Entrepreneurship 12 Name___________________________________ Score ____________ Prefi

MODULE
2 Labor Code of the Philippines

The Labor Code of the Philippines stands as the law governing employment practices and labor relations in the Philippines.
It was enacted on Labor Day of 1974 by President Ferdinand Marcos, in the exercise of his then extant legislative powers. It
prescribes the rules for hiring and termination of private employees; the conditions of work including maximum work hours and
overtime; employee benefits such as holiday pay, thirteenth month pay and retirement pay; and the guidelines in the organization
and membership in labor unions as well as in collective bargaining.
Labor Code Excerpts
Laws regulating labor in the Philippines can be found in the Labor Code of the Philippines and the Handbook on Statutory
Monetary Benefits by the Department of Labor and Employment (DOLE), Bureau of Working Conditions.
Protection of Workers
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.
Art. 34. Prohibited practices. It shall be unlawful for any individual, entity, licensee, or holder of authority… 6) 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
Wages
Art. 99. Regional minimum wages. The minimum wage rates for agricultural and non-agricultural employees and workers in each
and every region of the country shall be those prescribed by the Regional Tripartite Wages and Productivity Boards. (As amended
by Section 3, Republic Act No. 6727, June 9, 1989).
Ex. Time of payment-once in every 2 weeks/ twice a month at intervals not exceeding 16
Ex. March 15, and March 30 or March 5, and March 20
FORCE MAJEURE- is a provision in contract that frees both parties from obligation if an extraordinary event directly prevents
both from performing.
Employment of Minors -Minimum employable age. (Labor Force- anyone above 15 who is capable to work)
a. No child below fifteen (15) years of age shall be employed, except when he works directly under the sole responsibility of
his parents or guardian, and his employment does not in any way interfere with his schooling.
b. Any person between fifteen (15) and eighteen (18) years of age may be employed for such number of hours and such
periods of the day as determined by the Secretary of Labor and Employment in appropriate regulations.
Hours of Work
Art. 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight (8) hours a day. Rest periods of
short duration during working hours shall be counted as hours worked.
Art. 85. Meal periods. 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. (12:00 noon- 1:00 pm)
Art. 86. Night shift differential. Every employee shall be paid a night shift differential of not less than ten percent (10%) of his
regular wage for each hour of work performed between ten o’clock in the evening and six o’clock in the morning. (10 pm- 6 am or
12 mn to 8 am)
Art. 87. 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. 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%).
Overtime pay for normal days:
Ex. Daily Wage Rate: 912 pesos
Overtime pay= 912 pesos x 25% = 228
Overtime pay= 912 +228 =1,140

Overtime pay for holiday/rest day:

Ex. January 1 (holiday) - 912 pesos (double pay) =1,824
=912 x 30% = 273.6
1,824 +273.6= 2, 097.6 pesos

Night Shift differential payment:

640 pesos a day / 8 hours= 80 pesos (hourly wage)
80 pesos x 10% = 8 pesos
8 pesos x 8 hours= 64 pesos (night shift differential payment)
64 + 640 pesos = total income per day with a night shift duty
Rest Periods
Art. 91. Right to weekly rest day.
a. 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.
b. The employer shall determine and schedule the weekly rest day of his employees subject to collective bargaining
agreement [if any] 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. 92. 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. 93. Compensation for rest day, Sunday or holiday work.
a. Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an additional compensation of
at least thirty percent (30%) of his regular wage. An employee shall be entitled to such additional compensation for work
performed on Sunday only when it is his established rest day
b. Work performed on any special holiday shall be paid an additional compensation of at least thirty percent (30%) of the
regular wage of the employee. Where such holiday work falls on the employee’s scheduled rest day, he shall be entitled to
an additional compensation of at least fifty per cent (50%) of his regular wage.
Holiday: double pay
Rest day: daily wage + 50 % of it
Right to holiday pay
a. Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments
regularly employing less than ten (10) workers;
b. The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent
to twice his regular rate; and
c. As used in this Article, "holiday" includes: New Year’s Day, Maundy Thursday, Good Friday, the ninth of April, the first of
May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty ‐fifth and thirtieth of December and the
day designated by law for holding a general election
Entrepreneurship 12 page 2 Prefi
Right to service incentive leave
a. 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.
b. This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave
with pay of at least five days and those employed in establishments regularly employing less than ten employees or in
establishments exempted from granting this benefit by the Secretary of Labor and Employment after considering the
viability or financial condition of such establishment.
Maternity Leave. Every qualified pregnant woman in the private sector is entitled to maternity leave of 60 days in case of normal
delivery, abortion or miscarriage, or 78 days in case of caesarean delivery
-Normal Delivery (105 days leave with pay)
-CS Delivery (105 days + 15 days = 120 days leave with pay)
-Termination of Pregnancy/Abortion/Miscarriage/Fetal Death (60 days leave with pay)
a. Daily maternity benefit shall be equivalent to 100 percent of her average salary credit. The maternity benefits shall be paid
only for the first four deliveries or miscarriages.
20,000 x 6 months = 120,000/ 180 days =666.67 (average salary credit)
666.67 x 60 days= 40,000 (if termination of pregnancy)
666.67 x 105 =70, 000 (if normal delivery)
666.67 x 120 = 80, 000 (if CS)
b. The employer is required to advance to the pregnant female employee the full maternity benefit within 30 days from the
filing of the maternity leave application.
Maternity leave benefits
a. Every employer shall grant to any pregnant woman employee who has rendered an aggregate service of at least six (6)
months for the last twelve (12) months, maternity leave of at least two (2) weeks prior to the expected date of delivery and
another four (4) weeks after normal delivery or abortion with full pay based on her regular or average weekly wages. The
employer may require from any woman employee applying for maternity leave the production of a medical certificate
stating that delivery will probably take place within two weeks.
b. The maternity leave shall be extended without pay on account of illness medically certified to arise out of the pregnancy,
delivery, abortion or miscarriage, which renders the woman unfit for work, unless she has earned unused leave credits from
which such extended leave may be charged.
c. The maternity leave provided in this Article shall be paid by the employer only for the first four (4) deliveries by a woman
employee after the effectively of this Code.
Paternity Leave (RA 8187 or the Paternity Leave Act). Paternity leave benefit is granted to all married male employees, regardless
of employment status (e.g., probationary, regular, project). It applies to the first four deliveries of the employee’s lawful wife with
whom he is cohabiting.
The leave shall be for 7 days, with full pay, consisting of his basic salary, provided that his pay shall not be less than the mandated
minimum wage. In the event the paternity leave benefit is not availed of, said leave is not convertible to cash.

Other Information:
Public Holidays
The Philippines comprises different categories of holidays called regular holidays or special holidays. Employees are entitled to the
following 10 holidays in the Philippines:
 New Years’ Day
  Maundy Thursday
 The Day of Valor
 Good Friday
 Labor Day
 Independence Day
 National Heroes’ Day
 Bonifacio Day
 Christmas Day
 Rizal Day
In addition, the government each year announces several special holidays, which may change from year to year. Following are some
special non-working days:
 Chinese New Year
 People power revolution
 Black Saturday
 End of Ramadan
 Ninoy Aquino Day
 All Saint’s Day
 All Soul’s Day
 Immaculate Conception Day
 New Year’s Eve
Special Working Holidays
An employee who works on a special working holiday is entitled only to his basic rate. No premium pay is required since work
performed on said days is considered work on ordinary working days. Following are some of the common special working days –
 All Soul’s Day
 Christmas Eve
 Last day of the year
Successive Regular Holidays
In case of 2 successive regular holidays, like Maundy Thursday and Good Friday, an employee may not be paid for both holidays, if
absent from work on the day immediately preceding the first holiday, unless he works on the first holiday, in which case he is
entitled to holiday pay (100% of the regular wages) on the second holiday.

For example – In case, Thursday and Friday are both holidays, and an employee is absent on Wednesday, in such a scenario, the
employee will not get paid for both the holidays unless he has worked on Wednesday. But, if an employee has worked on Thursday,
then he will get paid for the holiday on Friday.

