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GENERAL PRINCIPLES OF THE LABOR CODE

MAXIMUM AID AND PROTECTION TO LABOR

ART.3

Declaration of Basic Policy. The State shall afford protection to labor, promote full employment, ensure equal
work opportunities regardless of sex, race or creed and regulate the relations between workers and employers. The
State shall assure the rights of workers to self-organization, collective bargaining, security tenure, and just and humane
conditions of work.

The Labor Code is a social legislation primary intended to help employees in conformity with the social justice guarantee
of the Constitution.

Extension of Applicability to Law Protect Labor

As a rule stipulations in an employment contract not contrary to statutes, public policy, public order or moral have the
force between of law between the contracting parties. In controversies between a labourer and his master, doubts
reasonably arising from the evidence, or in the interpretation of agreements should be resolved in favour if labor.

The policy is to extend the rule to a greater number of employees who cam avail of the benefits under the law, in
consonance with the avowed policy of the State to give maximum aid and protection to labor.

Protection of Labor Not Meant As a Sword to Oppress Employers

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not
be supposed that every dispute will automatically decide in favor of labor. The employer also has the rights, which are
entitled to respect and enforcement in the interest of simple fair play.

LIBERAL INTERPRETATION OF THE LABOR CODE

When Liberal Interpretation Is Allowed

Art. 4 Construction in Favor of Labor. All doubts in the implementation and interpretation of the provisions of this code,
including its implementing rules and regulations, shall be resolved in favor of labor.

The mandate of the law as that all doubts in the implementation and interpretation of the provisions of the Labor Code
and its implementing Rules and Regulations should be resolved in favor of labor. Under the policy of social justice, the
law bends over backwards to accommodate the interest of the working class on the humane justification that those with
less privileges in life should have more privileges in law.
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Where The Law Is Clear, the Las Is To Be Applied to The Facts of The Case

The doctrine of liberal construction cannot be applied where the law invoked is clear, unequivocal and leave no room for
construction. Where the law is clear, it should be applied to the facts of the case. Otherwise, it will contravene the
purpose for which the law was enacted and will defeat the ends which it seeks to attain.

Section 1 of R.A. No. 1568 allows the grant of retirement benefits to the Chairman or any Member of the Comelec who
has retired from the service after having completed his term of office. The petitioners obviously did not retire under R.A.
No. 1568, as amended, since they never completed the full seven-year term of office prescribed by Section 2, Article IX-D
of the 1987 Constitution; they served as Comelec Commissioners for barely four months,i.e., from February 16, 1998 to
June 30, 1998.

PRINCIPLE OF NON-DIMINUTION OF BENEFITS

ART. 100 Prohibition Against Elimination or Diminution of Benefits.

Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee
benefits being enjoyed at the time of promulgation of this Code.

The principle of non-diminution of benefits prohibits the elimination of supplements or other benefits already
enjoyed by the employees under existing laws, decrees, executive orders and employees.

Meaning of Supplements or Benefits

Supplements or benefits constitute extra remuneration. They are special privileges given to or received by employees
over and above their ordinary earning.

Supplements or benefits include but are not restricted to: (1) pay for vacation and special holidays not worked: (2) paid
sick leave; (3) overtime rate in excess of what is required by law: (4) profit-sharing: (5) family allowances: (6) Christmas
and cost-of-living bonuses: (7) bonuses other than those pais as a reward for extra output or time spent on the job: (8)
funeral or bereavement aid: and (9) any other benefit stipulated in a CBA.

Indicators That Benefits Have Ripened into Company Practice

To be considered as a company practice, the employee must prove by substantial evidence that the giving of the
benefits is done over a long period of time, and that it has been made consistently and deliberately. The benefit must be
characterized by regularity.

While jurisprudence has not laid down any hard and fast rule as to the length of time that the company practice should
have been exercised in order to constitute voluntary employer practice, the common denominator appears to be
regularity and deliberateness of the grant of benefits over a significant period of time. It requires an indubitable showing
that the employer agreed to continue giving the benefit knowing fully well that the employees are not covered by any
provision of the law or agreement requiring payment thereof.

Requisites for Diminution of Benefits

There is diminution of benefits when the following requisites are present: (1) The benefit is founded on a policy or has
ripened into a practice over a long period of time: (2) The practice is inconsistent and deliberate: (3) The practice is not
due to error in the construction or application of a doubtful or difficult question of law: and (4) The diminution or
discontinuance is done unilaterally by the employer.

MANAGEMENT PREROGATIVES

Even as the law is solicitous of the welfare oof the employees, it must also protect the right of the employer to exercise
what are clearly management prerogatives. This is known as the free will of the employer to conduct his own business
affairs to achieve his purpose.

An employer is free to regulate according to his own discretion and judgement all aspects of employment, including: (1)
hiring: (2) work assignments: (3) working methods: (4) time, place and manner of work: (5) tools to be used: (6)
processes of employees: (10) work supervision: (11) lay off of employees: and (12) discipline, dismissal and recall of
work.

Hiring and Firing of Employees

While the hiring and firing of personnel is a management prerogative, it is not without limitation. The limitation is
embodied in the constitutional requirement for the protection of labor and promotion of social justice, which tilts the
scales of justice in favor of the employee whenever there is doubt.

Discipline of Employees

Disciplinary action against an erring employee is a management prerogative, which is generally not subject to judicial
interference. However, this policy can be justified only if the disciplinary action is dictated by legitimate business reasons
and is not oppressive.

Transfer of Personnel

It is the employee’s prerogative based on his assessment of his employees’ qualification, aptitudes and competence, to
move the employees around the various areas in his business operations so that they will function with maximum
benefit to the company. An employee’s right to security of tenure does not give him much a vested right in his position
as would deprive the employer of his prerogative to change his assignment or transfer him where he will be most useful.
When this transfer is not unreasonable, inconvenient, or prejudicial to him and if it does not involve a demotion in rank
or a diminution of his salaries, benefits and other privileges.

Productivity Standards

The company policy of laying off workers because they failed to make the work quota has been recognized. The
Supreme Court has ruled that failure to meet the work quota assigned to an employee - either by failing to complete it
within the allotted reasonable period or by producing unsatisfactory results – constitutes a just cause of his dismissal,
regardless of the permanent or probationary status of his employment. This management prerogative of requiring
standards may be availed of so long as it is exercised in good faith to advance the employer’s interest.
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Granting of Bonus

Aside from holiday pay some companies dole but bonuses depending on its past performance at specific times of the
year. Despite being a general practice, bonuses are not a part of labor standards in the same class as salaries, cost-living
allowances (COLA), holiday pay and leave benefits, which are provided by the Labor Code. Thus, decrease in the midyear
and year-end bonuses, or even outright elimination, would not constitute a diminution of the employees’s salaries as
the granting of bonuses is entirely a management prerogative.

