TOPIC NO. 3 a.

All time during which an employee is required to be on duty or to be at the

LABOR STANDARDS employers premises or to be at a prescribed workplace; and
b. All time during which an employee is suffered or permitted to work.
A. HOURS OF WORK
When is waiting time compensable? Waiting time spent by an employee shall be
1. COVERAGE/EXCLUSIONS
(Article 82, Labor Code) 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. Time spent waiting for work is
Who are covered by the labor standards provisions of the Labor Code?
compensable if it is spent primarily for the benefit of the employer and [its] business.
Employees in all establishments, whether operated for profit or not, are covered by the
law on labor standards.
OVERTIME WORK, OVERTIME PAY
(Article 87, Labor Code)
Who are excluded? What are some basic principles on overtime work?
The following are excluded from the coverage of the law on labor standards: 1. Work rendered after normal eight (8) hours of work is called overtime work.
a. Government employees; 2. In computing overtime work, "regular wage" or "basic salary" means "cash" wage
b. Managerial employees; only without deduction for facilities provided by the employer.
c. Other officers or members of a managerial staff; 3. "Premium pay" means the additional compensation required by law for work
d. Domestic workers or kasambahay and persons in the personal service of performed within eight (8) hours on non-working days, such as regular holidays,
another; special holidays and rest days.
e. Workers paid by results; 4. "Overtime pay" means the additional compensation for work performed beyond
f. Non-agricultural field personnel; and eight (8) hours.
g. Members of the family of the employer. 5. Illustrations on how overtime is computed:
a. For overtime work performed on an ordinary day, the overtime pay is plus
2. NORMAL HOURS OF WORK 25% of the basic hourly rate.
What is the total normal hours of work per day? Eight (8) hours daily. b. For overtime work performed on a rest day or on a special day, the
overtime pay is plus 30% of the basic hourly rate which includes 30% additional
What is overtime work? Any work in excess of eight (8) hours is considered compensation as provided in Article 93 [a] of the Labor Code.
overtime work. c. For overtime work performed on a rest day which falls on a special day,
the overtime pay is plus 30% of the basic hourly rate which includes 50%
May normal working hours be reduced? Yes, provided that no corresponding additional compensation as provided in Article 93 [c] of the Labor Code.
d. For overtime work performed on a regular holiday, the overtime pay is plus
reduction is made on the employees wage or salary equivalent to an 8-hour work day.
30% of the basic hourly rate which includes 100% additional compensation as
In instances where the number of hours required by the nature of work is less than 8
provided in Article 94 [b] of the Labor Code.
hours, such number of hours should be regarded as the employees full working day.
e. For overtime work performed on a rest day which falls on a regular
holiday, the overtime pay is plus 30% of the basic hourly rate which includes
What are flexible working hours? Flexible work arrangements refer to alternative 160% additional compensation.
arrangements or schedules other than the traditional or standard work hours,
workdays and workweek. The effectivity and implementation of any of the flexible work What is the distinction between PREMIUM PAY and OVERTIME PAY? Premium
arrangements should be temporary in nature. pay refers to the additional compensation required by law for work performed within
Under R.A. No. 8972, otherwise known as The Solo Parents Welfare Act eight (8) hours on non-working days, such as rest days and regular and special
of 2000, solo parents are allowed to work on a flexible schedule. The phrase flexible holidays.
work schedule is defined in the same law as the right granted to a solo parent Overtime pay refers to the additional compensation for work performed
employee to vary his/her arrival and departure time without affecting the core work beyond eight (8) hours a day. Every employee who is entitled to premium pay is
hours as defined by the employer. likewise entitled to the benefit of overtime pay.
COMPRESSED WORK WEEK What is built-in overtime pay? In case the employment contract stipulates that the
What is compressed work week? Compressed Workweek or CWW refers to a compensation includes built-in overtime pay and the same is duly approved by the
situation where the normal workweek is reduced to less than six (6) days but the total DOLE, the non-payment by the employer of any overtime pay for overtime work is
number of work-hours of 48 hours per week remains. The normal workday is increased justified and valid.
to more than eight (8) hours but not to exceed twelve (12) hours, without
corresponding overtime premium. This concept can be adjusted accordingly in cases What is emergency overtime work? (Article 89, Labor Code).
where the normal workweek of the firm is five (5) days. a. General rule. The general rule remains that no employee may be compelled to
render overtime work against his will.
What are the conditions for its validity? The CWW scheme is undertaken as a b. Exceptions when employee may be compelled to render overtime work:
result of an express and voluntary agreement of majority of the covered 1. When the country is at war or when any other national or local emergency has
employees or their duly authorized representatives. been declared by the National
Assembly or the Chief Executive;
How should compensation be made under a valid CWW? Unless there is a more 2. When overtime work is necessary to prevent loss of life or property or in case
favorable practice existing in the firm, work beyond eight (8) hours will not be of imminent danger to public safety due to actual or impending emergency in the
compensable by overtime premium provided the total number of hours worked locality caused by serious accident, fire, floods, typhoons, earthquake, epidemic
per day shall not exceed twelve (12) hours. In any case, any work performed or other disasters or calamities;
beyond twelve (12) hours a day or forty-eight (48) hours a week shall be subject to 3. When there is urgent work to be performed on machines, installations or
overtime pay. equipment, or in order to avoid serious loss or damage to the employer or some
other causes of similar nature;
MEAL BREAK 4. When the work is necessary to prevent loss or damage to perishable goods;
(Article 85, Labor Code) 5. When the completion or continuation of work started before the 8th hour is
What is the rule on time-off for regular meal? Every employer is required to give necessary to prevent serious obstruction or prejudice to the business or
operations of the employer; and
his employees, regardless of sex, not less than one (1) hour (or 60 minutes) time-off
6. When overtime work is necessary to avail of favorable weather or
for regular meals.
environmental conditions where performance or quality of work is dependent
thereon.
Is meal break compensable? Being time-off, it is not compensable hours worked.
In this case, the employee is free to do anything he wants, except to work. If he is
required, however, to work while eating, he should be compensated therefor.
May an employee validly refuse to render overtime work under any of the
WAITING TIME afore-said circumstances? No, When an employee refuses to render emergency
(Article 84, Labor Code) overtime work under any of the foregoing conditions, he may be dismissed on the
What is covered by compensable working hours? The following shall be ground of insubordination or willful disobedience of the lawful order of the
considered as compensable hours worked: employer.
 WAGE VS. SALARY
Can overtime pay be waived? NO. The right to claim overtime pay is not subject to What is the basic distinction between wage and salary? The term wage is
a waiver. Such right is governed by law and not merely by the agreement of the used to characterize the compensation paid for manual skilled or unskilled labor.
parties. Salary, on the other hand, is used to describe the compensation for higher or
superior level of employment.
NIGHT WORK (R.A. NO. 10151),
NIGHT SHIFT DIFFERENTIAL (ARTICLE 86, LABOR CODE) What is the distinction in respect to execution, attachment or garnishment? In
What is the new law on night work? cases of execution, attachment or garnishment of the compensation of an
R.A. No. 10151 [JUNE 21, 2011]. employee received from work issued by the court to satisfy a judicially-determined
a. Significance of the law. obligation, a distinction should be made whether such compensation is considered
R.A. No. 10151 has repealed Article 130 [Nightwork Prohibition] and Article 131 wage or salary. Under Article 1708 of the Civil Code, if considered a wage, the
[Exceptions] of the Labor Code and accordingly renumbered the same articles. employees compensation shall not be subject to execution or attachment or
Additionally, it has inserted a new Chapter V of Title III of Book III of the Labor garnishment, except for debts incurred for food, shelter, clothing and medical
Code entitled Employment of Night Workers which addresses the issue on attendance.
nightwork of all employees, including women workers. Chapter V covers newly If deemed a salary, such compensation is not exempt from execution or
renumbered Articles 154 up to 161 of the Labor Code. attachment or garnishment. Thus, the salary, commission and other remuneration
b. Coverage of the law. The law on nightwork applies not only to women but to received by a managerial employee (as distinguished from an ordinary worker or
all persons, who shall be employed or permitted or suffered to work at night, laborer) cannot be considered wages. Salary is understood to relate to a position or
except those employed in agriculture, stock raising, fishing, maritime transport office, or the compensation given for official or other service; while wage is the
and inland navigation, during a period of not less than seven (7) consecutive compensation for labor.
hours, including the interval from midnight to five o'clock in the morning, to
be determined by the DOLE Secretary, after consulting the workers MINIMUM WAGE DEFINED
representatives/labor organizations and employers. What are the attributes of wage? Wage has the following attributes:
c. Night worker, meaning. "Night worker" means any employed person whose 1. It is the remuneration or earnings, however designated, for work done or to be done
work covers the period from 10 o'clock in the evening to 6 o'clock the or for services rendered or to be rendered;
following morning provided that the worker performs no less than seven (7) 2. It is capable of being expressed in terms of money, whether fixed or ascertained on
consecutive hours of work. a time, task, piece or commission basis, or other method of calculating the same;
3. It is payable by an employer to an employee under a written or unwritten contract of
NIGHT SHIFT DIFFERENTIAL PAY employment for work done or to be done or for services rendered or to be rendered;
How is it reckoned and computed? Night shift differential is equivalent to 10% of and
employee's regular wage for each hour of work performed between 10:00 p.m. and 4. It includes the fair and reasonable value, as determined by the DOLE Secretary, of
6:00 a.m. of the following day. board, lodging, or other facilities customarily furnished by the employer to the
employee. Fair and reasonable value shall not include any profit to the employer or
What is the distinction between night shift differential pay and overtime pay? to any person affiliated with the employer.
When the work of an employee falls at night time, the receipt of overtime pay shall not
preclude the right to receive night differential pay. The reason is the payment of the What is basic wage? Basic wage means all the remuneration or earnings paid
night differential pay is for the work done during the night; while the payment of the by an employer to a worker for services rendered on normal working days and hours
overtime pay is for work in excess of the regular eight (8) working hours. but does not include cost-of-living allowances, profit-sharing payments, premium
payments, 13th month pay or other monetary benefits which are not considered as
How is Night Shift Differential Pay computed? part of or integrated into the regular salary of the workers.
1. Where night shift (10 p.m. to 6 a.m.) work is regular work. Further, as held in Honda Phils., Inc. v. Samahan ng Malayang
a. On an ordinary day: Plus 10% of the basic hourly rate or a total of 110% of Manggagawa sa Honda, the following should be excluded from the computation of
the basic hourly rate. basic salary, to wit: payments for sick, vacation and maternity leaves, night
b. On a rest day, special day or regular holiday: Plus 10% of the regular hourly differentials, regular holiday pay and premiums for work done on rest days and
rate on a rest day, special day or regular holiday or a total of 110% of the regular special holidays.
hourly rate.
2. Where night shift (10 p.m. to 6 a.m.) work is overtime work. What is minimum wage? The minimum wage rates prescribed by law shall be
a. On an ordinary day: Plus 10% of the overtime hourly rate on an ordinary day the basic cash wages without deduction therefrom of whatever benefits, supplements
or a total of 110% of the overtime hourly rate on an ordinary day. or allowances which the employees enjoy free of charge aside from the basic pay.
b. On a rest day or special day or regular holiday: Plus 10% of the overtime
hourly rate on a rest day or special day or regular holiday. What is statutory minimum wage? The term statutory minimum wage refers
3. For overtime work in the night shift. Since overtime work is not usually eight (8) simply to the lowest basic wage rate fixed by law that an employer can pay his
hours, the compensation for overtime night shift work is also computed on the basis of workers.
the hourly rate.
a. On an ordinary day. Plus 10% of 125% of basic hourly rate or a total of 110% What is regional minimum wage rate? The term regional minimum wage
of 125% of basic hourly rate. rates refers to the lowest basic wage rates that an employer can pay his workers,
b. On a rest day or special day or regular holiday. Plus 10% of 130% of as fixed by the Regional Tripartite Wages and Productivity Boards (RTWPBs),
regular hourly rate on said days or a total of 110% of 130% of the applicable and which shall not be lower than the applicable statutory minimum wage rates.
regular hourly rate.
What are included/excluded in the term wage rate?
PART-TIME WORK The term "wage rates" includes cost-of-living allowances as fixed by the RTWPB,
What is part-time work? Part-time work is a single, regular or voluntary form of but excludes other wage-related benefits such as overtime pay, bonuses, night shift
employment with hours of work substantially shorter than those considered as normal differential pay, holiday pay, premium pay, 13th month pay, premium pay, leave
in the establishment. A part-time worker is an employed person whose normal hours benefits, among others.
of work are less than those of comparable full-time workers.
Part-time work may take different forms depending on the agreed hours of Can COLA be integrated into the minimum wage? Yes. The cost-of-living
work in a day, the days of work in a week or other reference periods. In the allowance (COLA) may be ordered integrated into the minimum wage by the Regional
Philippines, however, the two most common and acceptable forms are four (4) Tripartite Wages and Productivity Board (RTWPB or Regional Board).
hours work per day and weekend work or two (2) full days per week.
What is COLA? COLA is not in the nature of an allowance intended to reimburse
CONTRACT FOR PIECE WORK expenses incurred by employees in the performance of their official functions. It is not
(SEE CIVIL CODE) payment in consideration of the fulfillment of official duty. As defined, cost of living
What is contract for piece work under the Civil Code? By the contract for a refers to the level of prices relating to a range of everyday items or the cost of
piece of work, the contractor binds himself to execute a piece of work for the employer, purchasing the goods and services which are included in an accepted standard level
in consideration of a certain price or compensation. The contractor may either employ of consumption. Based on this premise, COLA is a benefit intended to cover
only his labor or skill, or also furnish the material. increases in the cost of living.

B. WAGES
 What is the NO WORK, NO PAY principle? The no work, no pay or fair The law does not make any categorical differentiation among the workers
days wage for fair days labor means that if the worker does not work, he is paid by results. Thus, the workers may be on pakyao (sometimes spelled pakyaw),
generally not entitled to any wage or pay. The exception is when it was the employer takay or piece-rate or output basis. All of them are similar in character in that they are
who unduly prevented him from working despite his ableness, willingness and all paid on the basis of the results of their work. When the law does not distinguish, we
readiness to work; or in cases where he is illegally locked out or illegally suspended or should not distinguish.
illegally dismissed, or otherwise illegally prevented from working, in which event, he
should be entitled to his wage. WAGE RATE OF APPRENTICES AND LEARNERS
What is the wage rate of apprentices and learners? The wage rate of a learner
MINIMUM WAGE SETTING or an apprentice is set at seventy-five percent (75%) of the statutory minimum
What is a Wage Order? The term Wage Order refers to the order promulgated wage.
by the Regional Board pursuant to its wage fixing authority.
WAGE RATE OF PERSONS WITH DISABILITY (PWDs)
When is it proper to issue a Wage Order? Whenever conditions in the region so What is the wage rate of PWD? Under R.A. No. 7277, the wage rate of PWDs had
warrant, the Regional Board shall investigate and study all pertinent facts and based been increased to and fixed at 100% of the applicable minimum wage.
on the prescribed standards and criteria, shall proceed to determine whether a Wage
Order should be issued. Any such Wage Order shall take effect after fifteen (15) days COMMISSIONS
from its complete publication in at least one (1) newspaper of general circulation in the What is commission? Commission is the recompense, compensation or
region. reward of an employee, agent, salesman, executor, trustee, receiver, factor, broker or
bailee, when the same is calculated as a percentage on the amount of his
What are the standards/criteria for minimum wage fixing? In the determination transactions or on the profit of the principal.
of regional minimum wages, the Regional Board shall, among other relevant factors,
consider the following: Is commission part of wage? Commission may or may not be considered part of
(1) Needs of workers and their families wage/salary depending on the peculiar circumstances of a case and on the purpose
1) Demand for living wages; for which the determination is being made. For instance, the rule on the inclusion of
2) Wage adjustment vis--vis the consumer price index; commissions for purposes of computing the separation pay may essentially differ from
3) Cost of living and changes therein; the inclusionary rule thereof for purposes of computing the 13th month pay.
4) Needs of workers and their families;
5) Improvements in standards of living. Is there a law which mandates the payment of commission? None. According to
(2) Capacity to pay Lagatic v. NLRC,1 there is no law which requires employers to pay commissions.
1) Fair return on capital invested and capacity to pay of employers;
2) Productivity. Is there a standard formula to compute commission? None. There is no law
(3) Comparable wages and incomes which prescribes a method for computing commission. The determination of the
1) Prevailing wage levels. amount of commissions is the result of collective bargaining negotiations, individual
(4) Requirements of economic and social development employment contracts or established employer practice.
1) Need to induce industries to invest in the countryside;
2) Effects on employment generation and family income; DEDUCTIONS FROM WAGES
3) Equitable distribution of income and wealth along the imperatives of economic May employer deduct from wage of employees? The general rule is that an
and social development. employer, by himself or through his representative, is prohibited from making any
deductions from the wages of his employees. The employer is not allowed to make
What are the methods of fixing the minimum wage rates? unnecessary deductions without the knowledge or authorization of the employees.
There are two (2) methods, to wit:
1. Floor-Wage method which involves the fixing of a determinate amount to be Are there exceptions to this rule? Yes.
added to the prevailing statutory minimum wage rates. This was applied in earlier (a) In cases where the worker is insured with his consent by the employer, and the
wage orders; and deduction is to recompense the employer for the amount paid by him as premium on
2. Salary-Cap or Salary-Ceiling method where the wage adjustment is to be the insurance;
applied to employees receiving a certain denominated salary ceiling. In other (b) For union dues, in cases where the right of the worker or his union to check-off
words, workers already being paid more than the existing minimum wage (up to a has been recognized by the employer or authorized in writing by the individual worker
certain amount stated in the Wage Order) are also to be given a wage increase. concerned; and
The Salary-Cap or Salary-Ceiling method is the preferred mode. The (c) In cases where the employer is authorized by law or regulations issued by the
distinction between the two (2) methods is best shown by way of an illustration. Under DOLE Secretary.
the Floor Wage Method, it would be sufficient if the Wage Order simply set P15.00 as (d) Deductions for loss or damage under Article 114 of the Labor Code;
the amount to be added to the prevailing statutory minimum wage rates; while in the (e) Deductions made for agency fees from non-union members who accept the
Salary-Ceiling Method, it would be sufficient if the Wage Order states a specific benefits under the CBA negotiated by the bargaining union. This form of deduction
salary, such as P250.00, and only those earning below it shall be entitled to the wage does not require the written authorization of the non-bargaining union member
increase. concerned;
(f) Deductions for value of meal and other facilities;
MINIMUM WAGE OF WORKERS PAID BY RESULTS (g) Deductions for premiums for SSS, PhilHealth, employees compensation and
What are the minimum wage rates of workers paid by results? According to Pag-IBIG;
Article 124 of the Labor Code: (h) Withholding tax mandated under the National Internal Revenue Code (NIRC);
All workers paid by results, including those who are paid on piecework, (i) Withholding of wages because of the employees debt to the employer which is
takay, pakyaw or task basis, shall receive not less than the prescribed wage rates already due;
per eight (8) hours of work a day, or a proportion thereof for working less than eight (j) Deductions made pursuant to a court judgment against the worker under
(8) hours. circumstances where the wages may be the subject of attachment or execution but
only for debts incurred for food, clothing, shelter and medical attendance;
Who are workers paid by results? They are workers who are engaged on pakyao, (k) When deductions from wages are ordered by the court;
piecework, task and other non-time work. They are so called because they are paid
not on the basis of the time spent on their work but according to the quantity, quality or NON-DIMINUTION OF BENEFITS
kind of job and the consequent results thereof. What is the applicability of the non-diminution rule in Article 100 of the Labor
Code? Albeit Article 100 is clear that the principle of non-elimination and non-
What are the categories of workers paid by results? Workers paid by results diminution of benefits apply only to the benefits being enjoyed at the time of the
may be classified into: promulgation of the Labor Code, the Supreme Court has consistently cited Article 100
a. Supervised workers; and as being applicable even to benefits granted after said promulgation. It has, in fact,
b. Unsupervised workers. been treated as the legal anchor for the declaration of the invalidity of so many acts of
As the term clearly connotes, supervised workers are those whose employers deemed to have eliminated or diminished the benefits of employees.
manner of work is under the control of the employer; while unsupervised workers are The 2014 case of Wesleyan University-Philippines v. Wesleyan
those whose work is controlled more in the results than in the manner or method of University-Philippines Faculty and Staff Association,1 succinctly pointed out that
performing it. the Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits
employers from eliminating or reducing the benefits received by their employees. This (a) Globe Mackay Cable and Radio Corporation v. NLRC,2 where the Supreme
rule, however, applies only if the benefit is based on any of the following: Court ruled on the proper computation of the cost-of-living allowance (COLA) for
(1) An express policy; monthly-paid employees. Petitioner corporation, pursuant to Wage Order No. 6
(2) A written contract; or (effective October 30, 1984), increased the COLA of its monthly-paid employees by
(3) A company practice. multiplying the P3.00 daily COLA by 22 days which is the number of working days in
There is not much controversy if the benefit involved is provided for under the company. The union disagreed with the computation, claiming that the daily COLA
Nos. 1 and 2 above. Thus, if it is expressly laid down in a written policy unilaterally rate of P3.00 should be multiplied by 30 days which has been the practice of the
promulgated by the employer, the employer is duty-bound to adhere and comply by its company for several years. The Supreme Court, however, upheld the contention of the
own policy. It cannot be allowed to renege from its commitment as expressed in the petitioner corporation. It held that the grant by the employer of benefits through an
policy. erroneous application of the law due to absence of clear administrative guidelines is
If the benefit is granted under a written contract such as an employment not considered a voluntary act which cannot be unilaterally discontinued.
contract or a collective bargaining agreement (CBA), the employer is likewise under
legal compulsion to so comply therewith. (b) TSPIC Corp. v. TSPIC Employees Union [FFW],3 where the Supreme Court
On No. 3 above, please see discussion below. reiterated the rule enunciated in Globe-Mackay, that an erroneously granted benefit
may be withdrawn without violating the prohibition against non-diminution of benefits.
COMPANY PRACTICE No vested right accrued to individual respondents when TSPIC corrected its error by
What is company practice? Company practice is a custom or habit shown by an crediting the salary increase for the year 2001 against the salary increase granted
employers repeated, habitual customary or succession of acts of similar kind by under Wage Order No. 8, all in accordance with the CBA. Hence, any amount given to
reason of which, it gains the status of a company policy that can no longer be the employees in excess of what they were entitled to, as computed above, may be
disturbed or withdrawn. legally deducted by TSPIC from the employees salaries.
To ripen into a company practice that is demandable as a matter of right, But if the error does not proceed from the interpretation or construction of
the giving of the benefit should not be by reason of a strict legal or contractual a law or a provision in the CBA, the same may ripen into a company practice.
obligation but by reason of an act of liberality on the part of the employer. Example:
(a) Hinatuan Mining Corporation and/or the Manager v. NLRC,4 where the
What are the criteria that may be used to determine existence of company act of the employer in granting separation pay to resigning employees, despite
practice? Since there is no hard and fast rule which may be used and applied in the fact that the Labor Code does not grant it, was considered an established
determining whether a certain act of the employer may be considered as having employer practice.
ripened into a practice, the following criteria may be used to determine whether an act
has ripened into a company practice: BONUS
(1) The act of the employer has been done for a considerable period of time; What is the rule on its demandability and enforceability? Bonus, as a general
(2) The act should be done consistently and intentionally; and rule, is an amount granted and paid ex gratia to the employee.
(3) The act should not be a product of erroneous interpretation or construction of a It cannot be forced upon the employer who may not be obliged to assume
doubtful or difficult question of law or provision in the CBA the onerous burden of granting bonuses or other benefits aside from the employees
(See the 2013 case of Vergara, Jr. v. Coca-Cola Bottlers Philippines, Inc.2) basic salaries or wages. If there is no profit, there should be no bonus. If profit is
reduced, bonus should likewise be reduced, absent any agreement making such
1. THE ACT OF THE EMPLOYER HAS BEEN DONE FOR A CONSIDERABLE bonus part of the compensation of the employees.
PERIOD OF TIME.
If done only once as in the case of Philippine Appliance Corporation When is bonus demandable and enforceable?
(Philacor) v. CA,3 where the CBA signing bonus was granted only once during the It becomes demandable and enforceable:
1997 CBA negotiation, the same cannot be considered as having ripened into a (1) If it has ripened into a company practice;
company practice. (2) If it is granted as an additional compensation which the employer agreed to give
In the following cases, the act of the employer was declared company without any condition such as success of business or more efficient or more productive
practice because of the considerable period of time it has been practiced: operation, hence, it is deemed part of wage or salary.
(a) Davao Fruits Corporation v. Associated Labor Unions.4 - The act of the (3) When considered as part of the compensation and therefore demandable and
company of freely and continuously including in the computation of the 13th enforceable, the amount is usually fixed. If the amount thereof is dependent upon the
month pay, items that were expressly excluded by law has lasted for six (6) years, realization of profits, the bonus is not demandable and enforceable.
hence, was considered indicative of company practice.
(b) Sevilla Trading Company v. A. V. A. Semana.5 - The act of including non- FACILITIES VS. SUPPLEMENTS
basic benefits such as paid leaves for unused sick leave and vacation leave in the What are facilities? The term facilities includes articles or services for the
computation of the employees 13th month pay for at least two (2) years was benefit of the employee or his family but does not include tools of the trade or
considered a company practice. articles or services primarily for the benefit of the employer or necessary to the
(c) The 2010 case of Central Azucarera de Tarlac v. Central Azucarera de conduct of the employers business. They are items of expense necessary for the
Tarlac Labor Union-NLU,6 also ruled as company practice the act of petitioner laborers and his familys existence and subsistence which form part of the wage and
of granting for thirty (30) years, its workers the mandatory 13th month pay when furnished by the employer, are deductible therefrom, since if they are not so
computed in accordance with the following formula: Total Basic Annual Salary furnished, the laborer would spend and pay for them just the same.
divided by twelve (12) and Including in the computation of the Total Basic
Annual Salary the following: basic monthly salary; first eight (8) hours overtime What are supplements? The term supplements means extra remuneration or
pay on Sunday and legal/special holiday; night premium pay; and vacation and special privileges or benefits given to or received by the laborers over and above
sick leaves for each year. their ordinary earnings or wages.

