PATERNITY LEAVE

Paternity Leave

It refers to the benefits granted to a married male Ee allowing him not to

report for work for 7 days but continues to earn the compensation
therefore, on the condition that his spouse has delivered a child or suffered
a miscarriage for purposes of enabling him to effectively lend support of his
wife in her period of recovery and/or in the nursing of the newly-born
child. In the event it is not availed of, such leave is not convertible to cash.
(RA 8187)

Concept of paternity leave benefits

It refers to the benefits granted to a married male Ee allowing him not to

report for work for 7 days but continues to earn the compensation
therefore, on the condition that his spouse has delivered a child or suffered
a miscarriage for purposes of enabling him to effectively lend support to
his wife in her period of recovery and/or in the nursing of the newly-born
child. In the event it is not availed of, such leave is not convertible to cash.
(RA 8187)

Concept for entitlement to paternity leave

The male Ee is:

1. Legally married to, and is cohabiting with the woman who delivers the
baby;
2. Ee of private or public sector;
3. Maybe availed of only for the first 4 deliveries of the legitimate spouse
with whom he is cohabiting; and
4. Notify his Er of the pregnancy of his legitimate spouse and the expected
date of such delivery

NOTE: Delivery shall include child birth or any miscarriage.

PARENTAL LEAVE
Leave benefits granted to a solo parent to enable him/her to perform
parental duties and responsibilities - where physical presence is required.

In addition to leave privileges under existing laws, parental leave of not

more than 7 working days every year shall be granted to any solo parent Ee
who has rendered service of at least 1 year. (Sec. 8, RA 8972)

Conditions for entitlement of parental leave

1. He or she must fall among those referred to as a solo parent

2. Must have the actual and physical custody of the child or children
-2-

3. Must have at least rendered service of one year or his or her employer
4. He or she must remain a solo parent

Persons considered a solo parent entitled to parental leave

Any individual who falls under any of the following categories:

1. A woman who gives birth as a result of rape and other crimes against
chastity even without a final conviction of the offender; Provided, that
the mother keeps and raises the child;
2. Parent left solo or alone with the responsibility of parenthood due to:

a. Death of spouse;
b. Detention or service of sentence of spouse for a criminal conviction
for at least 1 year;
c. Physical and/or mental incapacity of spouse
d. Legal separation or de facto separation form spouse for at least 1
year as long as he/she is entrusted with the custody of the children;
e. Nullity or annulment of marriage as decreed by a court or by a
church as long as he/she is entrusted with the custody of the
children;
f. Abandonment of spouse for at least 1 year;

3. Unmarred mother/father who has preferred to keep and rear his or her
child/children instead of:

a. Having others care for them or

b. Give them up to a welfare institution;

4. Any other person who solely provides:

a. Parental care and
b. Support to a child or children;

5. Any family member who assumes the responsibility of head of family as

a result of the:

a. death
b. abandonment
c. disappearance or
d. prolonged absence of the parents or solo parent.

NOTE: A change in the status or circumstance of the parent claiming

benefits under this act, such that he/she is no longer left alone with the
responsibility of parenthood, shall terminate his/her eligibility for these
benefits. (Sec. 3, RA 8972)
-3-

LEAVES FOR VICTIMS OF VIOLENCE AGAINST WOMEN AND

THEIR CHILDREN (R.A. 9262)

A female Ee who is a victim of violence (physical, sexual, or psychological) is

entitled to a paid leave of 10 days in addition to other paid leaves (R.A.
9262, Anti-VAWC Act). |This is known as the battered woman leave.

SPECIAL LEAVE BENEFIT FOR WOMEN

A woman Ee having rendered continuous aggregate employment service of

at least 6 months for the last 12 moths shall be entitled to a special leave
benefit of 2 months with full pay based on her gross monthly
compensation following surgery caused by gynaecological disorders (Sec.
18, R.A. 9710, Magna Carta of Women).

13th MONTH PAY

13th month pay or its equivalent

Additional income based on wage required by P.D. 851 requiring all Ers to
pay their Ees a 13th month pay which is equivalent to 1/12 of the total basic
salary earned by an Ee within a calendar year.

Basic Salary
Includes all remunerations or earnings paid by the employer to an
employee for services rendered inducting cost-of-living-allowances.

It does not include all allowances and monetary benefits which are not
considered or integrated as part of the regular or basic salary such as:

1. Cash equivalent of unused vacation and sick leave credits;

2. Overtime pay;
3. Premium pay;
4. Night Shift Differential;
5. Holiday pay;
6. Commissions, if it is not an integral part of the basic salary.
(Philippine Duplicators, Inc. V. NLRC, G.R. No. 110068,February 15,
1995)

These salary-related benefits should be included in the computation of the

13th month pay if by individual or collective agreement, company practice
or policy, the same are treated as part of the basic salary of the employees.
-4-

Absence of CBA provision not a bar in giving 13th month pay

The absence of an express provision in the CBA obligating the Er to pay the
members of a union 13th month pay is immaterial. Notwithstanding
therefore the absence of any contractual agreement, the payment of a 13 th
month pay being a statutory grant, compliance with the same is mandatory
and is deemed incorporated int he CBA.