Change of Working Hours

It is within management rights to regulate according to its own discretion and judgement, all aspects of employment,
including hiring, work assignments, working methods, time, place and manner of work process to be followed,
supervision of workers and discipline, dismissal and recall of workers. Further, management retains the prerogative,
whenever exigencies of the service so require to change the working hours of its employees. However, this exercise is
not absolute. Management prerogative must be exercised in good faith and with due regard to the rights of labor – with
the principles of fair play at heart and justice in mind.

Rules in Marriage: Prohibition on Marriage to Employees of Competitor Companies

The policy prohibiting an employee from leaving the relationship with an employee of a competitor company is a valid
exercise of management prerogative where relationships of this nature might compromise the interest of the company.
The employer has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential
programs and information from the competitors, and may issue a company policy prohibiting marriage with the
employees of competitor companies to protect its interest against the possibility that a competitor company will gain
access to its secrets and procedures.

Prohibition on Marriage to Co-Employees (No-Spouse Employment Policy)

Nowadays, employers are also enacting an employment policy specifically prohibiting spouses from working for the
same company. Whether this policy violates the rights of the employee under the Constitution and the Labor Code, and
is a valid exercise of management prerogative, depends on the reasonableness of the business necessity.

EMPLOYMENT RELATIONSHIP v. INDEPENDENT CONTRACTORSHIP

WHEN AN EMPLOYMENT RELATIONSHIP IS PRESENT

An employee is defined as a person who performs services for an employment in which either or both mental and
physical efforts are used and who receives compensation for such services, where there is an employer - employee
relationship.

The Fourfold Test

To determine the exercise of an employer-employee relationship, the following fourfold test is applied. (1) Selection and
engagement of then employee; (2) payment of wages; (3) power of dismissal, and (4) power to control the employee’s
conduct.
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Sufficiency of the Mere Existence of the Power to Control

The power of control refers to the existence of the power to control the employee’s conduct and not necessarily to the
actual exercise of that power. In other words, it is not essential for the employer to actually supervise the performance
of duties of the employee. It’s enough that the employer has the right wield that power in order that an employer-
employee relationship may be considered as existing between the parties.

The Relationship Between Jeepney Owners and Jeepney Drivers under the Boundary System Is That of Employer-
Employee and Not of Lessor-Lesse

The relationship between jeepney owners/operators and jeepney drivers under the boundary system is that of
employer-employee and not lessor-lessee. The fact that the drivers do not receive fixed wages but only get the amount
in excess of the so-called “boundary” that they pay to the owner/operator is not sufficient to negate the relationship
between them as employer-employee.

An Express Provision in the Contract That An Employee Is An Independent Contractor Cannot Negate An Employment
Relationship

The existence of an employer-employee relationship cannot be neglected by expressly repudiating it in the contract and
stipulating that the employee is an independent contractor, when the terms of the contract clearly indicate that the
relationship is in reality one of employment. The employment status of a person is defined and prescribed by law, and
not by the party what it says it is. In determining the status of the contract, the fourfold test of employment, specifically
the right-of-control test has to be applied.

There may be cases when an independent contractorship and not an employment relationship exist between the
parties.

NO EMPLOYMENT RELATIONSHIP INDEPENDENT CONTRACTORSHIP

Not Every Form Control Will Establish An Employment Relationship

The principal may establish guidelines to be followed by the person whose services are engaged, because not every form
of control that the principal reserves to himself over the conduct of the person engaged may be accorded the effect of
establishing an employer-employee relationship between them.

There Is No Control When Guidelines Do Not Dictate the Methods to Achieve the Desired Results

A line should be drawn between rules that merely serve as guidelines towards the achievement of mutually desired
results without dictating the means and methods to be employed in attaining it, and rules that control or fix the
methodology and bind or restrict the party hired to the use of such means. The first, which aims only to promote the
result, creates no employer-employee relationship, unlike the second, which addresses both the result and the means to
achieve it.

Contracting of Subcontractor
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Whenever an employer enters into a contract with another person for the performance of the former’s work, the
employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of
this Code.

Contracting and or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with a
contractor the performance or completion of a specific job, work or service within a definite or predetermined period,
regardless of whether such job, work or service is to be performed or completed within or outside the premises of the
principal.

Labor-Only Contracting

Labor only contracting is prohibited.

a. The contractor does not have substantial capital or investments in the form of tools, equipment, machinaries,
work premises, among others, and the employees recruited and placed with the principal are performing activities
which are usually necessary or desirable to the operation of the company, or directly related to the main business of the
principal with a definite or predetermined period, regardless of whether such job, work or services is to be performed or
completed within outside the premises of the principal; or

b. The contractor does not exercise the right of control over the performance of the work of the employee
Section (6).

Other Prohibitions under DO 18-A

The following actions are declared as prohibited for being contrary to law or public policy:

Contracting out of jobs, works or services when not done in good faith and not justified by the by exigencies of the
business such as the following; 

Contracting out of jobs, works or services when it results in the termination or reduction of regular employees and
reduction of work hours or reduction or splitting of the bargaining unit.

Contracting out of work with a Cabo, a person , group of persons or labor group, which, in guise of a labor organization,
cooperative or any entity, suppliers, workers to an employer, with or without any monetary or other consideration,
whether in capacity of an agent of the employer or an ostensible independent contractor.

Taking undue advantage of the economic situation or lack of bargaining strength of the contractor’s employees, or
undermining their security of tenure or basic rights, or circumventing the provisions of regular employment, such as; (a.)
Requiring them to perform functions which are currently being performed by the employees of the principal; and (b)
Requiring them to sign as a precondition to employment or continued employment, an antedated resignation letter; a
blank payroll, a waiver of labor standards including minimum wages and social or welfare benefits; or a quit claim
releasing the principal, contractor or from any liability as to payment of future claims;

Contracting out of a job, work or service through an in house agency;

Contracting out of a job, work or service that is necessary or desirable or directly related to the business or operation of
the principal by reason of a strike or lockout, whether actual or imminent.

Contracting out of a job, work or services being performed by union members when such will interfere with restrain or
coerce employees in the exercise of their rights to self-organization.

Repeated hiring of employees under an employment contract of short duration or under the Service Agreement of short
duration or under a Service Agreement of short duration with the same or different contractors, which circumvents the
Labor Code provisions n Security of tenure;

Requiring employees under a subcontracting arrangements to sign a contract fixing the period of employment to a term
shorter than the term of Service Agreement, unless the contract is divisible into phases for which substantially different
skills are required and this is made known to the employee at the time of engagement;

Refusal to provide a copy of Service Agreement and the employment contracts between the contractor and the
employees deployed to work in the bargaining unit in the principal’s certified bargaining agent to the sole and exclusive
bargaining agent;

Engaging or maintaining by the principal of subcontracted employees in excess of those provided for in the applicable
CBA or as set by the Industry Tripartite Council (ITC).

