serious Misconduct Willful Disobedience Teacher pressuring colleague to change a failing Borrowing Money: as a general rule, it is neither grade to a passing one plus misrepresentation. dishonest, nor immoral, nor illegal, much less [Padilla vs. NLRC, 1997] criminal [Medical Doctors, Inc. [Makati Medical Center] v. NLRC] except Obscene, insulting or offensive words against (a) it becomes a serious misconduct when superior. [Asian Design and Manufacturing vs. Hon. reprehensible behavior such as the use of a Deputy Minister of Labor, 1986] trust relationship as a leverage for borrowing money is involved. [Pearl S. Buck Foundation, Sleeping in post, gross insubordination, dereliction Inc. v. NLRC, 1990] of duty, challenging a superior to a fight. [Luzon Stevedoring vs. CIR, 1965] Love: teacher falling in love with student without a showing that the former took advantage of her Immorality / Immoral Conduct: conduct which is so position to court her student. Yielding to this gentle willful, flagrant or shameless as to show and universal emotion is not to be so casually indifference to the opinion of good and respectable equated with immorality. The deviation of the members of the community; such conduct must be circumstances of their marriage from the usual grossly immoral – so corrupt as to constitute a societal pattern cannot be considered as a defiance crime or so unprincipled as to be reprehensible to a of contemporary social mores [Chua-Qua v. Clave, high degree or committed under such scandalous 1990] or revolting circumstances as to shock the common decency. [Narag vs. Narag, 1998]; to be a valid cause for dismissal, the immoral act must render incapable performance of duties/services or calculated at injuring employer’s business. (a) When a teacher engages in extra-marital relationship, especially when the parties are both married. [Santos v. NLRC, 1998] Violation of Company Rules: Company policies and regulations, unless shown to be grossly oppressive or contrary to law, are generally valid and binding on the parties and must be complied with until finally revised or amended, unilaterally or preferably through negotiation, by competent authority. [Aparente, Sr. v. NLRC, 2000] Disobeying a Valid Order to Transfer (1) Test of Validity: (a) Not unreasonable (b) Not inconvenient (c) Not prejudicial (d) No demotion in rank (e) No diminution in salary, privileges or benefits [Blue Dairy vs. NLRC, 1999] (2) Mere inconvenience does not necessarily invalidate a transfer order; unreasonable inconvenience makes the order invalid. [Homeowners Savings and Loan Assoc. vs. NLRC, 1996] (3) Reasonableness pertains to the character of orders and to the manner in which they are made. [Escobin vs. NLRC, 1998] Gross and Neglect Non-Terminable Examples Assertion of employee’s right not to be made to work outside of what he had been hired to do. [Tierra International Production Corp. v. NLRC, 1996] Refusing a promotion, since promotion is in the nature of a gift or reward. [PT&TC vs. CA, 2003] (a) Disobeying an Invalid Order to Transfer: an invalid transfer amounts to constructive dismissal; it is invalid when it fails test of validity. (refer to the adjacent column for the test) Habitual Habitual tardiness and absenteeism [Manila Electric Simple negligence [RDS Trucking v. NLRC, 1998] or Co. v. NLRC, 1996] unsatisfactory performance [Oreta vs. NLRC, 1989] Abandonment – the deliberate and unjustified refusal of an Employee to resume his employment. [Nueva Ecija Electric Cooperative v. NLRC, 2005] (1) Requisites: failure to report to work or absence w/o valid reason (2) Clear intent to sever Employee–ER relationship via overt acts. [Labor v NLRC, 1995; Floren Hotel v. NLRC, 2005; Leonardo v. NLRC, 2000] (a) CANNOT be lightly inferred, much less legally presumed from certain equivocal acts such as interim employment. [Hacienda Dapdap v. NLRC, 1998] Mere involvement in an accident, absent any showing of fault or recklessness on the part of the Employee, is NOT a valid ground for dismissal. [Paguio Transport Corp. v. NLRC, 1998] Filing a complaint of illegal dismissal is inconsistent with abandonment; (a) Except when Employee prays for separation pay instead of reinstatement [Jo vs. NLRC, 2000] No Abandonment: (a) Mere absence from work [Mendoza v. NLRC, 50 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION 1999] Bank Employee delivered newly approved credit (b) Going home to have dinner; employees do not need to take their meals within the company cards to a total stranger without verification premises. [PAL v. NLRC, 1999] protocol. (c) Leaving his workplace to relieve himself [Dimabayo v. NLRC, 1999] Fraud or Willful Breach Dishonesty: Employee is not in a position of trust and confidence. of Trust (a) Custodian of petty cash fund reimbursed another