10/26/2020

LABOR STANDARDS
PREPARED BY: ATTY CYRUZ GENEREY G. ASIDOY CPA, REB, REA

TEST TO DETERMINE EMPLOYER-EMPLOYEE

RELATIONSHIP
The four–fold test
1. Selection and engagement of the employee;
2. Payment of wages;
3. Power of dismissal; and
4. Power of control

Control test
The control test assumes primacy in the overall consideration. There is an Er-Ee
relationship when the person for whom the services are performed reserves the right
to control not only the end achieved but also the manner and means used to achieve
that end

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HOURS OF WORK
COVERAGE/EXCLUSIONS
Title I, Book III of the Labor Code dealing with hours of work, weekly rest periods, holidays, service
incentive leaves and service charges, covers all employees in all establishments, whether for profit
or not.
Exception:
1. Government employees
2. Field personnel
3. Managerial employees
4. Officers and members of the managerial staff
5. Members of the family of the employer who are dependent on him for support
6. Workers paid by results
7. Persons in the personal service of another; and
8. Domestic helpers
The aforementioned employees are not entitled to overtime pay, premium pay for rest days and
holidays, night shift differential pay, holiday pay, service incentive leave and service charges.

GOVERNMENT EMPLOYEES

The terms and conditions of their employment are governed by the Civil Service Law.

In case of government-owned or controlled corporations with original charters, terms

and conditions of employment may be governed by such legislated charters.
Government-owned or controlled corporations without original charters are governed
by the Labor Code.

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MANAGERIAL EMPLOYEES

a. Their primary duty consists of the management of the establishment in which they
are employed or of a department or sub-division thereof.
b. They customarily and regularly direct the work of two or more employees therein.
c. They have the authority to hire or fire employees of lower rank; or their suggestions
and recommendations as to hiring and firing and as to the promotion or any other
change of status of other employees, are given particular weight.

OFFICERS OR MEMBERS OF MANAGERIAL

STAFF
a. Their primary duty consists of the performance of work directly related to management policies
of their employer;
b. They customarily and regularly exercise discretion and independent judgment; and
c. They regularly and directly assist a proprietor or -- a managerial employee whose primary duty
consists of the management of the establishment in which he is employed or subdivision thereof; or
execute under general supervision work along specialized or technical lines requiring special
training, experience, or knowledge; or execute, under general supervision, special assignments and
tasks; and
d. They do not devote more than 20 percent of their hours worked in a work week to activities
which are not directly and closely related to the performance of the work described above.

Officers and members of a managerial staff are considered managerial employees for they
customarily and regularly exercise discretion and independent judgment, that is, their powers are
not subject to evaluation, review and final action by the department heads and other higher
executives of the company

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DOMESTIC SERVANTS/ PERSONS IN THE

PERSONAL SERVICE OF ANOTHER
These are those who perform such services in the employer's home which are usually
necessary or desirable for the maintenance and enjoyment thereof, or minister to the
personal comfort, convenience, or safety of the employer as well as the members of
his employer's household.

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

MEMBERS OF THE FAMILY

They are exempted from the coverage, for the support given by the employer may
exceed the benefit for which an employee is entitled under appropriate labor
provisions.

WORKERS PAID BY RESULTS

Workers who are paid by results include those who are paid on piece-work, "takay,"
"pakiao," or task basis.
Payment of this type of worker is determined by the results of the work performed or
the number of units produced, not the number of hours used in the completion of the
job or the time spent in production.

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NORMAL HOURS OF WORK

The normal hours of work of any Employee shall not exceed 8 hours a day

COMPENSABLE HOURS WORKED

It shall include:
a. all time during which an employee is required to be on duty or to be at the
employer's premises or to be at a prescribed workplace,
b. all time during which an employee is suffered or permitted to work

PRINCIPLES IN DETERMINING HOURS

WORKED
1. All hours which the employee is required to give to his employer regardless of
whether or not such hours are spent in productive labor or involve physical or mental
exertion.
2. Rest period is excluded from hours worked, even if emloyee does not leave his
workplace, it being enough that:
a. He stops working
b. May rest completely
c. May leave his workplace, to go elsewhere, whether within or outside the premises
of the workplace

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3. All time spent for work is considered hours worked if:

a. The work performed was necessary
b. If it benefited the employer
c. Or the employee could not abandon his work at the end of his normal working
hours because he had no replacement
d. Provided, the work was with the knowledge of his employer or immediate
supervisor
4. The time during which an employee is inactive by reason of interruptions in his
work beyond his control shall be considered working time:
a. If the imminence of the resumption of the work requires the employees presence at
the place of work; or
b. If the interval is too brief to be utilized effectively and gainfully in the employees
own interest

TRAVEL FROM HOME TO WORK

GR: Normal travel from home to work is not working time.

