LABOR STANDARDS

By: Atty. Edwin E. Torres (MSU 2022)

1. CONDITIONS OF EMPLOYMENT

A) COVERAGE

B) HOURS OF WORK

(1) NORMAL HOURS OF WORK AND HOURS WORKED

Article 84. Hours worked. Hours worked shall include (a) all time during
which an employee is required to be on duty or to be at a prescribed
workplace; and (b) all time during which an employee is suffered or
permitted to work.

Rest periods of short duration during working hours shall be counted as

hours worked.

IMPLEMENTING RULES:

SECTION 3. Hours worked. - The following shall be considered as

compensable hours worked:

(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; and

(b) All time during which an employee is suffered or

permitted to work.

SECTION 4. Principles in determining hours worked. - The following

general principles shall govern in determining whether the time spent by
an employee is considered hours worked for purposes of this Rule:

(a) All hours are hours worked which the employee is

required to give his employer, regardless of whether or
not such hours are spent in productive labor or involve
physical or mental exertion.

(b) An employee need not leave the premises of the work

place in order that his rest period shall not be counted,
it being enough that he stops working, may rest
completely and may leave his work place, to go
elsewhere, whether within or outside the premises of his
work place.

(c) If the work performed was necessary, or it benefited the

employer, or the employee could not abandon his work
at the end of his normal working hours because he had
no replacement, all time spent for such work shall be
considered as hours worked, if the work was with the
knowledge of his employer or immediate supervisor.

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 (d) The time during which an employee is inactive by reason
of interruptions in his work beyond his control shall be
considered working time either if the imminence of the
resumption of work requires the employee's presence at
the place of work or if the interval is too brief to be
utilized effectively and gainfully in the employee's own
interest.

SECTION 5. Waiting time. - (a) Waiting time spent by an employee shall

be considered as working time if waiting is an integral part of his work or
the employee is required or engaged by the employer to wait.

(b) An employee who is required to remain on call in the employer's

premises or so close thereto that he cannot use the time effectively and
gainfully for his own purpose shall be considered as working while on call.
An employee who is not required to leave word at his home or with
company officials where he may be reached is not working while on call.

SECTION 6. Lectures, meetings, training programs. - Attendance at

lectures, meetings, training programs, and other similar activities shall
not be counted as working time if all of the following conditions are met:

(a) Attendance is outside of the employee's regular working

hours;

(b) Attendance is in fact voluntary; and

(c) The employee does not perform any productive work

during such attendance.

(2) COMPRESSED WORK WEEK

DOLE Department Advisory No. 2, series of 2009, provides for the following guidelines on the
adoption of various flexible work arrangements for labor and management wanting to
implement such arrangements as a coping mechanism and remedial measure in mitigating the
impact of the financial crisis on their business operations and the entire economy:

1. Compressed Workweek wherein the normal workweek is reduced to less

than six days but the total number of work hours of 48 hours per week
shall remain. The normal workday is increased to more than eight hours
but not to exceed 12 hours, without corresponding overtime premium. The
concept can be adjusted accordingly depending on the normal workweek of
the company pursuant to the provisions of Department Advisory No. 02,
series of 2004, dated 2 December 2004.

2. Reduction of Workdays wherein the normal workdays per week are

reduced but should not last for more than six months.

3. Rotation of Workers wherein the employees are rotated or alternately

provided work within the workweek.

4. Forced Leave wherein the employees are required to go on leave for

several days or weeks utilizing their leave credits if there are any.

5. Broken-time schedule wherein the work schedule is not continuous but

the work hours within the day or week remain.

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 6. Flexi-holidays schedule wherein the employees agree to avail the
holidays at some other days provided there is no diminution of existing
benefits as a result of such arrangement.

DOLE Department Advisory No. 4, series of 2010, provides for the following guidelines for
compressed work week:

“Flexible work arrangements refer to alternative arrangements or

schedules other than the traditional or standard workhours, workdays and
workweek.

The effectivity and implementation of any of the flexible work

arrangements shall be based on voluntary agreements between the
employer and the employees.

The adoption of the flexible work arrangements provided herein shall in

no case result in diminution of existing benefits of the employees.

III. The following are the flexible work arrangements which may be
considered, among others:

1. Compressed Workweek refers to one where the normal workweek is

reduced to less than six (6) days but the total number of work hours of
48per week shall remain. The normal workday is increased to more than
eight hours but not to exceed twelve hours, without corresponding
overtime premium. The concept can be adjusted accordingly depending
on the normal workweek of the company pursuant to the provisions of
the Department Advisory No.02, series of 2004, dated 2 December 2004.