employee for services the latter did not render. [Naguit v. NLRC, 2003] (b) Falsification of time cards. [San Miguel vs. NLRC, 1989] (c) Theft of company property. [Firestone Tire and Rubber Co. vs. Lariosa, 1987] Commission of a crime Theft; the employee here was convicted after she or offense against won her case for illegal dismissal. In view of the Employer employee’s conviction, the decision of the NLRC which had already become final and executory calling for her reinstatement and the payment of back wages should not now be enforced. Otherwise, she would in effect be undeservedly rewarded when she should instead be punished for her offense. [Sampaguita Garments Corp. v. NLRC, 1994] Analogous Causes Quarrelsome – Bossy: an Employee's attitude problem is a valid ground for dismissal, equivalent to loss of trust and confidence; an Employee who cannot get along with his fellow co-EEs is detrimental to the company for he can upset and restrain the working environment. [Heavylift Manila, Inc. v. CA] Conviction – Moral Turpitude: Violation of a company rule prohibiting the infliction of harm or physical injury against any person under the particular circumstances provided for in the same rule may be deemed analogous to serious misconduct. [Oania v. NLRC, 1995] Gross inefficiency is closely related to gross neglect for both involve specific acts or omission on the part of the employee resulting in damage to the employer or to his business. [Lim v. NLRC, 1996] Past Offenses: Previous offenses may be so used as valid justification for dismissal from work only if the infractions are related to the subsequent offense upon which basis the termination of employment is decreed. [Stellar Industrial Service, Inc. v. NLRC, 1996; La Carlota Planters Assn. v. NLRC, 1998] Professional Training / Residency Training: a residency or resident physician position in a medical specialty is never a permanent one. Residency connotes training and temporary status. It is the step taken by a physician right after post-graduate internship [and after hurdling the Medical Licensure Examinations] prior to his recognition as a specialist or sub-specialist in a given field. (a) right to security of tenure only to the extent that they periodically make the grade.[Felix v. Buenaseda, 1995] PAGE 98 Probable Cause: Although after preliminary investigation probable cause has been found and the accused has been detained, this is NOT legal basis for immediate termination of employment. [Standard Electric Manufacturing Corp. v. Standard Electric Union, 2005] Conviction – Moral Turpitude: Conviction of a crime involving moral turpitude is not one of these justifiable causes. (a) Not under fraud/willful breach since the crime was unrelated to the performance of the employee's function. (b) Not under commission of crime since it was not directed at Employer or his family or representative. (c) Analogous causes must have an element similar to those found in the specific just cause enumerated under Article 282. Clearly lacking in the ground invoked by petitioner is its relation to his work or to his employer. [IRRI v. NLRC, 1993] (d) In IRRI v. NLRC (1993), homicide outside IRRI [employer] complex after office hours and against a non-IRRI employee. Courtesy Resignation – Resignation must be voluntary. Adding the word "courtesy" did not change the essence of resignation. That courtesy resignations were utilized in government reorganization did not give private respondent the right to use it as well in its own reorganization and rehabilitation plan. [Batongbacal vs. Associated Bank, 1988] 51 ANNEX B: COMPARISON BETWEEN SSS AND GSIS SSS GSIS Enabling Law RA 1161 as amended by RA 8282: Social Security Act of 1997 RA 8291 amending PD 1146 Definition of Terms Employer – any person, natural or juridical, domestic or foreign, who carries on in the Philippines any trade business, industry, undertaking, and uses the services of another person who is under his orders as regards the employment, except those considered as employer under the GSIS. A self-employed person shall be both employer and employee at the same time. Employer – National government, its political subdivisions, branches, agencies or instrumentalities, including governmentowned or controlled corporations and financial institutions with original charters (GOCCs); constitutional commissions; and judiciary Employee – any person receiving compensation while in service of an employer whether by election or appointment, irrespective of Employee – any person who performs services for an employer status of appointment; baranggay officials; and sangguniang in which either or both mental and physical efforts are used officials and who receives compensation for such services, where there is an employer—employee relationship; also, a