Considering the same scenario, but the employee is absent on both Wednesday and Thursday, in such a case he will not get paid for
Friday.

Double Holiday
A double holiday happens when there are two holidays which fall on the same day. For example, if Araw ng Kagitingan falls on the
same day as Maundy Thursday or Good Friday. Labor Code of the Philippines, Article 94.

Payment of Wages on a Regular Holiday

 An employee who does not work on a regular holiday is entitled to be paid 100% of salary for that day.
 An employee who works on a regular holiday is entitled to 200% of salary for that day.
 An employee who works more than 8 hours (overtime work) on a holiday shall be paid an additional 30% of the hourly rate.
 An employee who works on a regular holiday which falls on his/her rest day shall be paid an additional 30% of his/her daily
rate of 200%.
 An employee who works for more than 8 hours(overtime) during a regular holiday which falls on his/her rest day, shall be
paid an additional 30% of his/her hourly rate.
 An employee who works in the night shift on a regular holiday shall be paid at an additional 10% of his/her daily rate of
200%.
 An employee who works overtime in the night shift on a regular holiday shall be paid an additional 30% of his/her daily rate
of 200%, in addition to wages for the night shift.
 An employee who works in the night shift on a regular holiday which falls on his/her rest day shall be paid at his/her daily rate
of 200%, in addition to wages for the night shift.
 An employee who works overtime in the night shift on a regular holiday, which falls on his/her rest day, shall be paid an
additional 30% of his/her daily rate of 200%, in addition to wages for the night shift.

FT1. Determine whether each statement signifies as a right or as responsibility of an employee

My Right My Responsibility
1. Receive fair pay at the correct time
2. Do all work in a safe manner and be mindful of other people’s safety at all times
3. Arrive on time and stay until the work day has ended
4. Have time for regular breaks
5. Work in a safe workplace
6. Use all equipment safely
7. Handle with care the equipment and materials at the workplace
8. Return materials and/or equipment after use
9. Wear protective clothing, gear or paraphernalia
10. Be trained in how to use equipment
FT2. If the statement is a fact, write TRUE, if not, write the correct statement and justify your answer.
1. The Philippine work week consists of 45 hours.
2. Young people under the age of 15 may work if they have their parent’s permission.
3. Employers may require its employees to work even during rest days.
4. Workers should not get involved in policy decisions about his/her rights because the government is the one making those
decisions.
5. Workers are entitled to paid leave at the employer’s expense.
6. ‘Rights’ and ‘responsibilities’ are the same for employers and employees.
7. The Filipino Labor law protects workers against harassment, intimidation and violence.
8. Women should not report sexual harassment by their supervisors because they will lose their job.
9. Filipino labor law protects adults, not youth.
10. Maternity benefits are only applicable to those employed women.
FT3. Read the following scenarios and answer the follow-up questions.
Time Off from Work
Betsay, a young, single mother, had been working long hours at the restaurant. She hadn’t had a day off in over a month and often
worked 55 hours per week. One day her child became very sick with dengue so she called the restaurant to let them know she could
not come to work. Her boss was annoyed, murmuring that she will look for someone more reliable than Betsay. Betsay became
worried she was going to lose her job. She told her friends about her problems and her friends gave her two options.
1. What is the issue?
2. What do you think the Philippine law says about number of work hours and time off?
3. How should Betsay handle this situation?
4. If you were Betsay’s friends what advice will you give to Betsay?
Health and Safety at Work
Manny recently started working for a construction company. His supervisor told him that because he was so smart and fit for the
job, he did not need training in the use of the equipment. He would learn by doing instead. One day he was trying to use a table saw
that he had never used before. He cut himself badly on one of his hands, and it began to bleed profusely, but he did not know where
the first aid kit was located. His co-workers did two things to help him.
1. What is the issue?
2. What do you think Philippine law says about health and safety at work?
3. If you were Manny, what steps should you have taken?
4. If you were Manny’s friends, what steps should you have taken?
5. How can such a situation be prevented in the future?