CHAPTER 7

WORKING CONDITIONS AND REST PERIODS

WORKING HOURS
The provisions of this title on working conditions and rest periods including hours of work shall
apply to employees in all establishments and undertaking wether for profit or not.
The same however do not apply to the following:
1.Government Employees
2.Field personnel
3.Managerial Employees
4.Members of the employersfamily who are dependent on him for support
5.Domestic helper
6.Persoms in the personal service of another; and
7.Workers who are paid by result (Art, 82 Labor Code as amended)

Government Employees
Government employees whether employed in the national government or in any political
subdivision (LGU's) including those employed in the Government Owned and Controlled
Corporations (GOCC) with original charter are governed by the Civil Service Law and its
implementing rules and regulations.
Managerial Employees
Managerial employees have various definitions under the Labor Code.

Workers who are paid by result

Workers are paid by results are those whose pay is calculated in terms of the quantity or quality
of their work output.

Domestic Servants
Persons in the personal service.

Non- Agricultural Field Personnel

Non- Agricultural Employees are those who regularly perfom their duties away from principal or
branch office or place of business and whose work hours cannot be determined with
reasonable certainty.

Hours Worked
Number of hours which employee is consideres working even if he did not actually rendered
service and therefore compensable.

Principles in Determing Hours Worked

Waiting Time
Attendance To Lectures, Meetings, Programs

MEALS/REST PERIOD
Every employer shall give his employees, regardless of gender not less than one (1) hour time
off for regular meals, except in the following cases: When a meal period of not less than twenty
(20) minutes may be given by the employer.
Coffee Breaks
OVERTIME PAY
Overtime Pay is on additional pay of 25% of a covered employee's hourly rate for work
perfomed beyond 8 hours a day for overtime work.

Regural Working Days

Normal Hours of Works in Hospital/Clinic
Personnel Covered
Additional Compensation
Overtime Work when required in Hospital/ Clinic
Hospital and Cilinics defined
Determination of Bed Capacity and Population
Determination of Population

NIGHT SHIFT DIFFERENTIAL

Every employee shall be paid a night shift differential of not 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 following morning (10:00 PM-6:00AM) (Art. 86 Labor Code as amended).

Additional Compensation scheduled on Rest Day/ Special Holiday

For work done(8 hours) (overtime work) on special day, they shall be paid additional 30% of
their hourly rate on said day.

Additional Compensation on Regular Holidays/No Diminution Of agreed

Benefits
For work done during regular holidays, an employee shall be entitled to his regular wage which
is 200% plus and additional compensation of not less than 10%.
Example 1:
X with salary of Php 420.00/day worked for 16 hours started from 2:00PM of Saturday to
6:00AM of Sunday which is his regular working schedule.
How much is X's income for the day?
To solve:
1. For the first 8 hours from 2:00 to 10:00 PM of Saturdays his income is Php 420 which his
regular wage;
2. For the last 8 hours from 10:00 PM to 6:00 AM of Sunday his income is as follows:
a. Php 420.00/8 = Php 52.50/hour b. Php 52.50 (regular rate) + Php 18.125 (OT rate)
= 65.625/hour x 8 - Php 525.00 525.00 x 10% (night differential) N
c.577.50 (income from 10:00 PM to 6:00 AM)
d.577.50+420.00
997.50 X's income for the day

WEEKLY REST DAY

Every employer shall give his employees a rest period of not less than twenty-four (24)
consecutive hours after every six (6) consecutive normal work days (Sec. 3 Rule II Book III
Omnibus Rules Implementing Labor Code).

Employee's Preference to choose his Rest Day

Respected by the employer if the same is based on religious grounds.

When Work on Rest Day be Authorized

An employer may require any of his employees to work on his scheduled rest day.

No employee shall be compelled to Work on Rest Day

No employee shall be required against his will, to work on his scheduled rest day except under
the circumstances afore mentioned.