Nature of 13th month pay

Such is in the nature of additional income granted to employees who are

not receiving the same. (Agabon v. NLRC, G.R. No. 158693, November 17,
2004)

It is based on wage but not part of wage. (|Central Azucarera de Tarlac v.

Central Azucarera de Tarlac Labor Union-NLU, G.R. No. 188949, July 26,
2010)

Minimum Period of Service Required

It is imposed as a ‘minimum service requirement’ that the employee

should have worked for at least one month during a calendar year. (No.
X[A], DOLE Handbook on Workers Statutory Monetary Benefits)

Persons covered by P.D. 851

1. Employees

GR: All rank-and-file Ees are covered by P.D. 851 regardless of the amount
of basic salary that they received in a month, if their Ers are not otherwise
exempted form paying the 13th month pay. Such Ees are entitled to the
13th month pay regardless of said designation of employment status, and
irrespective of the method by which their wages are paid.

Provided, that they have worked for at least 1 month, during a calendar
year (Revised Guidelines on the Implementation of the 13 th Month Pay
Law.)

XPN:
1. Government Ees;
2. Ees paid purely on commission basis;
3. Ees already receiving 13th month pay;
4. Managers’
5. Seafarers

NOTE: Managerial employees may receive 13th month pay, if such

payment has been a company practice.
-5-

GR: All Ers are covered by PDS 581.

XPN:
a. The Government and any of its political subdivisions, including GOCCs;

XPN to XPN: Corporation operating essentially as privated subsidiaries of

the Government

b. Ers already paying their Ees 13th month pay or more in a calendar year in
its equivalent at the time of the issuance of the Revised Guidelines;
c. Ers of those who are paid on purely basis of:

i. Commission;

NOTE: Bus drivers and conductors who are paid a fixed or guaranteed
minimum wage in case their commission be less than the statutory
minimum are entitled to a 13th-month pay equivalent to one twelfth of
their total earnings during the calendar year. (Philippine Agricultural
Commercial and Industrial Workers Union v. NLRC., GR No. 107994, 14
August 1995)

ii. Boundary; or
iii. Task; and
iv. Fixed amount for performing a specific work

Irrespective of the time consumed int he performance thereof.

XPN: Where the workers are paid on a piece-rate basis, in which case, the
employer shall be covered by the Revised Guidelines insofar as the
workers are concerned.

Note: ‘Piece-Rate Workers’ refers to those who are paid a standard

amount for every piece or unit of work produced that is more or less
regularly replicated without regard to the time spent in producing the
same.

d. Distressed Ers:

a. Currently incurring substantial losses; or

b. In the case of non-profit institutions and organization, where their
income, whether form donations, contributions, grants and other
earnings from any source, has consistently declined by more than
40% of their normal income for the last 2 years, subject to the
provision of Sec. 7 of P.D. 851.
-6-

Options of covered Ers

1. Pay 1/2 of the 13th month pay required before the opening of the
regular school year and the other half on or before the 24 th day of
December of every year.

2. In any establishment where a union has been recognized or certified as

the CB agent of the Ee, the periodicity or frequency of payment of the
13th month pay may be the subject of agreement.

Government Ees working as part-time in private sector or those with

multiple employers entitled to 13th month pay

Such includes private educational institutions, as well as employees

working in two or more private firms, whether in full or part-time basis,
regardless of their total earnings from each on all their employers (Revised
Guidelines on the Implementation of 13th Month Pay Law)
Dismissed or resigned employee entitled to 13th month pay.

An Ee who has resigned or was terminated at any time before the

payment of the 13th month is due, his monetary benefit shall be computed
in proportion to the length of time he worked during the year, reckoned in
proportion to the length of time he worked during the calendar year up to
his resignation or termination or 1/12 of his total basic pay earned during
the period (Section 6, DOLE Revised Guidelines on 13th Month Pay)

Other types of employment entitled to 13th month pay

1. Part-time Employee (Item 5 [b], Revised Guidelines of PD 851);
2. Extras;
3. Casual Employee; and
4. Seasonal Employee (BWC Opinion, December 19, 1987)

Equivalent forms of the 13th month pay

1. Christmas Bonus
2. Midyear Bonus
3. Profit Sharing Scheme
4. Other Cash bonuses amounting to not less than 1/12 of its basic salary

Note: It must always be in the form of a legal tender.

Things not proper substitutes for 13th month pay

1. Free rice
2. Electricity
3. Cash and Stock dividends
4. Cost-of-living Allowance (P.D. 851, Sec. 3)

Adjudicated claims
Non-payment of the 13th month pay provided by P.D. 851 and the rules of
NLRC shall be treated as money claims cases.
-7-

NOTE: Difference of opinion on how to compute the 13 th month pay is non-

strikeable and a strike held on that ground is illegal. (Isalama Machine
Works Corp. v. NLRC, G.R. No. 10016, March 2, 1995.)

The following Ees may or may not be entitled to 13th month pay

1. Ee paid by result - Entitled to 13th month pay.

NOTE: Ees paid a fixed or guaranteed wage plus commission are also
entitled to the mandated 13th month pay, based on their total earnings
during the calendar year,I.e. on both their fixed or guaranteed wage
and commission.

2. Those with Multiple Ers - Government Ees working part time in a

private enterprise, including private educational institutions, as well
as Ees working in 2 or more private firms, whether full or part time
basis, are entitled to the required 13th month pay from all their private
Ers regardless of their total earnings from each or all their Ers.

