LABOR LAW REVIEW

2nd S, 2020-21

Atty. Paciano F. Fallar Jr.

SSCR-CoL

NOTES ON
HOURS OF WORK

A. Coverage

Book III of the Labor Code sets out t main features of minimum labor standards. And it begins with the
coverage by means of exclusion.

Art. 82. Coverage. The provisions of this Title shall apply to employees in all establishments and undertakings
whether for profit or not, but not to government employees, managerial employees, field personnel,
members of the family of the employer who are dependent on him for support, domestic helpers,
persons in the personal service of another, and workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.

The implementing regulations then proceeds with the definitions:

"Managerial employees"- are those whose

(1) primary duty consists of the management of the establishment in which they are employed
or of a department or sub-division thereof.

(2) customarily and regularly direct the work of two or more employees

(3) have the authority to hire or fire employees of lower rank; or their suggestions and
recommendations as to hiring and firing and as to the promotion or any other change of status
of other employees, are given particula rweight.

Officers or members of am anagerial staff-if they perform the following duties and
responsibilities:

(1) The primary duty consists of the performance of work directly related to management
policies of their employer;

(2) Customarily and regularly exercise discretion and independent judgment; and

(3) (i) Regularly and directly assist a proprietor or a managerial employee whose
primary duty consists of the management of the establishment in which he is
employed or subdivision thereof;or,

(ii )execute under general supervision work along specialized or technical lines
requiring special training, experience, or knowledge; or

(iii) execute, under general supervision, special assignments and tasks; and

4) Who do not devote more than 20 percent of their hours worked in a work week to activities
which are not directly and closely related to the performance of the work described in
paragraphs (1), (2)and(3) above.

Art. 82 cannot be interpreted to mean that the excluded employees could be worked to death since they are
not covered by the maximum working hours and days. It does not also mean that excluded employees (e.g.,
managerial employees) cannot be compelled to work beyond 8 hours. The law should be interpreted in a
reasonable manner. Indeed, Book II Rule II Section 1 of the RILC ("Weekly rest periods") speaks of "all
employees". Managerial employees are not paid for the actual hours of work rendered, and they are not
subject to the 8-hour work limit. The statutory provision means that when the excluded employees work
beyond the normal work day of 8 hours or work week of 6 days, they are not entitled to premium pay.

Managerial employees' include both "managers" and "members of managerial staff"(basically,

supervisors). Their tasks involve the "management" or the running and control of the enterprise including the
business aspect ( production, financials, marketing, pricing, etc.) and personnel aspect ( hiring, firing,
transfer and employees; fixing of salaries, benefits , and work schedules, etc.). The classification of
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"managerial employees" would also have implications on labor relations ( they cannot form or join unions) and
security of tenure ( the rules on termination for just cause are less rigidly applied on them . The category of
"supervisory" employees would have impact on labor relations ( they must form a bargaining unit separate
from the rank-and-file). The distinction between "managerial employees" and "supervisory employees" for
purposes of labor relations are defined in Art.219 [m] of the Labor Code.

Some companies, to address the concerns of supervisory employees who render extra hours, grant fixed
allowance for this purpose ( meaning, the amount is pre-determined and is not tied up to actual rendition of
overtime work or to the actual number of excess hours of work).

Note that Art. 94 (Holidays, SIL, & Service Charge) adds another class of excluded employees: those working
in retail and service establishments regulary employing less than 10 workers."

The implementing regulations (Book II, Rule II, Sec. 1) also excludes from the coverage of night shift
differential "those working in retail and service establishments regulary employing less than 5
workers". Is this within the DOLE Secretary's authority or did he exceed his authority by going beyond what
the Labor Code prescribes?

The term "field personnel" seems descriptive. But it has a technical meaning in jurisprudence. The test for
"field personnel" is not whether they work outside the premises of the company but whether their working
hours could be determined with reasonable certainty. Thus, bus drivers and conductors ( who follow fixed
routes prescribed by the LTRFB) have been held not to be "field personnel" since their working hours from and
to the bus terminals are monitored by inspectors who board the buses in random manner along the bus routes
( Auto Bus Transport Systems vs Bautista , GR No. 156367, 16 May 2005). With the advent of ever sophisticated
tracking technology, this test could be challenged with increasing frequency.