XPNs:
i. Emergency call outside his regular working hours where he is required to travel to
his regular place of business or some other work site.
ii. Done through a conveyance provided by the Er.
iii. Done under the supervision and control of the Er.
iv. Done under vexing and dangerous circumstance.

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TRAVEL THAT IS ALL IN A DAY’S WORK

Time spent in travel as part of the employees principal activity.
E.g. travel from job site to job site during the work day, must be counted as working
hours.

TRAVEL AWAY FROM HOME

GR:
a. Travel that requires an overnight stay on the part of the employee when it cuts
across the employees workday is clearly working time.
b. The time is not only hours worked on regular workdays but also during
corresponding working hours on non-working days. Outside of these regular working
hours, travel away from home is not considered working time.

XPN: During meal period or when employee is permitted to sleep in adequate

facilities furnished by the employer.

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COMPRESSED WORKWEEK

It is a scheme where the normal workweek is reduced to less than 6 days but the total
number of work-hours of 48 hours per week shall remain. The normal workday is
increased to more than 8 hours but not to exceed 12 hours, without corresponding
overtime premium

CONDITIONS WHERE A "COMPRESSED WORKWEEK" SCHEDULE MAY BE

LEGALLY AUTHORIZED AS AN EXCEPTION TO THE "8-HOUR A DAY"
REQUIREMENT UNDER THE LC

1. The employee voluntarily agrees to it.

2. There is no diminution in their weekly or monthly take home pay or fringe benefits.
3. The benefits are more than or at least commensurate or equal to what is due to the
employees without the compressed work week.
4. OT pay will be due and demandable when they are required to work on those
days which should have ceased to be working days because of the compressed work
week schedule.
5. No strenuous physical exertion or that they are given adequate rest periods.
6. It must be for a temporary duration as determined by the DOLE.

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MEAL BREAK

Every employer shall give his employees not less than 60 minutes or 1 hour time-off
for regular meals.
Non- compensability of the meal period
It is not compensable during a time-off. Employee must be completely relieved from
duty.
When meal period is compensable
It is compensable where the lunch period or meal time:
1. Is predominantly spent for the Employer’s benefit; or
2. Where it is less than 20 min. It will be considered only as a coffee break.

WAITING TIME

1. It is considered working time if waiting is an integral part of his work, or

2. The Employee is required or engaged by the Employer to wait.

Waiting time not considered as working time

It is not considered working time when the Employee is waiting to be engaged; idle
time is not working time. Hence, it is not compensable.

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OVERTIME WORK, OVERTIME PAY

Work day
Work day is the 24-hour period which commences from the time the Employee regularly starts
to work.

Overtime work
Service rendered in excess of and in addition to eight hours on ordinary working days, which
are the prescribed daily work period, is overtime work.

Overtime pay
Any employee who is permitted or required to work beyond eight hours on ordinary working
days shall be paid an additional compensation for the overtime work in an amount equivalent
to his regular wage plus at least 25% thereof. It is the amount obtained by multiplying the
overtime hourly rate by the number of hours worked in excess of eight hours.

OVERTIME PAY RATES

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OVERTIME PAY RATES

Daily Wage Rate OT Rate Overtime Pay Total

Regular 800/8 = 100 25% 100 x 125% = 125 925.00
working day
Special 800 x 130% = 1040/8 = 30% 130 x 130% = 169 1,209.00
holiday 130
Rest day 800 x 130% = 1040/8 = 30% 130 x 130% = 169 1,209.00
130
Special 800 x 150% = 1200/8 = 30% 150 x 130% = 195 1,395.00
Holiday and 150
Rest day
Regular 800 x 200% = 1600/8 = 30% 200 x 130% = 260 1860.00
Holiday 200

UNDER TIME CANNOT OFFSET OVERTIME

Where a worker incurs under time hours during his regular daily work, said under
time hours should not be offset against the overtime hours on the same day or on any
other day

It will exempt him from paying additional pay for overtime work. It has been held the
proper remedy should be to deduct under time or absences against the employee's
accrued leave but pay him the overtime to which he is rightfully entitled

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RIGHT TO OT PAY CANNOT BE WAIVED

GR: The right to overtime pay cannot be waived. The right is intended for the benefit
of the laborers and employees. Any stipulation in the contract that the laborer shall
work beyond eight hours without additional compensation for the extra hours is
contrary to law and null and void.