3. Private School Teachers, including faculty members of universities and

colleges - Entitled regardless of the number of months they teach or
are paid within a year, if they have rendered service for at least 1
month within a year.

4. Resigned or Separated Ees - If resigned or separated from work

before the time of payment of 13th month pay, entitled to monetary
benefits in proportion to the length of time he started working during
the calendar year up to the time of resignation or termination of
service (Pro-rated 13th month pay).

Application of pro-ration of 13th month pay

GR: Pro-ration of 13th month pay applies only in cases of resignation or
separation form work; computation should be based on length of
service form work; computation should be based on length of service
and not on the actual wage earned by the worker (Honda Phils. v.
Samahan ng Manggagawa sa Honda, G.R. No. 145561, June 15, 2005).

XPN: Ees who are paid a guaranteed minimum wage or commissions

earned are entitled to 13th Month Pay based on total earnings
(Philippine Agricultural Commercial and Industrial Workers Union v.
NLRC, G.R. NO. 107994, August 14, 1995).

14th month pay not legally demandable

The granting of 14th month pay is a management prerogative and is not
legally demandable. It is basically a bonus and is gratuitous in nature
(Kamaya Point Hotel v. NLRC, G.R. No. 75289, August 31, 1989).
-8-

XPN: A bonus, however, becomes a demandable or enforceable obligation

when it is made part of the wage or salary or compensation of the
employee. If it is additional compensation which the employer promised
and agreed to give without any conditions imposed for its payment, such as
success of business or greater production or output, then
it is part of the wage. But if it is paid only if profits are realized or if a
certain level of productivity is achieved, it cannot be considered part of the
wage. Where it is not payable to all but only to some employees and only
when their labor becomes more efficient or more productive, it is only an
inducement for efficiency, a prize therefore, not a part of the wage.
(Metro Transit Organization, Inc. V. NLRC,. G.R. No. 116008, July 11, 1995).

Commission in relation to 13th month pay

1. The salesman’s commissions, comprising a predetermined percent of

the selling price of the goods sold by each salesman, were properly
included in the term basic salary for purposes of computing their 13 th
month pay. (Philippine Duplicators, Inc. V. NLRC, G.R. No. 110068,
February 15, 1995).
2. The so-called commission paid to or received by medical
representatives of Boie Takeda Chemical or by the rank-and-file Ees of
Phil. Fuji Xerox were excluded form the term basic salary because these
were paid as productivity bonuses. Such bonuses closely resemble
profit sharing, payments and have no clear, direct, necessary relation to
the amount of work actually done by each individual Ee. (Boie-Takeda
Chemicals, Inc. v. Dela Serna, G.R. No. 92174, December 10, 1993)
3. Earnings and remuneration which are closely akin to fringe benefits,
overtime pay or profit sharing payments are excluded in computing
13th month pay. However, sales commissions which are effectively
an integral portion of the basic salary structure of an employee shall be
included in determining his 13th month pay.

Retirement Pay

Retirement
It is the result of a bilateral act of the parties, a voluntary agreement
between the Er whereby the latter after reaching a certain age agrees
and/or consents to server his employment with the former (Ariola v. Philex
Mining Corp., G.R. No. 147756, August 9, 2005).

Persons covered by retirement benefit

All Ees in the private sector:

1. Regardless of their position, designation or status; and
2. Irrespective of the method by which their wages are paid (IRR, Book VI,
Rule II, Sec. 1);
3. Part-time Ees;
-9-

4. Ees of service and other job contractors;

5. Domestic Helpers or Persons in the personal service of another
(Department Order 20, May 31, 1994).
6. Underground mine workers (R.A. 8558);
7. Ees of GOCCs organized under the Corporation Code (without original
charters) (Postigos, et al. v. Philippine Tubercolosis Society, Inc., G.R.
No. 155146, January 24, 2006)

Persons not covered by retirement benefits

1. Compulsory and contributory in nature;
2. One set up by the agreement between the Er and Ees in the CBA or
other agreements between them (other applicable employment
contract;
3. One that is voluntarily given by the Er, expressly as announced company
policy or impliedly as in the failure to contest the Es’s claim for
retirement benefits (Marilyn Odchimar Gertach v. Reuters Limited
Phils., G.R. No. 14854, January 17, 2005.)

Retroactive application of art. 287 of the LC (on retirement) as amended

by R.A. 7641.

Art. 287 of the LC as amended by R.A. 7641 can be applied retroactively,

provided that;

1. The claimant for retirement benefits was still the Ee of the Er at the
time the statute took effect; and
2. The claimant was in compliance with the requirements for eligibility
under the statute for such retirement benefits (PSVSIA v. NLRC, G.R.
No. 115019, April 14, 1997).

Provisions of the retirement plan binding as part of the employment

contract

The retirement plan forms part of the employment contract since it is

made known to the Ees and accepted by them, and such plan has an
express provisi8on that the company has the choice to retire an Ee
regardless of age, with 20 years of service, said police is within the bounds
contemplated by the LC. Moreover, the manner of computation of
retirement benefits depends on the stipulation provided in the company
retirement plan (Progressive Dev’t. Corporation v. NLRC, G.R. No. 138826,
October 30, 2000).

