CLARENDON COLLEGE, INC.

Roxas, Oriental Mindoro

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Business Ethics and Social Responsibility

Section & Year Level 12 ABM/ Manuel V. Pangilinan
Lecturer Gilbert E. Gonzales
Lesson No. & Title Module 3: Social Responsibility of Entrepreneurs
Duration Week 22 & 23: January 25 – 30, 2021
Lecture Materials Format 1. Printed
Course Objectives:
At the end of the lesson, the students should be able to...
 suggest ways to enhance employer-employee relationship and encourage just and fair business policies and practices such as
recruitment, promotion, retention, marketing and advertising, intellectual property rights, sources and uses of funds, and the
like (ABM_ESR12-IVi-l-3.1);
 advocate honest policies and practices in all aspects of business operations (ABM_ESR12-IVi-l-3.2);
 observes and promote policies and practices in environmental management (ABM_ESR12-IVi-l-3.3); 
 cite examples of companies that practice social responsibility in the conduct of their business (ABM_ESR12-IVi-l-3.4); and
 provide evidence that ethical/social responsibility is profitable, i.e., makes good business sense (ABM_ESR12-IVi-l-3.5).

Module 3: Social Responsibility of Entrepreneurs

Module Topic:
1. Business Activity and Environmental Ethics

Business Activity and Environmental Ethics

Workers are not merely commodities but are the actual life-blood that pumps through each business, factory, and everyday products.
 
For this reading, we will use the term “worker” to refer to the employees and laborers who work for wage or salary in a
business establishment. A business cannot prosper without the workers who carry out the daily activities of the business. Ethical issues
in relation to workers can be seen from two perspectives. First, these may refer to issues focused on the employer’s duties toward the
workers. Regarding this, we will talk about the issues of contractualization. Second, these may be issues focused on the worker’s
duties toward the employer. Under this, we will discuss fiduciary duty.
WATCH: This brief video by Bulatlat on YouTube tackles the history of Labor Day:
This Week on People’s History: Mayo Uno: https://youtu.be.com/BjX9PcsFcOA
Labor Contractualization
In the Philippines, labor contractualization has become an intensely contested issue. The legal term for contractualization is
fixed-term employment. It is interesting to note that the Labor Code of the Philippines does not make any mention of these terms. A
clear definition of fixed-term employment can be found in a Supreme Court decision to resolve the legal case between Brent School,
Inc. and an athletic director. In the said decision, the Court defined fixed-term employment “as a contract of employment for a definite
period which terminates by its own terms or the end of such period.” The progressive Filipino legislator Satur Ocampo has a simpler
description for labor contractualization: “hiring workers for short-term, nonregular employment without the benefits accorded by law
to regular workers” (Abad in Flores and Santos 2012).
Why do employers want to contractualize? The main reason is to reduce business cost. Another reason is to discourage
workers from joining unions. In a recent study done by some students from the Ateneo de Manila University, companies and
contracting agencies interviewed admitted to these reasons. “Companies and the contracting agencies described contractualization as a
means to promote cost efficiency and a way to avoid having labor unions” (Cainglet et al. 2012). In itself, cost reduction is a
legitimate strategy for business especially because of the many exigencies that businesses in the Philippines are facing. What becomes
ethically questionable is when businesses desire unreasonably big profits at the expense of the workers. If you are the wealthiest
person in the country with profits from your business that overflow in your coffers, would you not carefully study your policies on
contractualization so that your workers would also raise their standard of living just like you?
Those who generally favor contractualization and see nothing wrong about it point to the benefits of the said practice. First,
employers do not encounter the ordinary problems of workers who become lax and less productive because of the protection of job
tenure. Second, many employers believe that when a worker is contractual, he or she is likely to be more serious and productive for at
least two reasons: fear of being terminated and aspiration to be rehired. Third, contractualization frees the employers from the many
headaches brought by the high cost of employee benefits. Fourth, more workers are given opportunity to work because after five
months, contractual workers would be replaced by a new batch of contractual workers.
 LINK:  Ever thought of May 1 as not just a holiday but an actual milestone in history for millions of workers around the
world? This article by Justin Umali of Esquire Philippines puts you in the right perspective as it traces the Labor Day history overseas
to here in the Philippines and how the work force has formed strong unions and fought for their rights since its
inception: https://www.esquiremag.ph/long-reads/features/may-1-history-a2212-20190429-lfrm
 