XPNs:
1. When the alleged waiver of overtime pay is in consideration of benefits and
privileges which may be more than what will accrue to them in overtime pay, the
waiver may be permitted.

2. Compressed workweek

NIGHT SHIFT DIFFERENTIAL AND OVERTIME

PAY
•When the tour of duty of an employee falls at night time, the receipt of overtime pay
will not preclude the right to night differential pay. The latter is payment for work
done during the night and the other is payment for the excess of the regular eight-
hour work.

•An employee shall be paid night shift differential of no less than ten percent (10%)
of his regular wage for each hour of work performed between ten o'clock in the
evening and six o'clock in the morning.

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PART-TIME WORK

Non-prohibition of part-time work

Considering the purpose of the law, it is not prohibited to have “normal hours of
work” of less than eight hours a day. What the law regulates is work hours exceeding
eight. It prescribes a maximum but not a minimum.

CONTRACT FOR A PIECE OF WORK

It is a contract whereby the contractor binds himself to execute a piece of work for
the Er, in price or consideration of a certain compensation. The contractor may
employ his labor, skill or also furnish the material.

NOTE: All workers paid on piece-work shall be entitled to receive not less than the
prescribed daily minimum wage or a proportion thereof for working less than 8
hours.

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TEST TO DETERMINE IF ONE IS AN EMPLOYEE

OR AN INDEPENDENT CONTRACTOR
The “right of control” test is used. If the person for whom services are to be
performed controls only the end to be achieved, the worker is a contractor; if the
former controls not only the end but also the manner and means to be used, the latter
is an Employee.

WAGES
It is the remuneration or earnings, however designated, capable of being expressed
in terms of money, whether fixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same, payable by an Employer to an
Employee under a written or unwritten contract of employment:
1. For work done or to be done, or for services rendered or to be rendered; and
includes
2. Fair and reasonable value of board, lodging, or other facilities customarily
furnished by the Employer to the Employee as determined by SLE.

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“NO WORK, NO PAY” PRINCIPLE (FAIR

DAY’S WAGE FOR A FAIR DAY’S LABOR)
GR: If there is no work performed by the Employee, without the fault of the Employer, there can
be no wage or pay. Burden of economic loss suffered by Employee shall not be shifted to the
Employer.

XPNs: The laborer was able, willing and ready to work but was:
1. Prevented by management;
2. Illegally locked out;
3. Illegally suspended;
4. Illegally dismissed
5. Illegally prevented from working

BONUS
Refers to the payment in excess of regular or guaranteed wages. It is granted to an employee
for his tangible contribution to the success of the employer’s business, without which the
employer may not realize bigger profits.

GR: The payment of bonus is a management function, not a demandable and enforceable
obligation, which cannot be enforced upon the employer who may not be obliged to assume
the onerous burden of granting bonuses or other benefits aside from the employee’s basic
salaries or wages.
XPN: Bonuses can be demanded as a matter of right if:
a. given without any condition; hence, part of the wage or
b. grant thereof is a result of an agreement such as the
c. given on account of company policy or practice
d. grant is mandated by law

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PAYMENT OF WAGES
The laborer’s wages shall be paid in legal currency.
No employer shall pay the wages of an employee by means of promissory notes, vouchers,
coupons, tokens, tickets, chits, or any object other than legal tender, even when expressly
requested by the employee
Payee
Wages shall be paid directly to the workers to whom they are due.
XPN:
1. Force majeure which renders the payment impossible
2. Special Circumstances determined by the SLE
3. Where worker died, the Er may pay the wages to the heirs without the necessity of intestate
proceedings. Heirs shall:
a. Execute affidavit attesting their relationship to the deceased and the fact that they are his
heirs
b. If minor, affidavit shall be executed on his behalf by his guardian or next-of-kin

TIME OF PAYMENT
Wages shall be paid atleast once every two
(2) weeks or twice a month at intervals not exceeding (16) days.

