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Special Topics in Marketing Management:

A Study of the Labor Code of the Philippines

SELECTED CODAL PROVISIONS

PRELIMINARY TITLE

Chapter I – GENERAL PROVISIONS

ART. 1. Name of Decree. The Decree shall be known as the Labor Code of the
Philippines.

ART. 2. Date of Effectivity. This Code shall take effect six (6) months after its
promulgation.

ART. 3. Declaration of Basic Policy The State shall afford protection to labor,
promote full employment, ensure equal work opportunities regardless of sex, race or
creed, and regulate the relations between workers and employers. The State shall
assure the rights of workers to self-organization, collective bargaining, security of
tenure, and just and humane conditions of work.

ART. 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.

ART. 5. Rules and Regulations. The Department of Labor and other government
agencies charged with the administration and enforcement of this Code or any of its
parts shall promulgate the necessary implementing rules and regulations. Such rules
and regulations shall become effective fifteen (15) days after announcement of their
adoption in newspapers of general circulation.

ART. 6. Applicability. All rights and benefits granted to workers under this Code
shall, except as may otherwise be provided herein, apply alike to all workers, whether
agricultural or non-agricultural.

BOOK THREE – CONDITIONS OF EMPLOYMENT

Title I – WORKING CONDITIONS AND REST PERIODS

Chapter I HOURS OF WORK

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.

As used herein, "managerial employees" refer to those whose primary duty consists
of the management of the establishment in which they are employed or of a
department or subdivision thereof, and to other officers or members of the
managerial staff.

"Field personnel" shall refer to non -agricultural employees who regularly perform
their duties away from the principal place of business or branch office of the
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employer and whose actual hours of work in the field cannot be determined with
reasonable certainty.

ART. 83. Normal Hours of Work. The normal hours of work of any employee shall
not exceed eight (8) hours a day.

Health personnel in cities and municipalities with a population of at least one million
(1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred
(100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week,
exclusive of time for meals, except where the exigencies of the service require that
such personnel work for six (6) days or forty-eight (48) hours, in which case, they
shall be entitled to an additional compensation of at least thirty percent (30%) of their
regular wage for work on the sixth day. For purposes of this Article, "health
personnel" shall include resident physicians, nurses, nutritionists, dieticians,
pharmacists, social workers, laboratory technicians, paramedical technicians,
psychologists, midwives, attendants and all other hospital or clinic personnel.

ART. 84. 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.

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

ART. 85. Meal Periods. Subject to such regulations as the Secretary of Labor may
prescribe, it shall be the duty of every employer to give his employees not less than
sixty (60) minutes time-off for their regular meals.

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

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

ART. 88. 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. 89. 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 Assembly73 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;
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(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.

Any employee required to render overtime work under this Article shall be paid the
additional compensation required in this Chapter.

Title II – WAGES
Chapter I PRELIMINARY MATTERS

ART. 97. Definitions. As used in this Title:

"Person" means an individual, partnership, association, corporation, business trust,

legal representatives, or any organized group of persons.

"Employer" includes any person acting directly or indirectly in the interest of an

employer in relation to an employee and shall include the government and all its
branches, subdivisions, and instrumentalities, all government-owned or controlled
corporations and institutions, as well as non-profit private institutions, or
organizations.

"Employee" includes any individual employed by an employer.

"Agriculture" includes farming in all its branches and, among other things, includes
cultivation and tillage of soil, dairying, the production, cultivation, growing, and
harvesting of any agricultural and horticultural commodities, the raising of livestock or
poultry, and any practices performed by a farmer on a farm as an incident to or in
conjunction with such farming operations, but does not include the manufacturing or
processing of sugar, coconuts, abaca, tobacco, pineapples or other farm products.

" Employ" includes to suffer or permit to work.

"Wage" paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis, or other method of
calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered and includes the fair and reasonable value, as
determined by the Secretary of Labor and Employment, of board, lodging, or other
facilities customarily furnished by the employer to the employee. "Fair and
reasonable value" shall not include any profit to the employer, or to any person
affiliated with the employer.

Chapter II MINIMUM WAGE RATES

ART. 99. Regional Minimum Wages. The minimum wage rates for agricultural and
non-agricultural employees and workers in each and every region of the country shall
be those prescribed by the Regional Tripartite Wages and Productivity Boards.
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ART. 100. Prohibition Against Elimination or Diminution of Benefits.