2. THE ACT SHOULD BE DONE CONSISTENTLY AND INTENTIONALLY. The What are the distinctions between facilities and supplements? The benefit or
following cases may be cited to illustrate this principle: privilege given to the employee which constitutes an extra remuneration over and
(a) Tiangco v. Leogardo, Jr.,1 where the employer has consistently been granting above his basic or ordinary earning or wage is supplement; and when said benefit or
fixed monthly emergency allowance to the employees from November, 1976 but privilege is made part of the laborers basic wage, it is a facility. The criterion is not so
discontinued this practice effective February, 1980 insofar as non-working days are much with the kind of the benefit or item (food, lodging, bonus or sick leave) given but
concerned based on the principle of no work, no pay. The Supreme Court ruled that its purpose.
the discontinuance of said benefit contravened Article 100 of the Labor Code which Thus, free meals supplied by the ship operator to crew members, out of
prohibits the diminution of existing benefits. necessity, cannot be considered as facilities but supplements which could not be
reduced having been given not as part of wages but as a necessary matter in the
3. THE ACT SHOULD NOT BE A PRODUCT OF ERRONEOUS INTERPRETATION maintenance of the health and efficiency of the crew during the voyage.
OR CONSTRUCTION OF A DOUBTFUL OR DIFFICULT QUESTION OF LAW OR
PROVISION IN THE CBA. What is the rule on deductibility of facilities and supplements?
The general rule is that if it is a past error that is being corrected, no Facilities are deductible from wage but not supplements.
vested right may be said to have arisen therefrom nor any diminution of benefit may
have resulted by virtue of the correction thereof. The error, however, must be corrected WAGE DISTORTION/RECTIFICATION
immediately after its discovery; otherwise, the rule on non-diminution of benefits would What is wage distortion? Wage distortion contemplates a situation where an
still apply. increase in prescribed wage rates results in either of the following:
The following cases would illuminate this principle:
1. Elimination of the quantitative differences in the rates of wages or salaries; or When can an employer require work on a rest day? The employer may require
2. Severe contraction of intentional quantitative differences in wage or salary rates any of its employees to work on their scheduled rest day for the duration of the
between and among employee groups in an establishment as to effectively obliterate following emergency and exceptional conditions:
the distinctions embodied in such wage structure based on the following criteria: a. In case of actual or impending emergencies caused by serious accident, fire, flood,
a. Skills; typhoon, earthquake, epidemic or other disaster or calamity, to prevent loss of life and
b. Length of service; or property, or in case of force majeure or imminent danger to public safety;
c. Other logical bases of differentiation. b. In case of urgent work to be performed on machineries, equipment, or installations,
Wage distortion presupposes a classification of positions and ranking of to avoid serious loss which the employer would otherwise suffer;
these positions at various levels. One visualizes a hierarchy of positions with c. In the event of abnormal pressure of work due to special circumstances, where the
corresponding ranks basically in terms of wages and other emoluments. Where a employer cannot ordinarily be expected to resort to other measures;
significant change occurs at the lowest level of positions in terms of basic wage d. To prevent serious loss of perishable goods;
without a corresponding change in the other level in the hierarchy of positions, e. Where the nature of the work is such that the employees have to work continuously
negating as a result thereof the distinction between one level of position from the next for seven (7) days in a week or more, as in the case of the crew members of a vessel
higher level, and resulting in a parity between the lowest level and the next higher level to complete a voyage and in other similar cases; and
or rank, between new entrants and old hires, there exists a wage distortion. xxx. The f. When the work is necessary to avail of favorable weather or environmental
concept of wage distortion assumes an existing grouping or classification of conditions where performance or quality of work is dependent thereon.
employees which establishes distinctions among such employees on some relevant or
legitimate basis. This classification is reflected in a differing wage rate for each of the HOLIDAY PAY/PREMIUM PAY
existing classes of employees. 1. COVERAGE, EXCLUSIONS
Who are covered by the law on holiday pay? Generally, all employees are
What are the elements of wage distortion? entitled to and covered by the law on holiday pay.
The four (4) elements of wage distortion are as follows:
(1) An existing hierarchy of positions with corresponding salary rates; Who are excluded from its coverage?
(2) A significant change in the salary rate of a lower pay class without a The following are excluded:
concomitant increase in the salary rate of a higher one; a. Those of the government and any of the political subdivisions, including
(3) The elimination of the distinction between the two levels; and government-owned and controlled corporations;
(4) The existence of the distortion in the same region of the country. b. Those of retail and service establishments regularly employing less than ten (10)
Normally, a company has a wage structure or method of determining the workers;
wages of its employees. In a problem dealing with wage distortion, the basic c. Domestic workers or Kasambahays;
assumption is that there exists a grouping or classification of employees that d. Persons in the personal service of another;
establishes distinctions among them on some relevant or legitimate bases. e. Managerial employees as defined in Book III of the Labor Code;
Involved in the classification of employees are various factors such as the f. Field personnel and other employees whose time and performance is unsupervised
degrees of responsibility, the skills and knowledge required, the complexity of the by the employer;
job, or other logical basis of differentiation. The differing wage rate for each of the g. Those who are engaged on task or contract basis or purely commission basis;
existing classes of employees reflects this classification. h. Those who are paid a fixed amount for performing work irrespective of the time
consumed in the performance thereof;
What is the formula for rectifying or resolving wage distortion? i. Other officers and members of the managerial staff;
Following is the formula for the correction of wage distortion in the pay scale j. Members of the family of the employer who are dependent on him for support.
structures:
Minimum Wage=% x Prescribed Increase = Distortion Adjustment What are REGULAR and SPECIAL HOLIDAYS?
Actual Salary A. Regular Holidays
The above formula was held to be just and equitable. New Years Day - 1 January (Wednesday)
Araw ng Kagitingan - 9 April (Wednesday)
DIVISOR TO DETERMINE DAILY RATE Maundy Thursday - 17 April
Who is a monthly-paid employee? A monthly-paid employee is one who is Good Friday - 18 April
paid his wage or salary for every day of the month, including unworked rest days, Labor Day - 1 May (Thursday)
special days or regular holidays. Independence Day - 12 June (Thursday)
National Heroes Day - 25 August (Last Monday of August)
Who is a daily-paid employee? A daily-paid employee is one who is paid his Bonifacio Day - 30 November (Sunday)
wage or salary only on the days he actually worked, except in cases of regular Christmas Day - 25 December (Thursday)
holidays wherein he is paid his wage or salary even if he does not work during those Rizal Day - 30 December (Tuesday)
days, provided that he is present or on leave of absence with pay on the working day
immediately preceding the regular holidays. B. Special (Non-Working) Days
Chinese New Year - 31 January (Friday)
What are the factors/divisors in computing benefits and wage deductions? Black Saturday - 19 April
Equivalent daily rate (EDR), the basis for deductions for absences and for computing Ninoy Aquino Day - 21 August (Thursday)
overtime pay and other benefits All Saints Day - 1 November (Saturday)

Monthly Rate x 12 C. Special Holiday (for all schools)

No. of Days Considered = Equivalent Daily Rate (EDR) EDSA Revolution Anniversary 25 February (Tuesday)
Paid in a Year Not included in the enumeration above on regular holidays are (1) Eidl Fitr and
(2) Eidul Adha.
REST PERIODS The reason is that proclamations declaring the observance of these
1. WEEKLY REST DAY national holidays are issued after the approximate dates of the Islamic holidays have
What is the duration of weekly rest period? It shall be the duty of every employer, been determined in accordance with the Islamic calendar (Hijra) or the lunar calendar,
whether operating for profit or not, to provide each of his employees a rest period of or upon Islamic astronomical calculations, whichever is possible or convenient.
not less than twenty-four (24) consecutive hours after every six (6) consecutive To this end, the National Commission on Muslim Filipinos (NCMF) shall
normal work days. inform the Office of the President on which days the holidays shall respectively fall.

Is the employers prerogative to determine the rest period of its employees What is the total number of regular holidays? The total number of regular
subject to limitations? Yes. The employer shall determine and schedule the weekly holidays is twelve (12) days per year. This is important for purposes of reckoning
rest day of his employees subject to CBA and to such rules and regulations as the certain divisors and computation of employee benefits.
DOLE Secretary may provide. However, the employer shall respect the preference of
employees as to their weekly rest day when such preference is based on religious What is premium pay for holidays and rest days? Premium pay refers to the
grounds. additional compensation required by law to be paid for work performed within the
regular eight (8) hours on non-working days, such as rest days, regular and special
2. EMERGENCY REST DAY WORK holidays.
 How is premium pay for holidays computed? Are piece-workers, takay and others paid by results entitled to holiday pay?
a. Regular Holidays Yes. Where a covered employee is paid by results or output such as payment on
If the employee did not work, he/she shall be paid 100 % of his/her salary for piece-work, his holiday pay should not be less than his average daily earnings for the
that day. Computation: (Daily rate + Cost of Living Allowance) x 100%. The COLA last seven (7) actual working days preceding the regular holiday. In no case,
is included in the computation of holiday pay. however, should the holiday pay be less than the applicable statutory minimum wage
If the employee worked, he/she shall be paid 200 % of his/her regular salary for rate.
that day for the first eight hours. Computation: (Daily rate + COLA) x 200%. The
COLA is also included in computation of holiday pay. What are the distinctions between supervised and unsupervised workers
If the employee worked in excess of eight hours (overtime work), he/she shall paid by results to determine their entitlement to holiday pay? The principal test to
be paid an additional 30 percent of his/her hourly rate on said day. Computation: determine entitlement to holiday pay is whether the employees time and performance
Hourly rate of the basic daily wage x 200% x 130% x number of hours worked. of the work are supervised or unsupervised by their employer. If supervised, the
If the employee worked during a regular holiday that also falls on his/her rest employee is entitled to holiday pay. If unsupervised, he is not.
day, he/she shall be paid an additional 30 % of his/her daily rate of 200 %. The distinctions between supervised and unsupervised workers paid by
Computation: (Daily rate + COLA) x 200%] + (30% [Daily rate x 200%)]. results are as follows:
If the employee worked in excess of eight hours (overtime work) during a (1) Those whose time and performance are supervised by the employer. Here,
regular holiday that also falls on his/her rest day, he/she shall be paid an there is an element of control and supervision over the manner as to how the
additional 30 % of his/her hourly rate on said day. Computation: (Hourly rate of work is to be performed. A piece-rate worker belongs to this category especially if
the basic daily wage x 200% x 130% x 130% x number of hours worked); he performs his work in the company premises; and
b. Special (Non-Working) Days (2) Those whose time and performance are unsupervised. Here, the employers
If the employee did not work, the no work, no pay principle shall apply, control is over the result of the work. Workers on pakyao and takay basis belong
unless there is a favorable company policy, practice, or CBA granting payment on to this group. Both classes of workers are paid per unit accomplished. Piece-rate
a special day. payment is generally practiced in garment factories where work is done in the
If the employee worked, he/she shall be paid an additional 30 % of his/her daily company premises, while payment on pakyao and takay basis is commonly
rate on the first eight hours of work. Computation: [(Daily rate x 130%) + COLA). observed in the agricultural industry, such as in sugar plantations where the work
If the employee worked in excess of eight hours (overtime work), he/she shall is performed in bulk or in volumes, hence, difficult to quantify.
be paid an additional 30 % of his/her hourly rate on said day. Computation:
(Hourly rate of the basic daily wage x 130% x 130% x number of hours worked).
If the employee worked during a special day that also falls on his/her rest day, Are seasonal workers entitled to holiday pay? Yes. Seasonal workers are entitled
he/she shall be paid an additional 50% of his/her daily rate on the first eight hours to holiday pay while working during the season. They may not be paid the required
of work. Computation: [(Daily rate x 150%) + COLA]. regular holiday pay during off-season where they are not at work.
If the employee worked in excess of eight hours (overtime work) during a
special day that also falls on his/her rest day, he/she shall be paid an additional Are seafarers entitled to holiday pay? Yes. Any hours of work or duty including
30 % of his/her hourly rate on said day. Computation: (Hourly rate of the basic hours of watchkeeping performed by the seafarer on designated rest days and
daily wage x 150% x 130% x number of hours worked). holidays shall be paid rest day or holiday pay.

c. Special Holiday for all schools What are important principles on holiday pay?
For private establishments, 25 February 2014 is an ordinary workday and no In case of two (2) regular holidays falling on the same day, the worker should be
premium is required to be paid for work on said day. compensated as follows:
On the other hand, employees in private schools, whether academic or oIf unworked 200% for the two regular holidays;
administrative personnel, shall be paid in accordance with the rules for pay on oIf worked 200% for the two regular holidays plus premium of 100% for work
special (non-working) days as stated above. on that day.
Monthly-paid employees are not excluded from the coverage of holiday pay.
What are the effects of absences on the computation of holiday pay?
LEAVES
1. Employees on leave of absence with pay - entitled to holiday pay when they are
1. SERVICE INCENTIVE LEAVE
on leave of absence with pay.
What is service incentive leave? Every covered employee who has rendered at
2. Employees on leave of absence without pay on the day immediately
least one (1) year of service is entitled to a yearly service incentive leave of five (5)
preceding the regular holiday may not be paid the required holiday pay if they
days with pay.
have not worked on such regular holiday.
The term at least one year of service should mean service within
3. Employees on leave while on SSS or employees compensation benefits -
twelve (12) months, whether continuous or broken, reckoned from the date the
Employers should grant the same percentage of the holiday pay as the benefit granted
employee started working, including authorized absences and paid regular holidays,
by competent authority in the form of employees compensation or social security
unless the number of working days in the establishment as a matter of practice or
payment, whichever is higher, if they are not reporting for work while on such benefits.
policy, or that provided in the employment contract, is less than twelve (12) months, in
4. When day preceding regular holiday is a non-working day or scheduled rest
which case, said period should be considered as one (1) year for the purpose of
day - should not be deemed to be on leave of absence on that day, in which case,
determining entitlement to the service incentive leave benefit.
employees are entitled to the regular holiday pay if they worked on the day
immediately preceding the non-working day or rest day.
Who are excluded from its coverage?
All employees are covered by the rule on service incentive leave except:
2. HOLIDAY PAY/PREMIUM PAY OF TEACHERS, PIECE
a. Those of the government and any of its political subdivisions, including government
WORKERS, TAKAY, SEASONAL WORKERS, SEAFARERS
owned and controlled corporations;
Are private school teachers entitled to holiday pay during semestral
b. Domestic workers or kasambahays;
vacations? What about Christmas vacation c. Persons in the personal service of another;
No, as far as regular holidays during semestral vacations are d. Managerial employees as defined in Book III of the Labor Code;
concerned. e. Field personnel and other employees whose performance is unsupervised by the
Yes, as far as regular holidays during Christmas vacation are employer;
concerned. f. Those who are engaged on task or contract basis, purely commission basis, or those
who are paid in a fixed amount for performing work irrespective of the time consumed
Are hourly-paid teachers entitled to holiday pay? A school is exempted from in the performance thereof;
paying hourly-paid faculty members their pay for regular holidays, whether the same g. Those who are already enjoying the benefit provided in the law;
be during the regular semesters of the school year or during semestral, Christmas, or h. Those enjoying vacation leave with pay of at least five (5) days;
Holy Week vacations. However, it is liable to pay the faculty members their regular i. Those employed in establishments regularly employing less than ten (10)
hourly rate on days declared as special holidays or if, for some reason, classes are employees;
called off or shortened for the hours they are supposed to have taught, whether j. Other officers and members of the managerial staff; and
extensions of class days be ordered or not; and in case of extensions, said faculty k. Members of the family of the employer who are dependent on him for support.
members shall likewise be paid their hourly rates should they teach during said
extensions. Are unavailed service incentive leaves commutable to cash? Yes. The service
incentive leave is commutable to its money equivalent if not used or exhausted at the
end of the year.
 (4) Parent left solo or alone with the responsibility of parenthood due to physical and/or
2. MATERNITY LEAVE mental incapacity of spouse as certified by a public medical practitioner;
What is maternity leave? Maternity leave is the period of time which may be (5) Parent left solo or alone with the responsibility of parenthood due to legal
availed of by a woman employee, married or unmarried, to undergo and recuperate separation or de facto separation from spouse for at least one (1) year, as long as
from childbirth, miscarriage or complete abortion during which she is permitted to he/she is entrusted with the custody of the children;
retain her rights and benefits flowing from her employment. (6) Parent left solo or alone with the responsibility of parenthood due to declaration of
nullity or annulment of marriage as decreed by a court or by a church as long as
What is the period of leave? he/she is entrusted with the custody of the children;
60 days for normal delivery (7) Parent left solo or alone with the responsibility of parenthood due to abandonment
78 days for caesarian delivery of spouse for at least one (1) year;
(8) Unmarried mother/father who has preferred to keep and rear her/his child/children
What is the amount granted? instead of having others care for them or give them up to a welfare institution;
Daily maternity benefit equivalent to one hundred percent (100%) of her average daily (9) Any other person who solely provides parental care and support to a child or
salary credit for sixty (60) days or seventy-eight (78) days in case of caesarian children;
delivery/ (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
What is the number of delivery or miscarriage covered? The maternity benefits parent.
shall be paid only for the first four (4) deliveries or miscarriages/
What is the effect of change of status of the solo parent? A change in the status
Is an unmarried woman entitled to maternity leave benefit? Yes. For as long as or circumstance of the parent claiming benefits under this Act, such that he/she is no
a woman is pregnant, she is entitled to maternity leave benefit regardless of whether longer left alone with the responsibility of parenthood, shall terminate his/her eligibility
she is married or unmarried. for these benefits.

PATERNITY LEAVE Who are considered children under this law? "Children" refer to those living
What is paternity leave benefit? Paternity leave covers a married male with and dependent upon the solo parent for support who are unmarried, unemployed
employee allowing him not to report for work for seven (7) calendar days but and not more than eighteen (18) years of age, or even over eighteen (18) years but
continues to earn the compensation therefor, on the condition that his spouse has are incapable of self-support because of mental and/or physical defect/disability.
delivered a child or suffered miscarriage for purposes of enabling him to effectively
lend support to his wife in her period of recovery and/or in the nursing of the newlyborn Is an unavailed parental leave convertible to cash? No. In the event that the
child. parental leave is not availed of, said leave shall not be convertible to cash unless
specifically
Delivery includes childbirth or any miscarriage. agreed upon previously.

Spouse refers to the lawful wife. For this purpose, lawful wife refers to a woman LEAVE FOR VICTIMS OF VIOLENCE
who is legally married to the male employee concerned. AGAINST WOMEN AND CHILDREN
(R.A. No. 9262)
Cohabiting refers to the obligation of the husband and wife to live together. What is this kind of leave? This special leave is granted to a woman employee
who is a victim under this law. It is for a total of ten (10) days of paid leave of
What is the covered total number of deliveries? Every married employee in the absence, in addition to other paid leaves under the law. It is extendible when the
private and public sectors is entitled to a paternity leave of seven (7) calendar days necessity arises as specified in the protection order. Its purpose is to enable the
with full pay for the first four (4) deliveries of the legitimate spouse with whom he is woman employee to attend to the medical and legal concerns relative to said law.
cohabiting. This leave is not convertible to cash.
Paternity leave benefits are granted to the qualified employee after the
delivery by his wife, without prejudice to an employer allowing an employee to avail of What is the requirement for its entitlement? At any time during the application of
the benefit before or during the delivery, provided that the total number of days any protection order, investigation, prosecution and/or trial of the criminal case, a
should not exceed seven (7) calendar days for each delivery. victim of Violence Against Women and their Children (VAWC) who is employed shall
be entitled to said paid leave of up to ten (10) days. The Punong Barangay/kagawad
Is an unavailed paternity leave benefit convertible to cash? or prosecutor or the Clerk of Court, as the case may be, shall issue a certification at no
No. In the event that the paternity leave benefit is not availed of, said cost to the woman that such an action is pending, and this is all that is required for
leave shall not be convertible to cash. the employer to comply with the 10- day paid leave.