Effects of Finding of Labor-Only Contracting And/Or Violation of DO 18-A on Other Prohibitions, Rights of Contractor’s
Employees and required Contracts (Employment Contract and Service Agreement).

A finding of competent authority of labor-only contracting shall render the principal jointly and severally liable with the
contractor to the latter’s employees, in the same manner and to the extent that the principal is liable to the employees
directly hired by him as provided in the Article 106 of the Labor Code (Section 27).

On Solidary Liability

Solidarity Liability refers to the liability of the principal pursuant to the provision of Article 109, as direct employer
together with the contractor for any violation of the provision of the Labor Code. It also refers to the liability of the
principal in the same manner and extent that he is liable to his direct employees to the extent of the work performed
under the contract, when the contractor fails to pay the wages of his employees as provided in Article 106 (Section 3(k)).

Distinction Between A Job Contractor and A Labor-Only Contractor

The main distinction between a job contractor and a labor-only contractor is that the legitimate job contractor, which
essentially prohibited by law provides manpower only. The legitimate job contractor undertakes to perform a specific
job for the principal, while the labor-only contractor merely provides the personnel who will work for the principal.

Extent of Liability of Principles of Job Contractors. In legitimate job contracting, the principal is considered only as an
indirect employer of the contractual employees. The contractor is the direct employer of the contractual employees.

In labor-only contracting, the principal is considered as the direct employer of the contractual employees. The
contractor is considered as mere agent of the principal.
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The Principal on the Job Contractor Is An Indirect Employer. In legitimate job contracting, no employer-employee
relationship exist between the contractual employees and the principal. However, when the job contractor fails to pay
the wages of his contractual employees in accordance with the Labor Code, the principal becomes solidarily liable with
his contractor to the contractual employees to the extent of the work performed under the contract as though the
contractual employees were directly employed by the principal (Article 106).

Rationale for the Solidary Liability of the Job Contractor and the Principal. The solidary liability of the job contractor and
the principal was enacted to ensure compliance with the provisions of the Labor Code, principally those on statutory
minimum wage. The job contractor is made liable by virtue of his status as direct employer. On the other hand, the
principal is liable as indirect employer of the contractual employees. The 1987 Constitution mandates that the
employees be given ample protection and this solidary liability facilitates and guarantees payment of the employees’
compensation.

Right of Reimbursement from the Job Contractor. While the principal and the job contractor are solidarily liable for the
payment of wages of the contractual employees, the principal has the right of reimbursement from the job contractor in
case he pays the obligation to the contractual employees.

CONDITIONS OF EMPLOYMENT AND LEAVE BENEFITS

Working Conditions and Rest Periods (Articles 82 up to 96) refers to the following employment benefits; (1) normal
hours of work; (2) meal periods; (3) rest periods; (4) night-shift differential; (5) overtime pay (6) weekly rest day; (7)
holiday pay; (8) workers paid by results (Article 82).

Excluded Employees

The following employees are excluded from the employment benefits under Title 1: (1) government employees; (2)
managerial employees; (3) officers and members of the managerial staff; (4) field personnel; (5) employer’s family; (6)
domestic helpers and persons in the personal service of another; and (7) workers paid by results (Article 82).

Additional Excluded Employees for Night-Shift Differential. Employees of retail and service establishments regularly
employing not more than five (5) workers are entitled to night-shifts differential (Section 1. Rule II. Book III. Omnibus
Rules).

Additional Excluded Employees for Holiday Pay. Employees of retail and service establishments regularly employing less
than ten (10) workers are not entitled to regular holiday pay (Article 94).

Additional Excluded Employees for Severe Incentive Leave. (1) Employees who are already enjoying the benefit of five
days service incentive leave with pay; (2) Employees enjoying vacation leave with pay of at least five days; (3) Employees
of retail and services establishments exempted from granting service incentive leave by the Secretary of Labor and
Employment (“Labor Secretary”) after considering the viability or financial condition of the establishment, are not
entitled to service incentive leave. (Article 95).

Definitions
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1. Government Employees. Government Employees refers to those employed by the National Government or any
of its political subdivisions,, including those employed in government-owned and/or controlled corporations (Section 2
(a) Rule I. Book III. Omnibus Rules).

2. Managerial Employees. Managerial Employees refers to those whose primary duty consists of the management
of the establishment or department or subdivision of the establishment in which they are employed, including other
officers or members of the managerial staff (Article 82).

3. Officers or Members of the Managerial Staff. Officers or Members of the Managerial Staff refers to those who
perform the following duties and responsibilities: Their primary duty consists of the performance of work directly
related to the management policies of their employer, and they customarily and regularly exercise discretion and
independent judgement.

4. Field Personnel. Field Personnel refers to non-agricultural employees who regularly perform their duties away
from the principal place and business or branch office of the employer, and whose actual hours of work in field cannot
be determined with reasonable certainty (Art. 82; Section 2(f) Rule I. Book III. Omnibus Rules).

5. Employer’s Family Members. Employer’s Family Members refers to the members of the family of the employer
who are dependent on the employer for support (Art. 82).

Hours of Work

What Hours Work Include. The following shall be considered as compensable hours worked: (i) All the time during which
an employee is required to be on duty or to be at prescribed workplace; (ii) All the time during which an employee is
suffered or permitted to work. (Section 3 Rule I. Book III Omnibus Rules).

How to Determine Hours Worked. The following generally principles shall be govern in determining whether the time
spent by an employee is considered hours worked.

Broken Shifts. The employer and employee may agree on the schedule of working hours of the employee. If the
established working hours of an employee run from 8am up to 12noon then from 4pm up to 8pm, the employee may
only be compensated for the actual hours worked. The period from 12noon up to 4pm is not considered as working time
as he is not require to be at the prescribed workplace during this 4-hour period.

Waiting Time. Waiting time spent by an employee shall be considered as working time in the following instances; (1)
When waiting is an integral part of the work; or (2) when the employee is required or engaged by the employer to wait
(Section 5 Rule I. Book III. Omnibus Rules). A company driver who brings the manager to a meeting, waits for the
manager, and after the meeting drives the manager back to the establishment of the employer, is considered to be
working while waiting.

On-Call Time. An employee who is required to remain on-call in the employer’s premises or so close to the premises that
he cannot use the time effectively and gainfully for his own purpose shall be considered as working while on-call.
However, an employee is not working while on-call when he is not required to leave word at his home or with the
company officials as to where he may be reached (Section 5 Rule I. Book III. Omnibus Rules).
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Meal Period

A meal period or meal break is a period consisting of sixty (60) minutes or one (1) hour time-off given by employers to
employees for their regular meals. The 1-hour meal-break is not considered working time. Hence, it is not compensated.
(Phil. Airlines, Inc. NLRC et al G.R. 132805. Feb 1999).