ART. 101. Payment by Results (a) The Secretary of Labor and Employment shall
regulate the payment of wages by results, including pakyao, piecework, and other
non-time work, in order to ensure the payment of fair and reasonable wage rates,
preferably through time and motion studies or in consultation with representatives of
workers’ and employers’ organizations.

ART. 218. [211] Declaration of Policy. A. It is the policy of the State:

(a) To promote and emphasize the primacy of free collective bargaining
and negotiations, including voluntary arbitration, mediation, and
conciliation, as modes of settling labor or industrial disputes;
(b) To promote free trade unionism as an instrument for the enhancement
of democracy and the promotion of social justice and development
(c) To foster the free and voluntary organization of a strong and united
labor movement;
(d) To promote the enlightenment of workers concerning their rights and
obligations as union members and as employees;
(e) To provide an adequate administrative machinery for the expeditious
settlement of labor or industrial disputes;
(f) To ensure a stable but dynamic and just industrial peace; and
(g) To ensure the participation of workers in the decision and policy-
making processes affecting their rights, duties, and welfare,

B. To encourage a truly democratic method of regulating the relations between the

employers and employees by means of agreements freely entered into through
collective bargaining, no court or administrative agency or official shall have the
power to set or fix wages, rates of pay, hours of work or other terms and conditions of
employment, except as otherwise provided under this Code.

ART. 224. [217] Jurisdiction of the Labor Arbiters and the Commission- (a) Except
as otherwise provided under this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without extension, even in the
absence of stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:

(1) Unfair labor practice cases;

(2) Termination disputes;
(3) If accompanied with a claim for reinstatement, those cases that workers
may file involving wages, rates of pay, hours of work and other terms and
conditions of employment;
(4) Claims for actual, moral, exemplary and other forms of damages arising
from the employer-employee relations;
(5) Cases arising from any violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts; and
(6) Except claims for Employees Compensation, Social Security, Medicare,
and maternity benefits, all other claims arising from employer-employee
relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a claim for reinstatement.
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(b) The Commission shall have exclusive appellate jurisdiction over all cases decided
by Labor Arbiters.

(c) Cases arising from the interpretation or implementation of collective bargaining

agreements and those arising from the interpretation or enforcement of company
personnel policies shall be disposed of by the Labor Arbiter by referring the same
to the grievance machinery and voluntary arbitration as may be provided in said
agreements.

ART. 232. [226] Bureau of Labor Relations.176 The Bureau of Labor Relations and
the Labor Relations Divisions in the regional offices of the Department of Labor shall
have original and exclusive authority to act, at their own initiative or upon request of
either or both parties, on all inter-union and intra-union conflicts, and all disputes,
grievances or problems arising from or affecting labor-management relations in all
workplaces, whether agricultural or non-agricultural, except those arising from the
implementation or interpretation of collective bargaining agreements which shall be
the subject of a grievance procedure and/or voluntary arbitration.

The Bureau shall have fifteen (15) working days to act on labor cases before it,
subject to extension by agreement of the parties.

ART. 240. [234] Requirements of Registration. A federation, national union or

industry or trade union center, or an independent union shall acquire legal personality
and shall be entitled to the rights and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of registration based on the following
requirements:

(a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the
labor organization, the minutes of the organizational meetings, and the
list of the workers who participated in such meetings;
(c) In case the applicant is an independent union, the names of all its
members comprising at least twenty percent (20%) of all the employees
in the bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one or more years,
copies of its annual financial reports; and
(e) Four copies of the constitution and by-laws of the applicant union,
minutes of its adoption or ratification, and the list of the members who
participated in it.
ART. 251. [242] Rights of Legitimate Labor Organizations. 193 A legitimate labor
organization shall have the right:

(a) To act as the representative of its members for the purpose of

collective bargaining;
(b) To be certified as the exclusive representative of all the employees in
an appropriate bargaining unit for purposes of collective bargaining;
(c) To be furnished by the employer, upon written request, with its annual
audited financial statements, including the balance sheet and the profit
and loss statement, within thirty (30) calendar days from the date of
receipt of the request, after the union has been duly recognized by the
employer or certified as the sole and exclusive bargaining
representative of the employees in the bargaining unit, or within sixty
(60) calendar days before the expiration of the existing collective
bargaining agreement, or during the collective bargaining negotiation;
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(d) To own property, real or personal, for the use and benefit of the labor
organization and its members;
(e) To sue and be sued in its registered name; and
(f) To undertake all other activities designed to benefit the organization
and its members, including cooperative, housing, welfare, and other
projects not contrary to law.