"Workers who are paid by results " are excluded only if their work hours and performance are
unsupervised by the employer. If they worked within company premises and their work is monitored by the
employer, they will be covered by the provisions on hours of work ( Labor Congress of the Phlippines vs
NLRC, GR No. 123938, 21 May 1998). Jeepney and taxi drivers paid on "boundary" basis are "workers who
are paid by results", and at the same time their working hours are unsupervised.

Employees of government owned and controlled corporations are supposedly excluded only if the GOCC has
no original charter. Otherwise, if the GOCC is incorporated under the Corporation Code (like private
corporations), its employees are covered by the Labor Code. But with the passage of RA 10149 (GOCC
Governance Act of 20110), such distinction has been effectively obliterated. Compensation of GOCC
employees and by implication their right to collective bargaining , are now no longer subject to the Labor
Code (GSIS Family Bank Employees Union vs Berberabe-Martinez, GR No. 197836, 07 December 2015).

B Hours of Work

The normal hours of work of any employee shall not exceed eight (8) hours a day (Art. 83, Labor Code)

The law refers to a 24-hour cycle. Work could start and end at any hour within the same 24-hour cycle.

What the law sets is a maximum. The law does not set a minimum. Hence, a one-hour daily work schedule
is technically allowable. A CBA may however validly stipulate a longer regular hours ( e.g. 12-hour work day),
which the employer may also change if such discretion is allowed in the CBA and when the employees
implicitly consent to it (Interphil Laboratories Employees Union-FFW vs Interphil Laboratories GR No.142824, 19
December 2001).

The DOLE recognizes part-time work( i.e., less than 8 hours/day), with the consequence that the minimum
wage will be set pro rata.

In case of company financial distress, may an employer reduce the work hours of its employees (and
consequently their salaries) so that it avoids retrenchment of a portion of its work force? The reducation of
work days from 6 to only 3, and on rotation basis, was allowed as a valid and humane temporary measure
(Philippine Graphic Arts vs NLRC , GR No. L-80737, 29 September 1988). Note that the reduction of work days
would result in the reduction of the take home salaries, and perhaps even allowances, in line with the "no work
no pay" principle and the rationale for adopting a shorter work week which is to cut on operating expenses. But
reduction of work hours was disallowed when the claimed substantial losses were not proven. It was held
that permitting redcution of work and pay at the slightest indication of losses would be contrary to the State's
policy to afford protection to labor and provide full employment. The affected workers were allowed to recover
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lost salaries for the unworked days. (Linton Commercial vs Hellera GR No.163147, 10 October 2007; La Rosa vs
Ambassador Hotel, GR No.177059, 13 March 2009.

The law does not impose a straight 8 hours of work. "Broken time" ( e.g., 2 blocks of 4-hour shifts separated by
a non-work hours period) is technically allowed but rarely practiced.

Art. 83 fixes the normal work hours of health personnel (including resident physicians, nurses, nutritionists,
dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists,
midwives, attendants) at eight (8) hoyrs a day for five (5) days only. Work on the 6th day would merit 30%
premium. The statutory provision only covers "health personnel in: a) cities and municipalities with a
population of at least 1 Million; or, b) in hospitals and clinics with a bed capacity of at least 100".

C. "Hours worked"

Hours worked shall include (a) all time during which an employee is required to be on duty or to be at a
prescribed workplace; and (b) all time during which an employee is suffered or permitted to work. (Art. 84,
Labor Code)

Rest periods of short duration during working hours shall be counted as hours worked

Implementing Rules:

SECTION 4.Principles in determining hours worked. — The following generalprinciples shall govern
in determining whether the time spent by an employeeis considered hours worked for purposes of this
Rule:

(a) All hours are hours worked which the employee is required to give hisemployer, regardless of
whether or not such hours are spent in productive laboror involve physical or mental exertion.

