LABOR STANDARDS

GENERAL PRINCIPLES AND CONCEPTS

Labor refers to physical or mental exertion necessary to produce goods.
Labor Law includes all the rules of law governing the conditions under which persons may
work under the control of other persons called employers.
Labor Legislation consists of statutes, rules and regulations governing the relations between
capital and labor, by providing for certain employment standards and a legal framework for
negotiating, adjusting and administering those standards and other incidents of employment. The
purpose of labor legislation is to protect the worker from the mighty and to correct the injustices
that are inherent in the employer-employee relationship. It provides the set of restrictions upon
the worker in his relationship with the employer and vice-versa in order to maintain industrial
peace and harmony. Ultimately, the primordial purpose of labor legislation is to promote the
welfare of the people based on the Latin maxim, solus populi est suprema lex, the welfare of the
people is the supreme law.
Classification of labor laws:
A. Labor Standards prescribe the terms and conditions of employment as affecting wages
and monetary and welfare benefits, hours of work, and occupational safety and health
standards.
B. Labor Relations defines and regulates the status, rights and duties, and the institutional
mechanisms that govern the individual and collective interactions of the employer and
employees.
Social legislation refers to all laws passed by the State to promote public welfare, or those made
in furtherance of social justice. It includes statutes intended to enhance the welfare of the people
even where there is no employer-employee relationship.
Labor Law v. Social Legislation
Labor Law Social Legislation
More direct in its application as it affects Governs the effects of employment such as
directly actual employment such as wages compensation for injuries and death
Designed to meet the daily needs of a worker Involves long-term benefits
Covers employment for profit or gain Covers employment for gain or non-profit
Affects the work of the employee Affects the life of the employee
Benefits are paid by the worker’s employer Benefits are paid by government agencies
administering the program such as the SSS
Labor laws are social legislation, but not all social legislations are labor laws.

Legal Bases of Labor and Social Legislation

a. Police power f. Full employment clause
b. Social justice clause g. Freedom from poverty clause
c. Protection to labor clause h. Freedom of association clause
d. Doctrine of incorporation clause i. Due process and equal protection clause
 e. Social service clause
SOCIAL JUSTIFICATION OF CLASS LEGISLATION
The principle of equality cannot mean that all persons must under all circumstances be treated
alike, but it can only mean that equal conditions must receive equal treatment. Legislative
discrimination is therefore allowed and in many cases has been sanctioned provided there is a
reasonable basis for classification. Thus, laws regulating and restricting hours of labor of women
are constitutional because they apply only to women and not to men. The theory that they affect
an arbitrary classification may, to some extent, be based upon the nature of the employer’s
business, rather than the character of the employee’s work and the fact that they apply only to
women employed in specified establishments and occupations does not render them
unconstitutional so long as they apply alike to all women who work in any of the
establishments or occupations mentioned.
SOCIAL JUSTICE CLAUSE
“The State shall promote social justice in all phases of national development.” (Section 10,
Article 2 of the Constitution)
Social justice is neither communism, nor despotism, nor atomism, nor anarchy, but the
humanization of the laws and the equalization of the social and economic forces by the State so
that justice in its rational and objectively secular conception may at least be approximated. Social
justice means the promotion of the welfare of the people, the adoption by the Government of
measures calculated to insure economic stability of all the component elements of society
through the maintenance of proper economic and social equilibration in the inter-relations of the
members of the community; constitutionally, through the exercise of powers underlying the
existence of all governments, on the time-honored principle of solus populi est suprema lex.
(Calalang v. Williams, 70 Phil. 728)
Social justice or any justice for that matter is for the deserving, whether he be a millionaire in his
mansion or a pauper in his hovel. In case of reasonable doubt, courts are called upon to tilt the
balance in favor of the poor, to whom the Constitution fittingly extends its sympathy and
compassion. But it is never justified to prefer the poor simply because they are poor, or to reject
the rich simply because they are rich, for justice must always be served, for poor and rich alike,
according to the mandate of the law. (Gelos v. CA, G.R. No. 86186, May 8, 1992)
PROTECTION TO LABOR CLAUSE
“The State shall afford full protection to labor, local and overseas, organized and unorganized,
and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with
law. They shall be entitled to security of tenure, humane conditions of work, and a living wage.