A worker’s march is a testimony to their everyday struggle and a remembrance of the inequalities of society.
There are also many criticisms against contractualization. Unconscientious contractualization undermines many basic rights of the
worker. These rights include the right to security of tenure, right to other benefits of workers (insurance, maternity benefits), right to
organize, and right to join unions, among others.
Critics also say that contractualization of workers degrade the value of work and the worker. Work is simply reduced to a commodity
that can easily be bought and sold. The worker is also reduced to a commodity that can easily be replaced on the whims and caprice of
the employer.
Further, contractualization violates fundamental justice. In many instances, the business establishment accumulates huge profits with
the help of the contractual worker. But the contractual worker only receives minimum wage and benefits mandated by the law.
Labor contractualization is also an open invitation to more abuses of the rights of the workers. Poor working conditions, unsafe
workplace, wages below what is prescribed by the law, and other violations of mandated rules that protect contractual workers are not
unusual. It is because contractual workers hesitate and fear to question these unjust and exploitative practices; to question them would
endanger their job.
LINK: Why should the youth care for laborers and join their cause? This article by youth reporters of Mulat Pinoy
Kabataan News Network answers it in their article “Youth for workers: Labor Day in
photos”: www.mulatpinoy.ph/2015/06/02/youth-for-workers-labor-day-photos/
 

An employee serves a moral duty by upholding the business owner’s interest.

Fiduciary Duty of the Employee
If the employees have fundamental rights to ensure that their work and working condition improve their lives and well-being,
they have also corresponding moral duties toward the employer that they serve. The basic principle that underlies the duties of the
employees toward the employer is captured in what is now famously known as the theory of agency. The online Legal Dictionary
defines the theory of agency this way: “a consensual relationship created by contract or by law where one party, the principal, grants
authority for another party, the agent, to act on behalf of and under the control of the principal to deal with a third party
(freedictionary.com).”
The business owner is not always present to deal directly with customers, suppliers, government officials, and other
stakeholders. The owner may be present but it is also possible that he or she is not an expert with regard to the details of his or her
business. Hence, he or she hires employees. An employee is entrusted to do the business dealings in the employer’s absence or
because of his/her lack of knowledge, skills, and expertise. The employee is called the agent of the business owner, while the business
owner is called the principal. The agent (employee) acts in behalf of the principal (owner). The agent, therefore, has specific duties
toward his or her principal.
Fiduciary duty is the legal and technical term to refer to the obligations of the employee (agent) to always act on behalf of his
or her employer (principal). A fiduciary relationship is a relationship of trust between two parties. A fiduciary duty is one’s obligation
to carry out the tasks entrusted to him or her. A fiduciary is a person “who has been entrusted with the care of another’s property or
other valuables and who has a responsibility to exercise discretionary judgment in this capacity solely in the interest of this other
person’s interest” (Boatright 2008).
Fiduciary duty is important because not everything can be stated in the contract between the employer and the employee.
“Fiduciary relationships exist primarily to enable individuals to give control of property, information, or power to other people without
complete instructions, relying instead on trust” (Boatright 2008). Fiduciary duty aids in keeping the integrity of the employee intact.
Performance Task
Directions: Draw a picture of yourself when you have joined the business industry.

REMINDERS
Output/s to be submitted PERFORMANCE TASK
Deadline of Submission Output 15 February 2021, Monday
Mode of Submission Submit your work at Clarendon College

Prepared by: Approved by:

GILBERT E. GONZALES HAZEL P. PALAPUS, MEng.

Teacher Principal