ELIGIBILITY

Retirement age
It is the age of retirement that is specified in the
1. CBA:
2. Employment contract;
-10-

3. Retirement plan (IRR,Book VI, Rule II, sec. 3); or

4. Optional retirement age for underground mining Ees

Retirement age in the absence of a retirement plan or other applicable

agreement

1. Optional - upon reaching 60 years old provided that Ee has rendered 5

years of service.

The option to retire upon reaching the age of 60 years or more but not
beyond 65 is the4 exclusive prerogative of the Ee if there is no provision on
retirement in a CBA or any other agreement or if the Er has no retirement
plan (Capili v. NLRC, G.R. No. 117378, March 26, 1997).

2. Compulsory - 65 years old, regardless of years of service (IRR, Book VI,

Rule II, Sec. 4).

Retirement benefits, where not mandated by law, may be granted by

agreement of the Ees and their Er or as a voluntary act on the part of the
Er. Retirement benefits are intended to help the Ee enjoy the remaining
years of his life, lessening the burden of worrying for his financial support,
and are a form of reward for his loyalty and service to the Er (Aquino v.
NLRC, G.R. No. 87653, February 11, 1992).

5 year service requirement only applies to absence of retirement plan

Being in a nature of ‘minimum requirement’, the parties cannot stipulate a

period higher that five years since this will run counter to the law. (Chan,
2014).

The minimum length of service includes authorized absences and

vacations, regular holidays, and mandatory fulfillment of a military or civic
duty. (Service 4.4, Rule II, IRR of the Retirement Pay Law.)

Employee must have met the conditions of eligibility as condition

precedent

Although retirement plan forms part of the employment contract, before a

right to retirement benefits or pension vests in an Ee, he must have met
the stated conditions of eligibility with respect to the nature of
employment, age, and length of service. This is a condition precedent to
his acquisition of rights there under. (Brion v. South Phil. Union Mission of
the seventh Day Adventist Church, G.r. No. 135136 May 19, 1999).

NOTE: SC ruled that the conditions of eligibility for retirement must be met
at the time of retirement at which juncture the right to retirement benefits
or pension, if the Ee is eligible, vests in him. (Ibid.)
-11-

Compulsory retirement age below 60 allowed by mutual agreement

Art. 287 permits Er and Ee to fix the applicable retirement age at below 60.
The same is legal and enforceable so long as the parties agree to be
governed by such CBA (Pantranco North Express v. NLRC, G.R. No. 95940,
July 24, 1996).

NOTE: In order for retirement at an earlier age to be valid, it must be

shown that the Ee’s participation in the plan is voluntary. (Jaculbe v.
Siliman University,k G.r. no. 156934, March 16, 2007)

Different Retirement Age for mine workers under R.A. 8558

The optional retirement age of underground mine workers is fifty (50)
years of age; while the compulsory retirement age is sixty (60) years old.
(Section 2.2, Department Order No. 09, Series of 1998)

Rule for extension of service of retiree upon reaching the compulsory

retirement age

Upon the compulsory retirement of an Ee or official in the public or private

service, his employment is deemed terminated. The matter of extension of
service of such Ee or official is addressed to the sound discretion of Er (UST
Faculty Union v. NLRC, G.R. No. 89885, August 6, 1990).

RETIREMENT PAY SEPARATION PAY DISTINCTIONS

Paid by reason of retirement Required in cases enumerated
under Article 283 and 284 and as a
substitute where reinstatement is
not possible
Purpose is to held the Ee enjoy the Wherewithal during the period that
remaining years of his life thereby an employee is looking for another
lessening the burden of worrying for employment after his termination
his financial support

When both must be paid

Payment of retrenchment embodied in the CBA as well as retirement pay

provided under a separate Retirement Plan due to the demand of the Ee of
their right under the CBA which was result of negotiations between the
company and Ees. (Aquino v. NLRC,G.R. No. 87653, Feb. 11, 1992)

When Ees are entitled to only one form of benefit

When the CBA provisions are considered an effective bar to the availment
if retirement or vice versa. Such when the CBA enunciates express
prohibition against double recovery: (Zuelig Pharma Corp. V. Sibal, G.R. No.
173587, July 15, 2013)
-12-

AMOUNT

Computation of retirement benefits in the absence of an applicable

agreement or retirement plan

A retiree is entitled to a retirement pay equivalent to at least 1/2 month

salary for every year of service, a fraction of at least 6 months being
considered as 1 whole (R.A. 7641).

Composition of 1/2 month salary or retirement pay

Unless parties provide for broader inclusions, retirement pay is comprised

of:

1. 15 days salary based on latest salary rate;

2. Cash equivalent of not more than 5 days of service incentive leaves
(22.5/year of service)
3. 1/12 of the 13th month pay
4. All other benefits as may be agreed upon by the Er and Ee ( IRR, Book VI,
Rule II, Sec. 5.2).

NOTE: Under sec. 26 of R.A. 4670, otherwise known as “Magna Carta for
Public School Teachers”, public school teachers having fulfilled the age and
service requirements of the applicable retirement laws shall be given one
range salary raise upon the retirement, which shall be the basis of the
computation of the lump sum of the retirement pay and monthly benefit
thereafter.

