LABOR LAW 1 CLASS AND INTEGRATION NOTES
Prof. Domingo Disini Jr.
Labor Law Defined
It is the law governing the rights and duties of ER and EE [a] with
respect to the terms and conditions of employment, and [b] with respect
to labor disputes arising from collective bargaining respecting such
terms and conditions.
3 branches:
1. Labor standards – sets down the minimum terms and conditions for
employment; it is a social statement
2. Labor relations – provide for the institutional relationship regulations;
its objective is that no worker should be become a burden to society;
in here the worker is part of the union and the union speaks for the
worker
3 Welfare legislation – designed to provide for continuity of income
*However, in reality it is very difficult to draw the line among these
branches.
Q: What is the legal implication, if any, of a labor contract? It will
become the law between ER and EE; will become binding; there
may be economic costs and political repercussions.
Q: When will an act ripen into a company practice? When [a] given
voluntarily without any compulsion of law; a unilateral act on the
part of the ER, and [b] there’s a passage of time, or a time frame
Test of Labor Case:
[a] presence of ER-EE relationship, [b] there’s a violation of the Labor
Code (LC). Other than these, it is not a labor case. LC is the regulatory
law; there must be strict interpretation.
Management Function or Management Prerogative
– It is the right of the ER to promulgate rules and regulations as are
necessary for the efficient management and operation of the
establishment.
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Basis of management function: The Right of Ownership, which is
inherent in the rights of the enterprise.
BUT, the manner of exercise will be the subject of inquiry: It must be in
accordance with law and the principles of fair play.
Limitations: law, CBA, principles of justice and fair play
Compromise and Waiver
Periquet v NLRC
1 – The law frowns upon waivers and compromise as a general principal
because it is subject to abuse
2 – But not all C & W are void or contrary to law
3 – There is a test to determine the validity of C & W:
[a] Voluntarily entered into
[b] Proximate equality, no moral ascendancy over the other
[c] Amount is reasonable and not unconscionable
* Re first statement in Periquet: The law frowns upon waivers:
Law recognizes that the situation is not of even or equal terms bet. ER
and EE. Principle is grounded on fair play.
* Why is there a second statement?
Labor law not meant to oppress ERs. Just as it protects EEs, it also
protects ERs. There’s a shared responsibility: EEs’ right to the fruits of
their labor, and Er’s rights to the return of their investment.
Labor and the Constitution
Art. 13 Sec. 3 of 1987 Constitution – Protection of labor clause
Antamoc case –
Framers responded to the situation of unrest due to social and economic
factors. They adopted the proposition that the State will actively
intervene in labor legislation (Welfare State)
Q: What is the meaning of the phrase “the State affirms labor as primary
economic force” – This means the State recognizes that there is a human
factor in production (labor) in contrast to non-human factor (capital).
When there’s conflict between labor and capital, conflict should be
resolved in favor of labor.
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Calalang v Williams
The definition of Social Justice (SJ) is addressed to the worker. What SJ
is not, what it is, how it is achieved, how it cannot be achieved.
PLDT v NLRC ruling –
Limitation on the use of Social Justice: SJ not intended to countenance
wrongdoing simply because it is committed by the underprivileged.
Compassion for the poor is an imperative of every humane society but
only when the recipient is not a rascal claiming an undeserved privilege.
In sum, 1987 Consti re Labor:
3 provisions: [a] Art. 2 re characterization of labor as primary social
economic force, [b] social justice, and [c] Art 13 Sec. 3 Labor protection
clause
1 – Mantle of legal protection is FULL
2 – It’s spread, even if EE is not part of any labor union
3 – Extended even if EE is not in the Phils.
Management and the Constitution
[1] The mandate of the Constitution is to protect and promote welfare of
EE. But the law protects the worker, only when the worker is right.
(PLDT case)
[2] Consti not designed to destroy nor oppress ER because ER is also
protected by law.
Q: How to balance?
Labor as Property within Consti meaning:
Labor is life itself for the worker. It is not only personal to the worker,
because he has a family to recognize. It is livelihood. Therefore, EE
should be accorder substantive (Book 6, A282, A283 of LC) and
procedural due process (Notice-Hearing-Notice Rule and Ang Tibay
case).
Participation in Decision-making Process
PAL v NLRC – EE’s right to participation in decision making process is
not absolute but qualified. A line has to be drawn between (a) unilateral
decision-making, that is, affecting only capital, and (b) bilateral
decision-making, that is, affecting labor (rights, benefits as provided by
law). EEs are entitled to such right to participate ONLY with regard to
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decision and policy making processes affecting their rights, duties and
welfare.
Labor and the Civil Code
A1700 CC – relationship governed by special laws.
2 Important Things:
1 – CC characterizes the relationship between labor and mgt. as not
merely contractual, but impressed with public interest; that their
relationship shall be governed by special laws; and that they should not
oppress each other.
2 – Labor and mgt, when they relate to each other, should not
inconvenience the public
Labor and International Covenants
We adopt this by virtue of Art. 2 Sec. 2, the Incorporation Clause of our
Consti. There’s an international labor code which consists of the
conventions of international labor organizations. This is a special
agency of he UN, but it’s not a supra agency. It can’t compel and order
member States. There’s a need to ratify. (See International School
Alliance of Educators v Quisumbing)
Applicability of LC – A6, A276 LC, and provisions in Consti
Q: Do A6 and A276 LC contradict or complement each other?
Q: Does Consti make distinction between EEs performing purely
government functions and those who do not?
Rule on GOCCs
Q: What is the significance of the manner of creation with regard to the
law governing GOCCs?
– LC applies only to GOCCs without original charters and those
incorporated in the Corporation Code of the Phils. GOCCs with original
charters are governed by the Civil Service law and EO 180. The Law of
Creation will always be the test!
Note: In terms of wages, LC is applicable to the government, all
branches, subdivision and instrumentalities, GOCCs, profit or non-profit
organizations.
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Rule on International Agencies
LC does not apply. What applies is the treaty or international agreement.
In these treaties or agreements, there is a specific grant of immunity
from suit to assure independence in operations. If there’s abuse or any
injustice created due to this exemption from suit, the remedy of EE is to
ask Phils. to withdraw the grant of immunity from suit. Then the legal
processes and provisions of law in the Phils will apply.
Rule on School Teachers
Public School Teachers – Civil Service Law applies
Private School Teachers – on the issue of probationary employment, the
Manual f Regulations for Private School issued by the DECS applies
and not LC. Labor Code however, is suppletory.
Rule on Religious Corporations
Ecclesiastical affairs, that is, matters of faith worship and governance of
the congregation, are beyond the scope of LC. But, on secular affairs,
say termination of work, LC applies and LA and NLRC have
jurisdiction (Austria v NLRC)
Rule Making Power – The Sec. of DOLE is authorized under law to
promulgate rules and regulations to implement LC, BUT, he cannot
amend the law under the guise of interpretation. Rules and regulations
must always be in accordance with LC.
Law Interpretation
A4 LC – Construction in favor of labor
Q: Is there a difference in interpreting labor law and labor contracts in
CC and LC? – Common word: doubt. In CC, worded as “in favor of the
safety and decency of the living conditions of the worker. In LC,
worded as “in favor of labor,” liberally construed
Rules:
1 – If there’s NO doubt, and the language o the law is clear and
unambiguous, there’s no room for interpretation
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2 – If there’s DOUBT, then resolve in favor of labor (liberal
construction). There’s doubt when the law is susceptible to 2 or more
interpretation, both or all of which are correct.