They shall also participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers
and the preferential use of voluntary modes in settling disputes, including conciliation, and shall
enforce their mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of
labor to its just share in the fruits of production and the right of enterprises to reasonable returns
on investments, and to expansion and growth.” (Section 3, Article XIII of the 1987 Constitution)
The purpose of affording protection to labor is to place labor on an equal plane with management
with all its power and influence in negotiating for the advancement of his interests and the
defense of his rights.
When the conflicting interests of labor and capital are weighed on the scales of social justice, the
heavier influence of the latter must be counterbalance by the sympathy and compassion the law
must accord the underprivileged worker.
LIBERAL CONSTRUCTION IN FAVOR OF LABOR
All doubts in the implementation and interpretation of labor laws, rules and regulations are
liberally construed in favor of labor. Due to labor’s economic dependence upon the capital, it is
considered the weaker factor of production and therefore needs protection from the State.
An employee died of acute hemorrhagic pancreatitis after retiring from the night shift.
Decedent’s mother filed a claim for income benefits which was denied by the GSIS on the
ground that the disease was not occupational. Furthermore, she failed to show causal connection
between the ailment and the nature of the employment. The decision of the GSIS was affirmed
by the Employees Compensation Commission. Petitioner went to the SC which held, among
others, that since “the exact cause of the acute hemorrhagic pancreatitis is still unknown despite
extensive researches in this field” any doubt thereof shall be resolved in favor of labor.
Right to labor, a property right
The right of a person to his labor is deemed to be property within the mantle of constitutional
protection. That is his means of livelihood. He cannot be deprived of his labor or work without
due process of law. When a person has no property, his job may possibly be his only possession
or means of livelihood for him and his family, He should be protected and insulated against any
arbitrary and unjust deprivation of his job.
Meaning of full employment
Full employment does not mean that everybody is working and the society does not experience
involuntary unemployment or deflationary unemployment. Full employment means that those
who want to work at the prevailing rates of pay are able to find work without undue difficulty.
Unemployment is involuntary idleness on the part of an employee who is able and willing to
work but could hardly fine one.
CONSTITUTIONAL RIGHTS OF WORKERS
a. Right to self-organization. The reason for the establishment of labor organization is,
according to Chief Justice Hughes, “That they were organized out of the necessities of the
situation, that a single employee was helpless in dealing with an employer; that he was
dependent ordinarily on his daily wage for the maintenance of himself and his family; that if the
employer refused to pay him the wages he thought fair he was nevertheless unable to leave the
employ and resist arbitrary and unfair treatment; that a union was essential to give laborers
opportunity to deal on equality with their employer.”
The Labor Code provides under Article 245 that “Employees of government corporations
established under the Corporation Code shall have the right to organize and to bargain
collectively with their respective employers. All other employees in the civil service shall have
the right to form associations for purposes not contrary to law.”
Do rights to organize and negotiate in the government sector include the right to strike?
Government employees have the rights to organize and negotiate under the Constitution, but they
cannot call or join a strike arising from dissatisfaction on terms, and conditions of employment.
The government as employer assumes that since it represents the sovereign power, it must
reserve the right to determine the terms and conditions of employment under which its
employees work.
Government employees should not be treated similarly with employees in the private sector.
Substantial differences exist between them. First, the government is established to promote the
common good; the private enterprise is created for profit or gain. Second, terms and conditions
in government employment are fixed by law and governed by civil service law; employment in
the private sector is governed by labor law. Third, public funds are appropriated pursuant to a
law enacted by Congress; funds in the private sector are contributed by private individuals or
institutions. Fourth, the most salent factor is the doctrine of State sovereignty which underlies the
existence of all governments based on the time-honored principle of solus populi est suprema
lex; the private entity possesses no sovereign will.