HOLIDAYS WITH PAY

The following are not covered with the payment of Holidays under the Labor Code as amended:
1. Government employees
2. Those employed in government owned and controlled corporation with original charter
3. Those employed in retail and service establishment with less than 10 employees
4. Domestic helpers and persons in the personal service of another
5. Managerial employees
6. Field personnel
Double Pay for work on holidays
An employee who is permitted on any regular holiday, not exceeding eight hours shall be paid
at least two hundred percent(200%)of his regular wage.
Overtime Pay for Holdiay Work
The regular holiday rest day rate an employee is 200% of the regular daily wage rate plus 30%.
Absences
Employees who are leave of absence may not be paid the required holiday pay if he had not
worked on such regular holiday.
Where the day immediately preceding the holiday is Non-Working Day
Employees who are not reporting for work on holidays
Temporary or periodic Shut down
Cessation of operation due to Business Reverses
Holiday Pay of certain Employees
Workeers Paid by Result also entitled to Holiday Pay
Seasonal worker not entitled to Holiday Pay
Regular Holiday falling on Rest Day/Sunday
Successive Regular Holidays

SERVICE INCENTIVE LEAVE

Every employee who has rendered at least one (1) year shall be entitled to a yearly service
incentive leave of five (5) days with pay (Sec. 2 Rule V Book 111 Omnibus Rules Implementing
Labor Code as amended). Ml
Incentive Leave Pay Commutable to Cash
One Year Serviceas as used in this context

SERVICE CHARGES
A service charge is a fee collected to pay for services related to the primary product or service
being purchased. The charge is usually added at the time of the transaction.
Covered Employees
This rule applies to all employees regardless of their positions, designations or employment
status and irrespective of the method by which their wages are paid except the managerial
employees (Sec. 2, ibid).
Distribution of service Charges
All service charges collected by covered employees shall be distributed at the rate of 85% for
the employees and 15% for the management.
.Frequency of Distribution
The shares referred to herein shall be distributed and paid to the employees not less than every
two (2) weeks or twice a month at the interval of not exceeding 16 days.
Permanency of service Charges
In case the service charge is abolished, the shares of the covered employees shall be considered
integrated in their wages. The basis of the amount to be integrated shall be the average
monthly share of each employee for the past 12 months immediately preceding the abolition or
withdrawal of such service charge (Sec. 5).

Payment by Result
Payment by result is based on such determination as follow:
The basis for the establishment of rates for piece output or contract work shall be the
performance of an ordinary worker of minimum skills or ability.

Travel when considered Working time

Travel from home to work is not compensable since it is a normal incident of employment.

Criterion for the overtime of Seaman

The correct criterion in determining whether or not sailors/seamen are entitled to overtime is
the actual service rendered in excess of regular work for the day (National Shipyards and Steel
Corp. vs. CIR, 3 SCRA 890).Overtime summative formula

Overtime Summative Formula

1. Regular Day
Daily Wage +25% (OT rate)
2. Legal or Regular Holidays - Daily Wage (200%) + 30% (OT rate)
3. Rest Day or Special Holiday Regular Rate of 130% +30% (OT rate)
4. Scheduled Rest Day which is also Special Holiday - Regular Rate of 150% +30% (OT rate)
5. Double Holiday
Regular Rate of 400% +30% (OT rate)
6. Rest Day which also Legal or Regular Holiday - Regular Rate of 200%+30% for Rest day rate +
30% (OT rate)

Umdertime not Offset by Overtime on Another day

Offsetting of undertime work by overtime work whether rendered on the same or another day
is prohibited by law.
Permission given by the employer for the employee to go on leave does not exempt him from
being paid with overtime rendered on another day.

Waiver of an overtime
An overtime pay cannot be waivedMeal Period not Compensable and may be taken outside the
workplace
The eight-hour work does not include the meal break. Nowhere in the law may be inferred that
employees must take their meals within the company premises as long as they return to their
post on time (PALI vs. NLRC G.R. No. 132805 February 2, 1999).