2. Gliding or Flexi-time schedule refers to one where the employees

are free required to complete the core workhours in the establishment but
are free to determine their arrival and departure time.

3. Flexi-holidays schedule refers to one where the employees agree to

avail the holidays at some other days provided there is no diminution of
existing benefits as a result of such arrangement.

The employers and the employees may likewise explore other alternative
work arrangements under any agreement and company policy or practice
in accordance with existing laws and regulations.

IV. ADMINISTRATION

The parties to the flexible work arrangements shall be primarily

responsible for its administration. In case of difference of interpretation,
the following guidelines shall be observed:

1. The differences shall be treated as grievances under the applicable

grievance mechanism of the company.

2. If there is no grievance mechanism or if this mechanism is

inadequate, the grievance shall be referred to the Regional Office which
has jurisdiction over the workplace for appropriate conciliation.

3. To facilitate the resolution of grievances, employers are required

to keep and maintain, as part of their records, in the documentary
requirements proving that the flexible work arrangement was voluntarily
adopted.

xxx xxx xxx

Women employees may be allowed to work during nighttime in

accordance with Article 131 of the Labor Code, subject to the limitation
that the female employees should not be below eighteen (18) years of age.

Employees are likewise required, among others, to provide safe and

healthful working conditions, and adequate/ reasonable facilities such as
sleeping/resting quarters in the establishments.

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 Pregnant women and nursing mothers may be allowed to work at night
only if a competent physician, other than the company physician, shall
certify their fitness to render night work, and specify, in the case of
pregnant employees, the period of the pregnancy that they can safely
work.

Any deviation from the limitations stated above and those provided for
under the Labor Code, and Department Circular No.1, Series of 2008
(Policy Guidelines Governing the Occupational Safety and Health of
Workers in the Call Center Industry) shall be a ground for revocation of
the exemption granted herein.

V. NOTICE

The employer shall notify the department through the Regional Office
which has jurisdiction over the workplace, copy furnished the Bureau of
Working Conditions, of the adoption of any of the above flexible work
arrangements and the employment of women employees during
nighttime.”

(3) MEAL PERIODS

Article 85. Meal periods. Subject to such regulations as the Secretary of

Labor may prescribe, it shall be the duty of every employer to give his
employees not less than sixty (60) minutes time-off for their regular
meals.

IMPLEMENTING RULES:

SECTION 7. Meal and Rest Periods. - Every employer shall give his
employees, regardless of sex, 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 provided
that such shorter meal period is credited as compensable hours worked of
the employee:

(a) Where the work is non-manual work in nature or does

not involve strenuous physical exertion;

(b) Where the establishment regularly operates not less than

sixteen (16) hours a day;

(c) In case of actual or impending emergencies or there is

urgent work to be performed on machineries, equipment
or installations to avoid serious loss which the employer
would otherwise suffer; and

(d) Where the work is necessary to prevent serious loss of

perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes
shall be considered as compensable working time.

(4) NIGHT-SHIFT DIFFERENTIAL

Article 86.  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 morning.

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(5) OVERTIME WORK

Article 87. Overtime work. Work may be performed beyond eight (8) hours

a day provided that the employee is paid for the overtime work, an
additional compensation equivalent to his regular wage plus at least
twenty-five percent (25%) thereof. Work performed beyond eight hours on
a holiday or rest day shall be paid an additional compensation equivalent
to the rate of the first eight hours on a holiday or rest day plus at least
thirty percent (30%) thereof.

Article 88. Undertime not offset by overtime. Undertime work on any

particular day shall not be offset by overtime work on any other day.
Permission given to the employee to go on leave on some other day of the
week shall not exempt the employer from paying the additional
compensation required in this Chapter.

(6) COMPUTATION OF ADDITIONAL COMPENSATION (RATES ONLY)

Article 89. Emergency overtime work. Any employee may be required by

the employer to perform overtime work in any of the following cases:

When the country is at war or when any other national or local emergency
has been declared by the National Assembly or the Chief Executive;

When it is necessary to prevent loss of life or property or in case of

imminent danger to public safety due to an actual or impending
emergency in the locality caused by serious accidents, fire, flood,
typhoon, earthquake, epidemic, or other disaster or calamity;

When there is urgent work to be performed on machines, installations, or

equipment, in order to avoid serious loss or damage to the employer or
some other cause of similar nature;

When the work is necessary to prevent loss or damage to perishable

goods; and

Where the completion or continuation of the work started before the

eighth hour is necessary to prevent serious obstruction or prejudice to
the business or operations of the employer.