When Meal Period Is Compensable. In the following cases, a meal period of not less than twenty (20) minutes may be
given by the employer; provided that such shorter meal period is credited as compensable hours worked by the
employee; (1) Where the work is non-manual in nature or does not involve strenuous physical exertion; (2) Where the
establishment regularly operates not less than sixteen (16) hours a day; (3) In case of actual or impending emergencies
or there is urgent work to be performed on machineries, equipment or installations to avoid serious loss which the
employer would otherwise suffer; and (4) where the work is necessary to prevent serious loss of perishable good
(Section 7. Rule I. Book III. Omnibus Rules).

Where Meals May Be Taken. Meals need not be taken within the premises of the company. Even if an employee is oblige
to stay in the company premises for eight (8) hours, there is nothing in the law which states that the employees must
take their meals within the company premises. Employees are not prohibited from leaving the premises as long as they
return to their post on time.

Rest Periods

Rest periods or Coffee Breaks are period of shirt duration, running from five (5) to twenty (20) minutes during working
hours. Rest periods or coffee breaks are considered as compensable working time. (Section 7. Rule I. Book III. Omnibus
Rules).

NIGHT-SHIFT DIFFERENTIAL

Night-shift Differential is the additional compensation paid to an employees for each hour of work performed between
10pm and 6am

A Night-shift Differential Rate. Night Shift differential rate is equivalent to at least 10% of the regular hourly wage of the
employee.

Rationale for Night-shift Differential. A night-shift differential is paid for the work done during the graveyard shift
because an employee must contend with night work inconveniences and disadvantages, such as disagreement of his
social life, the loss of recreation or activities for leisure and the ordinary association of normal family relations, the work
time’s adverse effect upon efficiency and output, and its remotely injurious effect on his health, consonant with the
common saying among wage-earning people that the night was made for rest and sleep, and not for work.

Overtime Pay

Overtime pay is the additional compensation given to employees for each hour of work performed in excess of the
normal working eight (8) hours a day.
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Overtime on a Regular Working Day. The premium for overtime work on a regular working day (“Regular Day”) is
equivalent to at least 25% of the regular hourly wage of the employee on a regular day.

Regular hourly rate x 125%

Overtime on a rest day or holiday

Hourly rate x 130%

Overtime on a Regular Day When Rendered between 10Pm-6Am

Hourly rate x [125% + (10%) 125%]

Undertime Not Offset by Overtime. The legal prohibition to offset overtime against undertime (Article 88) applies only to
undertime incurred and overtime work rendered on different days, because the employee would be deprived of
additional pay for overtime work rendered. An employee who was late by thirty (30) minutes on a regular working day
8am-5pm, and rendered work until 7pm on the same day is entitled only one and one-half hours of overtime pay due to
his 30 minutes tardiness.

C. Compulsory Overtime Work. Subject to payment of additional compensation for overtime work, an employer
may require the employee to perform overtime work in any of the following cases; (1) when the country is at war or
when any other national or local emergencies is declared by the Congress or the President (2) when overtime work is
necessary to prevent loss of life or property or in case of imminent danger to public safety due to an actual or impending
emergency in the locality caused by serious accident, fire, flood, typhoon, earthquake, epidemic, or other disaster or
calamity; (3) when there is urgent work to be performed on machines, installations or equipment , in order to avoid
serious loss or damage to the employer or some other cause of similar nature; (4) when the work is necessary to prevent
loss or damage to perishable goods; (5P) when the completion or continuation of the work started before the 8th hour is
necessary to prevent serious obstruction or prejudice to the business or operations of the employer; and (6) when the
overtime work is necessary to avail of favourable weather or environmental conditions, where performance or quality of
work is dependent thereon. (Art. 89. Rule I. Book III. Omnibus Rules).

Weekly Rest Period

A weekly rest period or a rest day is a rest period of not less than twenty-four (24) consecutive hours or one (1) day after
six (6) consecutive normal workdays.

C. Compulsory Work on Rest Day. The employer may require the employee to work on his rest day .in any of the
following cases; (1) in case of actual or impending emergencies caused by serious accident, fire, blood, typhoon,
earthquake, epidemic, or other disaster or calamity to prevent loss of life and property or imminent danger to public
safety; (2) in case of urgent work to be performed on the machinery equipment or installation, to avoid serious loss
which the employer would otherwise suffer; (3) in the event of abnormal pressure of work due to special circumstances
where the employer cannot ordinarily be expected to resort to other measures; (4) to prevent loss or damage to
perishable goods; (5) where the nature of the work requires continuous operations and the stoppage of work may result
in irreparable injury or loss to the employer; (6) under other circumstances analogous to the foregoing as determined by
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the Labor Secretary (Art. 92); and (7) when the work is necessary to avail of favourable weather or environmental
conditions, where performance or quality is dependent thereon.

Rest Day Pay Rules.

1. Rest Day Pay. Rest day pay is equivalent to the regular wage of the employee, plus at least 30% of the
regular wage. The employer shall pay a higher premium for rest day work when stipulated in the CBA or employment
contract (Art. 93).

Daily rate x 130%

2. Overtime Work on A Rest Day. For overtime work on a rest day, an employee is entitled to an additional
compensation of at least 30% on his hourly rate on a rest day. (Art. 87. Sec. 9. Rule. I Book. III. Omnibus Rules).

Hourly rate x 169%

3. Overtime Work on a Rest Day Rendered between 10pm-6am. When an employee renders overtime
work between 10pm-6am on a rest day shall be given additional compensation equivalent to his overtime rate on a rest
day (169%) and an additional amount of not less than 10% of the overtime rate on a rest day for each hour of work
performed (Section 4. Rule II. Book III. Omnibus Rules).

Hourly rate x [169% + (10%) 169%)

Exceptions to the 48-Hour Workweek. Since a normal working day shall not exceed eight (8) hours, the normal
workweek of an employee shall not exceed forty-eight (48) hours. However, an establishment may have a forty (40)
hour work week in the following cases; (1) when there is an agreement between the employer and the employee; or (2)
when health personnel are involved.

The 40-Hour Workweek by Agreement. Normally Saturday is not a rest day or day off. However, the employer and
employee may agree may agree on a regular workweek of only forty (40) hours, eight (8) hours a day, Monday to Friday.
Under this agreement, when an employee is required to render work on Saturday in excess of the forty (40) hour
workweek, the employee may be considered as performing overtime work on that particular Saturday.

The Forty (40) Hour Workweek for Health Personnel

The regular working days of the following health personnel shall not exceed five (5) days or forty (40) hours per week;
(1) Those in the cities or municipalities with a population on at least one (1) million; and (2) those in hospitals or clinics
with a bed capacity of at least 100.