Shortened Meal Break Upon Employees Request

The employees may request that their meal period be shortened so that they can leave work
earlier than the previously established schedule.

Compulsory overtime
Employees cannot be compelled to render overtime work against their will.
 Chapter 8

WAGES AND OTHER BENEFITS

PAYMENT OF WAGES

Payment of wages is anchored on the basic principles embodied in the Labor Code

(PD 442 as amended) hereunder discussed as follows:

Fair Day’s Wage for a Fair Day’s Labor

“No Work No Pay Principle”

If there is no work performed by the employee, there can be no wage or pay, unless

The worker was able, willing and ready to work but was illegally locked out suspended,

Or dismissed or otherwise illegally prevented from working (Aklan Electric Coop. vs.

NLRC, G.R. No. 129246, January 25, 2000).

Equal Pay for Equal Work

Employees holding the same position and rank are presumed to be performing

Equal work. The rule equal pay for equal work applies whether the employee is hired

Locally or abroad (International School Alliance of Educators vs. Hon. Quisumbing

G.R. No. 128845, June 1, 2000).

Salary and Wage Distinguished

The term wage applies to the compensation for manual labor skilled or unskilled
Paid at the stated time and measured by the day, week, months or season.

While salary denotes a higher degree of employment, or a superior grade of

Services and implies a position or office (Gaa vs. CA, L-44169, 140 SCRA 309).

Importance of the Distinction between Salary and Wage

The importance of distinguishing salary from wage is that the latter being payment

For the services of workers with usually hand-to-mouth existence, the same is not

Subject for garnishment.

Said the Supreme Court:

“We do not think that the legislature intended the exemption in Article 1708

Of the New Civil code to operate in favor of any but those who are laboring

Men or women in the sense that their work is manual. Persons belonging

To this class usually look to their reward of a day’s labor for immediate or

Present support and such persons are more in need of exemption than others”

(Gaa vs. CA ibid).

Garnishment

A warning to a person in whose hands the effects of another are attached, not to

Pay the money or deliver the property of the defendant in his hand to him, but to

Appear and answer the plaintiff’s suit (Reliance Procoma Inc. vs. Phil. Asia Tobacco

Corp, 57 SCRA 374).

Simply stated, it means withholding one’s salary for payment to judgment creditor,

The person whose salary is withheld being adjudged as a judgment debtor.

Commission

Commission is remuneration / compensation received by the salesman, agent,

Executor, broker or trustee approximated to be the proportionate percentage

Corresponding to the benefit or profit obtained by the principal as a result of the

Transaction. Said commission is deemed reasonable in relation to the profit realized.

Facilities

Facilities include all articles or services granted by the employer for the benefit of

The employee and his family.

It does not include tools, or any article necessary to the conduct of the employer’s

Business.

Supplement defined

Foods or snacks or other convenience provided by the employer are deemed

Supplements if they are granted for the convenience of the employer. The criterion in

Making the distinction between a supplement and a facility does not lie in the kind but

In its purpose (Mayon Hotel & Restaurant vs. Adana, G.R. No. 157654, May 16, 2005

Application of the Rule on Wages

1. Farm tenancy or leasehold

2. Household or domestic helpers

3. Homeworkers

4. Workers employed in any establishment duly registered with the National Cottage Industry
Development Authority (NACIDA)

5. Workers in duly registered cooperative upon approval of the Secretary of Labor

6. Workers of a Barangay Micro Business Enterprise (RA 9178 Nov. 13, 2002)

Retail / Service Establishment to be exempted from Minimum Wage

For a retail/service establishment to be exempted from the coverage of the minimum wage
law, it must be shown that the establishment is regularly employing not more than ten (10)
workers and has applied for exemptions with and as determined by the appropriate Regional
Board (G.Planas Commercial vs. NLRC, G.R. No. 144619, November 11, 2005).