b. Right to collective bargaining. It is through collective bargaining that employees are enabled
to obtain a relative equality of bargaining power with the employer, for it compels him to deal
with them as a group rather than as isolated individuals. The objective and normal end-result of
collective bargaining is the formation of a Collective Bargaining Agreement.
c. Right to security of tenure. It is the right of the worker to be secure or to continue in
employment until the same is terminated by authorized or just cause provided by law. Security of
tenure is not confined to cases of termination; it is also intended to shield the workers from an
unwarranted or unconsented demotion or transfer.
d. Right to just and humane conditions of work. This refers to fair wages and equal
remuneration for work of equal value, safe and healthy working conditions, equal opportunity to
promotion and rest, leisure and reasonable limitation of working hours,” such as:
Right to regular working hours
Right to regular working days
Right to weekly rest periods
Right to additional compensation for overtime work
Right to additional compensation on scheduled restday, special holiday
Right to holiday pay
e. Right to collective negotiations. Employees in the government sector cannot collectively
bargain on terms and conditions of employment simply because the same are fized by law and
determined by civil service law, rules and regulations. What has been granted to them instead is
the right to collective negotiations
f. Right to peaceful concerted activities. Concerted activities are designed by the workers to
express their collective demands through the machinery of boycott, pickets and strikes.
g. Right to strike. A strike is any temporary stoppage of work by the concerted action of
employees as a result of any industrial or labor dispute designed to compel the employer to
accede to certain demands of the employees.
h. Right to a living wage. Is minimum wage a living wage? Not necessarily. The purpose of a
minimum wage is to set a barrier below which wages may not fall. It is designed to insure a
rock-bottom protection to a wage earner. A living wage is not a mere subsistence wage but one
sufficient to enable the worker to live in reasonable comfort; a wage that can provide him and his
family a decent standard of living.
i. Right to participate in policy and decision-making processes. In upholding this right, the
Supreme Court ruled that the company should allow the union to participate in the amendment of
the company’s Code of Discipline for its provision shave repercussion son the employee’s right
to security of tenure. A line must be drawn between management prerogatives regarding business
operations per se and those which affect the rifgts of the employees. In treating the latter, the
management should see to it that its employees are at least properly informed of its decisions or
modes of action. (PAL, Inc. v. NLRC, G.R. No. 85985, August 13, 1993)
j. Right to a just share in the fruits of production. This provision is not self-executory, it needs
an enabling law. “Fruits of production” cover not only salaries, wages, benefits but also includes
profits. But the workers cannot demand as a matter of right, profit-sharing benefits in the absence
of an enabling law, unless the same is granted on account of company policy or practice or
collective bargaining.
ESCALATOR CLAUSE
It is a monetary feature that may be incorporated in the CBA. Under the escalator clause, wage
rates rise periodically usually with specific rises in the consumer price index or cost-of-living
index, but prohibit a decrease to reflect a drop in the cost-of-living.
Capital-labor relations impressed with public interest
Labor contracts are not merely contractual because they are impressed with public interest. Thus,
all labor contracts must yield to the common good. 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.
Principle of non-oppression
Article 1702 of the Civil Code provides that “neither capital nor labor shall act oppressively
against the other, or impair the interest or convenience of the public.”
Where the totality of the evidence is sufficient to warrant the dismissal of the employees, the law
warrants their dismissal without making any distinction between a first offender and a habitual
delinquent. The law, in protecting the rights of the laborer, authorizes neither oppression nor
self-destruction of the employer. (Colgate-Palmolive Phils. v. Ople, G.R. No. 7361, June 30,
1988) As a measure of self-protection against acts inimical to its interest, a company has the
right to dismiss its erring employees. The law does not impose unjust situations on either labor or
management. (Mercury Drug Corp. v. NLRC, G.R. No. 75662, September 15, 1989)
In the same vein, to require a company to continue being generous when it is no longer in a
position to do so would certainly be unduly oppressive, unfair and most revolting to the
conscience (North Davao Mining Corp. v. NLRC, 69 SCAD 430,431). The principle of social
justice is never meant to oppress the employer.
Liberal construction in favor of labor. Art. 1702 of the Civil Code provides that in case of doubt,
all labor legislations and all labor contracts shall be construed in favor of the safety and decent
living of the laborer.