Any employee required to render overtime work under this Article shall
be paid the additional compensation required in this Chapter.

Article 90. Computation of additional compensation. For purposes of

computing overtime and other additional remuneration as required by
this Chapter, the "regular wage" of an employee shall include the cash
wage only, without deduction on account of facilities provided by the
employer.

C) REST PERIODS

Article 91. Right to weekly rest day.

It shall be the duty of every employer, whether operating for profit or not,
to provide each of his employees a rest period of not less than twenty-
four (24) consecutive hours after every six (6) consecutive normal work
days.

The employer shall determine and schedule the weekly rest day of his
employees subject to collective bargaining agreement and to such rules
and regulations as the Secretary of Labor and Employment may provide.
However, the employer shall respect the preference of employees as to
their weekly rest day when such preference is based on religious grounds.

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 Article 92. When employer may require work on a rest day. The employer
may require his employees to work on any day:

In case of actual or impending emergencies caused by serious accident,

fire, flood, typhoon, earthquake, epidemic or other disaster or calamity to
prevent loss of life and property, or imminent danger to public safety;

In cases of urgent work to be performed on the machinery, equipment, or

installation, to avoid serious loss which the employer would otherwise
suffer;

In the event of abnormal pressure of work due to special circumstances,

where the employer cannot ordinarily be expected to resort to other
measures;

To prevent loss or damage to perishable goods;

Where the nature of the work requires continuous operations and the
stoppage of work may result in irreparable injury or loss to the employer;
and

Under other circumstances analogous or similar to the foregoing as

determined by the Secretary of Labor and Employment.

Article 93. Compensation for rest day, Sunday or holiday work.

Where an employee is made or permitted to work on his scheduled rest

day, he shall be paid an additional compensation of at least thirty percent
(30%) of his regular wage. An employee shall be entitled to such
additional compensation for work performed on Sunday only when it is
his established rest day.

When the nature of the work of the employee is such that he has no
regular workdays and no regular rest days can be scheduled, he shall be
paid an additional compensation of at least thirty percent (30%) of his
regular wage for work performed on Sundays and holidays.

Work performed on any special holiday shall be paid an additional

compensation of at least thirty percent (30%) of the regular wage of the
employee. Where such holiday work falls on the employee’s scheduled
rest day, he shall be entitled to an additional compensation of at least
fifty per cent (50%) of his regular wage.

Where the collective bargaining agreement or other applicable

employment contract stipulates the payment of a higher premium pay
than that prescribed under this Article, the employer shall pay such
higher rate.

D) HOLIDAYS

Article 94. Right to holiday pay.

Every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than
ten (10) workers;

The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular
rate; and

As used in this Article, "holiday" includes: New Year’s Day, Maundy

Thursday, Good Friday, the ninth of April, the first of May, the twelfth of
June, the fourth of July, the thirtieth of November, the twenty-fifth and

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 thirtieth of December and the day designated by law for holding a general
election.

Presently, there are already 12 regular holidays, with two other regular holidays added to the
10 regular holidays in the Labor Code. They are:

New Year’s Day - January 1

Araw ng Kagitingan - April 9
Maundy Thursday - April 14
Good Friday - April 15Labor Day
Labor Day - May 1
Eid’l Fitr (Feast of Ramadan) - (no fixed date)
Independence Day - June 12
Eid’l Adha (Feast of Sacrifice) - (no fixed date)
National Heroes Day - August 29
Bonifacio Day - November 30
Christmas Day - December 25
Rizal Day - December 30

RULES IN THE PAYMENTN OF HOLIDAY PAY:

1. General rule: The law that provides for holiday pay is Article 94 of the Labor Code. It
provides in part:

“Art. 94. Right to holiday pay. – (a) Every worker shall be paid his
regular daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers;

(b) The employer may require an employee to work on any holiday but
such employee shall be paid a compensation equivalent to twice his regular
rate; x x x.”

Sec. 3, Rule IV, Book III, Omnibus Rules Implementing the Labor Code, provides:

“Sec. 3. Holiday Pay. – Every employer shall pay his employees their
regular daily wage for any unworked regular holiday. x x x.”

On the basis of the above-cited provisions, an employee is entitled to “holiday pay” that is
equivalent to 100% of his daily wage if he does not work on the given regular holiday. If he
works on that holiday, then he is entitled to 200% of his daily wage.

2. Leave of absence with pay. Section 6, Rule IV, Book III, Omnibus Rules Implementing
the Labor Code, provides:

“Sec. 6. Absences. - (a) All covered employees shall be entitled to the

benefit provided herein when they are on leave of absence with pay.
Employees who are on leave of absence without pay on the day immediately
preceding a regular holiday may not be paid the required holiday pay if he has
not worked on such regular holiday.