PARENTAL LEAVE SPECIAL LEAVE BENEFIT FOR WOMEN

(R.A. No. 8972) What is this special leave benefit [GYNECOLOGICAL SURGERY LEAVE]? A
What is parental leave? Parental leave is the leave benefit granted to a male or special leave benefit for women was granted under R.A. No. 9710, otherwise known
female solo parent to enable him/her to perform parental duties and responsibilities as The Magna Carta of Women [August 14, 2009]. Thus, any female employee in the
where physical presence is required. public and private sector regardless of age and civil status shall be entitled to a special
leave of two (2) months with full pay based on her gross monthly compensation
How many days may be availed of as parental leave? The parental leave shall subject to existing laws, rules and regulations due to surgery caused by
not be more than seven (7) working days every year to a solo parent who has gynecological disorders under the following terms and conditions:
rendered service of at least one (1) year, to enable him/her to perform parental duties 1. She has rendered at least six (6) months continuous aggregate employment service
and responsibilities where his/her physical presence is required. This leave shall be for the last twelve (12) months prior to surgery;
non-cumulative. 2. In the event that an extended leave is necessary, the female employee may use her
It bears noting that this leave privilege is an additional leave benefit which earned leave credits; and
is separate and distinct from any other leave benefits provided under existing laws or 3. This special leave shall be non-cumulative and non-convertible to cash.
agreements. Gynecological disorders refer to disorders that would require surgical
procedures such as, but not limited to, dilatation and curettage and those involving
Who is a solo parent? female reproductive organs such as the vagina, cervix, uterus, fallopian tubes, ovaries,
The term "solo parent" refers to any individual who falls under any of the breast, adnexa and pelvic floor, as certified by a competent physician. Gynecological
following categories: surgeries shall also include hysterectomy, ovariectomy, and mastectomy.
(1) A woman who gives birth as a result of rape and other crimes against chastity even
without a final conviction of the offender: Provided, That the mother keeps and raises Is this leave similar to maternity leave? No. This leave should be distinguished
the child; from maternity leave benefit, a separate and distinct benefit, which may be availed of
(2) Parent left solo or alone with the responsibility of parenthood due to death of in case of childbirth, miscarriage or complete abortion.
spouse; A woman, therefore, may avail of this special leave benefit in case she
(3) Parent left solo or alone with the responsibility of parenthood while the spouse is undergoes surgery caused by gynecological disorder and at the same time maternity
detained or is serving sentence for a criminal conviction for at least one (1) year; benefit as these two leaves are not mutually exclusive.

SERVICE CHARGE
 What are the kinds of establishment covered by the law on service charge? Are extras, casuals and seasonal employees entitled to 13th month pay? Yes,
The rules on service charge apply only to establishments collecting service charges, they are entitled thereto.
such as hotels, restaurants, lodging houses, night clubs, cocktail lounges, massage
clinics, bars, casinos and gambling houses, and similar enterprises, including those Is 13th month pay part of wage?
entities operating primarily as private subsidiaries of the government. 13th month pay which is in the nature of additional income, is based on wage but
not part of wage.
Who are the employees covered by this law? The same rules on service charges What is the minimum amount of the 13th month pay? The minimum 13th month
apply to all employees of covered employers, regardless of their positions,
pay should not be less than one-twelfth (1/12) of the total basic salary earned by
designations or employment status, and irrespective of the method by which their
an employee within a calendar year.
wages are paid except those receiving more than P2,000.00 a month.

Who are not covered? Specifically excluded from coverage are employees who What is meant by basic salary or basic wage? Basic salary or basic wage
are receiving wages of more than P2,000.00 a month. However, it must be pointed out contemplates work within the normal eight (8) working hours in a day. This means
that the P2,000.00 ceiling is no longer realistic considering the applicable minimum that the basic salary of an employee for purposes of computing the 13th month pay
wages prevailing in the country. Hence, it must be disregarded. should include all remunerations or earnings paid by the employer for services
rendered during normal working hours.
How is the service charge distributed? For purposes of computing the 13th month pay, basic salary should be
a. Percentage of sharing. All service charges collected by covered employers are interpreted to mean not the amount actually received by an employee, but 1/12 of their
required to be distributed at the following rates: standard monthly wage multiplied by their length of service within a given calendar
1. 85% to be distributed equally among the covered employees; and year.
2. 15% to management to answer for losses and breakages and distribution to
employees receiving more than P2,000.00 a month, at the discretion of the SEPARATION PAY
management. What are the separation pays expressly provided under the Labor Code?
b. Frequency of distribution. The share of the employees referred to above should The Labor Code prescribes the payment of separation pay only in the
be distributed and paid to them not less often than once every two (2) weeks or twice a following four (4) situations:
month at intervals not exceeding sixteen (16) days. (1) When termination is due to authorized causes:
(1) installation of labor-saving devices;
Can the service charge be integrated into the wages of covered employees? (2) redundancy;
Yes. In case the service charge is abolished, the share of covered employees should (3) retrenchment; or
be considered integrated in their wages, in accordance with Article 96 of the Labor (4) closing or cessation of business operations; and
Code. The basis of the amount to be integrated is the average monthly share of each (5) disease.
employee for the past twelve (12) months immediately preceding the abolition or
withdrawal of such charges. What are separation pays provided in jurisprudence? In accordance with
jurisprudence, the following separation pay may be cited:
What are some principles on service charge? (1) Separation pay in lieu of reinstatement; and
Tips and services charges are two different things. Tips are given by customers (2) Separation pay as financial assistance in cases where the dismissal was held
voluntarily to waiters and other people who serve them out of recognition of valid and legal but the employee is given financial assistance by reason of long years
satisfactory or excellent service. There is no compulsion to give tips under the of service, unblemished record, substantial justice, etc.
law. The same may not be said of service charges which are considered integral
part of the cost of the food, goods or services What is the prevailing doctrine regarding grant of financial assistance?
ordered by the customers. THE TOYOTA DOCTRINE. Under this doctrine, all grounds in Article 282 of the
Service charges are not in the nature of profit share and, therefore, Labor Code, except analogous causes, would not merit payment of financial
cannot be deducted from wage. assistance.
In the following cases, the Toyota doctrine was applied; hence, no
Who are covered by the 13th month pay law? Only rank-and-file employees, financial assistance was awarded because the grounds invoked are in accordance
regardless of their designation or employment status and irrespective of the method by with Article 282:
which their wages are paid, are entitled to the 13th month pay benefit. Managerial Reno Foods v. Nagkakaisang Lakas ng Manggagawa (NLM), where it was
employees are not entitled to 13th month pay. maintained that labor adjudicatory officials and the Court of Appeals must demur
the award of separation pay based on social justice when an employees
dismissal is based on serious misconduct or willful disobedience; gross and
What is the minimum period of service required in a calendar year to be habitual neglect of duty; fraud or willful breach of trust; or commission of a crime
entitled to 13th month pay? To be entitled to the 13th month pay benefit, it is against the person of the employer or his immediate family grounds under
imposed as a minimum service requirement that the employee should have worked Article 282 of the Labor Code that sanction dismissals of employees.
for at least one (1) month during a calendar year.
Equitable PCI Bank v. Dompor, Moya v. First Solid Rubber Industries, Inc.,
When should 13th month pay be paid? It must be paid not later than December and Unilever Philippines, Inc. v. Rivera, where the infractions committed by the
24 of every year. respondent constituted serious misconduct or willful disobedience resulting to
loss of trust and confidence
Who are excluded from its coverage? The following employers are not covered by
the 13th month pay law: Central Philippines Bandag Retreaders, Inc. v. Diasnes, and Quiambao v.
1. The government and any of its political subdivisions, including government- Manila Electric Company, involving gross and habitual neglect of duties due to
owned and controlled corporations, except those corporations operating essentially respondents repeated and continuous absences without prior leave and frequent
as private subsidiaries of the government. tardiness.
2. Employers already paying their employees 13th month pay or more in a calendar
year or its equivalent at the time of the issuance of the Revised Guidelines. Exception to Toyota doctrine: When termination is based on analogous
3. Employers of those who are paid on purely commission, boundary, or task causes. Toyota, however, makes a distinction when the grounds cited are the
basis, and those who are paid a fixed amount for performing a specific work, analogous causes for termination under Article282(e), like inefficiency,
irrespective of the time consumed in the performance thereof, except where the incompetence, ineptitude, poor performance and others. It declared that in these
workers are paid on piece-rate basis, in which case, the employer shall be covered by cases, the NLRC or the courts may opt to grant separation pay anchored on social
the Revised Guidelines insofar as such workers are concerned. justice in consideration of the length of service of the employee, the amount
Workers paid on piece-rate basis shall refer to those who are paid a involved, whether the act is the first offense, the performance of the employee and
standard amount for every piece or unit of work produced that is more or less regularly the like, using the guideposts enunciated in PLDT on the propriety of the award of
replicated without regard to the time spent in producing the same. separation pay.

Are domestic workers or Kasambahays covered? Yes. They are now covered Illustrative cases.
under the Kasambahay Law. Yrasuegui v. Philippine Airlines, Inc., where the dismissal of petitioner (an
international flight attendant) due to his obesity was held valid as an analogous
 cause under Article 282(e) of the Labor Code. The Supreme Court, however, as prerogative granted by the mutually-negotiated CBA between the school and the union
an act of social justice and for reason of equity, awarded him separation pay is valid.
equivalent to one-half (1/2) months pay for every year of service, including his
regular allowances. The Court observed that his dismissal occasioned by his e. To be valid, retirement at an earlier age must be voluntarily consented to by
failure to meet the weight standards of his employer was not for serious the employee.
misconduct and does not reflect on his moral character. In Jaculbe v. Silliman University, the Supreme Court ruled that in order
for retirement at an earlier age to be valid, it must be shown that the employees
THE SOLIDBANK DOCTRINE. Under this 2010 doctrine, as distinguished from participation in the plan is voluntary. An employer is free to impose a retirement age of
just cause termination, employees terminated due to authorized cause are not less than 65 for as long as it has the employees consent. Stated conversely,
entitled to be paid additional separation pay by way of financial assistance. employees are free to accept the employers offer to lower the retirement age if they
The reason is that the employer is only required under the law to pay his employees feel they can get a better deal with the retirement plan presented by the employer.
separation pay in accordance with Article 283 of the Labor Code. That is all that the
law requires. The Court should refrain from adding more than what the law requires, What is the minimum years of service required for entitlement under the law?
as the same is within the realm of the legislature. Five (5) years is the minimum years of service that must be rendered by the employee
before he can avail of the retirement benefits upon reaching optional or compulsory
RETIREMENT PAY retirement age under Article 287.
a. ELIGIBILITY
Who are covered under the retirement pay law? The following employees are What is the retirement age of underground mine workers? The optional
eligible to avail of retirement benefits under Article 287 of the Labor Code: retirement age of underground mine workers is 50 years of age; while the
1. All employees in the private sector, regardless of their position, designation or compulsory retirement age is 60 years old.
status and irrespective of the method by which their wages are paid;
2. Part-time employees; What is the minimum number of years of service required of underground
3. Employees of service and other job contractors; mine workers? Minimum years of service is also 5 years.
4. Domestic helpers or persons in the personal service of another;
3. Underground mine workers;
4. Employees of government-owned and/or controlled corporations organized under Are the retirement benefits of underground mine workers similar to ordinary
the Corporation Code (without original charters). retirees? Yes. In fact, other than the retirement age, all other requirements as well as
benefits provided in the law are applicable to underground mine workers.
Who are excluded? Article 287, as amended, does not apply to the following
AMOUNT OF RETIREMENT PAY
employees:
What is retirement pay under the law?
1. Employees of the national government and its political subdivisions, including
a. One-half () month salary. In the absence of a retirement plan or agreement
government-owned and/or controlled corporations, if they are covered by the Civil
providing for retirement benefits of employees in the establishment, an employee,
Service Law and its regulations.
upon reaching the optional or compulsory retirement age specified in Article 287, shall
2. Employees of retail, service and agricultural establishments or operations
be entitled to retirement pay equivalent to at least one-half () month salary for every
regularly employing not more than ten (10) employees. These terms are defined as
year of service, a fraction of at least six (6) months being considered as one (1) whole
follows:
year.
a. Retail establishment is one principally engaged in the sale of goods to end-
b. Components of one-half () month salary. For purposes of determining the
users for personal or household use. It shall lose its retail character qualified for
minimum retirement pay due an employee under Article 287, the term one-half
exemption if it is engaged in both retail and wholesale of goods.
month salary shall include all of the following:
b. Service establishment is one principally engaged in the sale of service to
(1) Fifteen (15) days salary of the employee based on his latest salary rate.
individuals for their own or household use and is generally recognized as such.
(2) The cash equivalent of five (5) days of service incentive leave;
c. Agricultural establishment/operation refers to an employer which is
(3) One-twelfth (1/12) of the 13th month pay due the employee; and
engaged in agriculture. This term refers to all farming activities in all branches
(4) All other benefits that the employer and employee may agree upon that
and includes, among others, the cultivation and tillage of soil, production,
should be included in the computation of the employees retirement pay.
cultivation, growing and harvesting of any agricultural or horticultural
c. One-half () month salary means 22.5 days. One-half [] month salary is
commodities, dairying, raising of livestock or poultry, the culture of fish and other
equivalent to 22.5 days arrived at after adding 15 days plus 2.5 days representing
aquatic products in farms or ponds, and any activities performed by a farmer or
one-twelfth [1/12] of the 13th month pay plus 5 days of service incentive leave.
on a farm as an incident to, or in conjunction with, such farming operations, but
does not include the manufacture and/or processing of sugar, coconut, abaca,
tobacco, pineapple, aquatic or other farm products. What are some principles on retirement benefits?
1/12 of 13th month pay and 5 days of service incentive leave (SIL) should not be
What is the optional and compulsory retirement age? included if the employee was not entitled to 13th month pay and SIL during his
a. Under Article 287. This article provides for two (2) types of retirement: employment.
(1) Optional retirement upon reaching the age of sixty (60) years. Example: R & E Transport, Inc. v. Latag,1 where it was held that employees
(2) Compulsory retirement upon reaching the age of sixty-five (65) years. who are not entitled to 13th month pay and SIL pay while still working should not
It is the employee who exercises the option under No. 1 above. be paid the entire 22.5 days but only the fifteen (15) days salary. In other words,
b. Under retirement plan. The optional and compulsory retirement schemes provided the additional 2.5 days representing one-twelfth [1/12] of the 13th month pay and
under Article 287 come into play only in the absence of a retirement plan or the five (5) days of SIL should not be included as part of the retirement benefits.
agreement setting forth other forms of optional or compulsory retirement schemes. The employee in this case was a taxi driver who was being paid on the
Thus, if there is a retirement plan or agreement in an establishment providing for an boundary system basis. It was undisputed that he was entitled to retirement
earlier or older age of retirement (but not beyond 65 which has been declared the benefits after working for fourteen (14) years with R & E Transport, Inc. However,
compulsory retirement age), the same shall be controlling. he was not entitled to the 13th month pay since Section 3 of the Rules and
c. Retirement at an earlier age or after rendering certain period of service. Based Regulations Implementing P.D. No. 851 exempts from its coverage employers of
on Article 287 the employers and employees are free to agree and stipulate on the those who are paid on purely boundary basis. He was also not entitled to the 5-
retirement age, either in a CBA or employment contract. It is only in the absence of day service incentive leave pay pursuant to the Rules to Implement the Labor
such agreement that the retirement age shall be fixed by law, that is, in accordance Code which expressly excepts field personnel and other employees whose
with the optional and compulsory retirement age prescribed under Article 287. performance is unsupervised by the employer.
d. By mutual agreement, employers may be granted the sole and exclusive But in the 2010 case of Serrano v. Severino Santos Transit,2 which
prerogative to retire employees at an earlier age or after rendering a certain involves a bus conductor (petitioner) who worked for 14 years for respondent bus
period of service. company which did not adopt any retirement scheme. It was held herein that even
Cainta Catholic School v. Cainta Catholic School Employees Union if petitioner as bus conductor was paid on commission basis, he falls within the
[CCSEU], where the Supreme Court upheld the exercise by the school of its option to coverage of R.A. 7641 (Retirement Pay Law, now Article 287 of Labor Code).
retire employees pursuant to the existing CBA where it is provided that the school This means that his retirement pay should include the cash equivalent of the 5-
has the option to retire an employee upon reaching the age limit of sixty (60) or day SIL and 1/12 of the 13th month pay for a total of 22.5 days. The affirmance by
after having rendered at least twenty (20) years of service to the school, the last the Court of Appeals of the reliance by the NLRC on R & E Transport case was
three (3) years of which must be continuous. Hence, the termination of held erroneous. For purposes of applying the law on SIL as well as on retirement,
employment of the employees, arising as it did from an exercise of a management there is a difference between drivers paid under the boundary system and
 conductors paid on commission basis. This is so because in practice, taxi drivers followed in our jurisdiction, otherwise called the Reasonable Business Necessity
do not receive fixed wages. They retain only those sums in excess of the Rule:
boundary or fee they pay to the owners or operators of the vehicles. 1. New applicants will not be allowed to be hired if in case he/she has [a] relative,
Conductors, on the other hand, are paid a certain percentage of the bus earnings up to [the] 3rd degree of relationship, already employed by the company.
for the day. It bears emphasis that under P.D. No. 851 and the SIL Law, the 2. In case of two of our employees (both singles [sic], one male and another
exclusion from its coverage of workers who are paid on a purely commission female) developed a friendly relationship during the course of their employment
basis is only with respect to field personnel. and then decided to get married, one of them should resign to preserve the policy
stated above.
RETIREMENT BENEFITS OF WORKERS PAID BY RESULTS 3. Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines,
What are the retirement benefits of workers paid by results? For covered Inc.3 In this case, the prohibition against marriage embodied in the following
workers who are paid by results and do not have a fixed monthly rate, the basis for stipulation in the employment contract was held as valid:
the determination of the salary for fifteen (15) days shall be their average daily salary 10. You agree to disclose to management any existing or future relationship you
(ADS). The ADS is the average salary for the last twelve (12) months reckoned from may have, either by consanguinity or affinity with co-employees or employees of
the date of their retirement, divided by the number of actual working days in that competing drug companies. Should it pose a possible conflict of interest in
particular period. management discretion, you agree to resign voluntarily from the Company as a
matter of Company policy.
RETIREMENT BENEFITS OF PART-TIME WORKERS The Supreme Court ruled that the dismissal based on this stipulation in
How should the retirement benefits of part-time workers be computed? the employment contract is a valid exercise of management prerogative. The
Applying the principles under Article 287, as amended, the components of retirement prohibition against personal or marital relationships with employees of competitor
benefits of part-time workers may also be computed at least in proportion to the companies upon its employees was held reasonable under the circumstances
salary and related benefits due them. because relationships of that nature might compromise the interests of the company.
In laying down the assailed company policy, the employer only aims to protect its
J. WOMEN WORKERS interests against the possibility that a competitor company will gain access to its
a. PROVISIONS AGAINST DISCRIMINATION secrets and procedures.
What are acts of discrimination under the Labor Code?
(a) Payment of a lesser compensation, including wage, salary or other form of c. PROHIBITED ACTS
remuneration and fringe benefits, to a female employee as against a male employee, What are the prohibited acts against women under the Labor Code? Article 137
for work of equal value; and of the Labor Code and its implementing rule consider unlawful the followings acts of
(b) Favoring a male employee over a female employee with respect to promotion, the employer:
training opportunities, study and scholarship grants solely on account of their sexes. 1. To discharge any woman employed by him for the purpose of preventing such
woman from enjoying maternity leave, facilities and other benefits provided under
What are acts of discrimination under the Magna Carta of Women? R.A. No. the Labor Code;
9710, otherwise known as The Magna Carta of Women, is a comprehensive 2. To discharge such woman on account of her pregnancy, or while on leave or in
womens human rights law that seeks to eliminate discrimination against women by confinement due to her pregnancy;
recognizing, protecting, fulfilling and promoting the rights of Filipino women, especially 3. To discharge or refuse the admission of such woman upon returning to her work for
those in marginalized sector. fear that she may again be pregnant;
Based on the definition of the term Discrimination Against Women in 4. To discharge any woman or any other employee for having filed a complaint or
R.A. No. 9710, the following are considered discriminatory acts: having testified or being about to testify under the Labor Code; or
1. Any gender-based distinction, exclusion, or restriction which has the effect or 5. To require as a condition for or continuation of employment that a woman employee
purpose of impairing or nullifying the recognition, enjoyment, or exercise by women, shall not get married or to stipulate expressly or tacitly that upon getting married, a
irrespective of their marital status, on a basis of equality of men and women, of woman employee shall be deemed resigned or separated, or to actually dismiss,
human rights and fundamental freedoms in the political, economic, social, cultural, civil discharge, discriminate or otherwise prejudice a woman employee merely by
or any other field; reason of marriage.
2. Any act or omission, including by law, policy, administrative measure, or practice,
that directly or indirectly excludes or restricts women in the recognition and promotion d. ANTI-SEXUAL HARASSMENT ACT
of their rights and their access to and enjoyment of opportunities, benefits or (R.A. No. 7877)
privileges; What are the 3 situations contemplated under this law? R.A. No. 7877 declares
3. A measure or practice of general application that fails to provide for mechanisms to sexual harassment unlawful only in three (3) situations, namely:
offset or address sex or gender-based disadvantages or limitations of women, as a (1) employment;
result of which women are denied or restricted in the recognition and protection of their (2) education; and
rights and in their access to and enjoyment of opportunities, benefits, or privileges; or (3) training environment.
women, more than men, are shown to have suffered the greater adverse effects of
those measures or practices; and Can sexual harassment be committed also against a man? Yes. Sexual
4. Discrimination compounded by or intersecting with other grounds, status, or harassment is not the sole domain of women as men may also be subjected to the
condition, such as ethnicity, age, poverty or religion. same despicable act. Said law does not limit the victim of sexual harassment to
Additionally, women are guaranteed their right to decent work. The State women.
shall progressively realize and ensure decent work standards for women that involve
the creation of jobs of acceptable quality in conditions of freedom, equity, security and Who are the persons who may be held liable for sexual harassment? Work,
human dignity. education or training-related sexual harassment is committed by any employer,
employee, manager, supervisor, agent of the employer, teacher, instructor, professor,
b. STIPULATION AGAINST MARRIAGE coach, trainor, or any other person who, having authority, influence or moral
Is the prohibition against marriage valid? Article 136 of the Labor Code ascendancy over another in a work or training or education environment, demands,
considers as an unlawful act of the employer to require as a condition for or requests or otherwise requires any sexual favor from another, regardless of whether
continuation of employment that a woman employee shall not get married or to the demand, request or requirement for submission is accepted by the object of said
stipulate expressly or tacitly that upon getting married, a woman employee shall be act.
deemed resigned or separated. Further, any person who directs or induces another to commit any act of
It is likewise an unlawful act of the employer, to actually dismiss, sexual harassment as defined in the law, or who cooperates in the commission thereof
discharge, discriminate or otherwise prejudice a woman employee merely by reason of by another without which it would not have been committed, shall also be held liable
her marriage. under the law.