Rationale: Abella case – to give life and meaning to the compassion and
liberal spirit of the law, and to extend its applicability to a greater
number of EEs who can avail of the benefits under the law.
Q: Should moral reason and equity be also considered? – Manning v
NLRC case: No. There was positive interpretation of the law, and the
judge cannot interject his own views grounded on considerations of
equity and social justice.
ER-EE Relationship
ER – one acting in the interest of ER. One need not be owner of
enterprise to be considered as ER
EE – one in the employ of ER (broad in scope)
Q: May Company A and worker B agree in a document that there is no
ER-EE relationship that will exist between them? – NO.
ER-EE relationship is not a matter of agreement by the parties, but is
determined by law. This is to avoid circumvention of the law, and to
protect worker from possible abuse by ER.
How do we determine ER-EE relationship? 4-fold traditional test
1 – Selection and Engagement
2 – Payment of Wages
3 – Right to Dismiss
4 – Control
Control – for purposes of the test, Control refers to [a] control as to the
MEANS, and [b] control as to the RESULTS.
Notes: [1] This is to be distinguished from the control used in
Independent Contractor or IC. In IC, control is used not to test ER-
EE relationship, but WON there’s control (as to the means only) as
would warrant a relationship with an IC.
[2] One need not actually exercise control, provided the ER reserves the
right to control. It also need not be done personally or physically
because it may be done through an intermediary (supervisor or
manager, etc.)
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ABS-CBN v Sonza case: Where is the line between control of result only
and control of both manner and result? What was the fatal flaw in this
case? Had there not been an intermediary (MJDMC), the case would
have prospered. What was the materiality of the amount? It was only
mentioned to the fact that he had a rare talent. Is amount indicative of
ER-EE relationship? No.
Q: What if control is only a guideline? What is the relationship between
control and guideline?
Insular Life v NLRC case: Reiterated the control test doctrine but added
that not all control is indicative of ER-EE relationship. Control may be
used as [a] guideline or [b] regulation. What saved the insurance
company? Yes, all those rules and procedures were there, but they were
no actually enforced. Since the insurance business is impressed with
public interest, those rules were there in accordance with law. In effect,
the guidelines were provided by law and not by the company.
Sevilla case: There’s not only one test to determine ER-EE relationship.
The 4-Fold Test is the standard test. But in order to avoid mischief
because of the harsh application of the 4-fold test, there is the Economic
Dependence Test, so ER couldn’t circumvent the law. In this test, one
may inquire, “Is there economic basis?” for instance, if EE is enrolled in
SSS, then there’s ER-EE rel.
In sum,
1 – There’s not only 1 test in determining ER-EE rel (Sevilla case)
2 – There’s the Standard 4-Fold Test: hiring, wages, dismissal and
control.
Control as to the means and as to the result.
Control need not be exercised as long as there is a right reserved
to control
Control as mechanism to control workers’ method in doing their
work
Control as guideline (Insular Life case)
3 – There’s the Economic Dependence Test (mischief remedy test)
4 – There’s no specific rule of evidence to evidence to follow in
determining ER-EE rel. For instance, the amount, and the method of
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payment are not indicative of ER-EE relationship. However, the
quantum of proof necessary is only substantial evidence.
Independent Contractor v Labor-Only Contractor
A106 LC
Q: Why does the law validate IC and declares void LOC?
– [1] LOC is only ideological; it produces only bodies. [2] In IC, not all
businesses can do everything or anything; they need specialized help
(ICs); this will be convenient also because it will reduce the cost of
operations of the business.
Standard Test for IC:
1 – Nature of Business (separate, independent and distinct)
2 – Capital investment (has substantial capital or investment in tools,
equipments, machinery or work premises)
3 – Control only as to means (he’s not under control and supervision of
ER or Company)
-- In LOC, there’s merger of ER and LOC, with ER as the principal and
LOC as agent of ER, so that redress of grievances is to the ER.
-- In IC, if IC or subcontractor is unable to pay the EEs their wages, then
ER is jointly and severally liable.
A109 LC – refers to solidary liability to any and all violations of the LC.
A109 is broad as compared with A106 which is specific in the
payment of wages. Note: In the law on wages, the government is
included in the coverage of ER. Government is also liable by virtue of
its private contracting.
EE Classification
A280 LC –
Test: It is the LAW which determines classification of EE and NOT any
agreement bet ER an EE
A280 – Structure:
Regular
Except: Project
Seasonal
Casual
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Regular Employees
A280 Legal Test: [a] Nature of Work – EE-centered
[b] Nature of Business – ER-centered
[c] Reasonable Connection – Usually Necessary and Desirable
Plus,
Jurisprudence: This test is viewed as a WHOLE
Other Regular EEs
- Casual employment after 1 year of service whether continuous
or broken
- Probationary EE who is allowed to work even after completion
of probi period (A281)
- Learner who is allowed or suffered work during first 2 months
of learner period, if training is terminated by ER before end of
stipulated period
*Regular EE is not equal to Permanent EE. In law, there’s no such thing
as a permanent EE
Note: An EE may be a regular EE but may also be a project, seasonal or
casual EE. The existence of project, seasonal, and casual EEs is a
recognition that there’s no need for a continuing of the EE’s work.
Project Employees
EE whose employment is fixed on a specific project r undertaking, the
completion or termination of which is determined at the time of
engagement of EE
Law Requirements:
[a] LC
1. A280 – ER must inform EE of the name and duration of the
project.
2. Failure of this is fatal to ER. If ER fails in this obligation imposed
by law, then EE becomes a regular EE.
[b] Jurisprudence
3. If at the time of engagement the EE is informed, then no matter
how long the project is, project employment is valid, EE is
project EE.
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4. If the project is carefully crafted, EE cannot be converted into
regular EE. But if there’s continuing need for the project, then
EE converted to regular EE.
5. The project and principal business must be separate and distinct
from each other. (Associated Labor Union case)
6. There must be no attempt to deny security of tenure to EE
Seasonal Employees
Work to be performed is seasonal in nature, employment is only for
duration of the season. No continuing need for the worker.
Manila Hotel v CIR – The employment of seasonal workers, at the end
of the season, does not cease. They are temporarily laid off during the
off season and are not separated from service in said period but are
deemed only suspended. They are considered on leave until re-
employed. The right to be hired is based on 1 season.
Casual Employees
- They are not defined but are classified by elimination: neither regular
project or seasonal.
- Conversion Formula (when casual EEs automatically become regular):
1. one year of service whether continuous or broken
2. regular by automatic operation of law. But this is qualified: (a) only
with respected to the job for which the EE is hired, and (b) only while
the job is existing
Fixed Term Employment
Brent v Zamora case
[a] Fixed term employment is valid. Nothing in the law prohibits fixed
term employment, provided, that it does not intend to circumvent
the law on tenurial security.