(b) An employee need not leave the premises of the work place in order that hisrest period shall not be
counted, it being enough that he stops working, mayrest completely and may leave his work place, to
go elsewhere, whether within or outside the premises of his work place.

(c) If the work performed was necessary, or it benefited the employer, or the employee could not
abandon his work at the end of his normal working hoursbecause he had no replacement, all time
spent for such work shall be considered as hours worked, if the work was with the knowledge of his
employer or immediate supervisor.

(d) The time during which an employee is inactive by reason of interruptions inhis work beyond his
control shall be considered working time either if theimminence of the resumption of work requires the
employee's presence at theplace of work or if the interval is too brief to be utilized effectively and
gainfully in the employee's own interest.

SECTION 5.Waiting time.— (a) Waiting time spent by an employee shall be considered as working
time if waiting is an integral part of his work or the employee is required or engaged by the employer to
wait.

(b) An employee who is required to remain on call in the employer's premisesor so close thereto that
he cannot use the time effectively and gainfully for hisown purpose shall be considered as working
while on call. An employee who isnot required to leave word at his home or with company officials
where he maybe reached is not working while on call.

SECTION 6.Lectures, meetings, training programs. — Attendance at lectures,meetings, training

programs, and other similar activities shall not be countedas working time if all of the following
conditions are met:

(a) Attendance is outside of the employee's regular working hours;

(b) Attendance is in fact voluntary; and
(c) The employee does not perform any productive work during such attendance

Note that under the law and the regulations an employee need not be doing any productive activity to be
considered at work. He could even be resting, or sleeping. ( From another perspective, resting and sleeping
may be considered desirable activities for certain jobs)

What constitutes "hours worked" could be subject to company policy or agreement, usually for purposes of
compensability. Thus, company policy may prescribe that any overtime work to be compensable must be done
with prior written consent of the direct supervisor. A CBA may stipulate that attendance at grievance
meetings is compensable (Supreme Steel Corp. vs Nagkakaisang Manggagagawa, GR No. 185556,28 March
2011). By agreement, attendance at CBA conferences is usually deemed compensable although qualifications
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are put in place ( e.g., number of participants or the conferences must be held within normal work hours or if
outside work hours time spent is not considered overtime work) . Whether attendance at conferences before
the DOLE, NCMB, or NLRC would constitute compensable time would depend on CBA parameters. In the
absence of a CBA, attendance at hearings involving personal cases would not be compensable ( Sugue vs
Triumph International Phil., GR No. 164804-164784, 30 January 2009). But if an employee is utilized as a
witness by the company for the latter's litigated cases, then such attendance should be considered part of his
functions and must be compensated.

Team building activities, company excursions and outings , and Christmas parties will be governed by the
Implementing Rules (see above)

"Hours worked" is important not only for purposes of compensability but also on employee liability for
disciplinary causes. If an employee is not considered at work (and assuming the conduct is not done within
company premises) , he will not be in general subject to disciplinary sanction as the imputed misconduct would
lack work connection ( The exception would be if the misconduct has its roots in work place dynamics and,
even if it happened outside company premises and working hours would have deleterious effect on work
discipline. (See Technol Eight Phil vs Amular, GR No. 187605, 13 April 2010; Stanfilco vs Tequillo, GR No. 209735,
17 July 2019)

There have been legal issues on compensability of "assembly time" or similar pre-work activities like flag
ceremony and morning calisthenics. The guidepost should be whether these activitiess are mandatory and
non-compliance is subject to disciplinary sanction. If attendance is required and unjustified absence is
considered an offense, then the activity should be deemed hours worked (see PRISCO vs CIR, GR No.
L-13806, 23 May 1960). In another case, the 30--minute assembly time prior to actual work was held not
compensable. But this case as precedent should be applied with caution, since the Supreme Court relied on
res judicata to uphold the decision of the Minister of Labor (Arica vs NLRC ,GR No. 78210, 28 February 1989),

Do these rulings on pre-work activities apply equally to rank-and-file personnel (who are paid for actual hours
work) and managerial employees ( who are not considered paid for actual hours worked and are not covered
by Art. 82)?