Ability to Pay Immaterial

The employer cannot exempt himself from liability to pay minimum wage because of the poor
financial condition of the company. The payment of the minimum wage is not dependent upon
the ability to pay of the employer (De Racho vs. Municipality of Iligan, G.R. No. L-23542, January
2, 1968).

Estoppel not Applied

The principle of estoppel does not apply to an employee who accepted payment of his salary /
wage without any objection far below than what he ought to receive.

Thus, an employee is not barred to sue for the difference.

The reason is obvious; the workers needed money badly for his and his family survival. Hence,
he would be compelled to accept any amount even against his will.

So that to apply estoppel would under the circumstances be tolerating the employer to exploit
the plight of the employee. That is not, and it is not the law.

No Diminution of Benefits

The legal bases upon which the principles are anchored that no diminution of benefits or
supplements enjoyed by the employees are as follows:

1. Express terms of an employment agreement:

2. Company practice which refers to the implied terms of an employment agreement which the
employer has freely and voluntarily extended to his employees and thus cannot be withdrawn
except by mutual consent of the contracting parties;

3. The constitutional protection on Labor (Sec. 18 Art. II and Sec. 3 Art. XIII: and

4. The liberal construction of Labor Laws and contract in favor of Labor, Art. 4 of the Labor Code
as amended (ARCO Metals vs. SAMAR-NAFLU G.R. No. 170734 May 14, 2008).

Application of No Diminution Policy

The application of no diminution of benefits or supplement is applicable when it is shown that:

1. The grant of the benefit is founded on the policy that has ripened into a practice over a long
period.

2. The practice is consistent and deliberate.

3. The practice is not due to error in the construction or application of a doubt.

Minimum Wage

The minimum wage refers to the basic, cash wages without deducting therefrom whatever
benefits, supplement or allowances which the employees enjoy free of charge aside from the
basic pay.

An employer may provide subsidized meals and snacks to his employees provided that the
subsidy shall not be less than 30% of the fair and reasonable value of such facilities,

In such case the employer may deduct from the wages of the employee not more than 70% of
the value of the meals and snacks enjoyed by the employees, provided that said deduction is
with written authorization of the employees concerned (Sec. 4 Rule V11 Book 111 Omnibus
Rules Implementing Labor Code as amended: Memorandum Circular 2, Nov. 4, 1992).

Manner of Wage Payment

As a general rule, wages shall be paid with legal tender and the use of tokens, promissory note,
vouchers, coupons or any other forms alleged to represent legal tender is absolutely prohibited
even when expressly requested by the employee (Sec. 1 Rule VIII Book III Rules Implementing
Labor Code as amended).

Legal Tender

That, which a debtor may compel the creditor to accept in payment of a debt (whether public
or private). Excell Anglo Industrial Corp. vs. Gochangco CV-03663 Nov. 27, 1986.

Simply put legal tender is cash money of Philippines currency

Payment by Checks

Payment of wages by bank checks, postal checks or money order, is allowed where

Such manner of wage payment is customary on the date of the effectivity of the Code,

Where it is stipulated in the collective bargaining agreement, or all of the following

Conditions are met:

1. There is a bank or other facility for encashment within a radius of one (1)

Kilometer from work place;

2. The employer or any of his agents or representatives does not receive any

Pecuniary benefit directly or indirectly from the arrangement;

3. The employees are given reasonable time during banking hours to withdraw

Their wages from the bank which time shall be considered as compensable

Hours; and

4. The payment of check is with the written consent of the employees concerned if

There is no collective bargaining agreement authorizing the payment of wages By check (ibid).

Time of Payment

The time of payment shall be as follows:

1. Wages shall be paid not less than once every two (2) weeks or twice a month

With an interval not exceeding 16 days, unless payment cannot be paid with

Such regularity due to force majeure or circumstances beyond the employer’s

Control, in which case, the employer shall pay the wage immediately after such

Force majeure or circumstances have ceased;

2. In case of payment of wages by result involving works which cannot be

Furnished in two (2) weeks, payment shall be made at interval not exceeding

16 days in proportion to the amount of work completed and final settlement

Shall be made immediately upon completion of the work (ibid)

Place of Payment

As a general rule, the place of payment shall be at or near the place of undertaking.