[b] 2 Requisites for validity:
1. Entered knowing and voluntarily by the parties without any
force duress or improper pressure
2. ER and EE dealt with each other on more or less equal terms
with no moral dominance over the other
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Probationary Employees
A281 – Structure:
- period – not exceeding 6 months
- basis of termination: just cause or failure to qualify
- obligation of ER to lay down conditions or reasonable standards
to qualify for regular employment
- working after probi period = regular EE
Note: Apprentice NOT equal to probationary EE
Buiser v Leogardo case
Despite seeming restrictive provision of the law that probi period is
limited to 6 months, parties may agree to extend probi period, provided,
a. company policies so declare
b. nature of job so requires
Test: The nature of the job must have a direct relation to the duration of
the probi period. Otherwise, security of tenure is violated.
Cardinal Rule in probationary employment:
It is NOT the period that matters, it IS the purpose.
Mariwasa v Leogardo case
The extension of probi period of EE was an act of pure liberality on the
part of ER to give EE a second chance to make good after having
initially failed to prove his worth as EE.
Cebu Stevedoring v Regional Director case –
In case of absorbed EEs, EEs cannot be considered probi EEs because
they were already trained in their respective functions. They were not
novices in their jobs but were experienced workers. There’s no such
thing as a double probation.
Grand Motors case
Nothing will prohibit ER from putting EE on probationary. ER has the
right to select his employees and also the right to set or fix a probi
period within which ER may test and observe conduct of EE before
hiring him permanently.
*Disini: Midtown Hotel case – in case of an OJT, if period of probi is 6
mos. Only after the 3 months into the OJT that worker was informed
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that it was a probationary EE. ER cannot now impose another 6 mos.,
but the 3 mos. OJT was already considered part of the probi period, so,
only 3 mos. to go before probationary is completed. After 6 mos., by
automatic operation of law absent formal employment, probi becomes
regular EE (See Holiday Inn Manila V NLRC case)
Holiday Inn case – A was on OJT for 3 weeks. After 3 weeks, A’s
services were continued. In effect, A passed probation and qualified as
regular EE. Even assuming that probation did not end after 3 weeks of
OJT, such period must be included in the 6-month probi period. After 6
months, A is deemed a regular EE by automatic operation of law.
Important: ER must inform EE of the reasonable standards re
probationary employment. Failure of ER is fatal to him. ER cannot say
at the end of 6 months that EE did not qualify.
Q: When does EE become regular? Disini: From day 1
Recruitment and Placement of Workers
2 laws involved: LC and Migrant Workers Act of 1995 (RA 8042)
The dividing line between LC and MWA: Place of work, where the
worker is going to work, such that:
If place of work is Phils, LC applies
If place of work is abroad, MWA applies
Areas of Concern:
1 – How do you regulate the business of Recruitment and Placement
(RP) of workers in the private sector?
2 – What is illegal recruitment? When is there illegal recruitment?
3 – How do you enforce the rights of EE in the event there’s a violation?
I. R & P in the Private Sector:
LC does not deny but allows participation of the private sector in R & P.
(A25, LC). Regulatory techniques must be followed: Citizenship
requirement (A27), Capitalization (A28), Registration fees (A30), and
Reporting requirements on employment status (A32).
But, Travel Agencies are not allowed to conduct R & P.
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II. Illegal Recruitment
First Statement: A13(b) of LC same as A6 of MWA.
A13(b) – Structure consists of 2 parts:
1 – Main Part:
ACTS: Canvassing, Enlisting, Contracting, Transporting, Utilizing,
Hiring, or Procuring workers (C-E-C-T-U-H-P)
Also includes: Referrals, Contract services (R-C)
Acts accompanied by promise or advertising of employment locally or
abroad
For profit or not (consideration)
2 – Proviso:
- Any person or entity (actor)
- Offers, promises employment (act)
- For a fee (consideration)
- Employment of 2 or more workers
- Deemed engaged in recruitment (effect)
Notes: [a] The main part enumerates the Acts of R & P, but is silent as
to profit motive and number of workers involved. On the other hand,
the proviso mentions number of workers involved (2 or more), and a
consideration (for a fee).
[b] Relationship of main part and proviso: One can violate the
provision of the main part independently of the proviso and vice
versa.
People v Panis – The number of persons dealt with is not an essential
ingredient of the act of R & P of workers. Any of the acts mentioned in
the basic rule of A13(b) will constitute R & P even if only 1 prospective
worker is involved.
Second Statement: A34 of the LC refers to Prohibited Acts, which is
also incorporated in the MWA, but in A6 of MWA, it adds 2 acts to the
enumeration in A34 LC.
Third Statement: License and Authority defined the same in both laws.
*License – a document issued by DOLE authorizing a person or entity
to operate a private employment agency. A13 (d) of LC
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*Authority – document issued by DOLE authorizing a person or
association to engage in a private R & P activities as a private
recruitment entity
Q: When is there Illegal Recruitment?
[a] In LC, when one has NO license or authority and commits any of the
acts in A13(b). For there to be a violation of A34 on Prohibited
Acts, it is required that the actor has no license also.
[b] In MWA, when one has NO license or authority and commits any of
the acts in A6 of MWA. For there to be a violation of the Prohibited
Acts in the proviso of A6 (in A34 of LC), it does not matter whether
or not there is license or authority.
III. Enforcing the Rights of EE in case of Violations
Determine:
* The Place of work to know which law to apply (LC or MWL)
* The Acts involved (C-E-C-T-U-H-P or R-C, etc.)
* The nature of the offense (Simple, in Large Scale or by a Syndicate)
- Illegal Recruitment by a Syndicate – when carried out by a group
of 3 or more persons conspiring to carry out any unlawful
transaction (# of violators involved)
- Illegal Recruitment in Large Scale – when committed against 3 or
more persons individually or as a group (# of workers involved)
Notes: [a] In MWA, money claims are within the jurisdiction of the
Labor Arbiter, NLRC. [b] The Sec. of Labor has regulatory and
visitorial functions (A36 & 37 of LC). But he can no longer order the
arrest of violators. HE cannot issue search or arrest warrants, as this
must go through the judicial process, since A38par.(c) of LC already
deemed unconstitutional. [c] 3 separate informations of illegal
recruitment cannot be consolidated in order to charge the offense from
simply to large scale or by a syndicate.
Alien Employment
See Consti re preferential use of labor. But alien employment is VALID.
A40 LC re employment of non-resident aliens; employment permit.
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Almodiel v NLRC
A40 LC which requires employment permit (EP) refers to non-resident
aliens. EP is required for entry into the Phils. for employment purposes.
The EP is issued by DOLE after a finding by Secretary of non-
availability of a person in Phils. who is competent, able and willing at
the time of the application to perform the services for which the alien is
desired. A40 does not apply to resident aliens.
In sum, law requirements: [1] EP, [2] no person in Phils. competent,
able and willing to perform the services of the particular job, and [3]
such finding is only by Sec. of Labor.
Gen. Milling case – only Sec. of Labor is authorized to issue EPs. Other
agencies’ power is only recommendatory. Sec of Labor’s authority to
grant and deny EP is broad.
Notes: [a] re power of Sec. of Labor in granting or denying EP, other
factors are included like economic consideration and considerations of
national interest. See A12 LC which states “consistent with the
national interest.” [b] There can be no transfer of employment from
one ER to another because EP was granted only for that particular job.
[c] There must be an understudy program to assure the transfer of
technology.