Notwithstanding any provision of a general or special law to the contrary, the income
and the properties of legitimate labor organizations, including grants, endowments,
gifts, donations, and contributions they may receive from fraternal and similar
organizations, local or foreign, which are actually, directly and exclusively used for
their lawful purposes, shall be free from taxes, duties, and other assessments. The
exemptions provided herein may be withdrawn only by a special law expressly
repealing this provision.

ART. 258. [247] Concept of Unfair Labor Practice and Procedure for Prosecution
Thereof. Unfair labor practices violate the constitutional right of workers and
employees to self-organization, are inimical to the legitimate interests of both labor
and management, including their right to bargain collectively and otherwise deal with
each other in an atmosphere of freedom and mutual respect, disrupt industrial peace
and hinder the promotion of healthy and stable labor-management relations.

Consequently, unfair labor practices are not only violations of the civil rights of both
labor and management but are also criminal offenses against the State which shall
be subject to prosecution and punishment as herein provided.

Subject to the exercise by the President or by the Secretary of Labor and

Employment of the powers vested in them by Articles 263 and 264 of this Code, the
civil aspects of all cases involving unfair labor practices, which may include claims for
actual, moral, exemplary and other forms of damages, attorney’s fees and other
affirmative relief, shall be under the jurisdiction of the Labor Arbiters. The Labor
Arbiters shall give utmost priority to the hearing and resolution of all cases involving
unfair labor practices. They shall resolve such cases within thirty (30) calendar days
from the time they are submitted for decision.

Recovery of civil liability in the administrative proceedings shall bar recovery under
the Civil Code.

No criminal prosecution under this Title may be instituted without a final judgment
finding that an unfair labor practice was committed, having been first obtained in the
preceding paragraph. During the pendency of such administrative proceeding, the
running of the period of prescription of the criminal offense herein penalized shall be
considered interrupted: Provided, however, That the final judgment in the
administrative proceeding s shall not be binding in the criminal case nor be
considered as evidence of guilt but merely as a proof of compliance of the
requirements therein set forth.

ART. 259. [248] Unfair Labor Practices of Employers. It shall be unlawful for an
employer to commit any of the following unfair labor practices:

(a) To interfere with, restrain, or coerce employees in the exercise of

their right to self-organization;
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(b) To require as a condition of employment that a person or an

employee shall not join a labor organization or shall withdraw from
one to which he belongs;
(c) To contract out services or functions being performed by union
members when such will interfere with, restrain, or coerce employees
in the exercise of their right to self -organization;
(d) To initiate, dominate, assist or otherwise interfere with the formation
or administration of any labor organization, including the giving of
financial or other support to it or its organizers or supporters;
(e) To discriminate in regard to wages, hours of work, and other terms
and conditions of employment in order to encourage or discourage
membership in any labor organization. Nothing in this Code or in any
other law shall stop the parties from requiring membership in a
recognized collective bargaining agent as a condition for
employment, except those employees who are already members of
another union at the time of the signing of the collective
bargaining agreement Employees of an appropriate bargaining unit
who are not members of the recognized collective bargaining agent
may be assessed a reasonable fee equivalent to the dues and other
fees paid by members of the recognized collective bargaining agent,
if such non-union members accept the benefits under the collective
bargaining agreement: Provided, That the individual authorization
required under Article 242, paragraph (o) of this Code204 shall not
apply to the non -members of the recognized collective bargaining
agent;
(f) To dismiss, discharge or otherwise prejudice or discriminate against
an employee for having given or being about to give testimony under
this Code;
(g) To violate the duty to bargain collectively as prescribed by this Code;
(h) To pay negotiation or attorney’s fees to the union or its officers or
agents as part of the settlement of any issue in collective bargaining
or any other dispute; or
(i) To violate a collective bargaining agreement.

The provisions of the preceding paragraph notwithstanding, only the officers and
agents of corporations, associations, or partnerships who have actually participated
in, authorized, or ratified unfair labor practices shall be held criminally liable.