Payment in place other than the work place shall be permissible only under the
Following circumstances:

1. When payment cannot be effected at or near the place of work by reason of

The deterioration of peace or impending emergencies caused by fire, flood,

Epidemic or other calamity rendering payment thereat impossible.

2. When the employer provides free transportation to the employees back and Forth; and

3. Under any analogous circumstances, provided that the time spent by the employees in
collecting their wages shall be considered as compensable hours worked (Sec. 4, ibid).

No Payment of Wage at Bar, Night or Day Club

No employer shall pay his employees in any bar, night or day club, drinking establishment,
massage clinic, dance hall, or other similar places where games are played with stakes of money
or things representing money except in the case of persons employed in said places (ibid).

Direct Payment of Wages.

Payment of wages shall be made direct to the employees entitled thereto except in the
following cases;
 Chapter 9

“Employment Status”

An employment stastus refers to the rights and protections that employees are entitled to at
work. The employment status determines the responsibilities that an employer hires new
personnel, it is up to them to decide what type of employemnt status they are hiring under.

2 Kinds of Employees
- “Regular Employee” means an employee where employement is reasonaly expected to
continue for longer that two years, although such employmebt may be termeinated earlier by
action on the part of the Company or the employee.
-“Project Employee” is one whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the same time of
the engagement of the employee.

In Seasonal there is 2 Kinds of employee

-“Casual Employee” a person is a casual employee if they accept an offer for a job from an
employer knowing that there is no firm advance commitment to ongoing work within agreed
pattern of work.
-“Probationary Employee” is one who for a given period of time, is an observation by an
employer during which the letter determines whether or not he/she is qualified for permanent
employment.
Rules Governing in Probationary Employement

Article 281 of the Labor Code of the Philippines (LCP) provides that “probationary employment
shall not exceed six (6) months from the date the employee started working.” It also states that
“services of an employee who has been engaged on a probationary basis may be terminated for
a just cause or when he fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of his engage.

“Entitlement to Worker's Benefits”

Regardless of the employees classification as to whether casual or regular employee, every
employee shall be entitled to the rights and privileges and shall be subject to the duties and
obligations, as may be granted by law to regular employees during tge period of their actual
employment.

“Termination of Employment”
1) A written notice served on the employee specifying the ground or grounds for termination
and giving said employee reasonable opportunity within which to explain his side;
2) A hearing or conference, during which the employee concerned, with the assistance of
counsel, if he so desires with the opportunity to respond the charge, present his evidence or
rebut the evidence presented against him;
3) A written notice of termination served on the employee indicating that upon due
consideration of all circumstances, grounds have been established to justify his termination

“ Notice on Termination Due to Completion of the contract or Failure to meet the Standard”
If the termination is brought about by the completion of a contract or phase thereof, or by
failure of an employee to meet the standards of the employment in the case of probationary
employment.
“Reinstatement”
1) An employee who is separated from work without just cause shall be reinstated to his former
positio no.longer exists at the time of his reinstatement, in which case he shall be given a
substantially equivalent position in the same establishment without loss of seniority rights.
2) In case the establishment where the employee is to be reinstated has closed or created
operation or where his former position no longer exists at the time of reinstatement for
reasons not attributable to the fault of the employer, the employee shall be entitled to
separation equivalent to at least one(1) month salary or to one(1) month pay for every year of
service.

“Just Causes for Termination of Employment”

The just causes of termination refer to serious misconduct, willful disobedience or
insubordination, gross and habitual neglect of duties, fraud or willful breach of trust, loss of
confidence, a commission of a crime or offense, and analogous causes.