Special Class of Workers
- Apprentice
- Learners
- Handicapped
*On learners and handicapped workers – the intent of the law is that,
part of national interest and development is to have a trained manpower.
Handicapped Workers
Law: RA 7277 Magna Carta for Disabled Persons
- These are workers whose earning capacities are impaired, by reason of
age, physical or mental infirmity. But these infirmities are not
deterrent to gain an employment or livelihood.
- Handicapped workers will be treated like a regular worker. Disabled
persons have the same rights as other persons to take their proper
place in society.
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- If qualified, handicapped workers may be considered apprentices or
for apprenticeship
Bernardo v NLRC
A qualified disabled EE should be given the same terms and conditions
of a qualified able-bodied person. This means that a handicapped EE, if
his infirmity does not impair his earning capacity, should be considered
and treated like a normal EE. Effect: he should be paid full
compensation and not 75%)
Learners
Law: RA 7796
Sec.4(n) – Learners refer to persons hired as trainees in semi-skilled and
other industrial occupation w/c are non-apprenticeable. Learnership
programs must be approved by the Authority.
Learners may be hired when:
1 – No experience workers are available
2 – It is necessary to prevent curtailment of employment opportunities
3 – Employment does NOT create unfair competition in terms of labor
costs or impair lower working standards
*Period of Learnership: Not exceeding 3 mos.
*Wages: Shall begin at not less than 75% of applicable minimum wage
*Deemed Regular: Upon completion of learnership, and when after
working for 2 mos, terminated by ER w/o fault of learner, before end
of stipulated period.
Apprentices
Law: RA 7796
Apprentices – these refer to persons who undergo training within
employment with compulsory related theoretical instructions involving
a contract between an apprentice and an ER during a period established
assured by an apprenticeable occupation. – Sec4(j) RA 7796
* 2 concepts: 1) highly skilled, and 2) only ER can appoint apprentice
*Apprenticeable occupation is an occupation officially endorsed by a
tripartite body and approved by Authority. – Sec.4(m) RA 7796
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*Period of Apprenticeship: Not exceeding 6 mos. But may be extended
by agreement by the parties
*Wages: Shall start at not less than 75% of applicable minimum wage
*DOLE factor: Only the DOLE can: 1) determine if trade or skill is
apprenticeable, 2) determine if enterprise is highly skilled, and 3)
approve the program of apprenticeship
Conditions of Employement – Hours of Work
A82 LC
Covered: EEs in all establishments and undertakings, whether for profit
or not. (Sir: All EEs in private sector)
NOT Covered: Governmentt EEs,
Managerial EEs,
Field Personnel,
Members of ER’s family dependent upon for support,
Domestic helpers,
Persons in personal Service of another,
Piece worker
Note: If Piece worker earns less than minimum wage, then he’s paid the
minimum wage
*Managerial EE – primary duty consists of mgt of establishment,
includes members of managerial staff
*Field Personnel – non-agricultural EE who regularly perform duties
away from principal place of business and whose actual hours of work
in the field cannot be determined with reasonable certainty.
Note: The determination of hours of work with reasonable certainty is
equated with the degree of supervision (e.g. salesman).
Tests: Field Personnel
Mercidar v NLRC case
Re fishermen, where master of vessel controls fishermen while on boat.
Although the fishermen performed non-agri work outside ERs business
office, the fact that they are under the effective control or supervision of
vessel’s master did not make them field personnel. (Rule: If under
effective control, NOT field personnel)
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Union of Filipino EEs v Vivar
In deciding WON EEs actual working hours in the field can be
determined with reasonable certainty, query must be made as to WON
such EE’s time and performance is constantly supervised by ER.
Normal Hours of Work
The law does not defined a work day but it provides for a normal work
day – A83 LC
In A83, on Normal Hrs of Work:
a) Commercial or Industrial EE – normal work day is 8 hrs, and normal
work week is 6 days
b) Health Personnel – normal work day is 8 hrs, and normal work week
is 5 days
Law: normal work day is 8 hrs within a 24 hour cycle.
Q: What is included? (A84 on Hours Worked)
1 – All time EE is required to be at the prescribed work place
2 – All time EE required suffered or permitted to work
In an 8-hour, normal work day, excluded are –
[a] Meal period of 60 minutes (PAL v NLRC) except if during the so-
called meal break, EE was required to work and not allowed to leave
the work place, then it is compensable time (Pan American case).
[b] Breaks of short duration not exceeding 20 minutes
Idle Time – means time when EE is not working or completely at rest,
or can leave the work spot, therefore, not compensable time, except if
the work is continuous, then it is compensable time
Waiting Time – Arrica v NLRC case: The 30-minute assembly time was
NOT compensable time. Accdg. to SC, such assembly is a routinary
practice of EEs, and the proceedings attendant thereto are not infected
with complexities so as to deprive EEs time to attend to their personal
pursuits. (Sir: This is not good doctrine though)
Travel Time – The Basic Question to ask in determining WON travel
time is compensable is: For whose benefit? In Rada v NLRC, travel time
was instituted by the company for its benefit in order to answer the
9
problem of losses connected with the frequent tardiness of EEs. Hence,
travel time was compensable time.
*Entry Time Cards cannot be considered substantial evidence to
determine the number of hours worked.
Overtime Work and Offsetting
OT (A87 LC) – work performed by EE in excess of the regular normal
work day (8 hrs) as provided by law and CBA
- additional compensation of at least 20-30% of regular wage
- if on holidays or rest days, holiday pay + at least 30%
PNB case – Rationale for OT: EE made to work longer than what is
commensurate with agreed compensation for the statutory fixed hrs of
labor he is supposed to do. It is the additional work, labor or service and
the adverse effects of his longer stay in his place of work that justify and
is the real reason for the extra compensation called OT.
Off-Setting Prohibition – A88 LC
[1] OT in 1 day cannot be compensated by undertime work on another
day and vice versa.
[2] Work performed on a holiday cannot be off-set by undertime on
another working day.
*Why is this so? Factor: Loss of Premium Pay on the part of EE
*Rule: OT cannot be waived by EE
Built-in OT Package/ Compensation
This means that included in the EE’s salary is a paid OT worked or not
worked.
Q: Can you determine the hourly rate of worker? If so, proof of work
only requires substantial evidence
Engineering Equipment v MOLE case
Written contracts with a “built-in” OT pay in the 10-hour working day,
and that the EEs’ basic monthly pay was adjusted to reflect the higher
amount covering the guaranteed 2-hour extra time whether worked or
unworked are VALID.
C:\Documents and Settings\Reody Anthony\My Documents\Labor Law1 Class Notes
Q: Can EE be compelled to work OT, considering the issue on
involuntary servitude in the Constitution?
But, LC provides for exceptions (A89 LC, on emergency OT work):
- When there’s WAR, national or local emergency declared by
Congress or Chief Exec/Pres;
- When necessary to prevent LOSS of life or property or in case
of imminent danger to public safety;
- When there’s URGENT work to be performed on machines,
installations etc, to avoid serious loss or damage to ER;
- When work necessary to prevent loss or damage to
PERISHABLE goods;
- When completion or continuance of work started before the 8th
hour is necessary to prevent SERIOUS obstruction or prejudice
to ER business
Computation of Additional Compensation (A90 LC):
Base formula is regular wage
Night Work
A86 LC – Time frame: 10PM to 6AM, and; at least 10% additional pay
for each hour performed from 10PM to 6AM
Conditions of Employement – Weekly Rest Period
This simply means 24 hours of complete and continuous rest after 6
days of normal days of work.(A91 LC)
Coverage: A82 LC supra
Holidays
Every EE is entitled to a paid holiday whenever there’s a holiday. EE
shall be paid his regular daily wage during regular holidays except in
retail and service establishment regularly employing less than 10 EEs.