ART. 260 [249] unfair labor practice for a labor organization, its officers, agents, or
representatives:

(a) To restrain or coerce employees in the exercise of their right to self-

organization. However, a labor organization shall have the right to
prescribe its own rules with respect to the acquisition or retention of
membership;
(b) To cause or attempt to cause an employer to discriminate against an
employee, including discrimination against an employee with respect
to whom membership in such organization has been denied or to
terminate an employee on any ground other than the usual terms and
conditions under which membership or continuation of membership is
made available to other members;
(c) To violate the duty, or refuse to bargain collectively with the
employer, provided it is the representative of the employees;
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(d) To cause or attempt to cause an employer to pay or deliver or agree

to pay or deliver any money or other things of value, in the nature of
an exaction, for services which are not performed or not to be
performed, including the demand for a fee for union negotiations;
(e) To ask or accept negotiation or attorney’s fees from employers as
part of the settlement of any issue in collective bargaining or any
other dispute; or
(f) To violate a collective bargaining agreement.

The provisions of the preceding paragraph notwithstanding, only the officers,

members of governing boards, representatives or agents, or members of labor
associations or organizations who have actually participated in, authorized, or ratified
unfair labor practices shall be held criminally liable.

ART. 261. [250] Procedure in Collective Bargaining The following

procedures shall be observed in collective bargaining:

(a) When a party desires to negotiate an agreement, it shall serve a written

notice upon the other party with a statement of its proposals. The other
party shall make a reply thereto not later than ten (10) calendar days
from receipt of such notice;
(b) Should differences arise on the basis of such notice and reply, either
party may request for a conference which shall begin not later than ten
(10) calendar days from the date of request.
(c) If the dispute is not settled, the Board shall intervene upon request of
either or both parties or at its own initiative and immediately call the
parties to conciliation meetings. The Board shall have the power to
issue subpoenas requiring the attendance of the parties to such
meetings. It shall be the duty of the parties to participate fully and
promptly in the conciliation meetings the Board may call;
(d) During the conciliation proceedings in the Board, the parties are
prohibited from doing any act which may disrupt or impede the early
settlement of the disputes; and
(e) The Board shall exert all efforts to settle disputes amicably and
encourage the parties to submit their case to a voluntary arbitrator.

ART. 262. [251] Duty to Bargain Collectively in the Absence of Collective

Bargaining Agreements. In the absence of an agreement or other voluntary
arrangement providing for a more expeditious manner of collective bargaining, it shall
be the duty of the employer and the representatives of the employees to bargain
collectively in accordance with the provisions of this Code.

ART. 263. [252] Meaning of Duty to Bargain Collectively. The duty to bargain
collectively means the performance of a mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement
with respect to wages, hours of work and all other terms and conditions of
employment including proposals for adjusting any grievances or questions arising
under such agreement and executing a contract incorporating such agreements if
requested by either party but such duty does not compel any party to agree to a
proposal or to make any concession.

ART. 264. [253] Duty to Bargain Collectively When There Exists a Collective
Bargaining Agreement - When there is a collective bargaining agreement, the duty
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to bargain collectively shall also mean that neither party shall terminate nor modify
such agreement during its lifetime. However, either party can serve a written notice
to terminate or modify the agreement at least sixty (60) days prior to its expiration
date. It shall be the duty of both parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing agreement during the 60 -
day period and/or until a new agreement is reached by the parties.

ART. 265. [253-A] Terms of a Collective Bargaining Agreement Any Collective

Bargaining Agreement that the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of five (5) years. No petition
questioning the majority status of the incumbent bargaining agent shall be
entertained and no certification election shall be conducted by the Department of
Labor and Employment outside of the sixty-day period immediately before the date of
expiry of such five-year term of the Collective Bargaining Agreement. All other
provisions of the Collective Bargaining Agreement shall be renegotiated not later than
three (3) years after its execution. Any agreement on such other provisions of the
Collective Bargaining Agreement entered into within six (6) months from the date of
expiry of the term of such other provisions as fixed in such Collective Bargaining
Agreement, shall retroact to the day immediately following such date. If any such
agreement is entered into beyond six months, the parties shall agree on the duration
of retroactivity thereof. In case of a deadlock in the renegotiation of the Collective
Bargaining Agreement, the parties may exercise their rights under this Code.