MINIMUM WAGE
Statutory minimum wage is the lowest wage rate fixed by law that an Er can pay his
workers.

The minimum wage fixed by law is mandatory; thus it is non-waivable and non-
negotiable. The enactment is compulsory in nature in order to ensure decent living
conditions

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MINIMUM WAGE OF WORKERS

PAID BY RESULTS
Workers paid by results including those who are paid on piece work, “takay” or task
basis, shall be entitled to receive not less than the prescribed statutory minimum wage
for an eight-hour work or a proportion thereof for less than eight hours work

APPRENTICES/LEARNERS/PERSONS WITH
DISABILITY
Minimum wage applicable
The wage or salary rate shall not be less than 75% of the applicable minimum wage.

NON-DIMINUTION OF BENEFITS
GR: Benefits being given to Employees cannot be taken back or reduced unilaterally
by the Er because the benefit has become part of the employment contract, whether
written or unwritten.
XPN:
1. When diminution of benefits is done to correct an error.
2. If the benefit being claimed is a contingent or conditional benefit, whose demand
ability depends on a certain pre-conditions.

Benefit acquired through company practice

An employee can demand as a matter of right benefits granted by the employer for
a considerable, long period of time as the same may ripen into a company practice

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FACILITIES VS SUPPLEMENTS

FACILITIES AS PART OF WAGES

The term "wage" includes the fair and reasonable value of facilities customarily
furnished by the employer to an employee. Facilities have been defined to include
those articles or services of benefit to the employee and his family such as rice ration,
housing, recreational facilities, medical treatment to dependents, school facilities, cost
of light, water, fuel, meals or snacks.

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PROHIBITIONS REGARDING WAGES

Wage deduction prohibited
The law prohibits the employer from making deductions from the wages of an employee. The
evil sought to be prevented is to forestall the commission of unwarranted practices of
employers by making unnecessary deductions without employee's knowledge or authorization
Non-Interference in Disposal of Wages
Employer shall not limit or interfere with the freedom of any Employee to dispose his wages.
He shall not force, compel or oblige his Employees to purchase merchandise, commodities or
other property from any other person, or otherwise make use of any store services of such
Employer or any other person
Deposit for Loss or Damage
Employer shall not require his worker to make deposits from which deductions shall be made
for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the
Employer.
XPN:
Employer is engaged in such trade or business where the practice of making deductions or
requiring deposits is a recognized one, or is necessary or desirable as determined by the SLE.

WAGE DISTORTION/RECTIFICATION
A situation where an increase in wage results in the elimination or severe contraction
of intentional quantitative differences in wage or salary rates between and among-
the Employee-groups in an establishment as to effectively obliterate the distinctions
embodied in such wage structure based on skills, length of service or other logical
bases of differentiation
Elements of Wage Distortion
1. An existing hierarchy of positions with corresponding salary rates.
2. A significant change or increase in the salary rate of a lower pay class without a
corresponding increase in the salary rate of a higher one;
3. The elimination of the distinction between the 2 groups or classes; and
4. The WD exists in the same region of the country

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REST PERIODS

Right to weekly rest day (WRD)

Every Employer shall give his Employees a rest period of not less than 24 consecutive
hours after every 6 consecutive normal work days

Rest day not necessarily Sunday or holiday

All establishments and enterprises may operate or open for business on Sundays and
holidays provided that the employees are given the weekly rest day and the benefits
provided under the law

EMERGENCY REST DAY WORK

Employee to work on his rest day
GR: The Employee cannot be compelled by the Employer to work on his rest day.
XPNs:
1. Urgent work to be performed on the machinery, equipment or installation, to avoid serious
loss which the Employer would otherwise suffer;
2. Nature of work requires continuous operations for 7 days in a week or more and stoppage
of the work may result in irreparable injury or loss to the Employer;
3. Abnormal pressure of work due to special circumstances, where the Employer cannot be
ordinarily expected to resort to other measures;
4. Actual or impending emergencies (serious accident, fire, flood, typhoon, earthquake, etc.)
5. Prevent loss or damage to perishable goods;
6. Analogous or similar circumstances as determined by the SLE;
7. Work is necessary to avail of favorable weather or environmental conditions where
performance or quality of work is dependent thereon

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HOLIDAY PAY/PREMIUM PAY

GR: All Employees are entitled

XPNs:
1. Government Employees and any of its political subdivisions, including GOCCs (with original
charter)
2. Retail and service establishments regularly employing less than 10 workers
3. Domestic helpers and persons in the personal service of another
4. Employee engaged on task or contract basis or purely commission basis
5. Members of the Family of the Employer who are dependent on him for support
6. Managerial Employee and other members of the managerial staff
7. Field personnel and other Employee whose time and performance are unsupervised by the
Employer
8. Employee paid fixed amount for performing work irrespective of the time consumed in the
performance thereof .