Superiority of Benefits Rule

Once the Ee retires, it is not Article 287 that is controlling but the
retirement plan under the CBA or other applicable employment contract.
(Chan, (Chan, 2014) Article 287 becomes relevant only in the matter of
ensuring that the retirement benefits are not less than whose provided
therein (Elegir v. PAL, Inc., G.R. No. 181995, July 16, 2012.)

GRATUITY PAY VS. RETIREMENT BENEFITS

Gratuity Pay Retirement Benefits
It is paid to the beneficiary for the Are intended to help the Ee enjoy
past services or favor rendered the remaining years of his life,
purely out of the generosity of the releasing him from the burden of
giver or grantor. It is not intended worrying for his financial support,
to pay a worker for actual services and are a form of reward for his
rendered or for actual performance. loyalty to the Er (Sta. Catalina
It is a money benefit or bounty given College and Sr. Loreta Oranza, v.
to the worker, the purpose of which NLRC and Hilaria Tercera, G.R. no.
is to reward Ee’s who have rendered 144483, November 19, 2003).
satisfactory service to the company.
-13-

RETIREMENT PAY UNDER R.A. 7641 VIS-A-VIS RETIREMENT BENEFITS

UNDER SSS AND GSIS LAWS

Retirement pay under the LC in relation to retirement benefits under SSS

and GSIS Laws (1997 Bar Question)

Social Security Law Revised Government Employees

Service Insurance Act Compensation Act

Compulsory upon all Compulsory for All Compulsory upon all

Ee’s Ers

not over 60 years of Permanent Ees below and their Ees not over
age and their Ers. 60 years of age upon 60 years of age;
1. Filipinos recruited in appointment of provided, that an Ee
the Philippines by permanent status, and who is over 60 years of
foreign-based Ers for for all elective officials age and paying
employment abroad for the duration of their contributions to qualify
may be covered by the tenure. for the retirement or
SSS on a voluntary NOTE: Any person, life insurance benefit
basis. whether elected or administered by the
2. Compulsory upon all appointed, in the System shall be subject
self-employed persons service of an Er is a to compulsory
earning Php 1,800 or covered Ee if he coverage.
more per annum. receives compensation
for such service

Right to contributory retirement plan

Where both Er and Ee contribute to a retirement fund in accordance with

the CBA or other applicable employment contract, the Er’s total
contribution thereto should not be less than the total retirement benefits
to which the Ee would have been entitled had there been no such
retirement fund. In case the Er’s contribution is less than retirement
benefits provided under the law, the Er should pay the deficiency (Section
3.3, Rule II, IRR or the Retirement Pay Law)

Right to non-contributory retirement plan

The Ee have a vested and demandable right to a noncontributory

retirement plan. It is an existing benefit voluntarily granted to them by
their Er. The latter may not unilaterally withdraw, eliminate or diminish
such benefits. (Nestle Philippines, Inc. V. NLRC, G.R. No. 91231, February 4,
1991.)
-14-

RETIREMENT BENEFITS OF WORKERS PAID BY RESULTS/RETIREMENT

BENEFITS OF PART-TIME WORKERS/SEASONAL EMPLOYEE

Determination of the amount of retirement benefits of workers paid by

results and part time workers

The 15-day salary of workers paid by results and part-time workers shall be
determined from their average daily salary (ADS), which is the average
daily salary for the last 12 months reckoned from the date of their
retirement, divided by the number of actual working days in that particular
period (Rules Implementing the New Retirement Law, Sec. 5.2 and 5.3).

Note: The rule mentioned is the same for underground mine Ees. (Section
4.3, Rule II-A, Department Order No. 09, Series of 1998)

Determination of the amount of retirement benefits of a seasonal

employee

In the absence of a retirement plan or agreement providing for retirement

benefits of employees in the establishment, an employee upon reaching
the age of sixty (60) years or more, but not beyond sixty five (65) years
which is hereby declared the compulsory retirement age, who has served
at least five (5) years in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being
considered as one whole year. (Paz v. Northern Tobacco Redrying Co., Inc.
G.R. No. 199554, 18 February 2015)

TAXABILITY

Non-taxability of retirement benefits under R.A. 7641

Retirement benefits under R.A. 7641 are tax exempt provided that such
benefits provided by the retirement plan be equal or less than the
minimum requirement provided by law.

Requirements for tax exemption under R.A. 7641

1. That there be no CBA or other applicable employment contract

providing for retirement benefits for an Ee; or
2. Even if there is a CBA or other applicable employment contract
providing for retirement benefits for an Ee, that the same is below the
requirements set forth by law.
-15-

Retirement benefits if private firms shall not be subject to any tax

The following conditions must be complied with:

1. The retirement benefits received by the officials and Ees of private firms,
whether individual or corporate, is in accordance with a reasonable
private benefit plan maintained by the Er.
2. The retiring official or Ee has been in the service of the same Er for at
least ten (10) years;
3. The retiring official or Ee has been int he service of the same Er for at
least then (10) years;
4. He/she is not less than fifty (50) years of age at the time of his/her
retirement; and
5. The benefits shall be availed of by an official or employee only once.
(R.A. 4971)

R. A. 8424, the Tax Reform Act of 1997, which amended by NIRC, expressly
excludes retirement benefits from gross income based on the same four (4)
conditions enumerated above. Non-compliance with any of the
requirements would subject the benefits to tax. (Santos v. Servier
Philippines, Inc. G.R. No. 166377, November 28, 2008)

Exemption of retirement pay of under ground mine workers from tax

The retirement pay provided in R.A. 8558 may be exempted from tax
consistent with the BIR as discussed above.