(A94 LC)
Intent of the Law: To enable and encourage the workers to contemplate
and reflect on the significance of the holiday on the nation’s history and
culture and hopefully, they become better citizens. (The pay benefits the
worker, while becoming better citizens is the contemplated benefit to
the ER)
10
EO 213 – re list of declared regular holidays and special days to be
observed throughout the Phils.
ER may also require EE to work on any holiday but such EE must be
paid 2x his regular rate.
Conditions of Employement – Service Incentive Leave, PL & ML
Service Incentive Leave (SIL)
Coverage: A95 LC
- EE who has rendered at least 1 yr shall be entitled to SIL of 5
days with pay.
- A95 not applicable to EEs already enjoying such benefits
Paternity Leave
Law: RA 8187
– Male EEs in public and private sectors entitled to PL of 7 days with
full pay for the first 4 deliveries of LEGITIMATE spouse with whom
he’s cohabiting.
*2 concepts: 1) relationship should be LEGIT, and
2) limited to first 4 deliveries
Maternity Leave
Law: RA 8282 Sec.14
– Female EEs who have paid at least 3 mos. contribution in the 12-
month period immediately preceding the term of her childbirth or
miscarriage, are entitled to daily maternity benefit equivalent to 100%
of her average salary credit for 60 or 78 days.
Note: The question of morality is not an issue (miscarriage); the
question of birth control is (first 4 deliveries only).
Sick Leave and Vacation Leave
- Only government EEs entitled to vacation and sick leaves.
- No vacation or sick leaves to EEs in the private sector. It should be
negotiated by the EEs to the ER.
- The payment of vacation and sick leaves is governed by ER’s policy or
agreement between ER and EE
C:\Documents and Settings\Reody Anthony\My Documents\Labor Law1 Class Notes
Wages
2 preliminary things to consider:
1 – Coverage (A97): who are included; government defined as ER re
payment of wages
2 – A97 (f) – Definition of Wage
Wage –
- remuneration or earnings
- capable of being expressed in terms of money
- whether fixed on a time, task, piece, commission basis or other
method of calculating the same,
- paid to EE,
- under written or unwritten contract of employment,
- for work done, to be done or services rendered or to be rendered
- includes fair and reasonable value (determined by Sec. of
Labor) of board, lodging and other facilities customarily
furnished by ER to EE
“fair and reasonable value” – shall not include any profit to ER or to
any person affiliated with ER
“fair day’s pay for a fair day’s work”
Facilities v Supplements
*Facilities – items of expense necessary for the EE’s and his family’s
existence and subsistence and form part of the wage. If furnished by
ER, deductible from wage. (e.g board, lodging etc.)
*Supplements – constitute extra remuneration or special benefits given
to or received by EEs over and above their ordinary earnings or
wages.
Wage v Salary
Gaa v CA case
- Wage and salary are in essence synonymous because they refer to the
same meaning: reward or pay for services rendered.
- Distinction: Wage applies to compensation for manual labor, and to
skilled or unskilled work, while salary denotes a higher degree of
employment and applies to high-skilled or highly technical type of job.
11
(Note: This distinction is only artificial. It is only for attachment or
garnishment purposes. Wage is too small to be attached or garnished)
Gratuity v Wages
Gratuity pay is not intended to pay EE for job done but to reward EE for
satisfactory or efficient service. It is gratuitous, and as such, is a gift.
Payment of Wages
Form (A102) –
Must be through legal tender, NOT by promissory notes, vouchers,
tickets, checks etc. But payment of check or money allowed when 1)
manner is customary, 2) necessary because of special circumstances as
specified in regulations issued by DOLE, and 3) stipulated in CBA
*Payment of wages by means of legal tender combined with tuna liver
and intestines runs counter to LC. (Congson v NLRC)
Time (A103) –
At least once every 2 weeks or 2x a month at intervals not exceeding 16
days. No ER shall make payment with less frequency than once a
month. If due to force majeure ER can’t pay, payment must be
immediately after FM ceased.
Place –
- A104 LC – At or near place of work, except as otherwise provided by
Sec. of Labor
- Sec.7 RA 6727 (Wage Rationalization Act) – within 1km. radius to a
commercial, savings or rural bank within period of payment.
- Labor Advisory on Payment of Salaries thru ATM: ER may adopt a
system of payment other than in the workplace, as through ATM of
banks, provided it meets the conditions imposed.
Direct Payment of Wages (A105 LC)
Wages must be paid to EE directly to whom they are due except:
[a] In cases of force majeure where circumstances make it impossible as
determined by Sec of Labor, in w/c case, may be paid to another
person under written authroty of EE.
[b] If EE has died, ER pays wages to the heirs w/o necessity of intestate
proceedings
C:\Documents and Settings\Reody Anthony\My Documents\Labor Law1 Class Notes
Notes: 1) Sec. of Labor has authority to adjudicate conflicting claims; 2)
Payment to Sec. of Labor is exemption from liability. ER relieved
from liability when ER deposits amount to DOLE, but limited only to
amount deposited; 3) In A106 re wages, solidary liability of ER & IC.
Non-Interference (A112 LC) – ER cannot interfere on how EE disposes
of his wages in ALL circumstances. Also, cannot compel or oblige EE
to purchase of merchandise from ER.
Wage Deduction
1. A113 LC – No ER shall make deductions from EE’s wages except:
- When EE is insured with his consent by ER, and deduction is to
pay ER for amount paid by him for premium on the insurance
- For union dues, right of EE or union to check-off has been
recognized by ER or authorized in writing by EE concerned.
- Where ER authorized by law or regulations issued by Sec. of
Labor
2. A117 LC – deduction to ensure employment is unlawful.
Deposits
A114 LC – No ER shall require EE to make deposits for loss or damage
except only 1) when customary in trade, or 2) Sec of Labor provides.
However, before ER takes, there must be reasonable explanation
*A116 also prohibits withholding of wages and kickbacks. Note that
withholding of wages is NOT the same as deducting of wages.
Service Charges
A96 LC
1 – Only limited to certain establishments: hotels, restaurants, lodging
houses, night clubs, cocktail lounge, massage clinics, bars, casinos,
gambling houses, including those private subsidiaries of gov’t, etc.
(Q: Does it include a sauna bath?)
2 – There’s a sharing agreement between owner and EEs (85% for all
covered EEs, and 15% for management)
3 – EEs deemed included in the sharing: All EEs regardless of position
or rank except managerial EEs
12
Notes: 1) Service charges are different from tips. Service charges are
charges for the use of facilities, so there’s a sharing agreement while
tips are for EEs only, thus no sharing with ER; 2) The moment ER
abolishes service charges, ER must integrate in wages the average
share of EE in the service charges. This occurs by automatic
operation of law.