(b) Employees shall grant the same percentage of the holiday pay as
the benefit granted by competent authority in the form of employee’s
compensation or social security payment, whichever is higher, if they are not
reporting for work while on such benefits.

(c) Where the day immediately preceding the holiday is a non-working

day in the establishment or the scheduled rest day of the employee, he shall
not be deemed to be on leave of absence on that day, in which case he shall be
entitled to the holiday pay if he worked on the day immediately preceding the
non-working day or rest day.”

On the basis of the above-quoted Section 6(a), an employee is entitled to holiday pay if his leave
of absence during the holiday is WITH PAY. For instance, if the employee is absent during the
holiday because he is enjoying his service incentive leave which is with pay pursuant to law,
then he is entitled to the holiday pay. A vacation leave may either be with pay or without pay
on account of CBA or company practice. If it is with pay, then the employee is entitled to the
holiday pay. It should be noted that a vacation leave of more than 5 days already includes the

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SIL of 5 days with pay. A sick leave may be with pay on account of CBA, company practice, or
SSS coverage. In such case, the employee is entitled to holiday pay even if he did not work on
the holiday.

3. Leave of absence without pay. The rule is that an employee who is on leave of
absence WITHOUT PAY is not entitled to holiday pay for the holiday that falls within the period
of his absence. This is the import of the above-cited Section 6(a).

4. Day immediately preceding the holiday. RULE 1: If the day immediately preceding
the holiday is a non-working day in the company or a rest day of the employee, then he is not
considered on leave of absence on that day, in which case he is entitled to holiday pay. This is
the import of the above-quoted Section 6(c). RULE 2: If the day immediately preceding the
holiday is not a non-working day in the company or a rest day of the employee, then what is
controlling is whether or not the employee is on leave of absence with pay or without pay on
said day. If he is absent with pay, then the general rule applies that he is entitled to holiday
pay. If he is absent without pay, then he is not entitled to holiday pay unless he works on the
holiday.

5. Company practice. Labor standards – such as the holiday pay – are matters of law.
The employer is prohibited from providing benefits that are less than the labor standards
because said standards are minimum standards. For the same reason that labor standards
are minimum standards, the employer is free to provide benefits that are more than said
standards. Furthermore, aside from law, company practices and contracts are the other
sources of obligations in the field of labor. For instance, when an employer grants holiday pay
to employees who are on leave of absence without regard to whether or not their absence is
with pay as long as they have properly filed applications for leave and their applications were
approved, the employees are entitled to holiday pay as a matter of company practice.

6. Additional compensation for holiday work. Rule 1: When an employee works on a

holiday, then he is entitled to 200% of his daily wage. Rule 2: When the holiday falls on the
employee’s rest day (such as Sunday), then he is entitled to an additional premium pay of 30%
of his regular rate of 200% of his basic pay. Rule 3: If the employee works overtime on the
holiday, then he is entitled to overtime pay of 30% of his 200% holiday rate. Rule 4: If the
employee works overtime on the holiday that falls on the employee’s rest day, then the
employee is entitled to overtime pay of 30% of his rate on said holiday – i.e., 30% x (200% of
daily rate + 30% of said 200%). This is the import of the following Sections 4 and 5, Rule IV,
Book III, Omnibus Rules Implementing the Labor Code:

“Sec. 4. Compensation for holiday work . Any employee who is

permitted or suffered to work on any regular holiday, not exceeding eight (8)
hours, shall be paid at least two hundred percent (200%) of his regular daily
wage. If the holiday work falls on the scheduled rest day of the employee, he
shall be entitled to an additional premium pay of at least 30% of his regular
holiday rate of 200% based on his regular wage rate.”

xxx xxx xxx

“Sec. 5. Overtime pay for holiday work. For work performed in excess
of eight hours on a regular holiday, an employee shall be paid an additional
compensation for the overtime work equivalent to his rate for the first eight
hours on such holiday work plus at least 30% thereof.”

7. Successive regular holidays. Section 10, Rule IV, Book III, Omnibus Rules
Implementing the Labor Code, provides:

“ Sec. 10. Successive regular holidays. Where there are two (2) successive
regular holidays, like Holy Thursday and Good Friday, an employee may not
be paid for both holidays if he absents himself from work on the day
immediately preceding the first holiday, unless he works on the first holiday,
in which case he is entitled to his holiday pay on the second holiday.”