SPECIAL GROUP OF EMPLOYEES

WOMEN WORKERS

State policy on non-discrimination against women

The State condemns discrimination against women in all its Forms and
pursues by all appropriate means and without delay the policy of
eliminating discrimination against women in keeping with the Convention
on the Elimination of All Forms of Discrimination Against Women (CEDAW)
and other international instruments consistent with Philippine law. The
opportunities available to every member of society (R.A. 9710 or the
Magna Carta of Women, Sec. 2)

The State shall take steps to review and, when necessary, amend and/or
repeal existing laws that are discriminatory to women within 3 years from
the effectivity of this Act ( R.A. 9710, Sec. 12).

Discriminatory acts against women Ee

1. Discrimination with respect to the terms and conditions of employment

solely on account of sex
-16-

a. Discrimination in pay. Payment of a seller compensation including

wage, salary or other forms of remuneration and fringe benefits, to a
female Ee as against a male Ee;
b. Discrimination in employment opportunity - favoring a male Ee over a
female Ee with respect to promotion, assignment, transfer, training
opportunities, study and scholarship grants solely in account or their
sexes;
c. Discrimination in hiring - favoring a male applicant with respect to hiring
where the particular job can equally be handled by a woman;
d. Discrimination in dismissal - favoring a male Ee over a female Ee with
respect to dismissal of personnel or the application of the last in / first
out principle or other retrenchment policy of the Er. (Poquiz, 20212)

2. Stipulating, whether as a condition for employment or continuation of

employment.

a. That a woman Ee shall not get married, or

b. That upon marriage, such woman Ee shall be deemed Ee resigned or
separated (LC, Art. 136).

3. Dismissing, discriminating or otherwise prejudice a woman Ee by reason

of her being married (LC, Art. 136).

NOTE: Discrimination in any form from pre-employment to post

employment, including hiring, promotion or assignment, based on the
actual, perceived or suspected HIV status of an individual is unlawful
(Philippine AIDS Prevention and Control Act of 1998, R.A. 8504).

Standard of reasonable test

Under the standard reasonable test which is parallel to the concept of a

bona-fide occupational qualification test in American jurisdictions, the Er
has the burden of proof to prove the existence of a reasonable business
necessity that would justify an employment policy (Star Paper Corp. V.
Simbol,G.R. No. 164774m April 12, 2006).

Q: Can an individual, the sole proprietor of a business enterprise, be said

to have violated the Anti-Sexual Harassment Act of 19954 if he clearly
discriminates against women in the adoption of policy standards for
employment and promotions in the enterprise?
Explain. (2003 Barf Question)

A: When an Er discriminates against women in the adoption of policy

standards for employment and promotion in his enterprise, he is not
guilty of sexual Harassment. Instead, the Er is guilty of discrimination
against women Ees which is declared to be unlawful by the LC.
-17-

For an Er to commit Sexual harassment, he -- as a person of authority,

influence or moral ascendancy - should have demanded, requested or
otherwise required a sexual favor form his Ee whether the demand,
request or requirement for submission is accepted by the object of said
act.

PERSONS WITH DISABILITY (R.A. 7277 as amended by R.A. 9442)

DEFINITION

Persons with disability (PWD)

Those whose earning capacity is impaired by:

1. Physical deficiency
2. Age
3. Injury
4. Disease
5. Mental deficiency
6. Illness

Employment of PWD

1. When their employment is necessary to prevent curtailment of

employment opportunities; and
2. When it will not create unfair competition in labor costs or lower
working standards (LC, At. 79).

Employment period of PWD

There is no minimum or maximum duration.l It depends on the agreement

but it is necessary that there is a specific duration stated.

Persons with disability can be a regular Ee

Persons with disability can be a regular Ee if work is usually or necessarily

desirable to the business (Bernardo v. NLRC, G.R. No. 122917, July 12,
1999).

Persons who may employ persons with disability

Eers in all industries: Provided, the disability is not such as to effectively

impede the performance of job operations in the particular occupations for
which they are hired.
-18-

Not all workers with a disability are considered disabled workers

The mere fact that a worker has a disability does not make him a disabled
worker because his disability may not impair his efficiency or the quality of
his work. If despite his disability he can still efficiently perform his work, he
would be considered a qualified disabled worker entitled to the same
treatment as qualified able-bodied workers (Bernardo v. NLRC, G.R. No.
122917, July 12, 1999).

RIGHTS OF PERSONS WITH DISABILITY

Rights and privileges of PWD

1. Equal opportunity for employment - No PWD shall be denied access to

opportunities for suitable employment. Five percent (5%) of all casual
emergency and contractual positions in the DSWD, Health, Education
and other government agencies, offices or corporations engaged in
social development shall be reserved for PWDs. (Section 5, Chapter 1,
Title II, RA 7277)

2. Shelter employment - The Government shall endeavour to provide them

work if suitable employment for disabled persons cannot be found
through open employment.