13th Month Pay
• Whereas Clauses: In PD 851: 10 To further protct the level of
real wages from inflation, 2) The Christmas season is an
opportune time to show its concern for the plight of the working
masses so they may properly celebrate Christmas and New Year
• Beneficiaries: All Rank and file EEs, provided they have
worked for at least 1 month dring a calendar year.
• When paid: not later the December 24 of every year
Exempted ERs:
- Government and its political subdivision, and GOCCs except
those operating as private subsidiaries of the government
- ERs already paying their EEs a 13th month pay or its equivalent
- ERs of household helpers and persons in personal service of
another
- ERs of those who are paid on purely commission, task basis,
except where EEs are paid on piece work basis.
Excluded EEs:
- Government EEs
- Household helpers
- Terminated EEs, but may be paid in proportion to the length of
time worked during the year.
Bonus
The grant of a bonus is a management function and not an obligation. It
is not a demandable and enforceable obligation. But it becomes
demandable and enforceable when it is made part of the wage or salary
or compensation of the EE.
*Performance bonus – there’s a criteria; only for those who meet criteria
*Across-the-Board bonus – all EEs, but sometimes not all actually
C:\Documents and Settings\Reody Anthony\My Documents\Labor Law1 Class Notes
Wage Recovery – see A106 re contractor and subcontractor, also A110
of LC on worker preference during bankruptcy or liquidation. See also
A128 on visitorial and enforcement powers, and A129 on recovery of
wages, simple money claims and other benefits in connection with A217
re jurisdiction of LA and NLRC.
Minimum Wage Fixing
This is an integral part of the law. The criteria are provided.
Focus of the law: Determining the agencies established for wage fixing
machinery, namely:
1 – National Wages and Productivity Commission (NWPC)
2 – Regional Tripartite Wages and Productivity Board (RTWPB)
Tripartite consists of the following: ER, EE and Government
• NWPC (Commission)
[a] Prescribe or set rules and guidelines for the determination of
appropriate minimum wages and the factors to be considered
[b] Power to review wage levels set by RTWPB; appeal power
• RTWPB (Board)
[a] Determines and fixed minimum wage rates applicable to region,
provinces, industries
[b] Promulgates the wage order
IMPORTANT: The dividing line between NWPC and RTWPB is that
the Commission sets the guidelines to be followed, while the Board
promulgates the wage orders.
Process for Minimum Wage Fixing:
1 – There must be a need determined by the board based on its study of
pertinent facts
2 – Conduct public hearings and consultations
3 – Issue wage order (W.O.)
4 – Publication of wage order in a newspaper of general circulation.
W.O. takes effect 15 days thereafter
5 – Appeal to NWPC w/in 10 calendar days; NWPC required to resolve
issue w/in 60 days from filing
13
*Effect of Appeal: Appeal will NOT STAY execution of W.O., but if
ER posts a surety bond, then execution of WO will stay.
*One of the effects of the issuance of a WO is wage distortion (W.D.)
Wage Distortion
Cause: Implementation of a W.O. which increases prescribed minimum
wage
Result: Elimination OR Severe Contraction of intentional quantitative
wage/ salary rates between or among EEs. This
(Note: Look at wage and salary program of ER before you can
determine if there’s W.D. W.D. assumes a hierarchy in position or
salary, such that, lower rank, lower salary)
How is W.D. resolved?
• You have to distinguish between:
1) Organized establishment – meaning, there’s a CBA, or a union is
recognized as the exclusive bargaining representative
2) Unorganized establishment – no CBA, no recognized exclusive
bargaining representative even if there’s union
• Different procedures for settlement of each
Organized Establishment:
1 – Grievance procedure agreed in CBA
2 – Voluntary arbitration (usually a neutral third party resolves it)
Unorganized Establishment:
1 – ER and EE with aid of National Conciliation Mediation Board
(NCMB) through conciliation mediation
2 – Compulsory arbitration by NLRC
*ER can unilaterally resolve W.D. but ER has no obligation to restore
the same differential which existed prior to the W.D. as long as ER
restores a differential
Notes: 1) W.D. will always be a factual issue. The existence of a W.D.
will not stop execution of W.O.; 2) W.D. is localized. It will only
apply in a given industry or region and not nationwide; 3) A minimum
wage order cannot be less than that prior to the W.O. (A100 LC re rule
against diminution or elimination of income or benefits).
Q: Can NWPC motu propio review W.O.? The law is silent.
Disini: I think the better view is YES.
C:\Documents and Settings\Reody Anthony\My Documents\Labor Law1 Class Notes
*Policy issue, in relation to A124 LC and the IRR. Congress has the
authority to enact minimum wage but it has opted to follow the wage
rationalization law, which favors that of the Board.
Women and Minors
1. Women
*Consti recognizes the role of women (Art. 2 Sec.14)
*3 provisions: 1) re protection the institution of marriage, 2) protecting
women’s pregnancy, and 3) discrimination provisions on women
under certain conditions.
3 Areas of Concern:
[a] Institution of marriage – A136 provides for stipulation against
marriage. When does the law apply? Pre-employment and Post-
employment. In case of the pre-employment, does the law apply
within the time of pre-hiring or hiring?
[b] Law on pregnancy – 2 associated laws: Paternity Leave and
Maternity Leave
[c] Discrimination – A135 LC prohibits discrimination against women
with respect to terms and conditions of employment solely on
account of their sex. There must be equal opportunity, growth, work
and pay between male and female EEs
Special Women Workers: A138 LC provides for a classification of
certain women workers.
- Women under certain conditions deemed EEs when they meet
the test of the workplace, meaning, when they are permitted or
suffered to work in bars, lounges, night clubs and other similar
establishments.
- Wage is immaterial: “with or without compensation”
- Sec. of Labor should provide rules and regulations re terms and
conditions of these women workers
Star Paper case – No spouse employment policy declared invalid.
2. Minors
*There’s recognition in Consti on the role of minors (Art. 2 Sec. 13)
14
*Law: R.A. 7610 Special Protection of Children Against Child Abuse,
Exploitation and Discrimination Act
2 Areas of Concern:
[a] Minimum Employable Age: 15 years old
General. Rule: Below 15 y.o. NOT to be employed
Exceptions: 1) when employed by parents of legal guardian,
2) when employment in entertainment is essential, provided
that children are protected from any hazardous undertaking,
both physical and moral hazards
[b] Absolute prohibition on that range: No person shall employ children
models in all commercial ads, promoting alcoholic beverages,
intoxication drinks, tobacco and its b-products, and violence (Sec.14
RA 7610)
Main Requisite before Employment: ER must secure a work permit from
DOLE before engaging the child.
Sexual Harassment
How to measure if 1 act constitutes sexual harassment:
Guide:
[a] Where did it take place? Either work-related environment OR
education or training environment
[b] Did the actor have moral ascendancy?
[c] Medium of exchange: Sexual favor in return for benefits
Househelpers
A141 LC – coverage: all persons rendering services in households for
compensation
“Domestic or Household services” shall mean service in ER’s home
which is usually necessary or desirable for the maintenance and
enjoyment thereof and includes ministering to the personal comfort
and convenience of the members of ER’s household, including
services of family drivers.
*Househelpers shall not be assigned to non-household work assignment.