What are the relevant pieces of jurisprudence on marriage? How is sexual harassment committed in a work-related or employment
1. Philippine Telegraph and Telephone Company v. NLRC.1 - It was declared here environment? In a work-related or employment environment, sexual harassment is
that the company policy of not accepting or considering as disqualified from work any committed when:
woman worker who contracts marriage runs afoul of the test of, and the right against, 1. The sexual favor is made a condition in the hiring or in the employment, re-
discrimination afforded all women workers by our labor laws and by no less than the employment or continued employment of said individual or in granting said individual
Constitution. favorable compensation, terms, conditions, promotions, or privileges; or the refusal to
2. Star Paper Corp. v. Simbol, Comia and Estrella.2 - The following policies were grant the sexual favor results in limiting, segregating or classifying the employee which
struck down as invalid for violating the standard of reasonableness which is being
in any way would discriminate, deprive or diminish employment opportunities or (e) Laundry person; or
otherwise adversely affect said employee; (f) Any person who regularly performs domestic work in one household on an
2. The above acts would impair the employees rights or privileges under existing labor occupational basis.
laws; or
3. The above acts would result in an intimidating, hostile, or offensive environment for Who are excluded from its coverage? The following are not covered:
the employee. (a) Service providers;
(b) Family drivers;
What are duties of the employer in regard to sexual harassment complaints? It (c) Children under foster family arrangement; and
is the duty of the employer to prevent or deter the commission of acts of sexual (d) Any other person who performs work occasionally or sporadically and not on an
harassment and to provide the procedures for the resolution or prosecution of acts of occupational basis.
sexual harassment.
The employer or head of office is required to: Who is a domestic worker or kasambahay? Domestic worker or
1. promulgate appropriate rules and regulations, in consultation with and jointly kasambahay refers to any person engaged in domestic work within an employment
approved by the employees or students or trainees, through their duly designated relationship, whether on a live-in or live-out arrangement, such as, but not limited to,
representatives, prescribing the procedure for the investigation of sexual harassment general househelp, "yaya", cook, gardener, or laundry person, but shall exclude
cases and the administrative sanctions therefor. The said rules and regulations issued service providers, family drivers, children who are under foster family arrangement, or
shall include, among others, guidelines on proper decorum in the workplace and any person who performs domestic work only occasionally or sporadically and not on
educational or training institutions. an occupational basis.
2. create a committee on decorum and investigation of cases on sexual harassment. This term shall not include children who are under foster family
The committee shall conduct meetings, as the case may be, with officers and arrangement which refers to children who are living with a family or household of
employees, teachers, instructors, professors, coaches, trainors and students or relative/s and are provided access to education and given an allowance incidental to
trainees to increase understanding and prevent incidents of sexual harassment. It shall education, I.e., "baon", transportation, school projects, and school activities.
also conduct the investigation of alleged cases constituting sexual harassment. Because of these new terminologies prescribed in the law, the use of the
term househelper may no longer be legally correct.
EMPLOYMENT OF MINORS
(Labor Code and R.A. No. 7678, R.A. No. 9231) Is the employment contract required to be in writing? Yes. The employment
Who is a child or working child? For legal purposes, the term child refers contract must be in writing and should contain the conditions set by law.
to any person less than eighteen (18) years of age.
A working child refers to any child engaged as follows: What are the rights and privileges of a kasambahay? The rights and privileges
i. when the child is below eighteen (18) years of age, in work or economic activity of the Kasambahay are as follows:
that is not child labor; and (a) Minimum wage;
ii. when the child below fifteen (15) years of age: (b) Other mandatory benefits, such as the daily and weekly rest periods, service
(a) in work where he/she is directly under the responsibility of his/her parents or incentive leave, and 13th month pay;
legal guardian and where only members of the childs family are employed; or (c) Freedom from employers' interference in the disposal of wages;
(b) in public entertainment or information which refers to artistic, literary, and (d) Coverage under the SSS, PhilHealth and Pag-IBIG laws;
cultural performances for television show, radio program, cinema or film, theater, (e) Standard of treatment;
commercial advertisement, public relations activities or campaigns, print (f) Board, lodging and medical attendance;
materials, internet, and other media. (g) Right to privacy;
(h) Access to outside communication;
What are the working hours of a child? The term hours of work includes (1) all (i) Access to education and training;
time during which a child is required to be at a prescribed workplace, and (2) all time (j) Right to form, join, or assist labor organization;
during which a child is suffered or permitted to work. Rest periods of short duration (k) Right to be provided a copy of the employment contract; (I) Right to certificate of
during working hours shall be counted as hours worked. employment;
The following hours of work shall be observed for any child allowed to (m) Right to terminate the employment; and
work under R.A. No. 9231 and its Implementing Rules: (n) Right to exercise their own religious beliefs and cultural practices.
(a) For a child below 15 years of age, the hours of work shall not be more than The foregoing rights and privileges are discussed below.
twenty (20) hours per week, provided that the work shall not be more than four (4)
hours at any given day; What is the minimum wage of kasambahay? Under the Kasambahay Law, the
(b) For a child 15 years of age but below 18, the hours of work shall not be more following are the minimum wages of kasambahays:
than eight (8) hours a day, and in no case beyond forty (40) hours a week; and (a) Two thousand five hundred pesos (P2,500.00) a month for those employed in
(c) No child below 15 years of age shall be allowed to work between eight (8) the National Capital Region (NCR);
oclock in the evening and six (6) oclock in the morning of the following day and no (b) Two thousand pesos (P2,000.00) a month for those employed in chartered cities
child 15 years of age but below 18 shall be allowed to work between ten (10) and first class municipalities; and
oclock in the evening and six (6) oclock in the morning of the following day. (c) One thousand five hundred pesos (P1,500.00) a month for those employed in
other municipalities.
What is the prohibition of employing minors in certain undertakings and
advertisements? No child below 18 years of age is allowed to be employed as a Are the minimum wages subject to review by the RTWPBs or Regional
model in any advertisement directly or indirectly promoting alcoholic beverages, Boards? Yes. After one (1) year from the effectivity of the Kasambahay Law, and
intoxicating drinks, tobacco and its by-products, gambling or any form of violence or periodically thereafter, the Regional Tripartite and Productivity Wage Boards
pornography. (RTPWBs) shall review, and if proper, determine and adjust the minimum wage rates
of domestic workers.
L. HOUSEHELPERS
(Labor Code as amended by R.A. No. 7655, What are some important principles on wage of kasambahay?
An Act Increasing the Minimum Wage of Househelpers; Frequency of payment of wages. - The wages of the Kasambahay shall be paid
See also Household Service under the Civil Code)
at least once a month. This is so because the minimum wage rates are on a monthly
(NOTE: The above provisions of the Labor Code on Househelpers
basis.
cited in the 2014 Syllabus have already been repealed by R.A. No.
The equivalent minimum daily wage rate of the Kasambahay shall be
10361, otherwise known as Domestic Workers Act or Batas
Kasambahay approved by President Benigno S. Aquino III on determined by dividing the applicable minimum monthly rate by thirty (30) days.
January 18, 2013). The amount of the minimum wage depends on the geographical area where the
What is the coverage of the Kasambahay Law? R.A. No. 10361 applies to all Kasambahay works.
domestic workers employed and working within the country. It shall cover all parties Payment of wages:
to an employment contract for the services of the following Kasambahay, whether on a 1. To whom paid. - It should be made on time directly to the Kasambahay to
live-in or live-out arrangement, such as, but not limited to: whom they are due in cash at least once a month.
(a) General househelp; 2. Deductions, prohibition; when allowed. - The employer, unless allowed by
(b) Yaya; the Kasambahay through a written consent, shall make no deductions from the
(c) Cook; wages other than that which is mandated by law such as for SSS, Philhealth or
(d) Gardener; Pag-IBIG contributions.
 3. Mode of payment. - It should be paid in cash and not by means of (1) At least three (3) adequate meals a day, taking into consideration the
promissory notes, vouchers, coupons, tokens, tickets, chits, or any object other Kasambahay's religious beliefs and cultural practices;
than the cash wage as provided for under this Act. (2) Humane sleeping condition that respects the person's privacy for live-in
4. Pay slip. The employer shall at all times provide the Kasambahay with a arrangement; and
copy of the pay slip containing the amount paid in cash every pay day, and (3) Appropriate rest and medical assistance in the form of first-aid medicines, in
indicating all deductions made, if any. The copies of the pay slip shall be kept by case of illnesses and injuries sustained during service without loss of benefits.
the employer for a period of three (3) years. m. Opportunities for education and training. - The Kasambahay shall be afforded
5. Prohibition on Interference in the disposal of wages. It shall be unlawful the opportunity to finish basic education, which shall consist of elementary and
for the employer to interfere with the freedom of the Kasambahay in the secondary education. He/she may be allowed access to alternative learning systems
disposition of his/her wages, such as: and, as far as practicable, higher education or technical vocational education and
(a) Forcing, compelling, or obliging the Kasambahay to purchase training.
merchandise, commodities or other properties from the employer or from n. Membership in labor organization. - The Kasambahay shall have the right to join
any other person; or a labor organization of his/her own choosing for purposes of mutual aid and
(b) Making use of any store or services of such employer or any other collective negotiation.
person. r. Health and safety. - The employer shall safeguard the safety and health of the
6. Prohibition against withholding of wages. It shall be unlawful for an Kasambahay in accordance with the standards which the DOLE shall develop through
employer, directly or indirectly, to withhold the wages of the Kasambahay. If the the Bureau of Working Conditions (BWC) and the Occupational Safety and Health
Kasambahay leaves without any justifiable reason, any unpaid salary for a period Center (OSHC) within six (6) months from the promulgation of this IRR. The said
not exceeding fifteen (15) days shall be forfeited. Likewise, the employer shall not standards shall take into account the peculiar nature of domestic work.
induce the Kasambahay to give up any part of the wages by force, stealth, s. Prohibition on debt bondage. - It shall be unlawful for the employer or any person
intimidation, threat or by any other means whatsoever. acting on his/her behalf to place the Kasambahay under debt bondage. Debt
bondage refers to the rendering of service by the Kasambahay as security or
What are important terms and conditions of employment of kasambahay? The payment for a debt where the length and nature of service is not clearly defined or
following is a rundown of the basic terms and conditions that should be observed in when the value of the service is not reasonably applied in the payment of the debt.
the employment of a Kasambahay: t. Assignment to non-household work. - The employer shall not assign the
a. Employable age. - Children whose age is below 15 years are absolutely prohibited Kasambahay to work, whether in full or part-time, in a commercial, industrial or
to work as Kasambahay. agricultural enterprise at a wage rate lower than that provided for agricultural or
b. Normal daily hours of work. Because R.A. No. 10361 does not contain any nonagricultural workers.
provision on the number of normal hours of work that a Kasambahay should render in If so assigned, the Kasambahay will no longer be treated as such but
a day but merely prescribes said daily rest period of eight (8) hours per day, it may be as a regular employee of the establishment.
concluded that the Kasambahay should work for at least a total of sixteen (16) hours
per day as normal hours of work. However, it must be noted that the Labor Code does What are the rules on termination of Kasambahay?
not contain any provision on the normal hours of work of househelpers. Article 1695 a. Pre-termination of employment. The following rules shall be observed:
of the Civil Code, however, specifically provides that househelpers shall not be (1) In case the duration of employment is specified in the contract, the
required to work for more than ten (10) hours a day. Since R.A. No. 10361, a special Kasambahay and the employer may mutually agree upon notice to terminate the
law, is the most recent piece of legislation, it should prevail over the general provision contract of employment before the expiration of its term.
of the Civil Code. (2) In case the duration is not determined by stipulation or by nature of service,
c. Normal daily hours of work for working child-kasambahay is eight (8) hours the employer or the Kasambahay may give notice to end the employment
per day. relationship five (5) days before the intended termination of employment.
d. 13th month pay. - The Kasambahay who has rendered at least one (1) month of b. Termination of employment initiated by the Kasambahay. - The Kasambahay
service is entitled to a 13th month pay which shall not be less than one-twelfth (1/12) may terminate the employment relationship at any time before the expiration of the
of his/her total basic salary earned in a calendar year. contract for any of the following causes:
The 13th month pay shall be paid not later than December 24 of every (1) Verbal or emotional abuse of the Kasambahay by the employer or any
year or upon separation from employment. member of the household;
e. Daily rest period. The Kasambahay shall be entitled to an aggregate daily rest (2) Inhuman treatment including physical abuse of the Kasambahay by the
period of eight (8) hours. employer or any member of the household;
f. Weekly rest period. - The Kasambahay shall be entitled to at least twenty-four (24) (3) Commission of a crime or offense against the Kasambahay by the employer
consecutive hours of rest in a week. The employer and the Kasambahay shall agree or any member of the household;
in writing on the schedule of the weekly rest day but the preference of the (4) Violation by the employer of the terms and conditions of the employment
Kasambahay, when based on religious grounds, shall be respected. contract and other standards set forth in the law;
g. Service incentive leave. - A Kasambahay who has rendered at least one (1) year (5) Any disease prejudicial to the health of the Kasambahay, the employer, or
of service shall be entitled to an annual service incentive leave of at least five (5) days members of the household; and
with pay. Any unused portion of said annual leave shall not be cumulative or carried (6) Other causes analogous to the foregoing.
over to the succeeding years. Unused leaves shall not be convertible to cash. If the Kasambahay leaves without cause, any unpaid salary due, not
h. Social security benefits. - A Kasambahay who has rendered at least one (1) exceeding the equivalent of 15 days work, shall be forfeited. In addition, the employer
month of service shall be covered by the Social Security System (SSS), Employees may recover from the Kasambahay deployment expenses, if any, if the services have
Compensation Commission (ECC), Philippine Health Insurance Corporation been terminated within six (6) months from employment.
(PhilHealth), and Home Development Mutual Fund or Pag-IBIG, and shall be entitled c. Termination of employment initiated by the employer. - An employer may
to all the benefits in accordance with their respective policies, laws, rules and terminate the employment of the Kasambahay at any time before the expiration of the
regulations. contract for any of the following causes:
i. Obligation of employer to register and enrol with SSS, PhilHealth, and Pag- (1) Misconduct or willful disobedience by the Kasambahay of the lawful order of
IBIG. - As employer of the Kasambahay, he/she shall register himself/herself with, and the employer in connection with the former's work;
enroll the latter as his/her employee to the SSS, PhilHealth, and Pag-IBIG. (2) Gross or habitual neglect or inefficiency by the Kasambahay in the
j. Deposits for loss or damage. - It shall be unlawful for the employer or any other performance of duties;
person to require a Kasambahay to make deposits from which deductions shall be (3) Fraud or willful breach of the trust reposed by the employer on the
made for the reimbursement of loss or damage to tools, materials, furniture and Kasambahay;
equipment in the household. (4) Commission of a crime or offense by the Kasambahay against the person of
k. Standard of treatment. - The Kasambahay shall be treated with respect by the the employer or any immediate member of the employer's family;
employer or any member of the household. He/she shall not be subjected to any kind (5) Violation by the Kasambahay of the terms and conditions of the employment
of abuse, including repeated verbal or psychological, nor be inflicted with any form of contract and other standards set forth under the law;
physical violence or harassment or any act tending to degrade his/her dignity, as (6) Any disease prejudicial to the health of the Kasambahay, the employer, or
defined under the Revised Penal Code, Violence Against Women and their Children members of the household; and
Law (R.A. No. 9262), Special Protection of Children Against Child Abuse, Exploitation (7) Other causes analogous to the foregoing.
and Discrimination Act (R.A. No. 7610) as amended by R.A. No. 9231, Anti-Trafficking If the employer dismissed the Kasambahay for reasons other than the
in Persons Act of 2003 (R.A. No. 9208), and other applicable laws. above, he/she shall pay the Kasambahay the earned compensation plus indemnity in
l. Board, lodging and medical attendance. - The employer shall provide for the basic the amount equivalent to fifteen (15) days work.
necessities of the d. Invalid ground for termination. - Pregnancy and marriage of the Kasambahay are
Kasambahay, to include the following: not valid grounds for termination of employment.
e. Employment Certification. - Upon the termination of employment, the employer 5. Competency-based system. Unlike in apprenticeship, it is required in learnership
shall issue the Kasambahay, within five (5) days from request, a certificate of that it be implemented based on
employment indicating the nature, duration of the service and work description. the TESDA-approved competency-based system.
6. Duration of training. Learnership involves practical training on the job for a period
M. EMPLOYMENT OF HOMEWORKERS not exceeding three (3) months; while apprenticeship requires for proficiency, more
What are important terms that should be noted in employment of than three (3) months but not over six (6) months of practical training on the job.
homeworkers? 7. Qualifications. The law does not expressly mention any qualifications for learners;
a. Industrial homeworker. It refers to a worker who is engaged in industrial while the following qualifications are required to be met by apprentices under Article 59
homework. of the Labor Code:
b. Industrial homework. It refers to a system of production under which work for (a) Be at least fourteen (14) years of age;
an employer or contractor is carried out by a homeworker at his/her home. Materials (b) Possess vocational aptitude and capacity for appropriate tests; and
may or may not be furnished by the employer or contractor. It differs from regular (c) Possess the ability to comprehend and follow oral and written instructions.
factory production principally in that, it is a decentralized form of production where 8. Circumstances justifying hiring of trainees. Unlike in apprenticeship, in
there is ordinarily very little supervision or regulation of methods of work. learnership, the law, Article 74 of the
c. Home. - It means any nook, house, apartment or other premises used regularly, Labor Code, expressly prescribes the pre-requisites before learners may be validly
in whole or in part, as a dwelling place, except those situated within the premises or employed, to wit:
compound of an employer, contractor/subcontractor and the work performed therein is (a) When no experienced workers are available;
under the active or personal supervision by or for the latter. (b) The employment of learners is necessary to prevent curtailment of
d. Field personnel. It refers to a non-agricultural employee who regularly employment opportunities; and
performs his duties away from the principal place of business or branch office of the (c) The employment does not create unfair competition in terms of labor costs or
employer and whose actual hours of work in the field cannot be determined with impair or lower working
reasonable certainty. standards.
e. Employer. It refers to any natural or artificial person who, for his own account or 9. Limitation on the number of trainees. In learnership, a participating enterprise is
benefit, or on behalf of any person residing outside the Philippines, directly or allowed to take in learners only up to a maximum of twenty percent (20%) of its total
indirectly, or through any employee, agent, contractor, subcontractor or any other regular workforce. No similar cap is imposed in the case of apprenticeship.
person: 10. Option to employ. In learnership, the enterprise is obliged to hire the learner after
1. delivers or causes to be delivered any goods, articles or materials to be the lapse of the learnership period; while in apprenticeship, the enterprise is given only
processed or fabricated in or about a home and thereafter to be returned or to be an option to hire the apprentice as an employee.
disposed of or distributed in accordance with his direction; or 11. Wage rate. The wage rate of a learner or an apprentice is set at seventy-five
2. sells any goods, articles or materials for the purpose of having such goods or percent (75%) of the statutory minimum wage.
articles processed in or about a home and then repurchases them himself or
through another after such processing. O. PERSONS WITH DISABILITY
f. Contractor or subcontractor. - It refers to any person who, for the account or (R.A. No. 7277, as Amended by R.A. No. 9442)
benefit of an employer, delivers or causes to be delivered to a homeworker, goods or Who are persons with disability (PWDs)? Persons with Disability are those
articles to be processed in or about his home and thereafter to be returned, disposed suffering from restriction or different abilities, as a result of a mental, physical or
of or distributed in accordance with the direction of the employer. sensory impairment, to perform an activity in the manner or within the range
g. Processing. - It refers to manufacturing, fabricating, finishing, repairing, altering, considered normal for a human being.
packing, wrapping or handling in any way connected with the production or preparation
of an article or material. What is impairment? Impairment refers to any loss, diminution or aberration of
psychological, physiological, or anatomical structure or function.
How is homework paid?
Immediately upon receipt of the finished goods or articles, the employer is required to What is disability? Disability means (1) a physical or mental impairment that
pay the homeworker or the contractor or subcontractor, as the case may be, for the substantially limits one or more psychological, physiological or anatomical functions of
work performed less the corresponding homeworkers share of SSS, PhilHealth and an individual or activities of such individual; (2) a record of such an impairment; or (3)
ECC premium contributions which should be remitted by the contractor or being regarded as having such an impairment.
subcontractor or employer to the SSS with the employers share. However, where What is handicap?
payment is made to a contractor or subcontractor, the homeworker should likewise be Handicap refers to a disadvantage for a given individual, resulting from an
paid immediately after the goods or articles have been collected from the workers. impairment or a disability that limits or prevents the function or activity that is
considered normal given the age and sex of the individual.
What are prohibited homeworks? No homework shall be performed on the
following: b. RIGHTS OF PERSONS WITH DISABILITY
1. Explosives, fireworks and articles of like character; What are the rights of PWDs? Under the law, PWDs are entitled to equal
2. Drugs and poisons; and opportunity for employment. Consequently, no PWD shall be denied access to
3. Other articles, the processing of which requires exposure to toxic substances. opportunities for suitable employment. A qualified employee with disability shall be
subject to the same terms and conditions of employment and the same
N. APPRENTICES AND LEARNERS compensation, privileges, benefits, fringe benefits, incentives or allowances as
What are the distinctions between learnership and apprenticeship? The a qualified able-bodied person.
following are the distinctions:
1. Practical training. Both learnership and apprenticeship involve practical training What is the wage rate of PWDs? The wage rate of PWDs is 100% of the
on-the-job. applicable minimum wage.
2. Training agreement. Learnership is governed by a learnership agreement; while
apprenticeship is governed by an apprenticeship agreement. What is the wage rate of PWD if hired as apprentice or learner? A PWD hired as
2. Occupation. Learnership involves learnable occupations consisting of semi-skilled an apprentice or learner shall be paid not less than seventy-five percent (75%) of the
and other industrial occupations applicable minimum wage.
which are non-apprenticeable; while apprenticeship concerns apprenticeable
occupations or any trade, form of c. PROHIBITION ON DISCRIMINATION AGAINST PERSONS WITH
employment or occupation approved for apprenticeship by the DOLE Secretary. DISABILITY
What is the rule on discrimination against employment of PWDs? No entity,
3. Theoretical instructions. Learnership may or may not be supplemented by related whether public or private, shall discriminate against a qualified PWD by reason of
theoretical instructions; while disability in regard to job application procedures, the hiring, promotion, or discharge of
apprenticeship should always be supplemented by related theoretical instructions. employees, employee compensation, job training, and other terms, conditions and
4. Ratio of theoretical instructions and on-the-job training. For both learnership privileges of employment. The following constitute acts of discrimination:
and apprenticeship, the normal (a) Limiting, segregating or classifying a job applicant with disability in such a manner
ratio is one hundred (100) hours of theoretical instructions for every two thousand that adversely affects his work opportunities;
(2,000) hours of practical or onthe- (b) Using qualification standards, employment tests or other selection criteria that
job training. Theoretical instruction time for occupations requiring less than two screen out or tend to screen out a PWD unless such standards, tests or other
thousand (2,000) hours for selection criteria are shown to be job-related for the position in question and are
proficiency should be computed on the basis of such ratio. consistent with business necessity;
(c) Utilizing standards, criteria, or methods of administration that: Appeals,6 who is a columnist in the Philippine Daily Inquirer (PDI), not an
(1) have the effect of discrimination on the basis of disability; or employee of PDI but an independent contractor. Thus:
(2) perpetuate the discrimination of others who are subject to common Petitioners main occupation is not as a columnist for respondent
administrative control. but as a womens rights advocate working in various womens
(d) Providing less compensation, such as salary, wage or other forms of remuneration organizations. Likewise, she herself admits that she also contributes
and fringe benefits, to a qualified employee with disability, by reason of his disability, articles to other publications. Thus, it cannot be said that petitioner was
than the amount to which a non-disabled person performing the same work is entitled; dependent on respondent PDI for her continued employment in
(e) Favoring a non-disabled employee over a qualified employee with disability with respondents line of business.
respect to promotion, training opportunities, study and scholarship grants, solely on The inevitable conclusion is that petitioner was not respondent
account of the latters disability; PDIs employee but an independent contractor, engaged to do
(f) Re-assigning or transferring an employee with a disability to a job or position he independent work.
cannot perform by reason of his disability;
(g) Dismissing or terminating the services of an employee with disability by reason of Is it necessary to have a written contract of employment in order to establish
his disability unless the employer can prove that he impairs the satisfactory employer-employee relationship? No. It may be an oral or written contract. A written
performance of the work involved to the prejudice of the business entity; provided, contract is not necessary for the creation and validity of the relationship.
however, that the employer first sought to provide reasonable accommodations for The only exception is in the case of Kasambahay where it is required
persons with disability; that the contract of employment should be in writing.
(h) Failing to select or administer in the most effective manner employment tests which
accurately reflect the skills, aptitude or other factor of the applicant or employee with 2. KINDS OF EMPLOYMENT
disability that such tests purports to measure, rather than the impaired sensory, What are the general classifications of employment? There are five (5)
manual or speaking skills of such applicant or employee, if any; and classifications of employment:
(i) Excluding PWD from membership in labor unions or similar organizations. (a) Regular employees referring to those who have been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the
TOPIC NO. 4 employer;
TERMINATION OF EMPLOYMENT (b) Project employees referring to those whose employment has been fixed for a
specific project or undertaking, the completion or termination of which has been
A. EMPLOYER-EMPLOYEE RELATIONSHIP
determined at the time of the engagement of the employee;
(c) Seasonal employees referring to those who work or perform services which are
1. Four-Fold Test
seasonal in nature, and the employment is for the duration of the season;
What is the 4-fold test of existence of employer-employee relationship?
(d) Casual employees referring to those who are not regular, project, or seasonal
1. Selection and engagement of the employee;
employees;
2. Payment of wages or salaries;
(e) Fixed-term employees whose term is freely and voluntarily determined by the
3. Exercise of the power of dismissal; or
employer and the employee.
4. Exercise of the power to control the employees conduct.
These tests, however, are not fool-proof as they admit of exceptions.
a. PROBATIONARY EMPLOYMENT
The control test is the controlling test which means that the employer
How is probationary period, say, of 6 months computed? The 6-month
controls or has reserved the right to control the employee not only as to the result
of the work to be done but also as to the means and methods by which the same is probationary period should be reckoned from the date of appointment up to the
to be accomplished. same calendar date of the 6th month following.