However, health personnel may work for six (6) days or forty-eight (48) hours per week, when the exigencies of the
service so require. For work done on the 6th day, health personnel shall be entitled to an additional compensation of at
least 30% of their regular wages. Health Personnel include resident physicians, nurses, nutritionist, technician,
psychologists, midwives, attendants and all hospital and clinic personnel.
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Compressed Workweek

A Compressed Workweek Scheme (CWW) is an alternative arrangement between the employer and his
employees whereby the normal workweek is reduced to less than six (6) days but the total number of work hours per
week shall remain at forty-eight (48) hours. The normal workday is increased to more than eight (8) hours without
corresponding overtime premium. The concept can be adjusted accordingly in cases where the normal workweek of the
company is five (5) days.

Regular Holiday Pay

Every worker shall be paid his regular daily wage during holidays, except in retail and service establishment regularly
employing less than 10 workers.

Unworked regular holiday: Daily rate x 100%

Worked regular holiday: Daily rate x 200%

Overtime work on a regular holiday: Regular hourly rate x 260%

Worked regular holiday/rest day: Regular hourly rate x 260%

Overtime work on a regular holiday/rest day: Regular hourly rate x 338%

Unworked double holiday: RDR x 200%

Worked double holiday: RDR x 300%

Overtime work on a double holiday: RHR x 390%

Overtime work on a double holiday rendered between 10 pm to 6 am: RDR x 429%

Double holiday-rest day: RDR x 390%

Overtime work on a double holiday-rest day: RHR x 507%

Special Holiday Day Pay

Worked performed on any special holiday shall be paid an additional compensation of at least 30% of the regular wage
of the employee. Where such holiday falls on the employee’s scheduled rest day, he shall be entitled to an additional
compensation of at least 50% of his regular wage.
 14

Special holidays are: All Saint’s Day, last day of the year and Ninoy Aquino day.

While an employee is entitled to holiday pay during regular holidays, even if he does not work on these regular holidays,
in case of special holidays, an employee is entitled to compensation only if he actually performs work on such special
holidays. The principle “no work, no pay” applies to special holidays.

Service Incentive Leave

Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of 5
days with pay.

The service incentive leave shall be commutable to its cash equivalent if not used or exhausted at the end of the year.

There is no law granting employees vacation leave and sick leave benefits. Instead, these benefits are usually granted by
the employers through an individual agreement or through CBA.

Service Charges

All service charges, collected by hotels, restaurants and similar establishments, shall be distributed at the rate of 85% for
all covered employees and 15% for management. The share of employees shall be equally distributed among them. In
case the service charge is abolished, the share of the covered employees shall be considered integrated in their wages.

Note that the 15% shall be for the disposition by management to answer for losses and breakages and may also be
distributed to managerial employees at the discretion of management.

Maternity Leave Benefits

A female member who has paid at least 3 monthly contributions in the 12 month period immediately preceding the
semester of her childbirth or miscarriage shall be paid a daily maternity benefit equivalent to 100% of her average daily
salary credit for 60 days or 78 days in case of caesarean delivery.

Maternity leave benefits shall be paid only for the first 4 deliveries or miscarriages.

Paternity Leave (RA 8187)

Every married male employee in the private sector shall be entitled to paternity leave benefits of 7 days with full pay for
the first 4 deliveries by his lawful spouse.

Purpose: to enable the husband to effectively render support, care and assistance to wife in her period of recovery
and/or in nursing of the newly born child.

Parental Leave for Solo Parents (RA 8972)

In addition to leave privileges under existing laws, parental leave of not more than seven (7) working days shall be
granted to any solo parent employee who has rendered service of at least one (1) year.

Leave for Victims of Violence Against Women and Children (RA 9262)
 15

Victims under VAWC shall be entitled to take a paid leave of absence up to 10 days in addition to other paid leaves
under the Labor Code, extendible when the necessity arises

Special Leave Benefit for Women (RA 9710)

A woman employee having rendered continuous aggregate employment service of at least six (6) months for the last 12
months shall be entitled to a special leave benefit of 2 months with full pay based on her gross monthly compensation,
following surgery by gynaecological disorders.

WAGES, BENEFITS AND BONUSES

Coverage on the rules on wages

The rules on wages shall not apply to the following:

a. tenants of a farm tenancy or leasehold

b. domestic helpers and persons in the personal service of another

c. persons working in their homes in needlework or in any cottage industry

Wage

It refers to the renumeration payable by an employer for services rendered or to be rendered by an employee

It may be fixed or paid on the basis of results or time expended on the work

Payment by result is a method of compensation and not a basis for determining the existence or absence of EE
relationship

Facilities

Facilities include articles or services for the benefit of the employee or his family, but shall not include tools of trade or
articles or services primarily for the benefit of the employer or necessary to the conduct of the business of the employer

Thus, the value of facilities can be deducted from the wage to be paid to the emplouee

Requirements for deductibility of facilities

In order that facilities furnished may be deducted, the following must be present:

a. Proof must be shown that such facilities are customarily furnished by the trade

b. The provision of deductible facilities must be voluntarily accepted in writing by the employee

c. Facilities must be charged at a fair and reasonable values.

Versus Supplement
 16

A supplement is a benefit or privilege given to the employee which constitutes extra renumeration over and above his
basic earnings

Bonus

A bonus is an amount paid to an employee for his industry and loyalty which contributed to the success of the
employer’s business and made possible the realization of profits.

The granting of bonus is basically a management prerogative which cannot be forced upon the employer who may not
be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee’s basis salary.

When bonus may be considered part of the wage

A bonus may be considered part of the wage if:

a. If it is an additional compensation which the employer promised and agreed to give without any conditions
imposed for its payment, such as success of the business

b. If it becomes company policy

Forms of Payment

No employer shall pay the wages of an employee by means of promissory notes, vouchers, coupons, tokens, tickets,
chits or any object other legal tender, even when expressly requested by the employee.

Payment by ATM

BUT: considering the present day circumstances, practices and technology, employers may adopt a system of payment
other than in the workplace, such as through the ATM of banks, provided that:

a. There is written consent of all the employees concerned.

b. The employees are given reasonable time to withdraw their wages from the bank facility which time shall be
considered compensable hours, if done during working hours

c. The system shall allow employees to receive their wage at least once every two weeks

d. There is a bank or ATM facility within a radius of one kilometre from the place of work

e. Upon request, the employer shall issue record of payment of wages

f. There shall be no addition expenses and diminution of benefits

Time of Payment

Wages shall be paid at least once every two weeks or twice a month at intervals not exceeding sixteen days. If on
account for force majeure or circumstances beyond the employer’s control, payment of wages on or within the time
 17

provided cannot be made, the employer shall pay the wages immediately after such force majeure or circumstances
have ceased.

Place of Payment

Payment of wages shall be made at or near the place of undertaking.