If suffered to work in a commercial, industrial or agricultural
C:\Documents and Settings\Reody Anthony\My Documents\Labor Law1 Class Notes
enterprise, he must be paid the prevailing wage or salary of such
workers.
*Domestic servants or Househelpers are excluded from fringe benefits
Legal measure:
- place of work: ER’s home
- nature of work: for maintenance and enjoyment of ER’s home
and for personal comfort and convenience of ER’s family
- inclusion of family driver
Homeworkers
A153 LC – Regulations of industrial homework to be done by DOLE to
ensure general welfare and protection of homeworkers
*Industrial Homework: A system of production under which work for
an ER or contractor is carried out by a homework at his/her home.
Material may or may not be furnished by ER or contractor.
Termination of Employment
*Provisions: A282-284, A285, A277, A278-A279 LC
*There must be protection to EE’s right to Security of Tenure (A279
LC)
3 Things:
1- Termination at the instance of EE
2- Termination at the instance of ER
3- When termination of employment does NOT take place
a) The law has a common feature in #1 and #2 above: Termination
WITH cause and Termination WITHOUT cause
b) In #3, there’s NO termination of employment if required by law
for a period to perform a civic or military duty. But EE must
notify ER after such period of his intent to return on the job. ER
will reinstate him without loss of seniority rights (A286 LC)
c) Floating status of worker (usually associated with the case of
security guards): the period for floating status is 6 months. If it
goes beyond 6 months, there’s automatically termination of
15
 employment. However, ER must pay EE separation or
termination pay.
Termination at the Instance of EE
A285 LC
• WITH Just Cause – NO notice required
- EE may terminate employment WITHOUT serving any notice to ER
in any of the following just causes:
a. Serious insult by ER or his representative of the honor and
person of EE
b. Inhuman and unbearable treatment by ER or his representative
to EE
c. Commission of a crime or offense by ER or his rep to EE or any
members of his family
d. Other analogous causes
• WITHOUT Just Cause – Notice required
- EE may terminate employment without just cause, but must serve
notice to ER at least 1 month in advance. Failure to give notice is fatal
to EE, because he may be liable for damages
Voluntary Resignation – act of EE to dissociate himself from
employment because he believes that personal reasons cannot be
sacrificed in favor of the exigency of the work or service.
Requisites: 1) It must be unconditional and with the intent to operate
such, 2) Intention to relinquish job, 3) Act of relinquishment
2 – A283: Other Causes or Authorized Causes
3 – A284: Disease as Cause
Thrust of A282:
[a] EE’s attitude towards work,
[b] Integrity and honesty of worker,
[c] Commission of a crime.
2 Things to Remember:
• What is the qualifying phrase? What is the connective?
• What are the requirements for each ground?
GROUNDS:
(a) Serious misconduct OR willful disobedience by EE of the lawful
orders of his ER or representative in connection with his work;
(b) Gross AND habitual neglect by the EE of his duties;
(c) Fraud OR willful breach by EE of the trust reposed in him by his ER
or duly authorized representative;
(d) Commission of a crime or offense by EE against the person of his ER
or any immediate member of his family or his duly authorized
representative; and
(e) Other causes analogous to the foregoing.
A282(a)
Serious Misconduct
• Misconduct must be serious, meaning, of grave and aggravated
character, and not merely trivial and unimportant
• Such misconduct must be in connection with EE’s work
• It must show that EE has become unfit to continue working for
the ER

Q: Can letter of resignation be withdrawn? Willful Disobedience

A: Yes, until and unless it is not yet accepted by ER. But the moment • Act must be willful or intentional, willfulness being characterize
ER has accepted it, EE cannot withdraw without the consent of ER. by a wrongful and perverse attitude
• The order violated must be 1) reasonable, 2) made known to
Termination at the Instance of ER EE, and 3) must pertain to the duties or work to which he has
A282, A283, A284 LC been engaged to discharge
*If EE is illegally terminated A282 immediately comes into the picture.
3 Possible Situations or Choices A282(b)
1 – A282: Just Causes Gross and Habitual Neglect of Duties

C:\Documents and Settings\Reody Anthony\My Documents\Labor Law1 Class Notes 16

 • Gross negligence is want or absence of or failure to exercise
slight care or diligence, or the entire absence of care
Note: It evinces a thoughtless disregard of consequences w/o
exerting any effort to avoid them. Simple negligence not a
ground
• It must be habitual
Note: Single or isolated act of negligence does not constitute a
just cause
• Must be founded on facts clearly proven by ER – Proof is
substantial evidence
A282(c)
Loss of Confidence
• Premised on: EE hold a position of trust and confidence
Note: Position of trust and confidenc meanse EE is entrusted
with confidence on delicate matters, or with custody, handling,
or care and protection of ER’s property.
• Act complained of must be work-related
• Must be substantial and founded on clearly established facts
Willful Breach
• Breach must be willful: willful means intentionally, knowingly
and purposely without justifiable excuse
• Should be genuine and not simulated
Note: Not mere afterthought or subterfuge for causes
• Must be established by substantial evidence
A282(d) Commission of a Crime or Offense
A282 (e) Other Analogous Causes
Other Just Causes Claimed by ER
Abandonment
• There must be deliberate and unjustified refusal or failure on the
part of EE to resume his employment
• Clear and unequivocal act that EE has no intention to return to
work.
C:\Documents and Settings\Reody Anthony\My Documents\Labor Law1 Class Notes
Note: Filing of an action for illegal dismissal negates
abandonment. But there’s a question of time. Until when?
Borrowing Money
• This act becomes illegal and a ground for termination only if
there’s moral ascendancy on the part of the borrower
Q: Cradle Snatcher situation. Re teacher and student. Is termination of
teacher EE valid or invalid?
A283 LC
GROUNDS: (I-R-R-C)
(a) Installation of labor-saving devices
(b) Redundancy
(c) Retrenchment to prevent losses
(d) Cessation or Closing of operation of the establishment
Additional procedural requirements: 1) written notice to EE and to
DOLE at least a month before, 2) payment of EE of termination pay.
*Fundamental distinction between A282 and A283: In A282, the
grounds are attributable to EE. But in A283, the causes are business-
related causes and outside the control of the EE
Installation of Labor-Saving Devices
Disini: This is a question only ER can answer
Redundancy
• Redundancy exists where the services of an EE are in excess of
what is reasonably demanded by the actual requirements of the
enterprise. In other words, the position is superfluous.
Note: Factors that may result to superfluity of a position: over
hiring of EEs, decreased volume of business, or dropping of a
specific product line, etc. (Q: are members of the faculty in the
College of Law redundant?)
• Redundancy does NOT necessarily refer to duplication of work.
• NO requirement of Loss
17
 • Determination of continuing necessity of a particular position is
management function and the courts shall not intervene as long
as there is no abuse of discretion or arbitrary malicious action
by the ER.
Retrenchment To Prevent Losses
• Losses must be substantial and NOT merely de minimis
• Substantial losses apprehended must be reasonably imminent,
not necessary actual
• Retrenchment must be necessary and likely to prevent
effectively the expected losses
• Loss must be proved by substantial evidence.