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REGULAR HOLIDAY AND SPECIAL DAY

DISTINGUISHED
The distinctions are the following:
a. A covered employee who does not report for work during regular holidays is paid 100%
of his regular wage. On the other hand, a covered employee who fails to report for work on a
special day (special holiday) is not entitled to any compensation under the principle of "no
work, no-pay."
b. A covered employee who reports for work on regular holidays is entitled to 200% of his
regular wage. While, a covered employee who works on special days (special holidays) is
paid an additional compensation of not less than 30% of his basic pay or a total of 130%. If
the worker has suffered to work on special days (special holidays) which falls on his scheduled
rest day, he is entitled to an additional pay equivalent to at least 50% over his basic pay or a
total of 150%.

EFFECT IF A LEGAL HOLIDAY FALLS ON A

SUNDAY
A legal holiday falling on a Sunday creates no legal obligation for the Employer to
pay extra to the Employee who does not work on that day, aside from the usual
holiday pay to its monthly paid Employee

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CONCEPT OF ABSENCES
Effects of absences on holiday pay; successive regular holiday
a. If an employee is on leave of absence with pay, he is entitled to holiday pay
b. If an employee is on leave of absence without pay on the day immediately
preceding the regular holiday, he is not entitled to holiday pay.
c. If the day immediately preceding the holiday is a non-working day or the
scheduled rest day of an employee, he is not considered to be on leave of absence
on that day, in which case he shall be entitled to holiday pay if the employee should
work on the day immediately preceding the non-working day or rest day.
d. If there are two successive regular holidays like Holy Thursday and Good Friday,
an employee is not entitled to holiday pay for both holidays if he absents himself
from work without pay on the day immediately preceding the first regular holiday.
But if he works on the first holiday, he is entitled to holiday pay on the second holiday

LEAVE

Service Incentive Leave (SIL)

It is 5-days leave with pay for every Employee who has rendered at least 1 year of
service. It is commutable to its money equivalent if not used or exhausted at the end
of the year.

Persons entitled to SIL

GR: Applies to every Employee who has rendered at least 1 year of service.

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XPNs:
1. Government Employees and any of its political subdivisions including GOCCs
2. Those already enjoying the benefit
3. Domestic helpers and persons in the personal services of another
4. Those already enjoying vacation leave with pay of at least 5 days
5. Managerial Employees
6. Field personnel and other Employees whose performance is unsupervised by the
Employer
7. Employed in establishments regularly employing less than 10 workers
8. Exempt establishments
9. Engaged with a task or contract basis, purely commission basis, or those who are
paid in a fixed amount of performing work irrespective of the time consumed in the
performance thereof

SERVICE CHARGES

These are charges collected by hotels, restaurants and similar establishments. The
entire service charges must be distributed among the covered employees

Rule if service charge is abolished

If it is abolished, the share of the covered Ees shall be considered integrated in their
wages on the basis of the average monthly share of each Ees for the past 12 months
immediately preceding the abolition.

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13TH MONTH PAY

13th month pay or its equivalent

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

LEAVE

Maternity Leave under Republic Act No. 11210

Leave period of 105 days for female workers with an option to extend for an
additional 30 days without pay, and granting additional 15 days for solo mother.
Now, applicable as to unlimited number of deliveries

Allocation to the Child’s Father or Alternate Caregiver

The mother may, at her option, allocate up to 7 days of said benefits to the child’s
father, whether or not the same is married to the female worker.

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Paternity Leave under Republic Act No. 8187

A married male employee shall be entitled to paternity leave of 7 days for the first
4 deliveries of the legitimate spouse with whom he is cohabiting

Parental Solo Leave under Republic Act 8972

In addition to leave privileges under existing laws, parental leave of not more than
seven (7) working days every year shall be granted to any solo parent employee
who has rendered service of at least one (1) year.

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