With respect to time spent on strikes and pickets, the "no work no pay " principle applies. The rule applies
even to those who may not be participants, but are nonetheless unable to report for work because of the strike
or picket. Their inability to work, and earn, cannot be attributed to the employer.

What about work suspension as a result of government-mandated lockdown? The "no work no pay" principle
should also apply, just as it should apply to other similar situations like fortuitous events.

D. Meal Period

It shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off for
their regular meals (Art. 95, Labor Code)

Implementing Rules:

Section 7.Meal and Rest Periods.

xxx

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shallbe considered as compensable working
time.

The law contemplates an 8-hour work schedule. For part-time work, it is opined that the rule on pro rata would
similarly apply.

The law does not prescribe the time or the interval of time (e.g. , after 4 hours of work ) for the meal period.
This aspect would come within management prerogatives.

Albeit it is customary that all employees on the same shift would have the same meal period schedule, the law
does not prohibit employers from setting different schedules for different groups of employees so that business
operations do not come to a halt.

The law does not prohibit the employee from leaving the work premises during meal period. Such restriction,
including being "on call" for emergency work that would not allow the employee to make full use of the meal
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period, would make the same compensable.

In case of overtime, should a meal period ( or at least "rest period or cofeee breaks") be mandatory? There is
no decided case on this situation.

E. Night shift

Every employee shall be paid a night shift differential of not less than ten percent (10%) of his regular
wage for each hour of work performed between ten o’clock in the evening and six o’clock in the morning
(Art. 86, Labor Code).

Night work is not prohibited. Work on night shift is granted a premium.

The Implementing regulations (Book II, Rule II, Sec. 1) also exclude from the coverage of night shift differential
"those working in retail and service establishments regulary employing less than five (5) workers". Is this
addition by the Secretary of the DOLE to the list provided by the Labor Code within his delegated authority?

When an employee alleges that he works for a particular schedule within the night shift period and that he is
not paid night shift differential , the employer is obliged to submit the relevant time and payroll records or else
the employee's claims will be given merit (National Semi Conductor Distributionvs NLRC, GR No. 123520, 26
June 1998).

F. Overtime work

Work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime
work, an additional compensation equivalent to his regular wage plus at least twenty-five percent (25%)
thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent
(30%) thereof (Art. 87, Labor Code).

A company, either through a company policy or more likely by CBA stipulation, may grant overtime rate higher
than the ;egal minimum.

A company and a union may agree for automatic overtime work schedule , through CBA or by company
practice, non-compliance of which may constitute violation of the CBA (Interphil Lab Employees Union vs
InterphilLab,GR No. 142824, 19 Dec 2001)

An "all-inclusive salary package", in which payment for "built-in overtime work" (whether rendered or not)
is integrated, is not prohibited by the Labor Code. Besides being a product of agreement, the employee is not
put at a disadvantage since he is paid overtime premium even if he does not render actual overtime work (the
situation presupposes that the "all-inclusive salary" exceeds the statutory minimum wage rate). The higher rate
would also be advantagious to the employee for purposess of computing monetized leave credits, separation
pay, and retirement benefits since the base salary would be higher.(References: Damaso vs NLRC, GR No.
115755, 04 December 2000; PESALA vs NLRC, GR No. 105963, 22 August 1996; EEI v Min. of Labor, GR No. L-
64967, 23 September 1985)