Rule 1: In case of two successive holidays, the employee is not entitled to holiday pays for
these unworked holidays, if he did not work on the day immediately preceding the first holiday.
Rule 2: If the employee, who was absent on the day immediately preceding the first holiday,
worked on the first holiday, then he is entitled to 200% of his daily rate on the first holiday and

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100% thereof on his unworked second holiday. These rules should be interpreted to apply only
when the employee’s absence on the day immediately preceding the first holiday is without pay.

8. Temporary shutdown. In case of temporary shutdowns, the employee is entitled to

holiday pay for the holidays that fall within the period of the shutdown. The provision on this
is Section 7, Rule IV, Omnibus Rules Implementing the Labor Code, which provides thus:

“Section 7. Temporary or Periodic Shutdown and Temporary Cessation

of Work. – (a) In case of temporary or periodic shutdown and temporary
cessation of work of an establishment, as when a yearly inventory or when the
repair or cleaning of machineries and equipment is undertaken, the regular
holidays falling within the period shall be compensated in accordance with this
Rule.

(b) The regular holiday during the cessation of operation of an

enterprise due to business reverses as authorized by the Secretary of Labor
and Employment may not be paid by the employer.”

The shutdown because of lack of fish to be processed in a cannery is a temporary shutdown,

not a cessation of operation due to business reverses. Hence, the affected employees are
entitled to the holiday pays for the regular holidays that fall during the period of the shutdown.
The holiday pay that they are entitled to is only 100% of their daily wages.

E) SERVICE CHARGE [ARTICLE 96 OF THE LABOR CODE, AS AMENDED

BY RA 11360]

"Art. 96. Service Charges. - All service charges collected by hotels,

restaurants and similar establishments shall be distributed completely
and equally among the covered workers except managerial employees.

In the event that the minimum wage is increased by law of wage order,
service charges paid to the covered employees shall not be considered in
determining the employer's compliance with the increased minimum
age.

To facilitate resolution of any dispute between the management and the

employees on the distribution of service charges, a grievance mechanism
shall be established. If no grievance mechanism is established or if
inadequate, the grievance shall be referred to the regional office of the
Department of Labor and Employment which has jurisdiction over the
workplace for conciliation.

"For purposes of this Article, managerial employees refer to any person

vested with powers or prerogatives to lay down and execute management
policies or hire, transfer, suspend, pay-off, recall, discharge, assign or
discipline employees or to effectively recommend such managerial
actions."

Before the amendment of RA 11360, collected service charges are shared 85% to covered
employees and 15% to management. With the amendment, the entire service charges will go
to the covered employees.

F) OCCUPATIONAL SAFETY AND HEALTH STANDARDS LAW (RA 11058)

(1) COVERED WORKPLACES [SEC. 3(C)]

(c) Covered workplaces refer to establishments, projects, sites and all
other places where work is being undertaken wherein the number of
employees, nature of operations, and risk or hazard involved in the
business, as determined by the Secretary of Labor and Employment,
require compliance with the provisions of this Act.
(2) DUTIES OF EMPLOYERS WORKERS AND OTHER PERSONS [SEC. 4]

SEC. 4. Duties of Employers, Workers and Other Persons.

(a) Every employer, contractor or subcontractor, if any, and any person
who manages, controls or supervises the work being undertaken shall:

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 (1) Furnish the workers a place of employment free from
hazardous conditions that are causing or are likely to cause
death, illness or physical harm to the workers;
(2) Give complete job safety instructions or orientation to all the
workers especially to those entering the job for the first time,
including those relating to familiarization with their work
environment;
(3) Inform the workers of the hazards associated with their work,
health risks involved or to which they are exposed to,
preventive measures to eliminate or mlmmize the risks, and
steps to be taken in cases of emergency;
(4) Use only approved devices and equipment for the workplace;
(5) Comply with OSH standards including training, medical
examination and, where necessary, provision ofprotective and
safety devices such as personal protective equipment (PPE) and
machine guards;
(6) Allow workers and their safety and health representatives to
participate actively in the process of organizing, planning,
implementing and evaluating the safety and health program to
improve safety and health in the workplace; and
(7) Provide, where necessary, for measures to deal with
emergencies and accidents including first-aid arrangements.
(b) Every worker shall participate in ensuring compliance with
OSH standards in the workplace. The worker shall make proper
use of all safeguards and safety devices furnished for the
worker's protection and that of others, and shall observe
instructions to prevent accidents or imminent danger
situations in the workplace. The worker shall observe the
prescribed steps to be taken in cases of emergency.