Proof of Loss: audited financial statement, not just for 1 year
but for a series of years. Financial statement must be audited by
an independent external auditor
• It is a measure of last resort (and done in good faith)
• Sliding income or decreasing gross revenues is not a ground for
retrenchment to prevent losses
Notes: 1) Failure to meet these requirements is fatal to ER; 2) There’s
no such thing as temporary retrenchment. What is contemplated in
A283 is permanent retrenchment to prevent losses.
Closure of Business
• ER may close business even if he’s not suffering from serious
losses as long as he pays EE termination pay. This is
management function.
• Total or partial closure is allowed
• The purpose must not be to circumvent the law
A284 LC
Disease
• Nature of disease cannot be cured for a period of 6 months.
C:\Documents and Settings\Reody Anthony\My Documents\Labor Law1 Class Notes
• Continued employment prohibited by law or is prejudicial to
EE’s health and to the health of his co-EEs
• EE must be paid separation pay equivalent to at least 1 month
salary or to 1/ 2 month salary for every year of service,
whichever is greater, a fraction of at least 6 months considered 1
whole year.
Additional requirements: 1) Notice but accompanied by a medical
certificate by public physician, 2) No hearing required
Due Process Requirements
In all termination cases, it is important to ask:
1. Is there compliance with Substantive Due Process (SDP)?
2. Is there compliance with Procedural Due Process? (PDP)?
A282-A284 – designed to answer the substantive due process question
A277 – designed to answer procedural due process question
SDP – Must satisfy the conditions and requirement of A282 to A284 LC
PDP – Twin Notice Rule and Hearing (notice-hearing-notice) – A277(b)
In A282, Procedural Requirements:
Two Notice Rule
Notice –
• First Notice – apprises EE of acts or omissions (causes) for
which his dismissal is sought
• Second Notice – informs EE of ER’s decision and the reasons to
terminate him
*Failure to give either 1 or both of the notices is fatal to the cause of ER
*Due Process is personal. It is not enough to just notify the union.
Hearing
Hearing is required to afford the EE to defend himself
• Rule: The requirement of hearing need not require a formal or
physical hearing. It is sufficient as long as there’s ample
opportunity for the EE to defend himself. (e.g. submission of
position papers are enough to satisfy this requirement
18
 • Ample Opportunity in due process means that kind of assistance
ER must accord EE to enable him to prepare adequately for his
defense, including legal representation.
In A283, Procedural Requirements for ER:
- Notice to EE and to DOLE, at least 1 month in advance
- No hearing required
- Payment of separation pay of EEs (Note: basis of termination or
separation pay does not include fringe benefits)
• For Installation of Labor-saving Devices and Redundancy:
Separation pay must be at least 1 month pay or to at least 1
month pay for every year of service, whichever is higher.
• For Retrenchment and Closure of Business:
Separation pay must be equivalent to 1 month pay or at least 1/2
month pay for every year of service, whichever is higher.
Note: A fraction of at least 6 months is considered 1 whole year.
Exception to payment of separation pay: If ER is not in a
position to pay because of serious business loss, ER may not
pay (North Davao Mining case), OR when business closes
because it must comply with law.
In A284, Procedural Requirements:
• Notice required
• Medical Certification by any authorized public physician
• Payment of separation pay
• No hearing is required
Remedial Action
A278 and A279 LC
*If termination is VALID, then, end of case. But if termination is
INVALID, then, remedies and sanctions:
Twin Remedy: Reinstatement + full backwages
*Failure to pray for these reliefs is NOT fatal to EE. Adjudicating
agencies still obligated to award remedies or reliefs.
C:\Documents and Settings\Reody Anthony\My Documents\Labor Law1 Class Notes
Reinstatement
Reinstatement means to restore EE as nearly as to status quo ante
Rules:
• Reinstatement is without loss of seniority rights and other
privileges of EE
• Reinstatement is immediately executory even pending appeal
(Pioneer Texturizing Company case)
• ER has the option between physical reinstatement OR payroll
reinstatement. (If EE refuses reinstatement on the payroll but
insists on physical reinstatement, EE suffers the consequences)
• Same terms and conditions of employment prior to dismissal.
• Bond cannot stay execution order
Notes:
1) Prior to Agabon, the term inefficient termination was not existent. So,
a VALID and LEGAL termination at that time meant that there was
compliance with both SDP and PDP. If there was compliance with
SDP but did not comply with PDP, termination was still VALID,
but the remedy is only for damages.
2) Serrano later ruled that the remedy was reinstatement + full
backwages, if there was compliance with SDP but not PDP;
3) At present, the prevailing doctrine is Agabon, which introduced
inefficient / ineffectual termination which meant that there was
compliance with SDP but not with PDP. The remedy was not full
backwages, but damages. (Disini: Agabon doctrine is divided
doctrine.)
Full Backwages
• Backwages means earnings lost by EE due to his illegal
dismissal.
• Full means no deduction whatsoever.
• This is inclusive of allowances, other benefits, or other
monetary equivalent from date of compensation was withheld
up to actual reinstatement.
• The grant of separation pay does NOT preclude award of
backwages
*Prescription of action: 4 years from the time of dismissal. (A1146 CC)
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*Exception to Reinstatement: The Doctrine of Strained Relations
Strained Relations
- Rule: there’s loss of trust and confidence
- Rationale: It’s an act of oppression to compel ER and EE to return
to status quo ante where there is already loss of trust and confidence
between them.
- Remedy: In lieu of reinstatement: Separation pay – which is the
amount EE receives at the time of his severance from service, and is
designed to support him financially during the time he’s looking for
another job.
- Caution: This doctrine must be strictly applied. It is not the
discretion of ER, for fear of abuse. It is for the Courts to determine
WON there’s strained relations between ER and EE.
In Sum,
KEY to understand and approach Termination of Work cases:
Q1: Is there a violation of Consti or statutory requirement on the right
to Security of Tenure?
Guide: A278 and A279 LC and Consti provision in A13 Sec.3
Q2: Is there compliance both in substantive and procedural due
process?
Guide: A282-284 LC for SDP and A277 LC for PDP
Q3: Is there an act of illegal dismissal? If so, What is the remedy?
Guide: 1) Twin remedy is a mandate of the law, even if EE does
not pray; 2) Full backwages, meaning, no deductions whatsoever;
3) Rules on Reinstatement; 4) Period of prescription for illegal
termination is 4 years from time of dismissal.
• There’s no law that requires ER to provide a private
retirement plan (because of the SSS)
• General Rule: above-the-ground EEs, Exception:
underground miners
• In the absence of retirement plan, retirement age is 60-65
years old and length of service at least 5 years in said
establishment
Guide: 1) Age and Length of service, 2) Claimant: above-the-
ground or underground? 3) Retirement program NOT a mandatory
requirement of the law.
Welfare Legislation
• There is no more presumption of compensability. You have to
prove compensability.
• One common feature: There’s a clear intent on the part of the
lawmaker to provide benefits and income, although partial to
EEs.
• Workers should not be a burden to society and to his family.
(See Disini’s Comapartive Table on this)

Retirement
Law: A287 on retirement as amended by RA 8558
• EE may be retired upon reaching retirement age
established in: CBA or other applicable employment
contract
• EE upon retirement entitled to benefits under existing
law, CBA or other agreements

C:\Documents and Settings\Reody Anthony\My Documents\Labor Law1 Class Notes 20