Other places may be permissible under the following circumstances:

a. When payment cannot be effected at or near the place of work by reason of emergencies or peace and order
conditions or other calamity rendering payment at the workplace impossible

b. Where the employer provides free transportation to the employees to and from the place of payment of
wages

c. Under analogous circumstances

Direct Payment of Wages

Wages shall be paid directly to employees to whom they are due except in the following circumstances:

a. Where the employer is authorized in writing by the employee to pay his wages to a member of his family

b. Where the payment to another person of any part of the employee’s wages is authorized by existing law,
including payments for the insurance premiums of the employee and union dues

c. Where the employee has died

Prohibitions regarding wages

1. No employer shall limit or otherwise interfere with the freedom of any employee to dispose of his wages. He
shall not compel, force or oblige his employees to purchase merchandise or property from any other person or make use
of any store or services of such employer.

2. No employer shall make any deduction from the wages of his employees, except:

a. In cases where the worker is insured with his consent by the employer, and the deduction is to recompense
the employer for the amount paid by him as premium on the insurance

b. For union dues, where the right of the worker or his union to check off has been recognized by the employer
or authorized in writing by the individual worker concerned

c. In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and
Employment

3. It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker
or induce him to give up any part of hi wages by force, stealth, intimidation, threat or by any other means whatsoever
without the worker’s consent.

4. It shall be unlawful to make any deduction from the wages of any employee for the benefit of the employer or
his representative or intermediary as consideration of a promise of employment or retention in employment.
 18

5. It shall be unlawful for an employer to refuse to pay or reduce the wages and benefits of an employee who
has filed any complaint or instituted any proceeding under the law.

An Act to Rationalize Wage Policy Determination by Establishing Mechanism and Proper Standards Therefore

Wage Rationalization Act provides new wage rates and creates various Regional Tripartite Wages and Productivity
Boards or the regional boards in charge of prescribing the minimum wage rates for all employees in the various regions,
and the National Wages and Productivity Commission to review wage levels determined by the Regional Boards.

The purpose of the Wage Rationalization Act is meant to rationalize wages by having permanent boards to decide wages
rather than leaving determination to Congress year after year, law after law.

Minimum Wage

It shall consist of basic cash wage from which the benefits, supplements or allowances, which the employees enjoy free
of charge aside from basic pay, are not deducted.

An employer may provide subsidized meals and snacks to his employees provided that the subsidy shall not be less than
30% of the fair and reasonable value of such facilities. In such a case, the employer may deduct from the wages of the
employees not more than 70% of the value of the meals and snacks enjoyed by the employees, provided the deduction
is with the written authorization of the employees concerned.

Wages of workers paid by results

All workers paid by results, including those who are paid on piecework, takay, pakyaw or task basis shall receive at least
the applicable statutory minimum wage per eight (8) hours of work a day or proportion thereof, for working less than 8
hours.

Wages of special groups of workers

Wages of apprentices, learners and handicapped workers shall be at least 75% of the applicable statutory minimum
wage rates.

Wages of mobile and branch workers

The statutory minimum wages rates of employees who by the nature of their work have to travel shall be those
applicable in the employer’s domicile or head office.

Wages of employees transferred to other areas

The transfer of employees to areas outside of NCR shall not be a valid ground to the reduction in the wage rates being
enjoyed by the employees prior to their transfer,

Monthly paid vs. Daily paid

A monthly paid employee is one whose monthly salary includes payment for every day of the month, although he does
not regularly work on his rest days or Sundays, nor on regular and special holidays.
 19

A daily paid employee is one who is paid on the days he actually worked, except that on unworked regular holidays, he is
paid his basic wage if he is present or on leave with pay on the working day before the regular holiday. The “no work, no
pay” applies to a daily paid employee.

Working Conditions of Special Group of Employees

Women

Prohibitions on the Employment of Women

The following are the prohibitions on the employment of women:

a. Discrimination

b. Stipulation against marriage

c. Discharge on account of pregnancy

d. Denial of benefits

e. Discharge due to testimony

Discrimination

It is unlawful for any employer to discriminate against any female employee with respect to the terms and conditions of
employment, solely on the account of her sex. The following are the acts of discrimination:

1. Payment of a lesser compensation, including wage, salary, or other forms of renumeration and fringe benefits
to a female employee as against a male employee for work of equal value

2. Favoring a male employee over a female employee with respect to promotion, training opportunities, study
and scholarship grants, on account of sex

Stipulation against Marriage

It is unlawful for an employer to stipulate against the marriage of his female employees, as follows:

a. To require as a condition of employment or continuation of employment that a female shall not get married

b. To stipulate that upon getting married, a female employee shall be deemed resigned or separated

c. To actually dismiss, discharge or discriminate or otherwise prejudice a female employee merely be reason of
her marriage

Stipulation on account of pregnancy

It is also unlawful for an employer to discharge a female employee on account of pregnancy, as follows:

a. To discharge on account of her pregnancy or while on leave or in confinement due to her pregnancy
 20

b. To discharge or refuse the admission of a woman upon her return to work for fear that she may again become
pregnant

Denial of benefits

It is unlawful for an employer to deny any female employee the benefits provided for under the law or to discharge any
woman employed by him for the purpose of preventing her from enjoying the benefit.

Discharge on account of complaint

It is unlawful for an employer to discharge any woman or any other employee for having filed a complaint, having
testified or being about to testify under the Labor Code.

Anti-Sexual Harassment Act

Sexual harassment

It may be committed in the following environments:

a. work-related

b. education-related

c. training-related

Work-related environment

The sexual favor is made as a condition for: hiring or the employment, re-employment or continued employment of said
individual; granting said individual favourable compensation, terms, conditions, promotions or privileges; and the refusal
to grant the sexual favor results in limiting, segregating or classifying the employee, which would in any way
discriminate, deprive or diminishment the employment opportunities of the said employee

The sexual favor would impair the employee’s rights or privileges under existing labor laws

The demand, request or requirement for sexual favor would result in an intimidating, hostile, or offensive environment
for the employee

Education-related or training-related

When the sexual favor is made as a condition to the giving of a passing grade, or the granting of honors and scholarships
or the payment of a stipend, allowance or other benefits

When the sexual advances result in an intimidating, hostile or offensive environment for the student

Minors

Minimum employable age

The following are the rules on the employment of children:

a. Below 15 years of age cannot be employed

b. Between 15 and 18 years of age may be employed in any non-hazardous or non-deleterious work

When children below 15 years of age may be employed

When the child works directly under the sole responsibility of his parents or legal guardian and where only members of
his family are employed

Where the child’s employment or participation in public entertainment or information through cinema, theatre, radio or
television is essential

Hours of a working child

A child below 15 years of age may be allowed to work for not more than 4 hours a day, twenty hours a week. He shall
not be allowed to work between 8 pm to 6 am.