Labor wages not subject to execution. Art. 1708 of the Civil Code provides that the laborer’s
wages shall not be subject to execution or attachment, except for debts incurred for food, shelter,
clothing and medical attendance.
Commencement of employer-employee relationship.
Employer-employee relationship is created by an employment contract, whether express or
implied. It has been held that the contract of employment marks the beginning of employment,
not the commencement of work.
Hiring by competent person.
Hiring is considered competent in the following instances:
a. If it is done by an agent with actual authority
b. If it is done by an agent with apparent authority
c. If it is done without authority, but subsequently ratified either expressly or impliedly
Four-fold test; Economic or Economic Reality Test
The existence or non-existence of the employer-employee relationship is commonly determined
by examination of certain factors or aspects of the relationship, as follows:
a. The manner of selection and engagement of the putative employee
b. The mode of payment of wages
c. The presence or absence of the power of dismissal
d. The presence or absence of the power of control, i.e., the power to control the employee
with respect to the means and methods by which the work is to be accomplished
To bolster the payment of wages and control test, the existing economic conditions between the
parties, like the inclusion of the employee in the payrolls, submission of his name with the SSS,
PAG-IBIG, Philhealth, otherwise known as the economic test, are also applied in determining
employer-employee relationship.
Under the control test, an employment relation obtains where work is performed or services
rendered under the control and supervision of the party contracting for the service, not only as to
the result of the work but also as to the manner and details of the performance.
Not every form of control establishes employer-employee relationship. A demarcation line
should be drawn between: (a) rules that merely serve as guidelines which only promote the
result, and (b) rules that fix the methodology and bid or restrict the party hired to the use of such
means or methods. Under the first category, there is no employer-employee relationship. The
second category establishes an employer-employee relationship.
Illustrations:
a. The bus owner has control over a bus driver, an employee, although paid on a
commission basis (R. Transport v. Ejandra, G.R. No. 148508, May 20, 2004)
b. Employment does not exist for a sales agent who receives commission on his gross sales.
(Abante v. Lamadrid Bearing and Parts, G.R. No. 615989, May 28, ,2004)
Working scholars not employees
There is no employer-employee relationship between students on the one hand, and schools,
colleges or universities on the other, where students work for the latter in exchange for the
privilege to study free of charge, provided the students are given real opportunity, including such
facilities as may be reasonable, necessary to finish their chosen courses under such arrangement
(Sec. 14, Rule X, Book III, Rules Implementing the Labor Code)
In a civil suit for damages filed by an injured person against a working scholar and the school,
the later claimed non-existence of employer-employee relationship. It must be noted that for
purposes of imposing liability for tortious act, the working scholar is considered an employee
and the school as employer (Filamer Christian Institute v. IAC, 212 SCRA 637)
Professors as employees
The University practically exercises an effective control and supervision over the work of
professors which includes what subjects to be taught, when to be taught and where to be taught.
Furthermore, the receive regular compensations from the university and where their services are
proven to be unsatisfactory, they can be dismissed (FEATI Univ. v. Bautista, 18 SCRA 1191)
Jeepney drivers as employees
Under the boundary system, the jeepney driver is not paid a fixed wage, and he shoulders
gasoline expenses but these factors by themselves do not create a lessor-lessee relationship. The
jeepney owner still exercises control and supervision over the driver by seeing to it that he
negotiates the route prescribed by the government agency. In lease, the lessor loses complete
control over the chattel. In the case of a jeepney owner, he retains control over his vehicle
(CLFW v. Abbas, 18 SCRA 71)
Medical consultants not employees
There is no employer-employee relationship between a hospital and medical consultants as the
latter are not under the effective control and supervision of the former. At most, they receive
certain honorarim or fees on matters that require consultation/advice by the consultants.
However, for purposes of allocating responsibility in medical negligence cases (tortious act),
employer-employee relationship exists between the hospital and its attending or visiting
physician.
APPRENTICES
Apprenticeship – means practical training on the job supplemented by related theoretical
instruction.