3. Apprenticeship - PWD may be hired as apprentices or earners if their

disability is not such as to effectively impede the performance of job
operations in the particular occupations for which they are hired (LC,
Art. 81).

4. Vocational rehabilitation - To develop the skills and potentials of

disabled workers and enable them to compete in the labor market

5. Vocational guidance and counselling

Wage Rate (2013 Bar)

GR: Handicapped workers are entitled to not less than seventy-five percent
(75%) of the applicable adjusted minimum wage. (Article 80, LC)

XPN: All qualified handicapped workers shall receive the full amount of
the minimum wage rate prescribed herein pursuant to RA 7277
(Wage Order No. NCR-18, Effective October 4, 2013)

If a PWD is hired as an apprentice or learner, he shall be paid not less

than seventy-five percent (75%) of the applicable minimum wage.
-19

XPN: If the PWD, however is hired as a learner and employed in

piece or incentive rate jobs during the training period, he shall be
paid one hundred percent (100%) of the applicable minimum wage.
(Chan,2014)

PROHIBITIONS ON DISCRIMINATION AGAINST PERSONS

WITH DISABILITY

The following constitutes acts of discrimination:

1. Limiting, segregating, or classifying a job applicant with disability in

such a manner that adversely affects his work opportunities;
2. GR: Using qualification standards, employment tests or other
selection criteria that screen out or tend to screen out a PWD;

XPN: Such standards, tests or other selection criteria are shown

to be a job-related for the position in question and are
consistent with business necessity

3. Utilizing standards, criteria, or methods of administration that:

a. Have the effect of discrimination on the basis of disability; or

b. Perpetuate the discrimination of others who are subject to
common administrative control

4. Providing less compensation, by reason of his disability, that the

amount to which a non-disabled persons performing the same work
is entitled;

5. Favoring a non-disabled Ee over a qualified Ee with disability with

respect to promotion, training opportunities, study and scholarship
grants, solely on account of the latter’s disability;

6. GR: Dismissing or terminating the services of an Ee with disability by

reason of his disability

XPN: the Er can prove that he impairs the satisfactory performance

of the work involved to the prejudice of the business entity;
provided, however, that the er first sought to provide reasonable
accommodations for persons with disability;

7. Failing to select or administer in the most effective manner

employment tests which accurately reflect the skills, aptitude or
other factor of the applicant or employee with disability that such
test purports to measure, rather than the impaired sensory manual
or speaking skills of such applicant or employee, in any; and

8. Excluding PWD from membership in labor unions or similar

organizations. ( Section 32, Chapter I, Title III, RA 7277)
 -20-

INCENTIVES FOR EMPLOYEES

Incentives of Er who are employing disabled workers

1. Entitled to an additional deduction, from their gross income, equivalent

to 25% of the total amount paid as salaries and wages to disabled
persons

Provided, however, that such entities present proof as certified by the

DOLE that disable persons are under their employ

Provided further, that the disabled Ee is accredited with the DOLE and
the Department of Health as to his disability, skills and qualifications.

2. Private entities that improve or modify their physical facilities in order

to provide reasonable accommodation for disabled persons shall also
be entitled to an additional deduction form their net taxable income,
equivalent to 50% of the direct costs of the improvements or
modifications (R.A. 7277, Sec. 8).

The financial incentive, if any, granted by law to SPQ Garments whose

cutters and sewers in its garment-for-export operations are 80% staffed
by deaf and deaf-mute workers is additional deduction form its gross
income equivalent to 25% of amount paid as salaries to persons with
disability, (2013 Bar)

Basis: Magna Carta for Disabled Persons”

Persons with Disability vs. Differently Abled

Persons with Disability Differently Abled
Earning capacity is impaired by age, or Refers to all suffering from restriction
physical or mental deficiency or injury of different abilities as a result of
mental, physical or sensory impairment
to perform an activity in the manner or
within range
considered normal for a human being.
Covers only workers Covers all activities or endeavors.
Basis: Basis: range of activity which is normal
Loss/impairment of earning capacity. for a human being.
Loss due to injury or physical or mental Restriction due to impairment of
defect or age. mental/physical/sensory defect.
If hire,d entitled to 75% of minimum If qualified, entitled to all terms and
wage. Subject to definite periods of conditions as qualified able-bodied
employment persons.
Employable only when necessary to No restrictions on employment.
prevent curtailment of employment
opportunity Must get equal opportunity and no
unfair competition.
-21-

PHILIPPINE OVERSEAS EMPLOYMENT

ADMINISTRATION (POEA)

Principal Functions
1. Protection of the right of Filipino workers to fair and equitable
employment practices.
2. Regulation of private sector participation in the recruitment and
overseas placement of workers by setting up a licensing and
registration system
3. Deployment of Filipino workers through Government to Government
hiring
4. Formulation, implementation, and monitoring of overseas employment
of Filipino workers taking into consideration their welfare and domestic
manpower requirements
5. Shall inform migrant workers not only of their rights as workers but also
of their rights as human beings, instruct and guide the workers how to
assert their rights and provide the available mechanism to redress
violation of their rights (Sec. 14, R.A. 10022).
6. Implementation, in partnership with other law-enforcement agencies,
of an intensified program against illegal recruitment activities ( Sec. 14,
R.A. 10022).