A child between 15 and 18 years of age may be allowed to work for not more than 8 hours a day, 40 hours a week. He
shall not be allowed to work between 10 pm to 6 am.

Househelpers

Domestic worker

It refers to any person engaged in domestic work within an employment relationship such as but not limited to the
following: general househelp, nursemaid or yaya, cook, gardener or laundry person, but shall exclude any person who
performs domestic work only occasionally or sporadically and not on an occupational basis

Rights and privileges of the kasambahay

Freedom from any kind of abuse, physical violence, harassment or any act by the employer or any household member
tending to degrade the kasambahay’s dignity

At least 3 adequate meals a day, sleeping arrangements and appropriate rest and assistance from employer in case of
illness and injuries sustained during service without loss of benefits.

Respect for privacy extending to all forms of communication and personal effects

Access to outside communication during free time

Opportunity to finish basic education and access to alternative learning systems and higher education or vocational
training where practicable

Terms and conditions of employment

Rest periods: a kasambahay is entitled to an aggregate daily rest period of 8 hours a day and at least 24 consecutive
hours of rest in a week

Wages: 2,500 a month for those in NCR; 2,000 a month for chartered cities and 1st class municipalities; 1,500 a month
for those employed in other municipalities
 22

A kasambahay who has rendered at least one year of service shall be entitled to annual service incentive leave of five
days with pay

Apprentice

An apprentice is a person undergoing training for an approved apprenticeable occupation during an established period
assured by an apprenticeship agreement

An apprenticeable occupation means any trade, form of employment or occupation which requires more than 3 months
of practical training on the job supplemented by related theoretical instruction

Employers can only hire apprentices for apprenticeable occupations which must be officially endorsed by a tripartite
body and approved for apprenticeship by TESDA.

Wage rates may not be below 75 percent of the applicable minimum wage

Learners

They are persons hired as trainees in semi-skilled and other industrial occupations which are non-apprenticeable and
which may be learned though practical on the job training in a relatively short period of time, which shall not exceed
three months

They may be employed when no experienced workers are available, the employment of learners is necessary to prevent
curtailment of employment opportunities

Period shall not exceed 3 months

The wages shall begin at not less than 75 percent of the minimum wage rate

Learners allowed or suffered to work during the

Handicapped Workers

Handicapped workers are those whose earning capacity is impaired by age or physical or mental deficiency or injury

The Magna Carta for Disable Persons provides that qualified disable persons be granted the same terms and conditions
of employment as qualified employees.

Alien Workers

Any alien seeking admission to the Philippines for employment purposes and any domestic or foreign employer who
desires to engage an alien for employment in the Philippines shall obtain an employment permit from DOLE.

The permit may be issued to a non-resident alien or to the applicant employer after a determination of the non-
availability of a person in the Philippines who is competent, able and willing at the time of application to perform the
services for which the alien is desired

Assignment

Worked, Overtime of 3 hours on a regular day

Worked, Overtime of 3 hours on a regular day, 2 hours night shift

Worked, Rest day, with overtime of 4 hours

Worked, regular holiday, overtime of 3 hours

Worked, regular holiday and rest day, overtime of 4 hours

Worked, special holiday, with overtime of 2 hours

Unworked, regular holiday

Unworked, double holiday and rest day

Worked, special holiday and rest day, with overtime of 5 hours, 3 hours night shift

Worked, double holiday, with overtime of 4 hours, 3 hours night shift

Basic salary is Php500.00

Deadline: 5 pm tomorrow; email to my account

Classification of Employees

Classification of employees

Regular or permanent employees

Casual employees

Fixed-term or term employees

Project employees

Seasonal employees

Probationary employees

Regular Employees

Two kinds of regular employees

Those who are engaged to perform activities which are necessary or desirable in the usual business or trade of the
employer, except where the employment is fixed for a specific term or project or is seasonable in nature

Those casual employees who have rendered at least one year of service

Activities performed are necessary or desirable in the usual business of the employer

When the activities performed by the employee are usually necessary or desirable in the usual business or trade of the
employer, the employment is deemed regular, notwithstanding any contrary agreement

Length of performance of the activity performed

If the employee has been performing the activity for at least 1 year, even if the performance is not continuous but
intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity
of that activity to the business of his employer

Regular employees may only be terminated for just or authorized causes under the law and after compliance with the
requirements for due process.

Casual Employees

He is one who is engaged to work on an activity which is not necessary or desirable in the usual business or trade of the
employer, or is merely incidental to the business of the employer

By operation of law, a casual employee becomes a regular employee with respect to the activity in which he is employed
as soon as he has completed one year of service and his employment shall continue while such activity exists

Casual employees are protected by security. Hence they may be removed from service at any time.

Fixed Term Employees

A fixed term employee is an employee for whom a day certain is agreed upon by the employer and the employee for the
commencement and termination of their employment relationship.

When the agreement entered into by the parties fixes a period or a term to circumvent security of tenure of the
employee, the period or term should be struck down or disregarded as contrary to public police, moral and law. In this
case, the fixed term employee will be deemed to be a regular employee

Project Employees

They are those whose work is coterminous with the project for which they are hired.

An example is a particular job or project of a construction company. A construction company carries out two or more
identifiable construction project, a hotel and an airport. Employees hired for the carrying out of these projects are
properly treated as project employees.

Seasonal Employees

Employees who perform work or service that is seasonal in nature or whose employment is for the duration of the
season

Harvest of palay is seasonal, hence, employees engaged for this purpose are deemed to be seasonal employees.

When the seasonal employees are repeatedly re-employed by the employer every season, the seasonal employees are
deemed regular seasonal employees. As such, during off-seasons, they are not considered as separated from service, but
rather as being on leave of absence without pay until they are re-employed.

Probationary Employees
 25

They are those who are on trial by an employer which the employer determines whether they are qualified for regular
employment.

A probationary period is the trial period where the employer observes the fitness, propriety and efficiency of a
probationary employee, to ascertain whether he is qualified for regular employment in accordance with reasonable
standards made known by the employer to the employee at the time of his engagement.

The general probationary period lasts 6 months.

Generally, probationary employment shall not exceed 6 months. This means that the probationary employee may be
dismissed for cause at anytime before the expiration of 6 months after hiring. If after working for less than 6 months, he
is found unfit for the job, he can be dismissed. However, if he continues to be employed longer than 6 months, he
ceases to be a probationary employee and becomes a regular employee.

In all cases of probationary employment, the employer has to inform the employee at the time of his engagement, of
the standards under which he will qualify as a regular employee. Where no standards for regular employment are made
known to the employee at the time of his engagement, he shall be deemed a regular employee.

