Employer-Employee Relationship

Existence and the Correlative Rights and

Obligations of the Employer and the Employee
 Situation

I have been rendering services as a

secretary in a company for more than a
year now. My employment contract states
that no employer-employee relationship
shall exist between me and the company,
thereby depriving me of some of the benefits
and allowances to which other employees
are entitled.

Is this arrangement legal?

 Is this arrangement legal?

NO. This arrangement is illegal.

Things to consider:

 Is there an employee-employer (EER)

relationship between us?
 Why is EER important to me?
 What are our rights and obligations as an
employer and an employee?
 When does an EER exist?

An EER exist if ALL these ELEMENTS are

present:
(X as employer and Y as employee)

1. X selects and engages Y;

2. X pays the wages or salaries of Y;
3. X has the power to dismiss Y; and
4. X has the power to control how Y
conducts his work.
NOTE: Of these four, the control test is the most important.
X controls not only the end achieved, but also the manner
and means to be used in reaching that end.
Can the EER be denied through agreement by the parties?

NO.

The EER’s existence cannot be denied through

the parties’ agreement.

It is a question of law. If the elements of an

EER are present, the employee can enjoy the
benefits.
 Why is EER important?

1. EER determines what laws govern the rights and

liabilities between the parties, and what tribunal or
court will have jurisdiction over their cases.

2. The employee acquires the right to continue his

employment (property right). His employment may
only be terminated based on just or authorized
causes stated in the Labor Code.

3. EER affords greater protection to employee.

 What are the employer’s rights?

MANAGEMENT PREROGATIVE

Although the Constitution promotes social justice and protects

the working class, labor cases will not be automatically decided
in favor of labor. Management also has its own rights which are
entitled to respect in the interest of simple fair play.

Labor laws do not interfere with the employer’s judgment in

the conduct of its business. The employers may hire, fire,
transfer, demote, and promote its employees (subject to limitations
found in the law, a collective bargaining agreement, or in general principles of fair play and
justice).
What is covered by management prerogatives?

RIGHTS
(MANAGEMENT PREROGATIVES)
Hiring Supervision of workers

Working regulations Supervision of work

Time, place, and manner Transfer of employee/s

of work
Lay-off of workers
Working methods
Discipline
Processes to be followed
Dismissal
Tools to be used
Recall of workers
Work assignments
 What are the employer’s obligations?

OBLIGATIONS
Limitations of management The exercise of management
prerogative: prerogative, however, is not
absolute as it must be
1. law exercised in good faith and
2. Stipulations in the collective with due regard to the
bargaining agreement rights of labor.
3. General principles of fair play
and justice
 What are the employee’s rights?

GUARANTEED BASIC RIGHTS OF WORKERS

1. Security of tenure
2. Receive a living wage
3. Humane working conditions
4. Share in the fruits of production
5. Organize themselves
6. Conduct collective bargaining or negotiation with
management
7. Engage in peaceful concerted activities including strike
8. Participate in policy and decision making processes
 Who are entitled to the rights and benefits under
the Labor Code?

ALL WORKERS, whether agricultural or non-agricultural.

EXCEPTIONS:
1. Government employees
2. Employees of government corporations created by special or
original charter
3. Foreign governments
4. International agencies
5. Corporate officers/intra-corporate disputes
6. Local water district except where NLRC’s jurisdiction is invoked
7. As may otherwise be provided by the Labor Code
 Other Related Information
CONSTITUTIONAL MANDATES ON
LABOR LAWS
(Article II, 1987 Philippine
Constitution)
Section 9. The State shall promote a just and dynamic
social order that will ensure the prosperity and
independence of the nation and free the people from
poverty through policies that provide adequate social
services, promote full employment, a rising standard of
living, and an improved quality of life for all.
Section 10. The State shall promote social justice in all
phases of national development.
Section 11. The State values the dignity of every human
person and guarantees full respect for human rights.
Section 13. The State recognizes the vital role of the youth
in nation-building and shall promote and protect their
physical, moral, spiritual, intellectual, and social well-being.
It shall inculcate in the youth patriotism and nationalism,
and encourage their involvement in public and civic affairs.
CONSTITUTIONAL MANDATES ON
LABOR LAWS
(Article III, 1987 Philippine
Constitution)
Section 1. No person shall be deprived of life, liberty, or
property without due process of law, nor shall any person be
denied the equal protection of the laws.
Section 4. No law shall be passed abridging the freedom of
speech, of expression, or of the press, or the right of the
people peaceably to assemble and petition the government
for redress of grievances.
Section 8. The right of the people, including those employed
in the public and private sectors, to form unions, associations,
or societies for purposes not contrary to law shall not be
abridged.