Power to terminate or impose a ban on employment of migrant workers

The POEA may at any time terminate or impose a ban on employment of

migrant workers, to do so, in consultation with the DFA based on the
following grounds:

1. In pursuit of the national interest; or

2. When public welfare so requires (Sec. 4, R.A. 10022)

Minimum conditions/provisions of overseas employment contracts

1 Guaranteed wages for regular hours and OT, not lower than the
minimum wage prescribed in all of the following:

a. The host country

b. Bilateral agreements or international conventions ratified by the
host country and the Philippines
c. The Philippines

2. Free transportation to and from the worksite or offsetting benefit

3. Free food and accommodation of offsetting benefit
4. Just/authorized causes of termination of the contract or services of the
worker
-22-

NOTE: An agreement that diminishes the Ees’ pay and benefits as

contained in a POEA-approved contract is void, unless such subsequent
agreement is approved by the POEA.

Deployment of OFWs

The State shall allow the deployment of OFWs

1. Only in countries where the rights of Filipino migrant workers are

protected.
2. To vessels navigating the foreign seas or to installations located offshore
or on high seas whose owner/Ers are compliant with international laws
and standards that protect the rights of migrant workers.
3. To companies and contractors with international operations: Provided,
That they are compliant with standards, conditions and requirements,
as embodied in the employment contracts prescribed by the POEA and
in accordance with internationally-accepted standards. (Sec. 3, R.A.
10022 amending R.A. 8012).

Guarantees of the receiving country for the protection of the rights of

OFWs

1. It has existing labor and social laws protecting the rights of workers,
including migrant workers;
2. It is a signatory to and/or a ratifier of multilateral conventions,
declaration or resolutions relating to the protection of workers,
including migrant workers; and
3. It has concluded a bilateral agreement or arrangement with the
government on the protection of the rights of OFWs (Sec. 3. R.A. 10022
amending R.A. 8042).

Provided, that the receiving country is taking positive, concrete measures

to protect the rights of migrant workers in furtherance of any of the
guarantees.

NOTE: In the absence of a clear showing that any of the guarantees exists
in the country of destination of the migrant workers, no permit for
deployment shall be issued by the POEA.

Repatriation of a worker
GR: The repatriation of the:

1. Worker and the transport of his personal belongings - shall be the

primary responsibility of the agency which recruited or deployed the
worker overseas.

-23-
2. Remains and transport of the personal belongings of a deceased
worker and all costs attendant thereto - shall be borne by the principal
and/or the local agency.

XPN:
1. If the termination of employment is due solely to the fault of the worker,
the principal/ Er or agency shall not be responsible for the repatriation
of the former and/or his belongings.
2. In cases of war, epidemic, disaster or calamities, natural or man-made,
and other similar event, and where the principal or recruitment agency
cannot be identified, the Overseas Workers Welfare Administration, in
coordination with appropriate international agencies, shall take charge
of the repatriation (Sec. 15, R.A. 8042).

Mandatory repatriation of underage migrant workers

Upon discovery or being informed of the presence of migrant workers

whose ages fall below the minimum age requirement for overseas
deployment, the responsible officers in the foreign service shall without
delay repatriate said workers and advise the DFA through the fastest
means of communication available of such discovery and other relevant
information. The license of a recruitment/manning agency which recruited
or deployed an underage migrant worker shall be automatically revoked
and shall be imposed a fine of not less than P500,000 but not more than
P1,000,000 (Sec. 9, R.A. 10022).

Regulatory and adjudicatory functions of the POEA

Regulatory - It regulates the private sector participation in the recruitment

and overseas placement of workers through its licensing and registration
system.

1. Adjudicatory

a. Administrative cases involving violations of licensing rules and

regulations and registration of recruitment and employment
agencies or entitles
b. Disciplinary action cases and other special cases which are
administrative in character involving employers, principals,
contracting partners and Filipino migrants.

Grounds for disciplinary action of OFWs

Under R.A. 8042, these are:

1. Prostitution
2. Unjust refusal to depart for the worksite
3. Gun running or possession of deadly weapons
-24-
4. Vandalism or destroying company property
5. Violation of the laws and sacred practices of the host country and
unjustified breach of employment contract
6. Embezzlement of funds of the company or fellow worker entrusted for
delivery to relatives in the Philippines.
7. Creating trouble at the worksite or in the vessel
8. Gambling
9. Initiating or joining a strike or work stoppage where the laws of the host
country prohibits strikes or similar actions
10. Commission of felony punishable by Philippine laws or by the host
country
11. Theft or robbery
12. Drunkenness
13. Drug addiction or possession or trafficking or prohibited drugs
14. Desertion or abandonment

Jurisdiction of the LA vs. POEA

JURISDICTION
Labor Arbiter POEA
Original and exclusive jurisdiction Original and exclusive jurisdiction
over all claims arising out of Er-Ee over:
relationship or by virtue of any laws 1. All cases which are administrative
or contract involving OFWs including in character relating to licensing and
claims for: registration of recruitment and
employment agencies
1. Actual
2. Moral Disciplinary Action cases and other
3. Exemplary special cases, which are
Other forms of damages (Sec. 10, administrative in character,
R.A. 8042). involving Ees, principals, contracting
partners and Filipino migrant
workers (Rule VII, Book VII, POEA
Rules).