“Authorized Causes for Termination of Employment”

1) Installation of labor saving devices
2) Redundancy
3) Retrenchment to prevent losses
4) Closing or cessation of the establishment or undertaking

“Notice Requirement”
The notice of requirement is an interim notice that protects land for the designated purpose
until the final decision whether to confirm the designation is made by the requiring authority.
“Payments of Separation Pay for Authorized Cause of Termination Employment”
In cases of retrenchment due to financial losses, cessation of business or illness, separation pay
is normally half month's pay for every year of service or one month's pay, whichever is higher

“Termination of Employment by the Employer”

An employer may terminate an employment for any of the following causes: a. Serious
misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work; b. Gross and habitual neglect by the employee of
his duties;

“Termination by the Employee”

An employee may terminate without just cause the employee-employer relationship by serving
a written notice on the employer at least one (1) month in advance. The employer upon whom
no such notice was served may hold the employee liable for damages.

“Termination By the Employer without Notice”

1) Serious insult by the employer or his representative to the honor and person of the
employee;
2) Inhuman and unbearable treatment accorded the employee by the employer or his
representative.
3) Commission of a crime or offense by the employer or his representative against the person of
the employee or any of the immediate member of his family; and
4) Other cases analogous to the foregoing(Art. 285 Labor Code as Amended.)

“Disease as a Ground for Dismissal”

It substantiates the contention that the employee has indeed been suffering from a disease
that: (1) is prejudicial to his
“To Discipline Employee is Management Prerogative”
The Constitution gives the employees, whether regular or probationary, the right to security of
tenure. This means that dismissal can be effected only if there is cause and the employee
concerned was given due process.

“Burden of Proof is upon the Employer”

Burden of Proof is upon the employer to prove with substantial evidence just cause of dismissal
as an imposition of penalty.

“Misconduct Defined”
Misconduct has been defined as improper or wrong conduct. It is a transgression of some
established and definite rule of action a forbidden act, a dereliction of duties, willful in
character and implies wrongful intent and not mere error in judgement.
1) It must be serious;
2) Must relate to the performance of employee's duties; and
3) Must show that the employee has become unfit to continue working for the employer.

“ Serious Misconduct”
Under Article 282 (a) of the Labor Code, serious misconduct by the employee justifies the
employer in terminating his or her employment. Misconduct is defined as an improper or
wrong conduct

“Immorality”
Engaging in adulterous relations with another may be considered as immorality, which can be a
ground for termination of employment
“Misconduct by a Manager”
General Misconduct is behaviour that is inconsistent with employee obligations or duties; a
breach of company policy or procedure; or generally unacceptable or improper behaviour.

“Insubordination as a Valid Causes for Dismissal”

1) The employee's assailed conduct must have been willful or intentional;
2) The willfulness being characterized by a wrongful and perverse attitude;
3)The order violated must have been reasonable, lawful, made know to the employee; and
4) Must pertain to the duties which he had been engaged to discharge

“Employee Cannot Refuese to Follow Company Rules by Challenging its Responsibility”

It would be dangerous indeed, to allow employees to refuse to comply with the rules and
regulation, policies and procedures laid down by their employer by the simple expedient of
formally challenging their reasonableness.

“Repeated and Habitual Infractions Constitutes Misconduct”

Repeated and habitual infractions committed despite several warnings constitute gross
misconduct.

“Abandonment of Work”
Abandonment of work is a clear intent to discontinue one's employment without any intention
of returning back.
“The Employee must be Holding a Position of Trust and the Breach is Work Related”
The basic premise for dismissal on the ground of loss of confidence is that the employee
concerned holds a position of trust and confidence.

“No separation Pay for Dismissal on Ground under Act. 282 of the Labor Code”
Dismissed employees are not entitled to separation pay if the cause for dismissal falls under any
of the five circumstances stated under Article 282. However, if termination of employment was
due to the installation of labor-saving devices or redundancy, the employee shall be entitled to
a separation pay.