The worker shall report to the supervisor any work hazard that
may be discovered in the workplace.
(c) It shall be the duty of any person, including the builder or
contractor who visits, builds, renovates or installs devices or conducts
business in any establishment or workplace, to comply with the
provisions of thig Act and all other regulations issued by the Secretary of
Labor and Employment.
(d) Whenever two (2) or more undertakings are engaged in activities
simultaneously in one (1) workplace, it shall be the duty of all engaged to
collaborate in the application of OSH standards and regulations.
(3) WORKERS’ RIGHT TO KNOW [SEC. 5]

SEC. 5. Workers' Right to Know. — The right to safety and health at work
shall be guaranteed. All workers shall be appropriately informed by the
employer about all types of hazards in the workplace, provided access to
training and education on chemical safety, and to orientation on the data
sheet of chemical safety, electrical safety, mechanical safety, and
ergonomical safety.

(4) WORKERS' RIGHT TO REFUSE UNSAFE WORK [SEC. 6]

SEC. 6. Workers' Right to Refuse Unsafe Work. — The worker has the right
of refusal to work without threat or reprisal from the employer if, as
determined by the DOLE, an imminent danger situation exists in the
workplace that may result in illness, injury or death, and corrective
actions to eliminate the danger have not been undertaken by the
employer.

(5) WORKERS' RIGHT TO PERSONAL PROTECTIVE EQUIPMENT (PPE) [SEC. 8]

SEC 8. Workers' Right to Personal Protective Equipment (PPE). Every

employer, contractor or subcontractor, if any, shall provide his workers,
free of charge, protective equipment for their eyes, face, hands and feet,

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 and lifeline, safety belt or harness, gas or dust respirators or masks, and
protective shields whenever necessary by reason of the hazardous work
process or environment, chemical, radiological, mechanical and other
irritants or hazards capable of causing injury or impairment in the
function of any part of the body through absorption, inhalation or
physical contact. The cost of the PPE shall be part of the safety and
health program which is a separate pay item pursuant to Section 20 of
this Act.

All PPE shall be of the appropriate type as tested and approved by the
DOLE based on its standards. The usage of P PE in all establishments,
projects, sites and all other

places where work is being undertaken shall be based on the evaluation

and recommendation of the safety officer.
2. WAGES

A) DEFINITIONS

(1) WAGE VS. SALARY

1. The term "wages" as distinguished from "salary", applies to the compensation for
manual labor, skilled or unskilled, paid at stated times, and measured by the day, week,
month, or season, while "salary" denotes a higher degree of employment, or a superior grade of
services, and implies a position of office. By contrast, the term “wages” indicates considerable
pay for a lower and less responsible character of employment, while "salary" is suggestive of a
larger and more important service.1

2. “'Wages” are the compensation given to a hired person for service, and the same is true
of “salary”. The words seem to be synonymous, convertible terms, though we believe that use
and general acceptation have given to the word “salary” a significance somewhat different from
the word “wages” in this: that the former is understood to relate to position of office, to be the
compensation given for official or other service, as distinguished from “wages”, the
compensation for labor."2

(2) FACILITIES VS. SUPPLEMENTS

1. For FACILITIES to be considered part of wage, the following requirements must be

shown:

a. Such facilities are customarily furnished by the trade;

b. The deductible facilities must be voluntarily accepted in writing by the
employee; and
c. The facilities must be charged at fair and reasonable value.

One of the badges to show that a facility is customarily furnished by the trade is the existence
of a company policy or guideline showing that provisions for a facility were designated as part
of the employees’ salaries. Apart from company policy, the employer may also prove
compliance with the first requirement by showing the existence of an industry-wide practice of
furnishing the benefits in question among enterprises engaged in the same line of business. If
it were customary among construction companies to provide board and lodging to their workers
and treat their values as part of their wages, we would have more reason to conclude that these
benefits were really facilities. Lastly, even if a benefit is customarily provided by the trade, it
must still pass the purpose test set by jurisprudence. Under this test, if a benefit or privilege
granted to the employee is clearly for the employer’s convenience, it will not be considered as a
facility but a supplement. Here, careful consideration is given to the nature of the employer’s
business in relation to the work performed by the employee. This test is used to address
inequitable situations wherein employers consider a benefit deductible from the wages even if
the factual circumstances show that it clearly redounds to the employers’ greater advantage.
Under the law, only the value of the facilities may be deducted from the employees’ wages but
not the value of supplements. Facilities include articles or services for the benefit of the
employee or his family but exclude tools of the trade or articles or services primarily for the