What is the 2-tiered test of employment relationship? The two-tiered May probationary period be extended?
test enunciated in Francisco v. NLRC, is composed of: Yes, but only upon the mutual agreement by the employer and the probationary
(1) The putative employers power to control the employee employee.
with respect to the means and methods by which the work What is the effect of allowing a probationary employee to work beyond the
is to be accomplished [control test]; and probationary period? He is considered a regular employee.
(2) The underlying economic realities of the activity or
relationship [broader economic reality test]. What is the effect if there is no written contract providing for probationary
Employment relationship under the control test is employment? If there is no written contract, the employee is considered a regular
determined by asking whether the person for whom the employee from day one of his employment. And even if there is one, he is deemed
services are performed reserves the right to control not only regular if there is no stipulation on probationary period.
the end to be achieved but also the manner and means to
be used in reaching such end. What are the grounds to terminate probationary employment? Under Article
The broader economic reality test calls for the 281, a probationary employee may be terminated only on three (3) grounds, to wit:
determination of the nature of the relationship based on the 1. For a just cause; or
circumstances of the whole economic activity, namely: 2. For authorized cause; or
(1) The extent to which the services performed are an 3. When the probationary employee fails to qualify as a regular employee in
integral part of the employers business; accordance with reasonable standards made known by the employer to the
(2) The extent of the workers investment in equipment employee at the start of the employment.
and facilities;
(3) The nature and degree of control exercised by the Is procedural due process required in termination of probationary
employer; employment?
(4) The workers opportunity for profit and loss; Yes, but only in the case of Numbers 1 and 2 above.
(5) The amount of initiative, skill, judgment or foresight No, in the case of No. 3 above.
required for the success of the claimed independent When should termination of probationary employment be made? Termination to
enterprise; be valid must be done prior to lapse of probationary period. Termination a few days
(6) The permanency and duration of the relationship after lapse of probationary period cannot be done without due process as he has
between the worker and the employer; and already become a regular employee by that time.
(7) The degree of dependency of the worker upon the
employer for his continued employment in that line of b. REGULAR EMPLOYMENT
business. How does one become a regular employee? Under the Labor Code, regular
employment may be attained in either of three (3) ways, namely:
Under the economic reality test, the proper 1. By nature of work. - The employment is deemed regular when the employee has
standard of economic dependence is whether the worker is been engaged to perform activities which are usually necessary or desirable in the
dependent on the alleged employer for his continued usual business or trade of the employer.
employment in that line of business. 2. By period of service. - The employment is reckoned as regular when the employee
Following the broader economic reality test, the Supreme Court has rendered at least one (1) year of service, whether such service is continuous or
found petitioner in Orozco v. The Fifth Division of the Honorable Court of
broken, with respect to the activity in which he is employed and his employment shall incidental to the principal business of the employer and such work or job is for a
continue while such activity exists. definite period made known to the employee at the time of engagement.
3. By probationary employment. - The employment is considered regular when the
employee is allowed to work after a probationary period. When does a casual employee become regular? Casual employee becomes
regular after one year of service by operation of law. The one (1) year period should be
Is the manner or method of paying wage material in determining regularity of reckoned from the hiring date. Repeated rehiring of a casual employee makes him a
employment? No. The manner and method of payment of wage or salary is regular employee.
immaterial to the issue of whether the employee is regular or not.

c. PROJECT EMPLOYMENT f. FIXED-TERM EMPLOYMENT

What is the litmus test of project employment? The litmus test of project What are the requisites in order for fixed-term employment to be valid? The
employment, as distinguished from regular employment, is whether or not the project two (2) requisites or criteria for the validity of a fixed-term contract of employment are
employees were assigned to carry out a specific project or undertaking, the as follows:
duration and scope of which were specified at the time the employees were 1. The fixed period of employment was knowingly and voluntarily agreed upon by
engaged for that project. the parties, without any force, duress or improper pressure being brought to bear
A true project employee should be assigned to a project which begins and upon the employee and absent any other circumstances vitiating his consent; or
ends at determined or determinable times and be informed thereof at the time of 2. It satisfactorily appears that the employer and employee dealt with each other on
hiring. more or less equal terms with no moral dominance whatever being exercised by
the former on the latter.
What are the indicators of project employment? Either one or more of the
following circumstances, among others, may be considered as indicator/s that an Is fixed-term employment valid if the job is directly related to the principal
employee is a project employee: business of the employer? Yes. Fixed-term employment is the only exception to the
1. The duration of the specific/identified undertaking for which the worker is rule that one becomes regular if he is made to perform activities directly related to the
engaged is reasonably determinable. principal business of the employer (Regularity by virtue of nature of work)
2. Such duration, as well as the specific work/service to be performed, are defined in
an employment agreement and is made clear to the employee at the time of hiring. When does a fixed-term employee become regular?
3. The work/service performed by the employee is in connection with the particular 1. When he is allowed to work beyond the agreed fixed term.
project or undertaking for which he is engaged. 2. When there are successive renewals of fixed-period contracts.
4. The employee, while not employed and awaiting engagement, is free to offer
his services to any other employer. NOTE: The practice of hiring of employees on a uniformly fixed 5-month basis and
5. A report of the termination of employment in the particular project/undertaking is replacing them upon the expiration of their contracts with other workers with the same
submitted to the DOLE Regional Office having jurisdiction over the workplace, within employment status circumvents their right to security of tenure.
thirty (30) days following the date of his separation from work.
6. An undertaking in the employment contract by the employer to pay completion 3. JOB CONTRACTING
bonus to the project employee as practiced by most construction companies.
Is job contracting valid if the contractor-supplied employees are engaged to
perform not merely peripheral but core jobs with the principal? Yes, per the 2012
Is length of service material in determining validity of project employment? No. case of Digital Telecommunications Philippines, Inc. v. Digitel Employees Union
Length of service is not a controlling determinant of employment tenure. (DEU), where the Court recognized the management prerogative to farm out any of its
activities, regardless of whether such activity is peripheral or core in nature.
What are some principles on project employment?
1. Project employees should be informed of their status as such at inception of the b. DEPARTMENT ORDER NO. 18-A (Series of 2011)
employment relationship. What is this issuance? This is the prevailing implementing rules on legitimate job
2. There must be a written contract of project employment stating the duration of the contracting.
project employment as well as the particular work or service to be performed. A written
project employment contract is an indispensable requirement. c. DEPARTMENT CIRCULAR NO. 01-12
3. Intervals in employment contracts indicate project employment. What is this issuance? This was issued by the DOLE Secretary to clarify that
4. Continuous, as opposed to intermittent, rehiring shows that employee is regular. Department Order No. 18-A, Series of 2011, is not applicable to Business
5. Project-to-project basis of employment is valid. Processing Outsourcing (BPO)/Knowledge Process Outsourcing (KPO) and the
Construction Industry because:
On termination of project employment. (1) BPOs and KPOs since these companies may hire employees in accordance with
1. Project employees enjoy security of tenure only during the term of their project applicable laws, and maintain these employees based on business requirements,
employment. which may or may not be for different clients of the BPOs at different periods of the
2. Project employees have presumably become regular employees if they are allowed employees' employment.
to work beyond the completion of the project or any phase thereof to which they were (2) the Construction Industry because the licensing and the exercise of regulatory
assigned or after the day certain which they and their employer have mutually agreed powers over the construction industry are lodged with the Philippine Contractors
for its completion. Having become regular employees, they can no longer be Accreditation Board (PCAB), which is under the Construction Industry Authority of the
terminated on the basis of the completion of the project or any phase thereof to which Philippines (ClAP), and not with the DOLE. Thus, the DOLE, through its regional
they were deployed. offices, shall not require contractors licensed by PCAB in the Construction Industry to
register under D.O. 18-A, Series of 2011. Moreover, findings of violation/s on labor
d. SEASONAL EMPLOYMENT standards and occupational health and safety standards shall be coordinated with
Can a seasonal employee become a regular seasonal employee? Yes, provided PCAB for its appropriate action, including the possible cancellation/suspension of the
the following requisites are complied with: contractors license.
1. The seasonal employee should perform work or services that are seasonal in
nature; and d. TRILATERAL RELATIONSHIP IN JOB CONTRACTING
2. They must have also been employed for more than one (1) season. What is meant by trilateral relationship? As distinguished from employment
contract which is bilateral in nature, involving as it does only two (2) parties, namely:
Can a regular seasonal worker file an illegal dismissal case in the event he is (1) the employer, and (2) the employee, in legitimate job contracting, there are three
not hired for the next season? Yes. The reason is, being a regular seasonal (3) parties involved, to wit:
employee, the employer should re-hire him in the next season. During off-season, his 1. The principal who decides to farm out a job, work or service to a contractor;
employment is deemed suspended and he is considered as being on leave of absence 2. The contractor who has the capacity to independently undertake the performance
without pay. of the job, work or service; and
3. The contractual workers engaged by the contractor to accomplish the job, work or
e. CASUAL EMPLOYMENT service.
What is the most important distinguishing feature of casual employment? The
most important distinction is that the work or job for which he was hired is merely e. EFFECTS OF LABOR-ONLY CONTRACTING
LEGITIMATE JOB CONTRACTING.
What are the requisites of legitimate job contracting? 70% share of the service charges from Shangri-las guests who avail of
(1) The contractor must be duly registered with the DOLE. If not registered, the the clinic services.
contractor is presumed a labor-only contractor. With respect to the supervision and control of the nurses and
(2) The contractor carries a distinct and independent business and undertakes to clinic staff, it is not disputed that a document, Clinic Policies and
perform the job, work or service on its own responsibility, according to its own Employee Manual claimed to have been prepared by respondent doctor
manner and method, and free from control and direction of the principal in all exists, to which petitioners gave their conformity and in which they
matters connected with the performance of the work except as to the results acknowledged their co-terminus employment status. It is thus presumed
thereof; that said document, and not the employee manual being followed by
(3) The contractor has substantial capital and/or investment in the form of tools, Shangri-las regular workers, governs how they perform their respective
equipment, machineries, work premises, and other materials which are necessary in tasks and responsibilities.
the conduct of the business; and Contrary to petitioners contention, the various office directives
(4) The Service Agreement between principal and contractor should ensure issued by Shangri-las officers do not imply that it is Shangri-las
compliance with all the rights and benefits of workers under Labor Laws such as management and not respondent doctor who exercises control over them
labor and occupational safety and health standards, free exercise of the right to self- or that Shangri-la has control over how the doctor and the nurses perform
organization, security of tenure, and social and welfare benefits. their work. The letter addressed to respondent doctor dated February 7,
Absence of any of the foregoing requisites makes it a labor-only contracting 2003 from a certain Tata L. Reyes giving instructions regarding the
arrangement. replenishment of emergency kits is, at most, administrative in nature,
related as it is to safety matters; while the letter dated May 17, 2004 from
What is the amount of substantial capital under the new Rules? Shangri-las Assistant Financial Controller, Lotlot Dagat, forbidding the
1. In the case of corporations, partnerships or cooperatives paid-up capital clinic from receiving cash payments from the resorts guests is a matter of
stocks/shares of at least P3 Million; or financial policy in order to ensure proper sharing of the proceeds,
2. In the case of single proprietorship - a net worth of at least P3 Million. considering that Shangri-la and respondent doctor share in the guests
payments for medical services rendered. In fine, as Shangri-la does not
control how the work should be performed by petitioners, it is not
Substantial capital and investment in tools, etc. are two separate
petitioners
requirements.
Substantial capital and investment in tools, equipment, implements,
LABOR-ONLY CONTRACTING.
machineries and work premises should be treated as two (2) distinct and separate
When is there labor-only contracting?
requirements in determining whether there is legitimate job contracting arrangement.
(a) The contractor does not have substantial capital or investments in the form of
tools, equipment, machineries, work premises, among others, and the employees
May individuals engage in legitimate job contracting? Yes. Legitimate job recruited and placed are performing activities which are usually necessary or
contracting may not only be engaged by corporation, partnership or single desirable to the operation of the company, or directly related to the main
proprietorship. Individuals may become legitimate job contractors themselves for as business of the principal within a definite or predetermined period, regardless of
long as they have SPECIAL SKILLS or TALENTS. whether such job, work or service is to be performed or completed within or outside
the premises of the principal; OR
Are individuals engaged as legitimate job contractors required to fulfill the (b) The contractor does not exercise the right of control over the performance of the
requisites of legitimate job contracting as afore-described? NO. They need not be work of the employee.
registered as independent contractors with DOLE; they need not have substantial NOTE: Even if only one of the two (2) elements above is present, there is
capital. All that they are required is to have their tools consisting of SPECIAL SKILLS labor-only contracting.
or TALENTS.
What are the effects of labor-only contracting?
What are examples of individuals as independent contractors? 1. The labor-only contractor will be treated as the agent or intermediary of the
1. Sonza v. ABS-CBN Broadcasting Corporation - TV and radio talents and others principal. Since the act of an agent is the act of the principal, representations made by
with special talents and skills are not employees but legitimate independent the labor-only contractor to the employees will bind the principal.
contractors. 2. The principal will become the employer as if it directly employed the workers
2. Orozco v. The Fifth Division of the Honorable Court of Appeals- A newspaper supplied by the labor-only contractor to undertake the subcontracted job or service. It
columnist is not an employee but an independent contractor of the newspaper will be responsible to them for all their entitlements and benefits under labor laws.
publishing the column. 3. The principal and the labor-only contractor will be solidarily treated as the direct
3. Jose Mel Bernarte v. Philippine Basketball Association3 - Basketball or soccer employer.
referee or umpire, an independent contractor. 4. The employees will become employees of the principal, subject to the classifications
4. Semblante and Pilar v. CA, Gallera de Mandaue, et al.4 Cockpit masiador and of employees under Article 280 of the Labor Code.
sentenciador are independent contractors.
5. Escasinas v. Shangri-las Mactan Island Resort5 - A doctor may be engaged as What are the distinctions between legitimate job contracting and labor-only
an independent contractor. contracting? The chief distinctions between legitimate job contracting, on the one
Respondent hotel resort, pursuant to Article 157 of the Labor Code hand, and the prohibited labor-only contracting, on the other, may be summed up as
which requires that an employer which employs more than 200 workers, follows:
should furnish its employees with the services of a full-time registered 1. In the former, no employer-employee relationship exists between the contractual
nurse, a parttime physician and dentist, and an emergency clinic, engaged the employees of the job contractor and the principal; while in the latter, an employer-
services of respondent doctor who, in turn, hired petitioners as full-time employee relationship is created by law between the principal and the contractual
registered nurses. Petitioners contend that they are regular employees of employees supplied by the labor-only contractor.
respondent hotel resort. The Supreme Court, in holding that respondent doctor 2. In the former, the principal is considered only an indirect employer, as this term is
is an independent contractor and that petitioners are employees of the doctor understood under Article 107 of the Labor Code; while in the latter, the principal is
and not of respondent hotel resort, declared: considered the direct employer of the contractual employees in accordance with the
Against the above-listed determinants, the Court holds that last paragraph of Article 106 of the Labor Code.
respondent doctor is a legitimate independent contractor. That Shangri-la 3. In the former, the joint and several obligation of the principal and the legitimate job
provides the clinic premises and medical supplies for use of its employees contractor is only for a limited purpose, that is, to ensure that the employees are paid
and guests does not necessarily prove that respondent doctor lacks their wages. Other than this obligation of paying the wages, the principal is not
substantial capital and investment. Besides, the maintenance of a clinic responsible for any claim made by the contractual employees; while in the latter, the
and provision of medical services to its employees is required under Art. principal becomes jointly and severally or solidarily liable with the labor-only contractor
157, which are not directly related to Shangri-las principal business - to the latters employees in the same manner and extent that the principal is liable to
operation of hotels and restaurants. employees directly hired by him/her, as provided in Article 106 of the Labor Code, as
As to payment of wages, respondent doctor is the one who amended.
underwrites the following: salaries, SSS contributions and other benefits 4. In the former, the legitimate job contractor undertakes to perform a specific job for
of the staff; group life, group personal accident insurance and life/death the principal; while in the latter, the labor-only contractor merely provides, supplies,
insurance for the staff with minimum benefit payable at 12 times the recruits and places the personnel to work for the principal.
employees last drawn salary, as well as value added taxes and
withholding taxes, sourced from her P60,000.00 monthly retainer fee and
What are the prohibitions other than labor-only contracting? Contracting out (2) Article 264(a) - (Prohibited Activities) which provides for the termination of the
of jobs, works or services when not done in good faith and not justified by the following:
exigencies of the business such as the following: (a) Union officers who knowingly participate in an illegal strike and therefore
(1) Contracting out of jobs, works or services when the same results in the termination deemed to have lost their employment status.
or reduction of regular employees and reduction of work hours or reduction or splitting (b) Any employee, union officer or ordinary member who knowingly participates in
of the bargaining unit. the commission of illegal acts during a strike (irrespective of whether the strike is
(2) Contracting out of work with a "Cabo." "Cabo" refers to a person or group of legal or illegal), is also deemed to have lost his employment status.
persons or to a labor group which, in the guise of a labor organization, cooperative or (3) Article 263(g) - (National Interest Cases) where strikers who violate orders,
any entity, supplies workers to an employer, with or without any monetary or other prohibitions and/or injunctions as are issued by the DOLE Secretary or the NLRC, may
consideration, whether in the capacity of an agent of the employer or as an ostensible be imposed immediate disciplinary action, including dismissal or loss of employment
independent contractor. status.
(3) Taking undue advantage of the economic situation or lack of bargaining strength of (4) Article 248(e) - (Union Security Clause) where violation of the union security
the contractor's employees, or undermining their security of tenure or basic rights, or agreement in the CBA may result in termination of employment. Under this clause, the
circumventing the provisions of regular employment, in any of the following instances: bargaining union can demand from the employer the dismissal of an employee who
(i) Requiring them to perform functions which are currently being performed by commits a breach of union security arrangement, such as failure to join the union or to
the regular employees of the principal; and maintain his membership in good standing therein. The same union can also demand
(ii) Requiring them to sign, as a precondition to employment or continued the dismissal of a member who commits an act of disloyalty against it, such as when
employment, an antedated resignation letter; a blank payroll; a waiver of labor the member organizes a rival union.
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 What are just causes under jurisprudence?
claims. In addition to the just causes mentioned in the Labor Code, just causes are also found
(4) Contracting out of a job, work or service through an in-house agency. in prevailing jurisprudence. The following may be cited as just causes in accordance
(5) Contracting out of a job, work or service that is necessary or desirable or directly with prevailing jurisprudence:
related to the business or operation of the principal by reason of a strike or lockout 1. Violation of Company Rules and Regulations or Company Code of Discipline.
whether actual or imminent. 2. Theft of property owned by a co-employee as distinguished from company-owned
(6) Contracting out of a job, work or service being performed by union members when property which is considered serious misconduct.
such will interfere with, restrain or coerce employees in the exercise of their rights to 3. Incompetence, inefficiency or ineptitude.
self-organization as provided in Art. 248 (c) of the Labor Code, as amended. (7) 4. Failure to attain work quota.
Repeated hiring of employees under an employment contract of short duration or 5. Failure to comply with weight standards of employer.
under a Service Agreement of short duration with the same or different contractors, 6. Attitude problem.
which circumvents the Labor Code provisions on Security of Tenure.
(8) Requiring employees under a subcontracting arrangement to sign a contract fixing Is dismissal based on Company Code of Discipline or Company Rules and
the period of employment to a term shorter than the term of the Service Agreement, Regulations illegal? No.
unless the contract is divisible into phases for which substantially different skills are In the 2013 case of Sampaguita Auto Transport Corporation v. NLRC,
required and this is made known to the employee at the time of engagement. the Supreme Court pronounced that the Court of Appeals erred in ruling that the
(9) Refusal to provide a copy of the Service Agreement and the employment contracts dismissal of private respondent, a bus driver of petitioner, was illegal because the
between the contractor and the employees deployed to work in the bargaining unit of grounds upon which petitioners based respondents termination from employment,
the principal's certified bargaining agent to the sole and exclusive bargaining agent viz.: hindi lahat ng schedule nailalabas, []mababa ang revenue ng bus, laging
(SEBA). kasama an[g] asawa sa byahe and maraming naririnig na kwento tungkol sa kanya,
(10) Engaging or maintaining by the principal of subcontracted employees in excess of naguutos ng conductor para kumita sa hindi magandang paraan[,] xxx are not among
those provided for in the applicable Collective Bargaining Agreement (CBA) or as set those enumerated under Article 282 of the Labor Code as just causes for termination
by the Industry Tripartite Council (ITC). of employment. The irregularities or infractions committed by private respondent in
connection with his work as a bus driver constitute serious misconduct or, at the very
B. DISMISSAL FROM EMPLOYMENT least, conduct analogous to serious misconduct, under the above-cited Article 282 of
What is meant by two-fold due process requirement? Dismissal of employees the Labor Code. The requirement in the company rules that: 3. to obey traffic rules
requires the observance of the two-fold due process requisites, namely: and regulations as well as the company policies. 4. to ensure the safety of the
1. Substantive aspect which means that the dismissal must be for any of the (1) just riding public as well as the other vehicles and motorist (sic) is so fundamental
causes provided under Article 282 of the Labor Code or the company rules and and so universal that any bus driver is expected to satisfy the requirement whether or
regulations promulgated by the employer; or (2) authorized causes under Articles 283 not he has been so informed.
and 284 thereof; and
2. Procedural aspect which means that the employee must be accorded due process, I. SERIOUS MISCONDUCT
the elements of which are notice and the opportunity to be heard and to defend 1. REQUISITES.
himself. For misconduct or improper behavior to be a just cause for dismissal, the following
requisites must concur:
What is the distinction between JUST CAUSES and AUTHORIZED CAUSES? A 1. It must be serious; and
dismissal based on a just cause means that the employee has committed a wrongful 2. It must relate to the performance of the employees duties; and
act or omission; while a dismissal based on an authorized cause means that there 3. It must show that he has become unfit to continue working for the employer.
exists a ground which the law itself allows or authorizes to be invoked to justify the All the above three (3) requisites must concur.
termination of an employee even if he has not committed any wrongful act or omission
such as installation of labor-saving devices, redundancy, retrenchment, closure or 2. SOME PRINCIPLES ON SERIOUS MISCONDUCT.
cessation of business operations or disease. Serious misconduct implies that it must be of such grave and aggravated
character and not merely trivial or unimportant.
1. JUST CAUSES Simple or minor misconduct would not justify the termination of the services of
What are the just causes under the Labor Code? The just causes in the Labor an employee.
Code are found in the following provisions thereof: Possession or use of shabu or other drugs is a valid ground to terminate
(1) Article 282 - (Termination by the Employer) which provides for the following employment.
grounds: Immorality, as a general rule, is not a just ground to terminate employment. The
(a) Serious misconduct or willful disobedience by the employee of the lawful exception is when such immoral conduct is prejudicial or detrimental to the
orders of his employer or representative in connection with his work; interest of the employer.
(b) Gross and habitual neglect by the employee of his duties; Immoral act committed beyond office hours is a valid ground to terminate
(c) Fraud or willful breach by the employee of the trust reposed in him by his employment.
employer or duly authorized representative; Sexual intercourse inside company premises constitutes serious misconduct.
(d) Commission of a crime or offense by the employee against the person of his The act of a 30-year old lady teacher in falling in love with a 16-year old
employer or any immediate member of his family or his duly authorized student is not immoral.
representatives; and Fighting is a ground for termination but only the instigator or aggressor and not
(e) Other causes analogous to the foregoing. the victim who was constrained to defend himself should be dismissed.
Challenging superiors to a fight is a just cause for termination.
 Assaulting another employee is a just cause for termination. IV. ABANDONMENT OF WORK
Utterance of obscene, insulting or offensive words constitutes serious 1. CONCEPT.
misconduct. Abandonment is a form of neglect of duty; hence, a just cause for termination of
Gambling within company premises is a serious misconduct. employment under Article 282 [b] of the Labor Code.
Rendering service to business rival is a just cause to terminate employment.
Selling products of a competitor is a just cause for termination. 2. REQUISITES.
Organizing a credit union by employees in a bank is a serious misconduct. To constitute abandonment, two (2) elements must concur, namely:
Deceiving a customer for personal gain is a just cause for termination. 1. The employee must have failed to report for work or must have been absent without
Contracting work in competition with employer constitutes serious misconduct. valid or justifiable reason; and
Intoxication which interferes with the employees work constitutes serious 2. There must have been a clear intention on the part of the employee to sever the
misconduct. employer-employee relationship manifested by some overt act.
The act of a teacher in pressuring a colleague to change the failing grade of a
student is serious misconduct. 3. SOME PRINCIPLES ON ABANDONMENT.
Sexual harassment is a just ground to dismiss. Mere absence is not enough to constitute abandonment.
Sleeping while on duty is a ground for termination. Clear intention to sever employment relationship is necessary.
Dismissal is too harsh a penalty for eating while at work. Due process in abandonment cases consists only of the service of 2 notices to the
Pilferage or theft of company-owned property is a just cause to terminate. employee, viz.:
Theft of funds or property not owned by employer is not a ground to a. First notice directing the employee to explain why he should not be declared
terminate. as having abandoned his job; and
Act of falsification is a valid ground to terminate employment. b. Second notice to inform him of the employers decision to dismiss him on the
Punching-in of time cards of other employees is a just cause for termination. ground of abandonment.
No hearing is required to validly dismiss an employee for abandonment.
II. INSUBORDINATION OR WILLFUL DISOBEDIENCE OF LAWFUL Notices in abandonment cases must be sent to employees last known address per
ORDERS record of the company. The employer need not look for the employees current
1. REQUISITES. whereabouts.
One of the fundamental duties of an employee is to obey all reasonable Immediate filing of a complaint for illegal dismissal praying for reinstatement negates
rules, orders and instructions of the employer.
abandonment.
In order to validly invoke this ground, the following requisites must be
Lapse of time between dismissal and filing of a case is not a material indication of
complied with, to wit:
1. The employees assailed conduct must have been willful or intentional, the abandonment. Hence, lapse of 2 years and 5 months or 20 months or 9 months or 8
willfulness being characterized by a wrongful and perverse attitude; and months before filing the complaint for illegal dismissal is not an indication of
2. The order violated must be based on a reasonable and lawful company rule, abandonment. Under the law, the employee has a 4-year prescriptive period within
regulation or policy and made known to the employee and must pertain to the duties which to institute his action for illegal dismissal.
for which he has been engaged to discharge. Filing of a case to pre-empt investigation of the administrative case is tantamount to
abandonment.
2. SOME PRINCIPLES ON INSUBORDINATION. When what is prayed for in the complaint is separation pay and not
Making false allegations in complaint does not constitute insubordination. reinstatement, the filing of complaint does not negate abandonment
Failure to answer memo to explain constitutes willful disobedience. It is abandonment when what is prayed for in the complaint is separation pay and it
Another notice is required in case of termination on the ground of failure to was only in the position paper that reinstatement was prayed for.
answer memo to explain. Employment in another firm coinciding with the filing of complaint does not indicate
Refusal to undergo random drug testing constitutes both serious abandonment.
misconduct and insubordination. Offer of reinstatement by employer during proceedings before Labor Arbiter and
Refusal to render overtime to meet production deadline constitutes refusal by employee does not indicate abandonment but more of a symptom of
insubordination. strained relations between the parties.
Refusal to comply with a lawful transfer constitutes insubordination. An employee may be absolved from the charge of abandonment of work but
adjudged guilty of AWOL. These two grounds are separate and distinct from each
III. GROSS AND HABITUAL NEGLECT OF DUTIES other.
1. REQUISITES. An employee who failed to report for work after the expiration of the duly approved
The following are the requisites: leave of absence is considered to have abandoned his job.
(1) There must be negligence which is gross and/or habitual in character; and An employee who failed to comply with the order for his reinstatement is deemed to
(2) It must be work-related as would make him unfit to work for his employer. have abandoned his work.
An employee who, after being transferred to a new assignment, did not report for
2. SOME PRINCIPLES ON GROSS AND HABITUAL NEGLECT OF DUTIES. work anymore is deemed to have abandoned his job.
Simple negligence is not sufficient to terminate employment. An employee who deliberately absented from work without leave or permission from
The negligence must be gross in character which means absence of that diligence his employer for the purpose of looking for a job elsewhere is deemed to have
that an ordinarily prudent man would use in his own affairs. abandoned his work.
As a general rule, negligence must be both gross and habitual to be a valid ground Imprisonment or detention by military does not constitute abandonment.
to dismiss. Absence to evade arrest is not a valid justification. To do so would be to place an
Habituality may be disregarded if negligence is gross or the damage or loss is imprimatur on the employees attempt to derail the normal course of the administration
substantial. Habitual negligence implies repeated failure to perform ones duties for a of justice.
period of time, depending upon the circumstances.
Actual damage, loss or injury is not an essential requisite. V. FRAUD
Gross negligence may result to loss of trust and confidence. 1. REQUISITES.
The following are the requisites of this ground:
Absences, if authorized, cannot be cited as a ground to terminate employment.
1. There must be an act, omission, or concealment;
Tardiness or absenteeism, if not habitual, cannot be cited as a ground to terminate 2. The act, omission or concealment involves a breach of legal duty, trust, or
employment. confidence justly reposed;
Tardiness or absenteeism, if habitual, may be cited as a ground to terminate 3. It must be committed against the employer or his/her representative; and
employment. 4. It must be in connection with the employees' work.1
Tardiness or absenteeism, if habitual, may be tantamount to serious misconduct.
Absences or tardiness due to emergency, ailment or fortuitous event are justified and 2. SOME PRINCIPLES ON FRAUD.
may not be cited as just cause to terminate employment. Failure to deposit collection constitutes fraud.
Unsatisfactory or poor performance, inefficiency and incompetence are Lack of damage or losses is not necessary in fraud cases. The fact that the
considered just causes for dismissal only if they amount to gross and habitual neglect employer did not suffer losses from the dishonesty of the dismissed employee
of duties. because of its timely discovery does not excuse the latter from any culpability.
Lack of misappropriation or shortage is immaterial in case of unauthorized Full restitution does not absolve employee of offense which resulted in the loss of
encashment of personal checks by teller and cashier. trust and confidence.
Restitution does not have absolutory effect.
VII. COMMISSION OF CRIME OR OFFENSE
VI. WILLFUL BREACH OF TRUST AND CONFIDENCE 1. REQUISITES.
1. REQUISITES. The following are the requisites for the valid invocation of this ground:
For the doctrine of loss of trust and confidence to apply, the following requisites must 1. A crime or offense was committed by the employee;
be satisfied: 2. It was committed against any of the following persons:
(1) The employee holds a position of trust and confidence; (a) His employer;
(2) There exists an act justifying the loss of trust and confidence, which means that the (b) Any immediate member of his employers family; or
act that betrays the employers trust must be real, i.e., founded on clearly established (c) His employers duly authorized representative.
facts; 2. SOME PRINCIPLES ON THE COMMISSION OF CRIME OR OFFENSE.
(3) The employees breach of the trust must be willful, i.e., it was done intentionally, Because of its gravity, work-relation is not necessary. Neither is it necessary to show
knowingly and purposely, without justifiable excuse; and that the commission of the criminal act would render the employee unfit to perform his
(4) The act must be in relation to his work which would render him unfit to perform it. work for the employer.