An instance of government-sanctioned waiver of overtime pay is compressed workweek. In this case, the
management and the majority of the employees agree to reduce a 6-day, 8-hour workweek into a 5-day,12-
hour workweek without overtime premium.The emplyee will still be paid for all hours worked, but without the
25% OT premium.The agreement, which must be for a definite period and requires DOLE approval, is
predicated on the premise that the arrangement is mutually-beneficial and not one-sided since the employees
receive certain advantages ( e.g, a full day's rest with benefits like relief from traffic concerns and reduction in
transportation and meal cost) in exchange for the unpaid OT premium. The Supreme Court maintained the
validity of the Memorandum of Agreement (MOA) which the employer and the employees entered into
pursuant to Department of Labor and Employment Order (D.O.) No. 21, Series of 1990, the basis at the time.
( Bisig Manggagawa sa Tryco et. al vs. NLRC et. al, G.R. No. 151309, October 15, 2008)

An employer is given wide discretion in implementing work schedules , including no overtime work for certain
class of employees ( who previousy were allowed to work overtime) provided the same treatment is given to all
members of the class (San Miguel Corp. vs Layoc, GR No. 149640, 19 October 2007).

By the very nature of their work, seamen,must stay on board their vessels beyond the regular eight-hour work
schedule. For them to be entiled to overtime pay, they must submit proof of actual overtime work (Stolt-Nielsen
Marine Services vs NLRC, GR No. 109156, 11 July 1996).

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It has been held that an employer can always unilaterally withdraw the privilege of overtime pay to employees
not covered by Art. 82 (Salazar vs NLRC , GR No. 109210, 17 April 1996). This ruling is debatable, since the
theory of non-diminution of benefits and vested rights may be more applicable unless other benefits were
given to the employees to compensate for the loss of the overtime pay. What is clear is that if the employee
does not render overtime work, he is not entitled to overtime pay (SMC vs Layuc, GR No. 149640, 19 October
2007).

Unless the CBA, company policy, or employment contract grants a guaranteed overtime work on employees,
the latter could not demand extra work

An unjustified refusal to render overtime work when circumstances require it , in the context of the totality of
other offenses, will constitute a valid ground for dismissal (Realda vs New Age Graphics, GR No. 192190, 25 April
2012).

G. Undertime

Undertime not offset by overtime.Undertime work on any particular day shall not be offset by overtime work
on any other day. Permission given to the employee to go on leave on some other day of the week shall not
exempt the employer from paying the additional compensation required in this Chapter (Art. 88, Labor Code).

Offsetting is not allowed because overtime work is paid a premium of 25% of the regular wage rate.

But if the employer waives the right to treat the undertime (tardiness) as an offense, should the waiver be
deemed valid?

H. Compulsory Overtime Work

Emergency overtime work. Any employee may be required by the employer to perform overtime work
in any of the following cases:

a. When the country is at war or when any other national or local emergency has been declared
by the National Assembly or the Chief Executive;

b. When it is necessary to prevent loss of life or property or in case of imminent danger to public safety
due to an actual or impending emergency in the locality caused by serious accidents, fire, flood, typhoon,
earthquake, epidemic, or other disaster or calamity;

c. 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;

d. When the work is necessary to prevent loss or damage to perishable goods; and

e. Where the completion or continuation of the work started before the eighth hour is necessary to
prevent serious obstruction or prejudice to the business or operations of the employer. (Art. 89, Labor
Code).

As a general rule, overtime work is consensual ( both employer and employee must agree). If the employee
refuses to render overtime work, and the employer's reason is not among those listed in Art. 89, such refusal
would not constitute insubordination. Conversely, if the employee refuses despite the existence of any of the
statutory grounds, he is liable for insubordination.

An agreement for regular overtime work ( e.g., daily 12-hour work schedule agreed in advance ) is valid, and
refusal of an employee to render overtime work without justifiable reason is subject to disciplinary sanction.

In case it is the Union which declines to comply with the agreed regular overtime, it would constitute violation
of the economic provision of the collective bargaining agreement.

I. Overtime Rates

Computation of additional compensation. For purposes of computing overtime and other additional

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remuneration as required by this Chapter, the "regular wage" of an employee shall include the cash wage
only, without deduction on account of facilities provided by the employer (Art. 90, Labor Code).