self-employed Note: No counterpart for self-employed. person who is both employee and employer at the same time Self-employed – any person whose income is not derived from employment, including, but not limited to: (a) self-employed professionals; (b) partners and single proprietors of businesses; (c) actors, directors, scriptwriters, news correspondents not considered as employees under the above definition; (d) athletes, coaches, trainers, jockeys; and (e) individual farmers and fishers. Dependents: (a) Legal spouse entitled by law to receive support; (b) Child – unmarried, not gainfully employed, and below 21 or (c) Child over 21 if he or she became permanently incapacitated Same except that a child here is below 18 and incapable of self-support, physically or mentally,; child may be legitimate, legitimated, legally adopted, or illegitimate; Parent who is receiving regular support. Beneficiaries (1) Primary (a) Dependent spouse – until remarriage (see above); (b) Dependent children (see above); illegitimate children are entitled only to 50% of the share of legitimate Same except that RA 8291 does not distinguish share of children unless there are no legitimate children, in legitimate and illegitimate children which case, they get 100%. (2) Secondary – shall only receive when the primary beneficiaries are absent: Dependent parents (3) Other – any other person designated by the member as his/her secondary beneficiary. Compensation – all actual remuneration for employment, Compensation – basic pay received excluding per diems, bonuses, including living allowance, as well as the cash value of any overtime, honoraria, allowances and other emoluments not remuneration paid in any medium other than cash except that integrated into the basic pay under existing laws. portion already above the max salary credit under Sec. 18 of the Act. Coverage Compulsory (a) Employers as defined above; (b) Employees not over 60 years including household helpers with at least P1,000 monthly pay; and (c) Self-employed. Public sector employees below the compulsory retirement age of 65. Exceptions: (a) AFP and PNP; (b) Members of the Judiciary and Constitutional Commissions who Voluntary are covered only by life insurance as they have separate (a) Spouses who devote full time to managing household and retirement schemes; family affairs; (c) Contractual employees with no employee-employer relationship (b) OFWs recruited by foreign-based employers; with the agency they serve. (c) Employees already separated from employment or those self-employed with no realized income for a given month, who chose to continue with contributions to maintain right to full benefit. Note: Foreign governments, international organizations or their wholly owned instrumentality employing workers in the Philippines may enter into an agreement with the Philippine government to include their employees in the SSS except those already covered by their civil service retirement system. Effective Date of Coverage st Employer: 1 day of operation st Employee: 1 day at work Self-employed: upon registration with SSS Summary of Benefits (a) (b) (c) (d) (e) (f) (g) Monthly pension Dependents’ pension Retirement benefits Permanent disability benefits Death benefits Funeral benefits Loan – Social Security Commission Resolution No. 669. Moreover, several SSS-issued circulars such as Circular No. 21-P and No. 52 pertain to the treatment of salary loans, sometimes providing for more flexible payment terms or condonation for delinquent payers; Santiago v. CA and SSS, GR # L-39949 [1984] resolved an issue involving the treatment of salary loan repayments; SSS website also shows loans (h) Sickness benefits (i) Maternity leave benefits (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) Monthly pension Retirement benefits Permanent disability benefits Death Benefits Funeral benefits Loan – GSIS website provides for this Temporary disability benefits [similar to sickness] Separation benefits Unemployment benefits – Sec 11 Survivorship benefits Life insurance benefits Note: Judiciary and Constitutional Commissions are entitled to life insurance only. Effects of Separation from Employment (1) Employer’s contribution, and Continued membership for the unemployed member; and (2) Employee’s obligation to pay contribution both cease at entitlement to whatever benefits he has qualified to in the event of the end of the month of separation; any compensable contingency. (3) EE shall be credited with all contributions paid on his behalf and entitled to all benefits set forth by the law. Dispute Settlement Social Security Commission CA [Rule 43; questions of law GSIS  CA [Rule 43]  SC [Rule 45]; appeal does not stay and fact]  SC [Rule 45; questions of law only] execution. Prescriptive Period 20 years 4 years PAGE 100