2. GUIDELINES. VIII. OTHER ANALOGOUS CAUSES

As a safeguard against employers who indiscriminately use loss of trust and 1. ANALOGOUS CAUSES UNDER ESTABLISHED
confidence to justify arbitrary dismissal of employees, the Supreme Court, in addition JURISPRUDENCE.
to the above elements, came up with the following guidelines for the application of the The following may be cited as analogous causes:
doctrine: 1) Violation of company rules and regulations.
(1) The loss of confidence must not be simulated; 2) Theft of property owned by a co-employee, as distinguished from theft of property
(2) It should not be used as a subterfuge for causes which are illegal, improper or owned by the employer.
unjustified; 3) Incompetence, inefficiency or ineptitude.
(3) It may not be arbitrarily asserted in the face of overwhelming evidence to the 4) Failure to attain work quota.
contrary; and 5) Failure to comply with weight standards of employer.
(4) It must be genuine, not a mere afterthought, to justify earlier action taken in bad 6) Attitude problem is analogous to loss of trust and confidence.
faith.
The foregoing guidelines have been prescribed by the Supreme Court due IX. TERMINATION DUE TO ENFORCEMENT OF UNION SECURITY
to the subjective nature of this ground which makes termination based on loss of trust CLAUSE
and confidence prone to abuse.
What is a union security clause?
The union security clause is a stipulation in a CBA which allows the
3. SOME PRINCIPLES ON THE DOCTRINE OF LOSS OF TRUST AND
parties thereto to enter into an agreement requiring membership in the exclusive
CONFIDENCE.
collective bargaining agent which successfully negotiated said CBA as a condition for
Employees position must be reposed with trust and confidence.
continued employment with the exception of employees who are already members of
Position of trust and confidence is one where a person is entrusted with confidence another union at the time of the signing of the CBA.
on delicate matters, or with the custody, handling, or care and protection of the
employers property.
What are the effects of application of this clause? The following are the effects:
Two (2) classes of positions of trust.
a. On members of the bargaining union/agent. They are not allowed to resign or
The first class consists of managerial employees or those who, by the terminate their membership therefrom. Any member of the bargaining agent who
nature of their position, are entrusted with confidential and delicate matters and from resigns or is expelled therefrom may be recommended to the employer by the
whom greater fidelity to duty is correspondingly expected. They refer to those vested bargaining agent for termination of his employment.
with the powers or prerogatives to lay down and execute management policies and/or b. On non-members of the bargaining union/agent but members of the minority
to hire, transfer suspend, lay-off, recall, discharge, assign or discipline employees or to union/s. They are not bound by the union security clause if they are members of the
effectively recommend such managerial actions. Their primary duty consists of the minority or other unions at the time of the signing of the CBA.
management of the establishment in which they are employed or of a department or a Hence, they cannot be compelled to resign from their union/s in order to
subdivision thereof. join the bargaining agent.
The second class includes cashiers, auditors, property custodians, or c. On non-members of the bargaining union/agent or of any minority union/s. If
those who, in the normal and routine exercise of their functions, regularly handle not a member of the bargaining agent or any other unions in the bargaining unit at the
significant amounts of [the employers] money or property. They are fiduciary rank- time of the signing of the CBA by reason of the fact that he is excepted from the
and-file employees, who, though rank-and-file, are routinely charged with the custody, coverage of the bargaining unit, the employee cannot be compelled to join the
handling or care and protection of the employer's money or property, or entrusted with bargaining agent.
confidence on delicate matters, and are thus classified as occupying positions of trust d. On new employees hired after the signing of the CBA containing the union
and confidence. security clause. They can be compelled to join the bargaining agent. If they refuse,
Rules on termination of managerial and supervisory employees different from they can be recommended for termination.
those applicable to rank-and-file employees. Thus, with respect to rank-and-file
personnel, loss of trust and confidence as a ground for valid dismissal requires proof Is there an exception to this rule? Yes. An employee cannot be compelled to join a
of involvement in the alleged events in question and that mere uncorroborated union based on religious ground. For example: members of the Iglesia ni Kristo (INK)
assertions and accusations by the employer will not be sufficient. But as regards a cannot be compelled to join a union; hence, they are not bound by the union security
managerial employee, the mere existence of a basis for believing that he has doctrine.
breached the trust of his employer would suffice for his dismissal.
There must be some basis for the loss of trust and confidence which means that
What are the requisites in order to validly terminate employees based on this
there is reasonable ground to believe, if not to entertain the moral conviction, that the
clause?
concerned employee is responsible for the misconduct and that the nature of his
(1) The union security clause is applicable;
participation therein rendered him absolutely unworthy of trust and confidence
(2) The bargaining union is requesting for the termination of employment due to
demanded by his position.
enforcement of the union security provision in the CBA; and
Dismissal due to feng shui mismatch is not a valid ground to lose trust and
(3) There is sufficient evidence to support the unions decision to expel the employee
confidence. from the union.
Command responsibility of managerial employees is a ground to dismiss. All the foregoing requisites should be complied with to justify the
Confidential employee may be dismissed for loss of trust and confidence. termination of employment.
Grant of promotions and bonuses negates loss of trust and confidence.
Long years of service, absence of derogatory record and small amount involved are OTHER CAUSES PER DEPARTMENT ORDER NO. 147-15, SERIES OF 2015 (07
deemed inconsequential insofar as loss of trust and confidence is concerned. SEPTEMBER 2015):1
Dropping of criminal charges or acquittal in a criminal case arising from the same act An employee found positive for use of dangerous drugs shall be dealt with
does not affect the validity of dismissal based on loss of trust and confidence. administratively which shall be a ground for suspension or termination.2
An employee shall not be terminated from work based on actual, perceived or What are the additional requisites unique to this ground?
suspected HIV status.3 Per latest issuance of the DOLE, 3 the following are the additional requisites:
An employee shall not be terminated on basis of actual, perceived or 1. The retrenchment must be reasonably necessary and likely to prevent business
suspected Hepatitis B status. losses;
An employee who has or had Tuberculosis shall not be discriminated against. 2. The losses, if already incurred, are not merely de minimis, but substantial, serious,
He/she shall be entitled to work for as long as they are certified by the company's actual and real, or if only expected, are reasonably imminent;
accredited health provider as medically fit and shall be restored to work as soon as 3. The expected or actual losses must be proved by sufficient and convincing
his/her illness is controlled.5 evidence; and
An employee may also be terminated based on the grounds provided for 4. The retrenchment must be in good faith for the advancement of its interest and not
under the CBA. to defeat or circumvent the employees' right to security of tenure.
This is the only statutory ground in Article 283 which requires this kind of proof. The
2. AUTHORIZED CAUSES other grounds of closure or cessation of business operations may be resorted to with
What are the 2 classes of authorized cause termination? or without losses.
Under the Labor Code, authorized causes are classified into two (2)
classes, namely: What are some relevant principles on retrenchment?
(1) Business-related causes. Referring to the grounds specifically mentioned in The fact that there has been economic or other crisis besetting a particular sector
Article 283, to wit: or the country as a whole is not sufficient justification for retrenchment.
a. Installation of labor-saving device; The phrase retrenchment to prevent losses means that retrenchment must
b. Redundancy; be undertaken by the employer before the losses anticipated are actually sustained or
c. Retrenchment; realized. The employer need not keep all his employees until after his losses shall
d. Closure or cessation of business operations NOT due to serious business have materialized. Otherwise, the law could be vulnerable to attack as undue taking of
losses or financial reverses; and property for the benefit of another.
e. Closure or cessation of business operations due to serious business losses Best evidence of losses - financial statements audited by independent
and financial reverses. auditors (not by internal auditors).
(2) Health-related causes. Referring to disease covered by Article 284 of the Labor Best evidence of losses in a government-controlled corporation - financial
Code. statements audited by COA.
Income tax returns, not valid since they are self-serving documents.
What are the common requisites applicable to the authorized causes under Mere affidavit on alleged losses is not sufficient.
Article 283? The following are the five (5) common requisites applicable to the ALL Retrenchment effected long after the business losses is not valid.
the grounds under Article 283: Profitable operations in the past do not affect the validity of retrenchment.
1. There is good faith in effecting the termination; Retrenchment due to liquidity problem is not valid.
2. The termination is a matter of last resort, there being no other option available to Sharp drop in income is not a ground to justify retrenchment. A mere decline in
the employer after resorting to cost-cutting measures; gross income cannot in any manner be considered as serious business losses. It
3. Two (2) separate written notices are served on both the affected employees and should be substantial, sustained and real.
the DOLE at least one (1) month prior to the intended date of termination; Litany of woes, in the absence of any solid evidence that they translated into
4. Separation pay is paid to the affected employees, to wit: specific and substantial losses that would necessitate retrenchment, will not suffice to
(a) If based on (1) installation of labor-saving device, or (2) redundancy. - justify retrenchment.
One (1) month pay or at least one (1) month pay for every year of service, Rehiring of retrenched employees does not necessarily indicate illegality of
whichever is higher, a fraction of at least six (6) months shall be considered as retrenchment.
one (1) whole year. In an enterprise which has several branches nationwide, profitable
(b) If based on (1) retrenchment, or (2) closure NOT due serious business operations in some of them will not affect the validity of the retrenchment if
losses or financial reverses. One (1) month pay or at least one-half () overall, the financial condition thereof reflects losses.
month pay for every year of service, whichever is higher, a fraction of at least six
(6) months shall be considered as one (1) whole year. IV. CLOSURE OR CESSATION OF BUSINESS OPERATIONS
(c) If closure is due to serious business losses or financial reverses, NO Can an employer close its business even if it is not suffering from business
separation pay is required to be paid. losses? Yes. In fact, closure involves two (2) situations:
(d) In case the CBA or company policy provides for a higher separation pay, the (a) When NOT due to serious business losses or financial reverses; or
same must be followed instead of the one provided in Article 283. (b) When due to serious business losses or financial reverses
5. Fair and reasonable criteria in ascertaining what positions are to be affected by It is only in the first that payment of separation pay is required. No such
the termination, such as, but not limited to: nature of work; status of employment requirement is imposed in the second.
(whether casual, temporary or regular); experience; efficiency; seniority; dependability;
adaptability; flexibility; trainability; job performance; discipline; and attitude towards What are some relevant principles on closure?
work. Principle of closure under Article 283 applies in cases of both total and partial
Failure to follow fair and reasonable criteria in selecting who to terminate closure or cessation of business operations. Management may choose to close only a
would render the termination invalid. branch, a department, a plant, or a shop.
Closure of department or section and hiring of workers supplied by independent
I. INSTALLATION OF LABOR-SAVING DEVICE contractor as replacements is valid.
What are the additional requisites unique to this ground? Relocation of business may amount to cessation of operations.
In addition to the five (5) common requisites above, the unique requisites are as Closure of business to merge or consolidate with another or to sell or dispose all
follows: of its assets, held valid.
1. There must be introduction of machinery, equipment or other devices; and Audited financial statements necessary only in closure due to losses.
2. The purpose for such introduction must be valid such as to save on cost, enhance
efficiency and other justifiable economic reasons. V. DISEASE
1. THE DEOFERIO DOCTRINE ON THE REQUISITES.
II. REDUNDANCY Disease is one of the authorized causes to terminate employment. In the 2014 case of
What are the additional requisites unique to this ground? Deoferio v. Intel Technology Philippines, Inc.,1 the Supreme Court divided into two
The additional requisites are as follows: the requisites that must be complied with before termination of employment due to
1. There must be superfluous positions or services of employees; disease may be justified, namely:
2. The positions or services are in excess of what is reasonably demanded by the (1) Substantive requisites; and
actual requirements of the enterprise to operate in an economical and efficient (2) Procedural requisites.
manner; and
3. There must be an adequate proof of redundancy such as but not limited to the new 1.1. THE DEOFERIO RULE ON SUBSTANTIVE REQUISITES.
staffing pattern, feasibility studies/proposal, on the viability of the newly created The following are the three (3) substantive requisites:
positions, job description and the approval by the management (1) An employee has been found to be suffering from any disease;
of the restructuring. (2) His continued employment is prohibited by law or prejudicial to his health, as well
as to the health of his co-employees; and
III. RETRENCHMENT
(3) A competent public health authority issues a medical certificate that the disease is A competent public health authority refers to a government doctor whose
of such nature or at such a stage that it cannot be cured within a period of six (6) medical specialization pertains to the disease being suffered by the employee.
months even with proper medical treatment.2 For instance, if the employee suffers from tuberculosis, the medical certificate should
be issued by a government-employed pulmonologist who is competent to make an
1.2. THE DEOFERIO RULE ON PROCEDURAL REQUISITES. opinion thereon. If the employee has cardiac symptoms, the competent physician in
Deoferio, finally pronounced the rule that the employer must furnish the employee two this case would be a cardiologist.
(2) written notices in terminations due to disease, namely: The medical certificate should be procured by the employer and not by the
(1) The notice to apprise the employee of the ground for which his dismissal is sought; employee.
and
(2) The notice informing the employee of his dismissal, to be issued after the 3. DUE PROCESS
employee has been given reasonable opportunity to answer and to be heard on his (a) Twin-Notice Requirement
defense. (b) Hearing; Meaning of Opportunity to be Heard