This provision is not consistent with the definition of “wages” which includes the "reasonable value of
facilities". Does this violate the rule of a fair day's wage for a fair day's work?.

The inequity is more apparent if the employee's daily rate ( inclusive of the equivalent value of facilities) is set
at minimum, for in that case there would be a violation of the minimum wage law . From personal experience,
very few employers resort to the use of facilities as a way to comply with minimum wage.

J. DOLE Administration and Enforcement

(Book II, Rule X, Omnibus Rule Implementing the Labor Code)

Time & Payroll Records

Every employer is required to keep individual time and payroll records of its employees, to be kept in the
main or branch office of the establishment.

Managerial employees and managerial staff need not be required to keep individual time records, provided that
a record of their daily attendance is kept and maintained by the employer. They are not considered being paid
for actual hours rendered. Hence, the rules on salary deduction for tardiness and undertime do not apply to
them albeit they may be subject to disciplinary sanction for non-compliance with reporting hours.

The employer is required to preserve time and payroll records for at least three (3) years from the date of the
last entry in the records. This timeline is aligned with the 3-year prescriptive period for employment-related
money claims. A problematic area is the record keeping of proof of payment of service incentive leave credits ,
the reckoning of the prescription of which the Supreme Court has ruled starts only when the employer rejects
the employee's demand. And that may happen only when the employment relationship has been severed,
which means the period of the claim could cover the entire length of the employee's tenure. By that time,
decades would have passed. It would be un fair to require the employer to keep payroll records for an
employee's entire tenure.

The Secretary of DOLE and his authorized reprensentatives have the right, at any time of the day or night
whenever work is being undertaken, to gain access to employer's time and payroll records and to copy
therefrom. They may also interview the workers (Art. 128. Labor Code).

Because of this legal obligation to keep time and payroll records, the employer in money claim cases have the
burden of refuting an employee's specified money claims.

"In this case, it is noteworthy to stress that respondents [employees] have

presented their pay slips to prove their monetary claims. It is settled that once
the employee has set out with particularity in his complaint, position paper,
affidavits and other documents the labor standard benefits he is entitled to,
and which the employer failed to pay him, it becomes the employer's burden
to prove that it has paid these money claims. Once more, he who pleads
payment has the burden of proving it; and even where the employees must allege
nonpayment, the general rule is that the burden rests on the defendant to prove
payment, rather than on the plaintiff to prove nonpayment. Petitioners
[employer] could have easily presented pertinent company [time and payroll
records] to disprove respondents' claims. Yet, the records of the case are
bereft of such company records thus giving merit to respondents'
allegations. It is a rule that failure of employers to submit the necessary
documents that are in their possession as employers gives rise to the
presumption that the presentation thereof is prejudicial to their cause.
(Symex Security Services vs Rivera , GR No. 202613, 08 November 2017)

In an earlier case , the Supreme Court held that: "The general rule is that the burden rests on the employer to
prove payment rather than on the employee to prove non-payment of these money claims. The rationale for
this rule is that the pertinent personnel files, payrolls, records, remittances and other similar
documents – which will show that differentials, service incentive leave and other claims of workers
have been paid – are not in the possession of the worker but are in the custody and control of the
employer". Non-production of the payroll records would be deemed suppression of evidence and labor
tribunals would conclude that the money claims have not been paid " (Loon vs Power Master Inc ., GR No.
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189404, 11 December 2013).

Nonetheless, it may happen that employees are also given their copies of the pay slips, albeit they are not
(unlike the employer) required to keep copies of their pay slips. Moreover, employees whose salaries are
coursed to their ATM payroll accounts have access to their bank statements (while their employers could not,
owing to the bank secrecy law).Indeed, the rules implementing the Wage Rationalization Act provide:

Section 20. Duty of Bank. — Whenever applicable and upon request of a concerned

worker or union, the bank through which wages and other benefits are paid shall
issue a certification of the record of payment of said wages and benefits of a
particular worker or workers for a particular payroll period. 

PFFALLARJRMarch2021