1
Gaa vs. CA, et al. (G.R. No. L-44169, 3 December 1985).
2
Ibid.

11
benefit of the employer or necessary to the conduct of the employer’s business. The law also
prescribes that the computation of wages shall exclude whatever benefits, supplements or
allowances given to employees. Supplements are paid to employees on top of their basic pay
and are free of charge. Since it does not form part of the wage, a supplement’s value may not
be included in the determination of whether an employer complied with the prescribed
minimum wage rates.3

2. The benefit or privilege given to the employee which constitutes an extra remuneration
above and over his basic or ordinary earning or wage is SUPPLEMENT; and when said benefit
or privilege is part of the laborers' basic wages, it is a facility. The distinction lies not so much
in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for
which it is given. Ultimately, the real difference lies not on the kind of the benefit but on the
purpose why it was given by the employer. If it is primarily for the employee’s gain, then the
benefit is a facility; if its provision is mainly for the employer’s advantage, then it is a
supplement. Under the PURPOSE TEST, substantial consideration must be given to the
nature of the employer’s business in relation to the character or type of work performed by the
employees involved. Our Haus is engaged in the construction business, a labor-intensive
enterprise. The success of its projects is largely a function of the physical strength, vitality and
efficiency of its laborers. Its business will be jeopardized if its workers are weak, sickly, and
lack the required energy to perform strenuous physical activities. Thus, by ensuring that the
workers are adequately and well fed, the employer is actually investing on its business. Unlike
in office enterprises where the work is focused on desk jobs, the construction industry relies
heavily and directly on the physical capacity and endurance of its workers. This is not to say
that desk jobs do not require muscle strength; we simply emphasize that in the construction
business, bulk of the work performed are strenuous physical activities. Moreover, in the
construction business, contractors are usually faced with the problem of meeting target
deadlines. More often than not, work is performed continuously, day and night, in order to
finish the project on the designated turn-over date. Thus, it will be more convenient to the
employer if its workers are housed near the construction site to ensure their ready availability
during urgent or emergency circumstances. Also, productivity issues like tardiness and
unexpected absences would be minimized. Hence, under the purpose test, the subsidized
meals and free lodging provided by the construction company are actually supplements. 4

3. On whether the value of the FACILITIES should be included in the computation of the
"wages" received by private respondents, Section 1 of DOLE Memorandum Circular No. 2
provides that an employer may provide subsidized meals and snacks to his employees provided
that the subsidy shall not be less that 30% of the fair and reasonable value of such facilities. In
such cases, the employer may deduct from the wages of the employees not more than 70% of
the value of the meals and snacks enjoyed by the latter, provided that such deduction is with
the written authorization of the employees concerned. Moreover, before the value of facilities
can be deducted from the employees’ wages, the following requisites must all be
attendant: first, proof must be shown that such facilities are customarily furnished by the
trade; second, the provision of deductible facilities must be voluntarily accepted in writing by
the employee; and finally, facilities must be charged at reasonable value. Mere availment is not
sufficient to allow deductions from employees’ wages.5

B) PRINCIPLES

(1) NO WORK, NO PAY

1. The basic rule in this jurisdiction is "no work, no pay." The right to be paid for un-
worked days is generally limited to the ten legal holidays in a year. Employees’ claim is based
on a mistaken notion that Section 2, Rule IV of Book III gave rise to a right to be paid for un-
worked days beyond the twelve legal holidays. In effect, petitioners demand that the company
should pay them on Sundays, the un-worked half of Saturdays and other days that they do not
work at all. The employees’ line of reasoning is not only a violation of the "no work, no pay"
principle, it also gives rise to an invidious classification, a violation of the equal protection
clause. Sustaining their argument will make monthly-paid employees a privileged class who are
paid even if they do not work. The use of a divisor less than 365 days cannot make the
company automatically liable for underpayment. The facts show that petitioners are required
to work only from Monday to Friday and half of Saturday. Thus, the minimum allowable
divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52

3
Our Haus Realty Development Corporation vs. Parian, et al. (G.R. No. 204651, 6 August 2014).
4
Ibid.
5
SLL International Cables Specialist and Lagon vs. NLRC, et al. (G.R. No. 172161, 2 March 2011).