Apprentice – is a worker who is covered by a written apprenticeship agreement with an
individual employer or any of the entities recognized under the law. Once he has completed an
apprenticeship training, he can qualify for work in a highly-skilled trade.
Apprenticeable occupation – means any trade, form of employment or occupation which requires
more than 3 months of practical training on the job with compulsory related theoretical
instruction
Apprenticeship agreement is an employment contract wherein the employer binds himself to
train the apprentice and the apprentice in turn accepts the terms of training for a recognized
apprenticeable occupation emphasizing the rights, duties and responsibilities of each party.
On-the-job training – is the practical work experience through actual participation in productive
activities given to or acquired by an apprentice.
Qualifications of an apprentice:
a. At least 14 years of age
b. Possess vocational aptitude and capacity for appropriate tests
c. Possess the ability to comprehend and follow oral and written instructions
Employment of apprentices
Only employers in the highly technical industries may employ apprentices and only in
apprenticeable occupations. Apprenticeable occupation is defined as any trade, form of
employment or occupation which requires for proficiency more than 3 months of practical
training on the job with compulsory related theoretical instructions. Thus, a trade or occupation
which can be skillfully learned by a worker for only less than 3 months is not apprenticeable and
the worker cannot be hired as an apprentice.
A highly technical industry refers to a trade, business, enterprise, industry or other activity which
utilizes the application of advanced technology.
The period of apprenticeship shall not exceed 6 months. The wage rate of the apprentice shall
start at 75% of the statutory minimum wage for the first 6 months; thereafter, he shall be paid the
full minimum wage, including the full cost-of-living allowance. However, an apprentice may
receive no compensation whenever the on-the-job training is required by the school curriculum
as a prerequisite for graduation or for taking a government board examination. An employer who
shall pay the full minimum wage to the apprentice may avail of a deduction from taxable income
of ½ of the value of the training expenses.
LEARNERS
Learners – are persons hired as trainees in semi-skilled and other industrial occupations which
are non-apprenticeable and which may be learned through practical training on-the-job in a
relatively short period of time which shall not exceed 3 months. On-the-job or practical training
of a learner need not be supplemented by theoretical instructions.
Learners may be employed when no experienced workers are available, the employment of
learners being necessary to prevent curtailment of employment opportunities, and such
employment will not create unfair competition in terms of labor costs or impair working
standards
To protect him from exploitation, a minor below 15 years of age shall not be eligible for
employment as a learner. Those below 18 years of age may be employed only in non-hazardous
occupations
The learnership period shall not exceed 3 months. The wages or salary rates of the learners shall
be at least 75% of the applicable minimum wage.
All learners who have been allowed or suffered to work during the first 2 months shall be
deemed regular employees if training is terminated by the employer before the end of the
stipulated period through no fault of the learner.
Apprentices Learners
Apprentices are trained in apprenticeable Learners are trained in non-apprenticeable
occupations occupations
Employers who avail of the tax deduction Learners are always paid at not less than 75%
scheme pay their apprentices full minimum of the applicable minimum wage
wage instead of not less than 75% of the
applicable minimum wage
If the training is a prerequisite to graduation Learners employed in piece or incentive-rate
or for taking a government board jobs during the training period are paid in full
examination, hiring of apprentices without for the work done
compensation is authorized
Apprentices may be employed even when Learners may be employed only when there
there are experienced workers available are no experienced workers available

Apprenticeship/Learnership period is treated as a probationary period.

Probationary period is the span of time within which the employer is able to determine the
employee’s fitness, characteristics, and habits to a given job. It is the period one has to lear or
familiarize with the job. Thus, it may be shorter. If the job is apprenticeable, then the
probationary period is the apprenticeable period. If the job is learnable, the probationary
period is within 3 months or less. In both cases, upon completion of the apprenticeship or
learnership period, they may become employees in the company where they are trained. After the
training period, they shall no more undergo a probationary period for this would be tantamount
to double probation proscribed by law.