Due process in termination due to disease is similar to due process for just What is the latest rule on due process? Due process means compliance with
cause termination but different from authorized cause termination under Article both STATUTORY due process and CONTRACTUAL due process.
298 [283]. CONSTITUTIONAL due process is not applicable (Per Agabon
From these perspectives, it was held in Deoferio that the CA erred in not doctrine).
finding that the NLRC gravely abused its discretion when it ruled that the twin-notice Statutory due process refers to the one prescribed in the Labor Code
requirement does not apply to Article 284 (Disease) of the Labor Code. This (Article 277[b]); while contractual due process refers to the one prescribed in the
conclusion is totally devoid of any legal basis; its ruling is wholly unsupported by law Company Rules and Regulations (Per Abbott Laboratories doctrine).
and jurisprudence. In other words, the NLRCs unprecedented, whimsical and arbitrary Contractual due process was enunciated in the 2013 en banc ruling in
ruling, which the CA erroneously affirmed, amounted to a jurisdictional error. Abbott Laboratories, Philippines v. Pearlie Ann F. Alcaraz.1 Thus, it is now
required that in addition to compliance with the statutory due process, the employer
2. THE FUJI RULE THE EMPLOYEE SHOULD BE GIVEN THE CHANCE TO should still comply with the due process procedure prescribed in its own company
PRESENT COUNTERVAILING MEDICAL CERTIFICATES. Subsequent to Deoferio, rules. The employers failure to observe its own company-prescribed due process will
another 2014 case, Fuji Television Network, Inc. v. Arlene S. Espiritu,3 has further make it liable to pay an indemnity in the form of nominal damages, the amount of
expounded on the due process requirement in termination due to disease, this time by which is equivalent to the P30,000.00 awarded under the Agabon doctrine.
categorically specifying the right of the ailing employee to present countervailing
evidence in the form of medical certificates to prove that his dismissal due to disease Are the twin-notice requirement and hearing required in all cases of
is not proper and therefore illegal. termination? No. The two-notice requirement and hearing are required only in case of
Respondent Arlene was petitioners news correspondent/producer tasked just cause termination in the following order:
to report Philippine news to Fuji through its Manila Bureau field office. She was 1. Service of first written notice;
successively given yearly fixed-term employment contracts until she was diagnosed 2. Conduct of hearing; and
with lung cancer sometime in January 2009 when the Chief of News Agency of Fuji 3. Service of second written notice.
informed her that the company will have a problem renewing her contract since it
would be difficult for her to perform her job. She, however, insisted that she was still fit What is the King of Kings Transport doctrine on just cause procedural due
to work as certified by her attending physician. Subsequently, Arlene and Fuji signed a
process? Based on this doctrine which was enunciated in King of Kings Transport,
non-renewal contract where it was stipulated that her contract would no longer be
Inc. v. Mamac,2 the following requirements should be complied with in just cause
renewed after its expiration on May 31, 2009 and that the parties release each other
termination:
from liabilities and responsibilities under the employment contract. Arlene received her
(1) First written notice.
unpaid salaries and bonuses but she affixed her signature on the non-renewal contract
The first written notice to be served on the employee should:
with the initials U.P. for under protest. The day after Arlene signed the non-renewal
a) Contain the specific causes or grounds for termination against him;
contract, she filed a complaint for illegal dismissal and attorneys fees with the Labor
b) Contain a directive that the employee is given the opportunity to submit his written
Arbiter, alleging that she was forced to sign the non-renewal contract when Fuji came
explanation within the reasonable period of FIVE (5) CALENDAR DAYS from receipt
to know of her illness and that Fuji withheld her salaries and other benefits for March
of the notice:
and April 2009 when she refused to sign. Arlene claimed that she was left with no
1) to enable him to prepare adequately for his defense;
other recourse but to sign the non-renewal contract, and it was only upon signing that
2) to study the accusation against him;
she was given her salaries and bonuses, in addition to separation pay equivalent to 4
3) to consult a union official or lawyer;
years.
4) to gather data and evidence; and
The Supreme Court declared respondent Arlene as having been
5) to decide on the defenses he will raise against the complaint.
constructively dismissed. It was likewise held here that respondent was not afforded
c) Contain a detailed narration of the facts and circumstances that will serve as basis
due process, thus:
for the charge against the employee. This is required in order to enable him to
There is no evidence showing that Arlene was accorded due
intelligently prepare his explanation and defenses. A general description of the charge
process. After informing her employer of her lung cancer, she was not
will not suffice.
given the chance to present medical certificates. Fuji immediately
d) Specifically mention which company rules, if any, are violated and/or which among
concluded that Arlene could no longer perform her duties because of
the grounds under Article 282 is being charged against the employee.
chemotherapy. It did not ask her how her condition would affect her
work. Neither did it suggest for her to take a leave, even though she was
(2) Hearing required, After serving the first notice, the employer should schedule and
entitled to sick leaves. Worse, it did not present any certificate from a
conduct a hearing or conference wherein the employee will be given the opportunity
competent public health authority. What Fuji did was to inform her that
to:
her contract would no longer be renewed, and when she did not agree, her
1) explain and clarify his defenses to the charge/s against him;
salary was withheld. Thus, the Court of Appeals correctly upheld the
2) present evidence in support of his defenses; and
finding of the National Labor Relations Commission that for failure of
3) rebut the evidence presented against him by the management.
Fuji to comply with due process, Arlene was illegally dismissed.
During the hearing or conference, the employee is given the chance to
defend himself personally, with the assistance of a representative or counsel of his
What are some salient points to consider under this ground? choice. Moreover, this conference or hearing could be used by the parties as an
If the disease or ailment can be cured within the period of six (6) months with opportunity to come to an amicable settlement.
proper medical treatment, the employer should not terminate the employee but merely
ask him to take a leave of absence. The employer should reinstate him to his former (3) Second written notice.
position immediately upon the restoration of his normal health. After determining that termination of employment is justified, the employer shall serve
In case the employee unreasonably refuses to submit to medical examination or the employees a written notice of termination indicating that:
treatment upon being requested to do so, the employer may terminate his services on 1) all circumstances involving the charge/s against the employee have been
the ground of insubordination or willful disobedience of lawful order. considered; and
A medical certificate issued by a companys own physician is not an 2) grounds have been established to justify the severance of his employment.
acceptable certificate for purposes of terminating an employment based on Article 284,
it having been issued not by a competent public health authority, the person referred
to in the law.
What is the Perez doctrine on hearing? The Perez doctrine enunciates the new The rules on termination of employment in the Labor Code and pertinent jurisprudence
guiding principle on the hearing requirement. It has interpreted the term ample are applicable to seven (7) different situations, namely:
opportunity to be heard as follows: 1. The dismissal was for a just cause under Article 282, for an authorized cause under
(a) Ample opportunity to be heard means any meaningful opportunity (verbal or Article 283, or for health reasons under Article 284, and due process was observed
written) given to the employee to answer the charges against him and submit evidence This termination is LEGAL.
in support of his defense, whether in a hearing, conference or some other fair, just and 2. The dismissal was without a just or authorized cause but due process was observed
reasonable way. This termination is ILLEGAL.
(b) A formal hearing or conference is no longer mandatory. It becomes mandatory 3. The dismissal was without a just or authorized cause and due process was not
only under any of the following circumstances: observed This termination is ILLEGAL.
(1) When requested by the employee in writing; or 4. The dismissal was for a just or authorized cause but due process was not observed
(2) When substantial evidentiary disputes exist; or This termination is LEGAL.
(3) When a company rule or practice requires it; or 5. The dismissal was for a non-existent cause This termination is ILLEGAL.
(4) When similar circumstances justify it. 6. The dismissal was not supported by any evidence of termination This termination
(c) the ample opportunity to be heard standard in the Labor Code prevails over is NEITHER LEGAL NOR ILLEGAL as there is no dismissal to speak of.
the hearing or conference requirement in its Implementing Rules and Regulations. Reinstatement is ordered not as a relief for illegal dismissal but on equitable ground.
This is how the Supreme Court resolved the conflict in the following provisions of the 7. The dismissal was brought about by the implementation of a law This termination
Labor Code and its implementing rules: is LEGAL.
The Perez doctrine is now the prevailing rule as shown by a catena of
cases which cited it after its promulgation. C. RELIEFS FOR ILLEGAL DISMISSAL
1. RELIEFS UNDER ARTICLE 279 OF THE LABOR CODE.
Are the twin-notice requirement and hearing applicable to authorized cause Under this article, an illegally dismissed employee is entitled to the following reliefs:
termination? No. Due process in authorized cause termination is deemed complied (1) Reinstatement without loss of seniority rights and other privileges;
with upon the separate and simultaneous service of a written notice of the intended (2) Full backwages, inclusive of regular allowances; and
termination to both: (3) Other benefits or their monetary equivalent.
(1) the employee to be terminated; and
(2) the appropriate DOLE Regional Office, at least one (1) month before the intended 2. OTHER RELIEFS NOT FOUND IN ARTICLE 279 BUT AWARDED IN ILLEGAL
date of the termination specifying the ground/s therefor and the undertaking to pay the DISMISSAL CASES PER JURISPRUDENCE.
separation pay required under Article 283 of the Labor Code. The following reliefs that are awarded in illegal dismissal cases are missing in Article
For obvious reason, hearing is not required. 279:
(1) Award of separation pay in lieu of reinstatement.
Are the twin-notice requirement and hearing applicable to an abandonment (2) Award of penalty in the form of nominal damages in case of termination due to
just or authorized cause but without observance of procedural due process.
case which is a just cause to terminate employment? No. Although considered as
(3) Reliefs to illegally dismissed employee whose employment is for a fixed period.
a just cause to terminate employment, the due process requirement is different. No
The proper relief is only the payment of the employees salaries
hearing is required (since the employee has already abandoned his job) but the
corresponding to the unexpired portion of the employment contract.
following notices should be complied with:
(4) Award of damages and attorneys fees.
1) First notice asking the employee to explain why he should not be declared as
(5) Award of financial assistance in cases where the employees dismissal is
having abandoned his job; and
declared legal but because of long years of service, and other considerations, financial
2) Second notice informing him of the employers decision to dismiss him on the
assistance is awarded.
ground of abandonment.
(6) Imposition of legal interest on separation pay, backwages and other monetary
awards.
What are some notable principles on the hearing requirement?
If employee does not answer, hearing should still proceed. 1. REINSTATEMENT
Outright termination violates due process. a. REINSTATEMENT PENDING APPEAL
Investigation still required even if incident was witnessed by many. (Article 223, Labor Code)
Meeting, dialogue, consultation or interview is not the hearing required by law. It Is reinstatement pending appeal solely applicable to reinstatement ordered by
may not be a substitute for the actual holding of a hearing.
the Labor Arbiter? Yes. Reinstatement is self-executory or immediately executory
Prior consultation with union is not part of the due process requirement.
only if it is ordered by the Labor Arbiter. This means that the employee ordered
Cross-examination or confrontation of witnesses is not necessary in company reinstated need not file any motion for the issuance of writ of execution to enforce
investigations. reinstatement.
Co-conspirators confession is not sufficient to merit dismissal. The employer, in fact, is required to manifest within 10 days from his
receipt of the order of reinstatement which of the two (2) options he is taking:
What are the instances where hearing is not required? (1) To reinstate the employee to his former position or to a substantially equivalent
Hearing is not required in the following cases: position; or
1. Termination of project, seasonal, casual or fixed-term employment. (2) To reinstate him in the payroll, which means the employee need not report for work
2. Termination of probationary employment on the ground of failure of the but only for the purpose of getting his wage.
probationary employee to qualify as a regular employee in accordance with There is no way the employer can disregard the reinstatement order.
reasonable standards made known to him at the start of the employment. Posting of a bond does not stay the execution of immediate reinstatement.
3. Termination due to abandonment of work. In contrast, if ordered by the NLRC, on appeal, or the Court of Appeals,
4. Termination due to authorized causes under Article 283 (installation of labor-saving under a Rule 65 certiorari petition, or even by the Supreme Court, reinstatement is not
device, redundancy, retrenchment or closure of business or cessation of operations). immediately executory. This means that the employee reinstated should still file a
In such cases, there are no allegations which the employees should refute and defend motion for issuance of writ of execution to enforce the reinstatement.
themselves from.
5. Termination due to disease under Article 284. Are there instances where writ of execution of Labor Arbiters reinstatement
6. Termination by the employee (resignation) under Article 285. order is still required? Yes, under the 2011 NLRC Rules of Procedure, there are two
7. Termination after 6 months of bona-fide suspension of operation under Article 286. (2) instances when a writ of execution should still be issued immediately by the Labor
For purposes of satisfying due process, what is required is simply that the notices Arbiter to implement his order of reinstatement, even pending appeal, viz.:
provided under Article 283 be served to both the affected employees and the DOLE at (1) When the employer disobeys the Rules-prescribed directive to submit a report of
least one (1) month before the termination becomes effective. compliance within ten (10) calendar days from receipt of the decision; or
8. Termination due to retirement under Article 287. (2) When the employer refuses to reinstate the dismissed employee.
9. Termination due to closure or stoppage of work by government authorities The Labor Arbiter shall motu proprio issue a corresponding writ to satisfy
when non-compliance with the law or implementing rules and regulations poses grave the reinstatement wages as they accrue until actual reinstatement or reversal of the
and imminent danger to the health and safety of workers in the workplace. order of reinstatement.
10. Termination of employee who has admitted his guilt for the offense charged. The employee need not file a motion for the issuance of the writ of
execution since the Labor Arbiter shall thereafter motu proprio issue the writ. Employer
What are the seven (7) standard situations in termination cases? may be cited for contempt for his refusal to comply with the order of reinstatement.
 Employer is liable to pay the salaries for the period that the employee was What is the salary rate to be used in computing it? The salary rate prevailing at
ordered reinstated pending appeal even if his dismissal is later finally found to be legal the end of the period of putative service should be the basis for computation which
on appeal. refers to the period of imputed service for which the employee is entitled to
backwages.
What are some relevant principles on reinstatement pending appeal?
The Labor Arbiter cannot exercise option of employer by choosing payroll What are some important principles on separation pay in lieu of
reinstatement pending appeal. reinstatement?
If the former position is already filled up, the employee ordered reinstated under 1. Award of separation pay and backwages are not inconsistent with each other.
Article 223 should be admitted back to work in a substantially equivalent position. Hence, both may be awarded to an illegally dismissed employee. The payment of
Reinstatement to a position lower in rank is not proper. separation pay is in addition to payment of backwages.
Reinstatement cannot be refused on the basis of the employment elsewhere of 2. Reinstatement cannot be granted when what is prayed for by employee is
the employee ordered reinstated. separation pay in lieu thereof.
The failure of the illegally dismissed employee who was ordered reinstated to
report back to work does not give the employer the right to remove him, especially BACKWAGES
when there is a reasonable explanation for his failure. What is the Bustamante doctrine?
No reinstatement pending appeal should be made when antipathy and In 1996, the Supreme Court changed the rule on the reckoning of backwages. It
antagonism exist. announced a new doctrine in the case of Bustamante v. NLRC,1 which is now
If reinstatement is not stated in the Labor Arbiters decision (neither in the known as the Bustamante doctrine. Under this rule, the term full backwages
dispositive portion nor in the text thereof), reinstatement is not warranted. should mean exactly that, i.e., without deducting from backwages the earnings derived
elsewhere by the concerned employee during the period of his illegal dismissal.
b. SEPARATION PAY IN LIEU OF REINSTATEMENT
Is separation pay applicable only to reinstatement as an alternative remedy? What are the components of backwages?
Yes. Separation pay, as a substitute remedy, is only proper for reinstatement but not The components of backwages are as follows:
for backwages. 1. Salaries or wages computed on the basis of the wage rate level at the time of the
This remedy is not found in the Labor Code but is granted in case illegal dismissal and not in accordance with the latest, current wage level of the
reinstatement is no longer possible or feasible, such as when any of the following employees position.
circumstances exists: 2. Allowances and other benefits regularly granted to and received by the employee
(1) Where the continued relationship between the employer and the employee is no should be made part of backwages.
longer viable due to the strained relations and antagonism between them (Doctrine of
Strained Relations).
What are some principles on backwages?
(2) When reinstatement proves impossible, impracticable, not feasible or unwarranted
Salary increases during period of unemployment are not included as
for varied reasons and thus
component in the computation of backwages.
hardly in the best interest of the parties such as:
Dismissed employees ability to earn is irrelevant in the award of backwages.
(a) Where the employee has already been replaced permanently as when his
position has already been taken over by a regular employee and there is no In case reinstatement is ordered, full backwages should be reckoned from the
substantially equivalent position to which he may be reinstated. time the compensation was withheld (which, as a rule, is from the time of illegal
(b) Where the dismissed employees position is no longer available at the time of dismissal) up to the time of reinstatement, whether actual or in the payroll.
reinstatement for reasons not attributable to the fault of the employer. If separation pay is ordered in lieu of reinstatement, full backwages should
(c) When there has been long lapse or passage of time that the employee was be computed from the time of illegal dismissal until the finality of the decision. The
out of employers employ from the date of the dismissal to the final resolution of justification is that along with the finality of the Supreme Courts decision, the issue on
the case or because of the realities of the situation. the illegality of the dismissal is finally laid to rest.
(d) By reason of the injury suffered by the employee. If the illegally dismissed employee has reached the optional retirement age of
(e) The employee has already reached retirement age under a Retirement Plan. 60 years, his backwages should only cover the time when he was illegally dismissed
(f) When the illegally dismissed employees are over-age or beyond the up to the time when he reached 60 years. Under Article 287, 60 years is the optional
compulsory retirement age and their reinstatement would unjustly prejudice their retirement age.
employer. If the employee has reached 65 years of age or beyond, his full backwages
(3) Where the employee decides not to be reinstated as when he does not pray for should be computed only up to said age.
reinstatement in his complaint or position paper but asked for separation pay instead. The contention of the employer that backwages should be reckoned only
(4) When reinstatement is rendered moot and academic due to supervening events, up to age 60cannot be sustained.
such as: If employer has already ceased operations, full backwages should be computed
(a) Death of the illegally dismissed employee. only up to the date of the closure. To allow the computation of the backwages to be
(b) Declaration of insolvency of the employer by the court. based on a period beyond that would be an injustice to the employer.
(c) Fire which gutted the employers establishment and resulted in its total Any amount received during payroll reinstatement is deductible from
destruction. backwages.
(d) In case the establishment where the employee is to be reinstated has closed
or ceased operations. LIMITED BACKWAGES
(5) To prevent further delay in the execution of the decision to the prejudice of private When is the award of backwages limited?
respondent. (1) When the dismissal is deemed too harsh a penalty;
(6) Other circumstances such as (2) When the employer acted in good faith; or
(a) when reinstatement is inimical to the employers interest; (3) Where there is no evidence that the employer dismissed the employee.
(b) reinstatement does not serve the best interests of the parties involved; Thus, the backwages will not be granted in full but limited to 1 year, 2 years or 5
(c) the employer is prejudiced by the workers continued employment; or years.
(d) that it will not serve any prudent purpose as when supervening facts
transpired which made execution unjust or inequitable. PREVENTIVE SUSPENSION
When is preventive suspension proper to be imposed?
What is the amount of separation pay in lieu of reinstatement? Per Preventive suspension may be legally imposed against an errant employee only while
prevailing jurisprudence, the following are the components of separation pay in lieu of he is undergoing an investigation for certain serious offenses. Consequently, its
reinstatement> purpose is to prevent him from causing harm or injury to the company as well as to his
(1) The amount equivalent to at least one (1) month salary or to one (1) month salary fellow employees. It is justified only in cases where the employees continued
for every year of service, whichever is higher, a fraction of at least six (6) months being presence in the company premises during the investigation poses a serious and
considered as one (1) whole year. imminent threat to the life or property of the employer or of the employees co-
(2) Allowances that the employee has been receiving on a regular basis. workers. Without this threat, preventive suspension is not proper.

What is the period covered? From start of employment up to the date of finality of What are some relevant principles in preventive suspension?
decision except when the employer has ceased its operation earlier, in which case, the Preventive suspension is not a penalty. Preventive suspension, by itself, does
same should be computed up to the date of closure. not signify that the company has already adjudged the employee guilty of the charges
for which she was asked to answer and explain.
Preventive suspension is neither equivalent nor tantamount to dismissal. b) CBA;
If the basis of the preventive suspension is the employees absences and c) employment contract;
tardiness, the imposition of preventive suspension on him is not justified as his d) employer policy;
presence in the company premises does not pose any such serious or imminent threat e) employer practice; and
to the life or property of the employer or of the employees co-workers simply by f) general principles of fair play and justice.
incurring repeated absences and tardiness. 2. It is subject to police power.
Preventive suspension does not mean that due process may be disregarded. 3. Its exercise should be without abuse of discretion.
Preventive suspension should only be for a maximum period of thirty (30) days. 4. It should be done in good faith and with due regard to the rights of labor.
After the lapse of the 30-day period, the employer is required to reinstate the worker to
his former position or to a substantially equivalent position. A. DISCIPLINE
During the 30-day preventive suspension, the worker is not entitled to his wages What are the components of the right to discipline?
and other benefits. However, if the employer decides, for a justifiable reason, to extend The right or prerogative to discipline covers the following:
the period of preventive suspension beyond said 30-day period, he is obligated to pay 1) Right to discipline;
the wages and other benefits due the worker during said period of extension. In such a 2) Right to dismiss;
case, the worker is not bound to reimburse the amount paid to him during the 3) Right to determine who to punish;
extension if the employer decides to dismiss him after the completion of the 4) Right to promulgate rules and regulations;
investigation. 5) Right to impose penalty; proportionality rule;
Extension of period must be justified. During the 30-day period of preventive 6) Right to choose which penalty to impose; and
suspension, the employer is expected to conduct and finish the investigation of the 7) Right to impose heavier penalty than what the company rules prescribe.
employees administrative case. The period of thirty (30) days may only be extended if
the employer failed to complete the hearing or investigation within said period due to B. TRANSFER OF EMPLOYEES
justifiable grounds. No extension thereof can be made based on whimsical, capricious What are the various kinds of transfer?
or unreasonable grounds. a. Two (2) kinds of transfer. - A transfer means a movement:
Preventive suspension lasting longer than 30 days, without the benefit of valid 1. From one position to another of equivalent rank, level or salary, without a break in
extension, amounts to constructive dismissal. the service; or
Indefinite preventive suspension amounts to constructive dismissal. 2. From one office to another within the same business establishment.

CONSTRUCTIVE DISMISSAL What are salient points to consider in transfer?

When is there constructive dismissal? Constructive dismissal contemplates any The exercise of the prerogative to transfer or assign employees from one office
of the following situations: or area of operation to another is valid provided there is no demotion in rank or
1) An involuntary resignation resorted to when continued employment is rendered diminution of salary, benefits and other privileges. The transfer should not be
impossible, unreasonable or unlikely; motivated by discrimination or made in bad faith or effected as a form of punishment or
2) A demotion in rank and/or a diminution in pay; or demotion without sufficient cause.
3) A clear discrimination, insensibility or disdain by an employer which becomes Commitment made by the employee like a salesman in the employment
unbearable to the employee that it could foreclose any choice by him except to forego contract to be re-assigned anywhere in the Philippines is binding on him.
his continued employment. Even if the employee is performing well in his present assignment,
management may reassign him to a new post.
What is the test of constructive dismissal? The test of constructive dismissal is The transfer of an employee may constitute constructive dismissal when:
whether a reasonable person in the employees position would have felt compelled to 1) When the transfer is unreasonable, inconvenient or prejudicial to the employee;
give up his position under the circumstances. It is an act amounting to dismissal but 2) When the transfer involves a demotion in rank or diminution of salaries, benefits and
made to appear as if it were not. In fact, the employee who is constructively dismissed other privileges; and
may be allowed to keep on coming to work. Constructive dismissal is, therefore, a 3) When the employer performs a clear act of discrimination, insensibility, or disdain
dismissal in disguise. The law recognizes and resolves this situation in favor of the towards the employee, which forecloses any choice by the latter except to forego his
employees in order to protect their rights and interests from the coercive acts of the continued employment.
employer. The refusal of an employee to be transferred may be held justified if there is a
showing that the transfer was directed by the employer under questionable
What are examples of constructive dismissal or forced resignation? circumstances. For instance, the transfer of employees during the height of their
Denying to the workers entry to their work area and placing them on shifts not unions concerted activities in the company where they were active participants
by weeks but almost by month by reducing their workweek to three days. is illegal.
Barring the employees from entering the premises whenever they would report An employee who refuses to be transferred, when such transfer is valid, is
for work in the morning without any justifiable reason, and they were made to wait for a guilty of insubordination or willful disobedience of a lawful order of an employer
certain employee who would arrive in the office at around noon, after under Article 282 of the Labor Code.
they had waited for a long time and had left. Refusal to transfer due to parental obligations, additional expenses,
Sending to an employee a notice of indefinite suspension which is tantamount to inconvenience, hardship and anguish is
dismissal. not valid. An employee could not validly refuse lawful orders to transfer based
Imposing indefinite preventive suspension without actually conducting any on these grounds.
investigation. Refusal to transfer to overseas assignment is valid.
Changing the employees status from regular to casual constitutes constructive Refusal to transfer consequent to promotion is valid.
dismissal. Transfer to avoid conflict of interest is valid.
Preventing the employee from reporting for work by ordering the guards not to let A transfer from one position to another occasioned by the abolition of the position
her in. This is clear notice of dismissal. is valid.