Section 14. The State recognizes the role of women in

nation-building, and shall ensure the fundamental equality
before the law of women and men.

Section 18. The State affirms labor as a primary social

economic force. It shall protect the rights of workers and
promote their welfare.

Section 20. The State recognizes the indispensable role of

the private sector, encourages private enterprise, and
provides incentives to needed investments.
 Other Related Information
OTHER RELATED LAWS TO LABOR
1. Article 1700, Civil Code of the Philippines—The
relations between capital and labor are not merely
contractual. They are so impressed with public
interest that labor contracts must yield to the
common good. Therefore, such contracts are
subject to the special laws on labor unions,
collective bargaining, strikes and lockouts, closed
shop, wages, working conditions, hours of labor and
similar subjects.
2. Article 1701, Civil Code of the Philippines—
Neither capital nor labor shall act oppressively
against the other, or impair the interest or
convenience of the public. (Principle of Non-
Oppression)
3. Article 1702, Civil Code of the Philippines—In
case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety
and decent living for the laborer.
4. Article 1703, Civil Code of the Philippines—No
contract which practically amounts to involuntary
servitude, under any guise whatsoever, shall be
valid.
OTHER RELATED LAWS TO LABOR
5. Article 289, Revised Penal Code—Formation,
maintenance and prohibition of combination of
capital or labor through violence or threats. —
The penalty of arresto mayor and a fine not
exceeding 300 pesos shall be imposed upon any
person who, for the purpose of organizing,
maintaining or preventing coalitions or capital or
labor, strike of laborers or lock-out of employees,
shall employ violence or threats in such a degree
as to compel or force the laborers or employers in
the free and legal exercise of their industry or
work, if the act shall not constitute a more serious
offense in accordance with the provisions of this
Code.
6. Special Laws
• GSIS Law
• 13th Month Pay Law
• Retirement Pay Law
• SSS Law
• Paternity Leave Act
• Anti-Child Labor Act
• Anti-Sexual Harassment Act
• Magna Carta for Public Health Workers
• National Health Insurance Act as amended
by Republic Act 9241
• Migrant Workers and Overseas Filipinos Act
of 1995 as amended by Republic Act 10022
• Home Development Mutual Fund Law of
2009
• The Magna Carta of Women
• Comprehensive Agrarian Reform Law as
amended by R.A. 9700
• The Kasambahay Law
 Sources
█ 1987 Philippine Constitution.
█ Presidential Decree 442 otherwise known as “Labor Code of the
Philippines.”
█ Implementing Rules and Regulations of the Labor Code.
█ Department of Labor and Employment Order No. 40-03, Series of 2003.
█ Azucena, Cesario Jr. The Labor Code with Comments and Cases, Volume
II, 6th Edition 2007. (Quezon City: Rex Printing Company, Inc.)
█ Alcantara, Samson. Reviewer in Labor and Social Legislation. (Quezon
City: The Philippines Labor Relations Journal)
█ 2011 UST-Law Academics Committee. 2011 Golden Notes. (University
of Santo Tomas, Faculty of Civil Law, Manila)

[Uploaded on 16 October 2015]]

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