12
half Saturdays). Any divisor below 287 days means that the company’s workers are deprived of
their holiday pay for some or all of the ten legal holidays. The 304 days divisor used by the
company is clearly above the minimum of 287 days.6

2. If there is no work performed by the employee there can be no wage or pay, unless of
course the laborer was able, willing and ready to work but was illegally locked
out, dismissed or suspended. The "no work, no pay" principle contemplates a "no work"
situation where the employees voluntarily absent themselves. This is not the case were the
employee was forced to forego her continued employment and did not just abandon her duties.
In fact, she lost no time in protesting her reassignment as a form of constructive dismissal. It
is settled that the filing of a complaint for illegal dismissal is inconsistent with a charge of
abandonment. The filing of the complaint is proof enough of his desire to return to work, thus
negating any suggestion of abandonment. Hence, she should be paid her backwages during
the period when she did not work.7

3. The "no work no pay" scheme is merely a method of computing compensation, not a
basis for determining the existence or absence of employer-employee relationship. 8 

(2) EQUAL PAY FOR EQUAL WORK

1. The long honored legal truism of "equal pay for equal work," meaning, "persons who
work with substantially equal qualification, skill, effort and responsibility, under similar
conditions, should be paid similar salaries," has been institutionalized in our jurisdiction.
Such that "if an employer accords employees the same position and rank, the presumption is
that these employees perform equal work" as "borne by logic and human experience." The
ramification is that "(i)f the employer pays one employee less than the rest, it is not for that
employee to explain why he receives less or why the others receive more. That would be adding
insult to injury. The employer has discriminated against that employee; it is for the employer
to explain why the employee is treated unfairly." Not having satisfied this burden, the
employer is then liable for the wage differentials.9

2. Discrimination, particularly in terms of wages, is frowned upon by the Labor Code.

Article 135, for example, prohibits and penalizes the payment of lesser compensation to a
female employee as against a male employee for work of equal value. Article 248 declares it an
unfair labor practice for an employer to discriminate in regard to wages in order to encourage
or discourage membership in any labor organization. Notably, the International Covenant on
Economic, Social, and Cultural Rights, supra, in Article 7 thereof, provides:

“The States Parties to the present Covenant recognize the right of everyone to
the enjoyment of just and favourable conditions of work, which ensure, in
particular:

a. Remuneration which provides all workers, as a minimum, with:

(i) Fair wages and equal remuneration for work of equal

value without distinction of any kind, in particular women
being guaranteed conditions of work not inferior to those
enjoyed by men, with equal pay for equal work;

xxx      x x x          xxx

The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal
truism of "equal pay for equal work." Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be paid similar salaries. This
rule applies to the School, its "international character" notwithstanding. The School contends
that petitioner has not adduced evidence that local-hires perform work equal to that of foreign-
hires. The Court finds this argument a little cavalier. If an employer accords employees the
same position and rank, the presumption is that these employees perform equal work. This
presumption is borne by logic and human experience. If the employer pays one employee less
than the rest, it is not for that employee to explain why he receives less or why the others

6
Odango, et al. vs. NLRC and Antique Electric Cooperative, Inc. (G.R. No. 147420, 10 June 2004).
7
Republic of the Philippines vs. Pacheo (G.R. No. 178021, 25 January 2012).
8
CRC Agricultural Trading and Catintig vs. NLRC and Obias (G.R. No. 177664, 23 December 2009).
9
Philex Gold Philippines, Inc., et al. vs. Philex Bulawan Supervisors Union (G.R. 149758, 25 August 2005).

13
receive more. That would be adding insult to injury. The employer has discriminated against
that employee; it is for the employer to explain why the employee is treated unfairly. 10

(3) FAIR WAGE FOR FAIR WORK

When the case of strikes, and according to the CIR even if the strike is legal, strikers may not
collect their wages during the days they did not go to work, for the same reasons if not more,
laborers who voluntarily absent themselves from work to attend the hearing of a case in which
they seek to prove and establish their demands against the company, the legality and propriety
of which demands is not yet known, should lose their pay during the period of such absence
from work. The age-old rule governing the relation between labor and capital or management
and employee is that a "fair day's wage for a fair day's labor." If there is no work performed by
the employee there can be no wage or pay, unless of course, the laborer was able, willing and
ready to work but was illegally locked out, dismissed or suspended. It is hardly fair or just for
an employee or laborer to fight or litigate against his employer on the employer's time. 11

Conformably with the long honored principle of a fair day’s wage for a fair day’s labor,
employees dismissed for joining an illegal strike are not entitled to backwages for the period of
the strike even if they are reinstated by virtue of their being merely members of the striking
union who did not commit any illegal act during the strike. 12

10
International School Alliance of Educators vs. Quisumbing, et al. (G.R. No. 128845, 1 June 2000).
11
J.P. Heilbronn Co. vs. National Labor Union (G.R. No. L-5121, 30 January 1953).
12
Olisa, et al. vs. Escario, et al. (G.R. No. 160302, 27 September 2010).

14