TERMINATION OF EMPLOYMENT

Termination from employment has two aspects: the legality of the act per se which constitutes substantive due process,
and the legality of the manner of the dismissal, which constitutes procedural due process

Substantive Due Process

Just Causes

Serious misconduct or wilful disobedience by the employee of the lawful orders of his employer or representative in
connection with his work

Gross and habitual neglect by the employee of his duties

Fraud or willfull breach by the employee of the trust reposed in him by his employer or duly authorized representative

Commission of a crime or offenses by the employer against the person of his employer or any immediate member of this
family or his duly authorized representatives

Other causes analogous to the foregoing

Serious Misconduct

It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, wilful in
character, and implies wrongful intent and not mere error in judgment.

The misconduct must be serious and must be of such grave and aggravated character and not merely trivial or
uninimportant.

Willful Disobedience or Insubordination

One of the duties of the employee is to yield obedience to the lawful orders of his employer.
 26

To be validly dismissed on the ground of wilful disobedience requires of the at least two requisites:

a. The employee’s conduct must have been wilful or intention, the wilfulness being characterized by a wrongful
and perverse attitude

b. The order violated must have been reasonable, lawful and made known to the employee and must pertain
the duties which he had been engaged to discharge

Fraud or Willful Breach of Trust and Confidence

The two requisites for dismissal on the ground of loss of trust and confidence are:

a. The employee concerned must be holding a position of trust and confidence

b. There must be an act that would justify the loss of trust and confidence

Commission of a Crime or Offense

The commission of a crime or offense of the employee refers to the offense against the employer, immediate member of
the family and the employer’s authorized representative

Analogous Causes

Violation of company rules

Abandonment of work

Doctrine of Compassionate Justice

Even if the employee has committed an offense or infraction against the employer, where a penalty less harsh than
dismissal would be sufficient to penalize the employee, like suspension from work without pay, whatever missteps may
be committed by the employee should not be visited with a consequence as severe as dismissal.

Suspension vs. Preventive Suspension

Suspension as a penalty for offenses should be distinguished from preventive suspension as a remedial measure.
Suspension is a penalty lighter than dismissal, which may be imposed upon an employee after findings that the
employee has committed an infraction against the employer.

Preventive suspension is imposed during the pendency of an administrative investigation. It is a measure of precaution
so that the employee who is charged for an offense may be separated from the scene of his alleged misfeasance.

Preventive Suspension

The employer may place the worker under preventive suspension if his continued employment poses a threat to the life
or property of the employer or of his co-workers.
 27

A preventive suspension shall not exceed thirty days. After this period, the employee must be reinstated to his form
position. If the suspension is extended, the employee shall be entitled to this salaries and benefits that may accrued to
him during the period of extension of the suspension.

Authorized Causes

Installation of labor-saving devices

Redundancy

Retrenchment to prevent losses

Closing or cessation of operation of the establishment or undertaking

Installation of labor saving devices

This refers to the installation of machinery to effect economy and efficiency in the employer’s method of production

Payment of separation pay equivalent to at least one month pay or at least month pay for every year of service,
whichever is higher

Redundancy

There must be good faith in abolishing redundant positions

Criteria in implement its redundancy program such as but not limited to preferred status, efficiency and seniority
person.

Payment of separation pay of at least one month pay or at least one month pay for every year of service, whichever is
higher

Retrenchment to prevent losses

This is the termination employment initiated by the employer through no fault of the employee and without prejudice to
the latter, resorted by management during period of business recession, depression or seasonal fluctuation.

It is a reduction in manpower, a measure utilized by an employer to minimize business losses incurred in the operation
of its business.

Retrenchment must be due to serious, actual and real business losses.

Payment of separation pay equivalent to one month pay or at least one-half month pay for every year of service,
whichever is higher

Closure/Cessation of business

This is the complete cessation of the operation and shutdown of the establishment of the employer.

It is carried out to either stave off the financial ruin or promote the business interest of the employer.

Payment of separation pay equivalent to separation pay equivalent to one-half month pay for every year of service or
one month pay, whichever is higher
 28

No separation pay if due to serious losses

Analogous causes

A change of ownership in a business is not proscribed by law. It is a management prerogative of the employer to merge
or consolidate its business with another, sell or dispose of substantially all of its assets and properties, which may bring
about the termination of its employees in the process.

PROCEDURAL DUE PROCESS

Termination of employees for just or authorized causes must be accompanied by the procedural due process
requirements

Termination based on just causes provided by law

The following are the procedural requirements:

a. A written notice served on the employee specifying the grounds for termination and giving to said employee a
reasonable opportunity within which to explain his side

b. Hearing or conference during which the employee concerned is given the opportunity to respond to the
charge, present his evidence or rebut the evidence against him

c. A written notice of termination served on the employee indicating that upon due consideration of all
circumstances, grounds have been established to justify his termination

Termination based on authorized causes provided by law

The following are requirements of procedural due process:

a. A written notice to employee

b. A written notice to DOLE at least 30 days before the effectivity of the termination and specifying the grounds
for termination, which must be one of the authorized causes provided by law

There is no need for an investigation and hearing to be conducted by the employer in case of authorized causes.

Termination of services of an employee due to disease

An employer may terminate the services of an employee who has been found to be suffering from any disease and
whose continued employment is prohibited by law or is prejudicial to this health as well as to the health of his co-
employees; provided that he is paid separation pay equivalent to at least one month salary or to one-half month salary
for every year of service, whichever is higher

If the disease or ailment can be cured within a period of 6 months, the employer shall the employee to take a leave of
absence. The employer shall reinstate the employee to his former position immediately upon restoration of his normal
health

Termination of employment by employee: resignation

An employee may terminate without just cause the employer-employee relationship by serving a written notice on the
employer at least one month in advance.

An employee may put an end to the relationship if there is just cause, i.e., serious insult on the honor and person of the
employee, inhuman and unbearable treatment, commission of a crime or offense.

Forced resignation or constructive dismissal

This is defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely as an offer
involving a demotion in rank and diminution in pay.

This occurs when the unwarranted acts of the employer are committed to the end that the employee’s continued
employment shall become so intolerable

This exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the
employee leaving him no option but to forego his continued employment

Effect of termination with compliance of substantive and procedural due process

No payment of separation pay

Effect of termination without substantive due process but there is procedural due process

He is entitled to:

a. Reinstatement or separation pay, if reinstatement is no longer feasible

b. Full backwages from time of illegal dismissal to reinstatement

Effect of termination with substantive due process but without procedural due process

Php30,000.00/Php50,000.00

Remedies of Employees

Employee may file an action for illegal dismissal which prescribes 4 years from accrual of cause of action or date of
termination

Schedule of Exams

July 31, 2016, 5:00 p.m. until 8:00 p.m.

Essay/Hypothetical Questions; open notes

For the removal: multiple choice; closed notes

Results of the exam will be submitted to the Office of the Dean of Graduate Studies a week after, together with your
final grade.

Thank you!!!