HANDICAPPED WORKERS
Handicapped workers – those whose earning capacity is impaired by age or physical or mental
deficiency or injury. A handicapped worker is entitled to not less than 75% of the applicable
minimum wage
Despite age, physical or mental deficiencies, and with proper placement and adequate training
techniques, he is still employable under the following conditions:
a. The employment is necessary to prevent curtailment of employment opportunities
b. The employment does not create unfair competition in labor costs
c. The employment will not impair or lower working standards
d. The handicapped worker must be paid not less than 75% of the appropriate minimum
wage
Disabled worker – is one whose earning capacity is impaired by mental, physical or sensory
deficiency or injury. A disabled person shall not be denied access to opportunities for suitable
employment. A qualified disabled employee shall be subject to the same terms and conditions of
employment and the same compensation, privileges, benefits, fringe benefits, incentives, or
allowances as a qualified able-bodied person.
Under Article 80 of the Labor Code, handicapped workers are entitled to not less than 75% of the
applicable minimum wage. However, under the Magna Carta for Disabled Persons, it provides
that persons with disability are entitled to equal opportunity for employment and resultantly, they
are subject to the same terms and conditions of employment and the same compensation,
privileges, benefits, fringe benefits, incentives or allowances as a qualified able-bodied person.
Thus, all qualified handicapped workers shall receive the full amount of the minimum wage rate.
The disability must be related to the work for which he was hired; otherwise, he is not considered
as handicapped or disabled worker. He may have some disability but if the same is not related to
his work, he cannot be considered a disabled worker in relation to the particular work for which
he was hired. Thus, if the efficiency or quality of work is not impaired by the disability in
relation to the work performed, he is not classified as a handicapped worker.
Right to service incentive leave
Every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay. This provision shall not apply to those who are already
enjoying the benefit herein provided, those enjoying vacation leave with pay at least five days
and those employed in establishments regularly employing less than ten employees or in
establishments exempted from granting this benefit by the Secretary of Labor after considering
the viability or financial condition of such establishment.
The Labor Code provides a five-day service incentive leave with pay for employees who have
rendered at least 1 year of service which may be used as vacation or sick leave. If unused at the
end of the year, this benefit is convertible to its cash equivalent based on the salary rate at the
date of commutation. There is no law which makes the grant of vacation leave and its benefits
mandatory on the part of management. The claim for vacation pay can only be availed of through
an agreement or through a voluntary unilateral grant by the employer. In the absence of any
contract or company policy providing for such benefit, it is unavailing.
“at least 1 year service” – means service within 12 months, whether continuous or broken
reckoned from the date the employee started working, including authorized absences and paid
regular holidays, unless the working days in the establishment as a matter of practice or policy or
that provided for in the employment contract is less than 12 months, in which case, the period
shall be considered as 1 year based on the salary rate at the date of commutation
Victims of violence against women and children are entitled to take a paid leave of absence up to
10 days in addition to other paid leaves under the Labor Code.

1.
Non-diminution of benefits.

Promotion v. demotion
Promotion is the advancement from one position to another with an increase in duties and
responsibilities and usually accompanied by an increase in salary. The indispensable element is
that there must be an advancement from one position to another or an upward vertical movement
of the employee’s rank or position. Any increase in salary should only be considered incidental
but never determinative of whether or not a promotion is bestowed upon an employee.
Demotion is a movement from one position to another involving the issuance of an appointment
with diminution in duties, responsibilities, status or rank which may or may not involve
reduction in salary.

Facilities
Facilities shall include articles or services for the benefit of the employee or his family but shall
not include tools of trade or articles or service primarily for the benefit of the employer or
necessary to the conduct of the employer’s business. The fair and reasonable value of the
facilities can be deducted from the employee’s cash wage without violating the principle of non-
diminution of benefits.
The fair reasonable value of facilities is determined to be the cost of operation and maintenance,
including adequate depreciation plus reasonable allowance; provided that if the total computed is
more than the fair rental value (or the fair price of the price of the commodities or facilities
offered for sale) the fair rental value (or the fair price of the commodities or facilities offered for
sale) shall be the reasonable cost of operation and maintenance. The rate of depreciation and
depreciated amount computed by the employer shall be those arrived at under good accounting
practices.