TOPIC NO. 5 C. PRODUCTIVITY STANDARD

How may productivity standards be imposed?
MANAGEMENT PREROGATIVES
The employer has the prerogative to prescribe the standards of productivity which the
What are management prerogatives? employees should comply. The productivity standards may be used by the employer
Management prerogatives are granted to the employer to regulate every as:
aspect of their business, generally without restraint in accordance with their own 1. an incentive scheme; and/or
discretion and judgment. This privilege is inherent in the right of employers to 2. a disciplinary scheme.
control and manage their enterprise effectively. Such aspects of employment As an incentive scheme, employees who surpass the productivity standards or quota
include hiring, work assignments, working methods, time, place and manner of work, are usually given additional benefits.
tools to be used, processes to be followed, supervision of workers, working As a disciplinary scheme, employees may be sanctioned or dismissed
regulations, transfer of employees, lay-off of workers and the discipline, dismissal and for failure to meet the productivity standards or quota.
recall of workers. Illustrative cases:
What are the limitations to the exercise of these prerogatives? In the 2014 case of International School Manila v. International School
1. Limitations imposed by: Alliance of Educators (ISAE),1 the teacher was held guilty of gross inefficiency
a) law;
meriting her dismissal on the basis of the Courts finding that she failed to measure up
to the standards set by the school in teaching Filipino classes. What are the requisites in order for a non-compete clause to be valid? A non-
In the 2012 case of Reyes-Rayel v. Philippine Luen Thai Holdings compete clause is not necessarily void for being in restraint of trade as long as there
Corp.,2 the validity of the dismissal of petitioner who was the Corporate Human are reasonable limitations as to time, trade, and place.
Resources (CHR) Director for Manufacturing of respondent company, on the ground of Example:
inefficiency and ineptitude, was affirmed on the basis of the Courts finding that The non-compete clause (called Non-Involvement Provision) in the 2007
petitioner, on two occasions, gave wrong information regarding issues on leave and case of Daisy B. Tiu v. Platinum Plans Philippines, Inc., provides as follows: 8.
holiday pay which generated confusion among employees in the computation of NON-INVOLVEMENT PROVISION The EMPLOYEE further undertakes that during
salaries and wages. his/her engagement with EMPLOYER and in case of separation from the Company,
In another 2012 case, Realda v. New Age Graphics, Inc.,3 petitioner, a whether voluntary or for cause, he/she shall not, for the next TWO (2) years thereafter,
machine operator of respondent company, was dismissed on the ground, among engage in or be involved with any corporation, association or entity, whether directly or
others, of inefficiency. In affirming the validity of his dismissal, the Supreme Court indirectly, engaged in the same business or belonging to the same pre-need industry
reasoned: xxx (T)he petitioners failure to observe Graphics, Inc.s work standards as the EMPLOYER. Any breach of the foregoing provision shall render the
constitutes inefficiency that is a valid cause for dismissal. Failure to observe prescribed EMPLOYEE liable to the EMPLOYER in the amount of One Hundred Thousand Pesos
standards of work, or to fulfill reasonable work assignments due to inefficiency may (P100,000.00) for and as liquidated damages.
constitute just cause for dismissal. Such inefficiency is understood to mean failure to Starting on January 1, 1993, petitioner worked for respondent as Senior
attain work goals or work quotas, either by failing to complete the same within the Assistant Vice-President and Territorial Operations Head in charge of its Hongkong
allotted reasonable period, or by producing unsatisfactory results. and Asean operations under a 5-year contract of employment containing the
aforequoted clause. On September 16, 1995, petitioner stopped reporting for work. In
D. GRANT OF BONUS November 1995, she became the Vice- President for Sales of Professional Pension
See discussion on this under Topic III (Labor Standards) above. Plans, Inc., a corporation engaged also in the pre-need industry. Consequently,
respondent sued petitioner for damages before the RTC of Pasig City. Respondent
E. CHANGE OF WORKING HOURS alleged, among others, that petitioners employment with Professional Pension Plans,
What is the extent of the exercise of this prerogative? Employers have the Inc. violated the above-quoted non-involvement clause in her contract of employment.
freedom and prerogative, according to their discretion and best judgment, to regulate Respondent thus prayed for P100,000 as compensatory damages; P200,000 as moral
and control the time when workers should report for work and perform their respective damages; P100,000 as exemplary damages; and 25% of the total amount due plus
functions. Manila Jockey Club Employees Labor Union PTGWO, v. Manila P1,000 per counsels court appearance, as attorneys fees.
Jockey Club, Inc.4 - The validity of the exercise of the same prerogative to change Petitioner countered that the non-involvement clause was unenforceable
the working hours was affirmed in this case. It was found that while Section 1, Article for being against public order or public policy: First, the restraint imposed was much
IV of the CBA provides for a 7-hour work schedule from 9:00 a.m. to 12:00 noon and greater than what was necessary to afford respondent a fair and reasonable
from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays, Section 2, Article XI thereof protection. Petitioner contended that the transfer to a rival company was an accepted
expressly reserves to respondent the prerogative to change existing methods or practice in the pre-need industry. Since the products sold by the companies were more
facilities and to change the schedules of work. Consequently, the hours of work of or less the same, there was nothing peculiar or unique to protect. Second, respondent
regular monthly-paid employees were changed from the original 9:00 a.m. to 5:00 p.m. did not invest in petitioners training or improvement. At the time petitioner was
schedule to 1:00 p.m. to 8:00 p.m. when horse races are held, that is, every Tuesday recruited, she already possessed the knowledge and expertise required in the pre-
and Thursday. The 9:00 a.m. to 5:00 p.m. schedule for non-race days was, however, need industry and respondent benefited tremendously from it. Third, a strict application
retained. Respondent, as employer, cited the change in the program of horse races as of the noninvolvement clause would amount to a deprivation of petitioners right to
reason for the adjustment of the work schedule. It rationalized that when the CBA was engage in the only work she knew.
signed, the horse races started at 10:00 a.m. When the races were moved to 2:00 In upholding the validity of the non-involvement clause, the trial
p.m., there was no other choice for management but to change the work schedule as court ruled that a contract in restraint of trade is valid provided that there is a
there was no work to be done in the morning. Evidently, the adjustment in the work limitation upon either time or place. In the case of the pre-need industry, the trial
schedule is justified. court found the two-year restriction to be valid and reasonable.
On appeal, the Court of Appeals affirmed the trial courts ruling. It
F. RULES ON MARRIAGE BETWEEN EMPLOYEES OF reasoned that petitioner entered into the contract on her own will and volition. Thus,
COMPETITOR-EMPLOYERS she bound herself to fulfill not only what was expressly stipulated in the contract, but
What is the best illustrative case of this prerogative? Duncan Association of also all its consequences that were not against good faith, usage, and law. The
Detailman-PTGWO v. Glaxo Welcome Philippines, Inc.5 - The contract of appellate court also ruled that the stipulation prohibiting non-employment for two years
employment in this case expressly prohibited an employee from having a relationship was valid and enforceable considering the nature of respondents business.
with an employee of a competitor company. It provides: 10. You agree to disclose to In affirming the validity of the Non-Involvement Clause, the Supreme
management any existing or future relationship you may have, either by consanguinity Court ratiocinated as follows:
or affinity with co-employees or employees of competing drug companies. Should it xxx a non-involvement clause is not necessarily void for being in
pose a possible conflict of interest in management discretion, you agree to resign restraint of trade as long as there are reasonable limitations as to time, trade,
voluntarily from the Company as a matter of Company policy. and place.
The Supreme Court ruled that this stipulation is a valid exercise of In this case, the non-involvement clause has a time limit: two years
management prerogative. The prohibition against personal or marital relationships with from the time petitioners employment with respondent ends. It is also limited as
employees of competitor-companies upon its employees is reasonable under the to trade, since it only prohibits petitioner from engaging in any pre-need
circumstances because relationships of that nature might compromise the interests of business akin to respondents. It is limited as to place since the pprohibition covers
the company. In laying down the assailed company policy, the employer only aims to only Hongkong and Asean operations.
protect its interests against the possibility that a competitor company will gain access More significantly, since petitioner was the Senior Assistant Vice-
to its trade secrets, manufacturing formulas, marketing strategies and other President and Territorial Operations Head in charge of respondents Hongkong and
confidential programs and information. Asean operations, she had been privy to confidential and highly sensitive marketing
strategies of respondents business. To allow her to engage in a rival business soon
G. POST-EMPLOYMENT BAN after she leaves would make respondents trade secrets vulnerable especially in a
Is a non-compete clause valid? Yes. The employer and the employee are free to highly competitive marketing environment. In sum, we find the non involvement
stipulate in an employment contract prohibiting the employee within a certain period clause not contrary to public welfare and not greater than is necessary to afford
from and after the termination of his employment, from: a fair and reasonable protection to respondent.
(1) starting a similar business, profession or trade; or Thus, as held by the trial court and the Court of Appeals, petitioner is
(2) working in an entity that is engaged in a similar business that might compete with bound to pay respondent P100,000 as liquidated damages. While we have equitably
the employer. reduced liquidated damages in certain cases, we cannot do so in this case, since it
The non-compete clause is agreed upon to prevent the possibility that appears that even from the start, petitioner had not shown the least intention to fulfill
upon an employees termination or resignation, he might start a business or work for a the non-involvement clause in good faith.
competitor with the full competitive advantage of knowing and exploiting confidential
and sensitive information, trade secrets, marketing plans, customer/client lists, TOPIC NO. 6
business practices, upcoming products, etc., which he acquired and gained from his SOCIAL WELFARE LEGISLATION
employment with the former employer. Contracts which prohibit an employee from A. SSS LAW
engaging in business in competition with the employer are not necessarily void for (R.A. No. 8282)
being in restraint of trade. Who are covered employers?
a. An employer or any person who uses the services of another person in business, Workers whose employment or service falls under any of the following circumstances
trade, industry or any undertaking. are not covered:
b. A social, civic, professional, charitable and other non-profit organizations which hire (1) Employment purely casual and not for the purpose of occupation or business of
the services of employees are considered employers. the employer;
c. A foreign government, international organization or its wholly-owned instrumentality (2) Service performed on or in connection with an alien vessel by an employee if he is
such as an embassy in the Philippines, may enter into an administrative agreement employed when such vessel is outside the Philippines;
with the SSS for the coverage of its Filipino employees. (3) Service performed in the employ of the Philippine Government or instrumentality or
agency thereof;
Who are compulsorily covered employees? (4) Service performed in the employ of a foreign government or international
a. A private employee, whether permanent, temporary or provisional, who is not over organization, or their wholly-owned instrumentality: Provided, however, That this
60 years old. exemption notwithstanding, any foreign government, international organization or their
b. A domestic worker or kasambahay who has rendered at least one (1) month of wholly-owned instrumentality employing workers in the Philippines or employing
service. Filipinos outside of the Philippines, may enter into an agreement with the Philippine
c. A Filipino seafarer upon the signing of the standard contract of employment between Government for the inclusion of such employees in the SSS except those already
the seafarer and the manning agency which, together with the foreign ship owner, act covered by their respective civil service retirement systems: Provided, further, That the
as employers. terms of such agreement shall conform with the provisions of R.A. No. 8282 on
d. An employee of a foreign government, international organization or their wholly- coverage and amount of payment of contributions and benefits: Provided, finally, That
owned instrumentality based in the Philippines, which entered into an administrative the provisions of this Act shall be supplementary to any such agreement; and
agreement with the SSS for the coverage of its Filipino workers. (5) Such other services performed by temporary and other employees which may be
e. The parent, spouse or child below 21 years old of the owner of a single excluded by regulation of the Social Security Commission. Employees of bona-fide
proprietorship business. independent contractors shall not be deemed employees of the employer engaging the
service of said contractors.
Are self-employed persons covered? Yes. A self-employed person, regardless of
trade, business or occupation, with an income of at least P1,000 a month and not over What are the classifications of benefits? The SSS benefits may be classified into
60 years old, should register with the SSS. Included, but not limited to, are the two (2) as follows:
following self-employed persons: (a) Social security benefits:
a. Self-employed professionals; 1) Sickness
b. Business partners, single proprietors and board directors; 2) Maternity
c. Actors, actresses, directors, scriptwriters and news reporters who are not under an 3) Retirement
employer-employee relationship; 4) Disability
d. Professional athletes, coaches, trainers and jockeys; 5) Death and funeral.
e. Farmers and fisherfolks; and (b) Employees compensation benefits.
f. Workers in the informal sector such as cigarette vendors, watch-your-car boys,
hospitality girls, among others. Who are primary beneficiaries?
Unless otherwise specified, all provisions of the law, R.A. No. 8282, The following are primary beneficiaries:
applicable to covered employees shall also be applicable to the covered self-employed 1. The dependent spouse until he or she remarries;
persons. 2. The dependent legitimate, legitimated or legally adopted, and illegitimate
A self-employed person shall be both employee and employer at the same time. children who are not yet 21 years of age.
The dependent illegitimate children shall be entitled to 50% of the share
Who may be covered voluntarily? of the legitimate, legitimated or legally adopted children. However, in the absence of
1. Separated Members - A member who is separated from employment or ceased to the dependent legitimate, legitimated children of the member, his/her dependent
be self-employed/OFW/non-working spouse and would like to continue contributing. illegitimate children shall be entitled to 100% of the benefits
2. Overseas Filipino Workers (OFWs) - A Filipino recruited in the Philippines by a
foreign-based employer for employment abroad or one who legitimately entered a Who are secondary beneficiaries?
foreign country (i.e., tourist, student) and is eventually employed. The following are secondary beneficiaries:
3. Non-working spouses of SSS members - A person legally married to a currently 1. The dependent parents, in the absence of the primary beneficiaries.
employed and actively paying SSS member who devotes full time in the management 2. Any other person designated by the member as his/her secondary beneficiary, in
of household and family affairs may be covered on a voluntary basis, provided there is the absence of all the foregoing primary beneficiaries and dependent parents.
the approval of the working spouse. The person should never have been a member of
the SSS. The contributions will be based on 50 percent (50%) of the working spouses B. GSIS LAW
last posted monthly salary credit but in no case shall it be lower than P1,000. (R.A. No. 8291)
Who are compulsorily required to become members of the GSIS?
What is the effective date of coverage? 1. All government personnel, whether elective or appointive, irrespective of status of
For compulsory coverage: appointment, provided they are receiving fixed monthly compensation and have not
1. For employer - Compulsory coverage of the employer shall take effect on the first reached the mandatory retirement age of 65 years, are compulsorily covered as
day of his operation or on the first day he hires employee/s. The employer is given members of the GSIS and shall be required to pay contributions.
only 30 days from the date of employment of employee to report the person for 2. However, employees who have reached the retirement age of 65 or more shall also
coverage to the SSS. be covered, subject to the following rules:
2. For employee - Compulsory coverage of the employee shall take effect on the first An employee who is already beyond the mandatory retirement age of 65
day of his employment. shall be compulsorily covered and be required to pay both the life and retirement
3. For self-employed - The compulsory coverage of the self-employed person shall premiums under the following situations:
take effect upon his registration with the SSS or upon payment of the first valid a. An elective official who at the time of election to public office is below 65 years of
contribution, in case of initial coverage. age and will be 65 years or more at the end of his term of office, including the period/s
of his re-election to public office thereafter without interruption.
For voluntary coverage: b. Appointive officials who, before reaching the mandatory age of 65, are appointed
1. For an OFW upon first payment of contribution, in case of initial coverage. to government position by the President of the Republic of the Philippines and shall
2. For a non-working spouse upon first payment of contribution. remain in government service at age beyond 65.
3. For a separated member on the month he/she resumed payment of c. Contractual employees including casuals and other employees with an employee-
contribution. government agency relationship are also compulsorily covered, provided they are
receiving fixed monthly compensation and rendering the required number of working
Who are excluded employers? Government and any of its political subdivisions, hours for the month.
branches or instrumentalities, including corporations owned or controlled by the
Government with original charters. What are the classes of membership in the GSIS? Membership in the GSIS is
classified either by type or status of membership.
Who are excluded employees? As to type of members, there are regular and special members:
(a) Regular Members are those employed by the government of the Republic of the What is totalization? The term totalization refers to the process of adding up the
Philippines, national or local, legislative bodies, government-owned and controlled periods of creditable services or contributions under each of the Systems, SSS or
corporations (GOCC) with original charters, government financial institutions (GFIs), GSIS, for the purpose of eligibility and computation of benefits.
except uniformed personnel of the Armed Forces of the Philippines, the Philippine
National Police, Bureau of Jail Management and Penology (BJMP) and Bureau of Fire What is portability? On the other hand, the term portability refers to the transfer of
Protection (BFP), who are required by law to remit regular monthly contributions to the funds for the account and benefit of a worker who transfers from one system to the
GSIS. other.
(b) Special Members are constitutional commissioners, members of the judiciary,
including those with equivalent ranks, who are required by law to remit regular monthly
contributions for life insurance policies to the GSIS in order to answer for their life How are benefits computed? All services rendered or contributions paid by a
insurance benefits defined under RA 8291. member personally and those that were paid by the employers to either System shall
As to status of membership, there are active and inactive members. be considered in the computation of benefits which may be claimed from either or both
Systems. However, the amount of benefits to be paid by one System shall be in
(a) Active member refers to a member of the GSIS, whether regular or special, who
proportion to the services rendered or periods of contributions made to that System.
is still in the government service and together with the government agency to which he
Benefits refer to the following:
belongs, is required to pay the monthly contribution.
1. Old-age benefit;
(b) Inactive member a member who is separated from the service either by
2. Disability benefit;
resignation, retirement, disability, dismissal from the service, retrenchment or, who is
3. Survivorship benefit;
deemed retired from the service under this Act.
4. Sickness benefit;
5. Medicare benefit, provided that the member shall claim said benefit from the
When does membership become effective? The effective date of membership System where he was last a member; and
shall be the date of the members assumption to duty on his original appointment or 6. Such other benefits common to both Systems that may be availed of through
election to public office. totalization.

What is the effect of separation from the service? When does totalization apply?
A member separated from the service shall continue to be a member, and shall be a. if a worker is not qualified for any benefits from both Systems; or
entitled to whatever benefits he has qualified to in the event of any contingency b. if a worker in the public sector is not qualified for any benefits from the GSIS; or
compensable under the GSIS Law. c. if a worker in the private sector is not qualified for any benefits from the SSS.
For purposes of computation of benefits, totalization applies in all cases
Who are excluded from the compulsory coverage of the GSIS Law? The so that the contributions made by the worker-member in both Systems shall provide
following employees are excluded from compulsory coverage: maximum benefits which otherwise will not be available. In no case shall the
(a) Uniformed personnel of the Armed Forces of the Philippines (AFP), Philippine contribution be lost or forfeited.
National Police (PNP), Bureau of Fire Protection (BFP) and Bureau of Jail
Management and Penology (BJMP); What is the effect if worker is not qualified after totalization? If after totalization,
(b) Barangay and Sanggunian Officials who are not receiving fixed monthly the worker-member still does not qualify for any benefit as listed in the law, the
compensation; member will then get whatever benefits correspond to his/her contributions in either or
(c) Contractual Employees who are not receiving fixed monthly compensation; and both Systems.
(d) Employees who do not have monthly regular hours of work and are not receiving
fixed monthly compensation.
What is the effect if worker qualifies for benefits in both Systems? If a worker
qualifies for benefits in both Systems, totalization shall not apply.
What are the kinds of benefits under the GSIS Law? The following are the
benefits under the GSIS Law: D. EMPLOYEES COMPENSATION
(a) Compulsory Life Insurance Benefits under the Life Endowment Policy (LEP) COVERAGE AND WHEN COMPENSABLE
(b) Compulsory Life Insurance Benefits under the Enhanced Life Policy (ELP) What is the State Insurance Fund [SIF]? The State Insurance Fund (SIF) is built
(c) Retirement Benefits up by the contributions of employers based on the salaries of their employees as
(d) Separation Benefit provided under the Labor Code.
(e) Unemployment Benefit There are two (2) separate and distinct State Insurance Funds: one
(f) Disability Benefits established under the SSS for private sector employees; and the other, under the
(g) Survivorship Benefits GSIS for public sector employees. The management and investment of the Funds are
(h) Funeral Benefits done separately and distinctly by the SSS and the GSIS. It is used exclusively for
payment of the employees compensation benefits and no amount thereof is
Who are beneficiaries under the GSIS Law? There are two (2) kinds of authorized to be used for any other purpose.
beneficiaries under the GSIS Law as follows:
1. Primary beneficiaries The legal dependent spouse until he/she remarries and What are the agencies involved in the implementation of the Employees
the dependent children. Compensation Program (ECP)? There are three (3) agencies involved in the
2. Secondary beneficiaries The dependent parents and, subject to the restrictions implementation of the Employees Compensation Program (ECP). These are: (1) The
on dependent children, the legitimate descendants. Employees Compensation Commission (ECC) which is mandated to initiate,
rationalize and coordinate policies of the ECP and to review appealed cases from (2)
Who are dependents under the GSIS Law? Dependents shall be the following: the Government Service Insurance System (GSIS) and (3) the Social Security
(a) the legitimate spouse dependent for support upon the member or pensioner; System (SSS), the administering agencies of the ECP.
(b) the legitimate, legitimated, legally adopted child, including the illegitimate child, who
is unmarried, not gainfully employed, not over the age of majority, or is over the age of Who are covered by the ECP?
majority but incapacitated and incapable of selfsupport due to a mental or physical a. General coverage. The following shall be covered by the Employees
defect acquired prior to age of majority; and Compensation Program (ECP):
(c) the parents dependent upon the member for support. Gainful Occupation Any 1. All employers;
productive activity that provided the member with income at least equal to the 2. Every employee not over sixty (60) years of age;
minimum compensation of government employees. 3. An employee over 60 years of age who had been paying contributions to the
System (GSIS/SSS) prior to age sixty (60) and has not been compulsorily retired; and
C. LIMITED PORTABILITY LAW 4. Any employee who is coverable by both the GSIS and SSS and should be
(R.A. No. 7699) compulsorily covered by both Systems.
What is limited portability scheme? R.A. No. 7699 was enacted to enable those
from the private sector who transfer to the government service or from the government b. Sectors of employees covered by the ECP. - The following sectors are covered
sector to the private sector to combine their years of service and contributions which under the ECP:
have been credited with the SSS or GSIS, as the case may be, to satisfy the required 1. All public sector employees including those of government-owned and/or controlled
number of years of service for entitlement to the benefits under the applicable laws. corporations and local government units covered by the GSIS;
2. All private sector employees covered by the SSS; and
3. Overseas Filipino workers (OFWs), namely:
a. Filipino seafarers compulsorily covered under the SSS. a. Medical Benefits
b. Land-based contract workers provided that their employer, natural or juridical, is b. Disability Benefits
engaged in any trade, industry or business undertaking in the Philippines; otherwise, 1. Temporary total disability
they shall not be covered by the ECP. 2. Permanent total disability
3. Permanent partial disability
When is the start of coverage of employees under the ECP? c. Death Benefit
The coverage under the ECP of employees in the private and public sectors starts on d. Funeral Benefit
the first day of their employment.

What are the benefits under the ECP? The following are the benefits provided
under the Labor Code: