Labor Code of the Philippines

The Labor Code of the Philippines stands as the law governing employment practices and labor relations
in the Philippines. It was enacted on Labor day of 1974 by President Ferdinand Marcos, in the exercise of his
then extant legislative powers. It prescribes the rules for hiring and termination of private employees; the
conditions of work including maximum work hours and overtime; employee benefits such as holiday pay,
thirteenth month pay and retirement pay; and the guidelines in the organization and membership in labor unions
as well as in collective bargaining.

The Labor Code contains several provisions which are beneficial to labor. It prohibits termination from
employment of Private employees except for just or authorized causes as prescribed in Article 282 to 284 of the
Code. The right to trade union is expressly recognized, as is the right of a union to insist on a closed shop.

CHAPTER I GENERAL PROVISIONS

ART 1. NAME OF DECREE

☛ LABOR LEGISLATION - Consists of statutes, regulations and jurisprudence governing the relations between
capital and labor, by providing for certain standards of terms and conditions of employment or providing a legal
framework within which these terms and conditions and the employment relationship may be negotiated,
adjusted and administered. It is divided into labor standards and labor relations.
☛ LABOR STANDARDS - Are the minimum requirements prescribed by existing laws, rules and regulations
relating to wages, hours of work, cost-of-living allowance, and other monetary and welfare benefits, including
occupational safety, and health standards.
☛ LABOR RELATIONS LAW - defines the status, rights, and duties and the institutional mechanisms that
govern the individual and collective interactions of employers, employees or their representatives. - The law
which seeks to stabilize the relation between employer and employee, to forestall and thresh out their
differences through the encouragement of collective bargaining and the settlement of labor disputes through
conciliation, mediation, and arbitration.

ART. 2. DATE OF EFFECTIVITY

☛ The Labor Code took effect on November 1, 1974 (six months after its promulgation on May 1,1974)

☛ SEVEN (7) BASIC RIGHTS OF WORKERS AS GUARANTEED BY THE CONSTITUTION:

1. Right to Organize
2. Right to Conduct Collective Bargaining or Negotiation with Management
3. Right to Engage in Peaceful Concerted Activities including strike in accordance with law
4. Right to Enjoy Security of Tenure
5.Right to Work Under Humane Conditions
6.Right to Receive a Living Wage
7.Right to Participate in Policy & Decision-Making Processes affecting their rights and benefits as may be
provided by law

☛ RELATED LAWS: 1. CIVIL CODE: see Arts. 1700, 1701and 1703 2. REVISED PENAL CODE: Art. 289
3. OTHERS: SSS Law, GSIS Law, Agrarian Reform Law, the 13th month pay law, the Magna Carta for Public
Health Workers, etc.

ART 3. DECLARATION OF BASIC POLICY

The State shall afford protection to labor, promote full employment, ensure equal work opportunities
regardless of sex, age or creed, and regulate the relations between workers and employers. The State shall
assure the right of workers to self-organization, collective bargaining, security of tenure, and just and humane
conditions of work.

☛ EMPLOYER - one who employs the services of others; one for whom employees work and who pays their
wages or salaries.
☛ EMPLOYEE - one who works for an employer; a person working for salary or wages

ART 4. CONSTRUCTION IN FAVOR OF LABOR

☛ CONSTRUCTION IN FAVOR OF LABOR CLAUSE -this is with a view to apply the Code to the greater
number of employees to enable them to avail of the benefits under the law (Abella vs. NLRC). The working
man’s welfare should be the primordial consideration.
 - This rule is applicable if there is a doubt as to the meaning of the legal or contractual provision. If the
provision is clear and unambiguous, it must be applied in accordance with its express terms.
- These laws should be interpreted with a view to the fact that they are remedial in nature, they are
enacted to better the lot and promote the welfare of the members of the laboring class.
- Reservation of essential attributes of sovereign power is read into contracts as a postulate of the legal
order.
- Courts adopt a liberal approach that favors the exercise of labor rights. The mandate under Art. 4 is
simply to resolve doubt, if any, in favor of labor. If there is no doubt in implementing and interpreting the law,
labor will enjoy no built-in advantage and the law will have to be applied as it is.

☛ MANAGEMENT RIGHTS:
Right to conduct business
Right to prescribe rules
Right to select employees
Right to transfer or discharge employees

☛ MANAGEMENT PREROGATIVE
Except as limited by special laws, an employer is free to regulate, according to his own discretion and
judgment, all aspects of employment, including: HIRING, WORK ASSIGNMENTS, WORKING METHODS,
TIME PLACE AND MANNER OF WORK, TOOLS TO BE USED, PROCESSES TO BE FOLLOWED,
SUPERVISION OF WORKERS, WORKING REGULATIONS, TRANSFER OF EMPLOYEES, WORK
SUPERVISION, LAY-OFF OF WORKERS, AND DISCIPLINE, DISMISSAL AND RECALL OF
WORKERS.

Thus, so long as management prerogatives are exercised in good faith for the advancement of the
employer’s interest and not for the purpose of defeating or circumventing the rights of employees under special
law or under valid agreements, it shall be upheld.

ART 5. RULES AND REGULATIONS

The rules and regulations issued by the DOLE shall become effective 15 days after announcement of their
adoption in newspapers of general circulation.

ART 6. APPLICABILITY
☛ AGRICULTURAL OR FARM WORKER - one employed in an agricultural or farm enterprise and
assigned to perform tasks which are directly related to the agricultural activities of the employer, such as
cultivation and tillage of the soil, dairying, growing and harvesting of any agricultural and horticultural
commodities, the raising of livestock or poultry, and any activities performed by a farmer as an incident to or in
conjunction with such farming operations.
- There may be in one employer both agricultural as well as industrial workers. - PURPOSE of the
provision: intended to encourage workers to seek employment in agricultural enterprises instead of migrating to
already overcrowded urban areas to find work in industrial establishments
- The LC applies to all workers, whether agricultural or non-agricultural, including employees in a
government corporation incorporated under the Corporation Code.

CHAPTER II EMANCIPATION OF TENANTS

ART 7-11
- Share tenancy has been abolished placing in its stead leasehold system.
- Under Art. 8, the land covered by operation land transfer must be private agricultural land, tenanted, primarily
devoted to rice and/or corn, and more than seven hectares in are.

☛ Present retention limits:

- 5 hectares per landowner and 3 hectares per child provided the child is:
1. Is at least 15 years of age; and
2. Actually tilling the land or directly managing the farm
☛ EXCEPTIONS: - those covered by homestead patents - those covered by PD 27

☛ EMANCIPATION PATENT - is the title issued to the tenant upon compliance with all the requirements of
the government. It represents the full emancipation pf the tenant from the bondage of the soil.
☛ PROHIBITION AGAINST ALIENATION IS INTENDED TO:
1. Preserve the landholding in the hands of the owner-tiller and his heirs;
2. minimize land speculation; and
3. prevent a return to the regime of land ownership by a few.

BOOK ONE PRE-EMPLOYMENT

TITLE I RECRUITMENT AND PLACEMENT OF WORKERS
CHAPTER I GENERAL PROVISIONS

ART 13. DEFINITIONS

☛ WORKER -any member of the labor force, whether employed or unemployed
☛ RECRUITMENT AND PLACEMENT
- any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes
referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or
not; PROVIDED, that any person or entity which, in any manner, offers or promises for a fee employment to
two or more persons shall be deemed engaged in recruitment and placement. (CEC-TUCP) (RCPA)
-The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of
workers. The proviso merely creates the presumption.

ART 16. PRIVATE RECRUITMENT

☛ ENTITIES AUTHORIZED TO RECRUIT
1. Public employment offices
2. Private recruitment entities; private employment agencies
3. Shipping or manning agents or representatives
4. The POEA
5. Construction contractors if authorized by the DOLE and the Construction Industry Authority
6. Members of the diplomatic corps (but hirings must also go thru POEA)
7. Other persons or entities as may be authorized by the DOLE secretary

☛ DOCUMENTATION OF WORKERS:
1. Contract Processing – workers hired thru the POEA shall be issued the individual employment contract and
such other documents as may be necessary for travel
2. Passport Documentation
3. Visa Arrangement

ART 18. BAN ON DIRECT-HIRING

☛ Direct hiring of Filipino workers by a foreign employer is not allowed.

☛ EXCEPTIONS: the members of the diplomatic corps; international organizations; such other employers as
may be allowed by the Department of Labor and employment
1. name hirees – individual workers who are able to secure contracts for overseas employment on their
own efforts and representations without the assistance or participation or any agency

☛ RATIONALE OF THE PROHIBITION

- Filipino workers hired directly by a foreign employer, without government intervention may not be
assured of the best possible terms and conditions of work. The foreign employer must also be protected and
may chance upon a Filipino worker who do not possess sufficient knowledge for which he is employed.

CHAPTER II
REGULATIONS OF RECRUITMENT AND PLACEMENT ACTIVITIES

ART 29. NON-TRANSFERABILITY OF LICENSE OR AUTHORITY

- No license or authority shall be used directly or indirectly by any person other than the one in whose favor it
was issued or at any place other than that stated in the license or authority, nor may such license or authority be
transferred, conveyed or assigned to any other person or entity.
- Licensees or holders of authority or their duly authorized representatives may as a rule, undertake recruitment
and placement activities only at their authorized official addresses.
- Change of ownership or relationship of single proprietorship licensed to engage in overseas employment shall
cause the automatic revocation of the license.
- All overseas land based workers shall be provided both life and personal accident insurance.

MISCELLANEOUS PROVISIONS
ART 38. ILLEGAL RECRUITMENT (as per RA 8042 otherwise known as the Migrant Workers’ Act of 1995)

☛ ILLEGAL RECRUITMENT
- Any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers and
includes referring contract services, promising or advertising for employment abroad, whether for profit or not
when undertaken by a non-licensee or non-holder of authority.
PROVIDED that any such non-licensee or non-holder of authority who in any manner, offers or
promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall likewise
include the commission of prohibited acts whether committed by a non-licensee or non-holder of authority or a
licensee or holder of authority.

☛ PROHIBITED PRACTICES:
2. To charge or accept amount beyond amount allowed by law
3. To furnish or publish false notice or information in relation to Recruitment and Placement
4. To give any false notice and information or commit any act of misrepresentation to secure license or
authority
5. Induce or attempt to induce workers to quit employment to offer him another except if the transfer is
to liberate a worker from oppressive terms and conditions of employment (NOTE: it is not necessary
that worker was actually induced or did quit employment)
6. To influence or attempt to influence any person or entity not to employ any worker who has not
applied for employment in his agency
7. To engage in the recruitment or placement of workers in jobs harmful to public health or morality or
to the dignity of the Phil.
8. Obstruct or attempt to obstruct inspection by Secretary
9. Fail to file reports
10. Substitute or alter employment contracts
11. Become officer or Board member of corporation engaged in travel agency
12. Withhold or deny travel documents before the departure for monetary or financial consideration
other than those authorized by the Code.
13. Failure to actually deploy without valid reason as determined by the DOLE
14. Failure to reimburse expenses incurred by the worker in connection with his documentation and
processing for purposes of deployment, in cases where the deployment does not actually take place
without the worker’s fault

BOOK TWO
HUMAN RESOURCES DEVELOPMENT

TITLE I NATIONAL MANPOWER DEVELOPMENT PROGRAM

CHAPTER I NATIONAL POLICIES AND ADMINISTRATIVE MACHINERY FOR THEIR

IMPLELENTATION

ART 45. DEFINITIONS

☛ MANPOWER - that portion of the nation’s population which has actual or potential capability to contribute
directly to the production of goods and services.

☛ ENTREPRENEURSHIP - training for self-employment or assisting individual or small industries within the
purview of this the LC.

TITLE II TRAINING AND EMPLOYMENT OF SPECIAL WORKERS

CHAPTER I APPRENTICES

Types of Special Workers:

1. Apprentice
2. Learners
3. Handicapped

ART 58. DEFINITION OF TERMS

☛ APPRENTICESHIP - practical training on the job supplemented by related theoretical instruction
☛ APPRENTICE - worker who is covered by a written apprenticeship agreement with an individual employer
or any of the entities recognized under this chapter
☛ APPRENTICEABLE OCCUPATION - any trade, form of employment or occupation which requires more
than 3 months of practical training on the job supplemented by related theoretical instruction
☛ APPRENTICESHIP AGREEMENT - an employment contract wherein the employer binds himself to train
the apprentice and the apprentice in turn accepts the terms of training
☛ ON-THE-JOB TRAINING – the practical work experience through actual participation in productive
activities given to or acquired by an apprentice
☛ HIGHLY TECHNICAL INDUSTRIES – trade, business, enterprise, industry or other activity, which is
engaged in the application of advanced technology

BOOK THREE
CONDITIONS OF EMPLOYMENT

TITLE I WORKING CONDITIONS AND REST PERIODS CHAPTER I HOURS OF WORK

ART 82. COVERAGE

☛ ELEMENTS OF EMPLOYEREMPLOYEE RELATIONSHIP:
1. selection and engagement of the employee
2. the payment of wages
3. the power of dismissal
4. the employer’s power to control the employee (with respect to the means and methods by which the work is
to be accomplished)

- The last element as mentioned above is what is known as the CONTROL TEST - whether the
employer controls or has reserved the right to control the employee not only as to the result of the work to be
done but also as to the means and methods by which the same is to be accomplished. This last element is the
most important index of the existence of the relationship.

☛ EMPLOYEE - A natural person who is hired, directly or indirectly, by a natural or juridical person to
perform activities related to the business of the “hirer” who, directly or through an agent, supervises or controls
the work performance and pays the salary or wage of the hire.

☛ Employees Exempt from the Benefits of E-E Relationship

1. Government Employees
2. Managerial Employees
3. Field Personnel
4. Family Members dependent on the employer for support
5. Domestic Helpers
6. Persons on the Personal Service of another
7. Workers Paid by Result

☛ GOVERNMENT EMPLOYEES - Refers only to employees of government agencies, instrumentalities or

political subdivisions and of government corporations that are not incorporated under the Corporation Code,
meaning those which have original charters.
☛ MANAGERIAL EMPLOYEES - Refer to those whose primary duty consists of the management of the
establishment in which they are employed or of a department or subdivision thereof and to other members of the
managerial staff
☛ Note: Definition applies only to the 8- hour Labor law

☛ FIELD PERSONNEL - Refer to nonagricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty.
☛ WORKERS PAID BY RESULTS - Method of computing compensation based on the work completed and
not on the time spent in working.
☛ PIECE-RATE METHOD - Where pay is dependent on unit of product finished, preferred where the work
process is repetitive and the out put is standardized and easily countable.

DOMESTIC HELPERS/ PERSONS RENDERING PERSONAL SERVICES - Perform services in the

employers home which are usually necessary and desirable for the maintenance or enjoyment thereof, or
ministers to the personal comfort, convenience or safety of the employer, as well as the members of the
employer’s household.

ART 83. NORMAL HOURS OF WORK

- Shall not exceed 8 hours in a regular working day
☛ PURPOSE - to safeguard the health and welfare of the laborer and in a way to minimize unemployment by
utilizing different shifts
☛ REGULAR WORKING DAYS: The regular working days of covered employees shall not be more than five
days in a workweek. The workweek may begin at any hour and on any day, including Saturday or Sunday,
designated by the employer.

ART 85. MEAL PERIODS

☛ MEAL PERIODS
1. Should not be less than sixty (60) minutes, and is time-off/non-compensable
2. Under specified cases, may be less than sixty (60) minutes, but should not be less than twenty (20) minutes a
must be with full pay.
3. If less than twenty (20) minutes, it becomes only a rest period and is thus considered as work time
☛ NOTE: Employee must be completely relieved from duty. Otherwise, it is compensable as hours
worked.
- Mealtime is not compensable EXCEPT in cases where the lunch period or meal time is predominantly
spent for the employer’s benefit or where it is less than 60 minutes.
- Employees may request that their meal period be shortened so that they can leave work earlier that the
previously established schedule.

ART 86. NIGHT SHIFT DIFFERENTIAL

☛ NIGHT SHIFT DIFFERENTIAL
-Additional compensation of not less than ten percent (10%) of an employee’s regular wage for every
hour of work done between 10:00 PM and 6:00 AM, whether or not this period is part of the worker’s regular
shift.
- If work done between 10 PM and 6 AM is overtime work, then the 10% night shift differential should
be based on his overtime rate.

☛ RATIONALE - it serves as an inducement of employment

ART 87. OVERTIME WORK

☛ O VERTIME PAY- Additional compensation for work performed beyond eight (8) hours within the worker’s
24-hour workday.
30% of 130% if on a special holiday/rest day
1. 25% of regular wage if done on a regular workday
2. 30% of 150% if on special holiday AND rest day
3. 30% of 200% if on a regular holiday
☛ RATIONALE - employee is given OT pay because he is made to work longer than what is commensurate
with his agreed compensation for the statutorily fixed or voluntarily agreed hours of labor he is supposed to do.
- As a rule, cannot be waived, as it is intended to benefit laborers and employees. But when the waiver is
made in consideration of benefits and privileges which may even exceed the overtime pay, the waiver may be
permitted.

☛ NOTE: OT pay will not preclude payment of night shift differential pay.

CHAPTER II
WEEKLY REST PERIOD

ART 91. RIGHT TO A WEEKLY REST DAY

- Employees should be provided a rest period of not less than twenty-four (24) consecutive hours after every six
(6) consecutive normal work days.
- Employer shall schedule the weekly rest day of his employee’s subject to collective bargaining agreement.
However, the employer shall respect the preference of employees as to their weekly rest day when such
preference is based on religious grounds. But when such preference will prejudice the operations of the
undertaking and the employer cannot normally result to other remedial measures, the employer may so schedule
the weekly rest day that meets the employee’s choice for at least two (2) days a month.

CHAPTER III
HOLIDAYS, SERVICE INCENTIVE LEAVES AND SERVICE CHARGES

ART 94. RIGHT TO HOLIDAY PAY

☛ HOLIDAY PAY - A day’s pay given by law to an employee even if he does not work on a regular holiday. It
is limited to the ten (10) regular holidays listed by law.
- employee should not have been absent without pay on the working day preceding the regular holiday
Art. 94(b) refers to regular holidays, special holidays are taken care of under Art. 93.

☛ PREMIUM PAY - Additional compensation for work performed on a scheduled rest day or holiday.

☛ REGULAR HOLIDAYS:
1. New Year’s Day -January 1
2. Maundy Thursday -Movable date
3. Good Friday- Movable date
4. Araw ng Kagitingan -April 9
5. Labor Day -May 1
6. Independence Day -June 12
7. National Heroes Day`-Last Sunday of August
8. Bonifacio Day-November 30
9. Christmas Day-December 25
10. Rizal Day-December 30
Note: Compensable whether worked or unworked.

☛DOUBLE HOLIDAY PAY

1. 200% of the basic wage provided, he works on that day and was present or on leave with pay on the
preceding workday. If on leave without pay, rate still applies if leave is authorized.
2. 400% if he worked – as per DOLE Memo if there are 2 regular holidays in one day eg. April 9 and Good
Friday. Provided the employee worked on the day prior to the regular holiday or on leave with pay or on
authorized absence.
3. If there are two succeeding holidays eg., Maundy Thursday and Good Friday, the employee must be present
the day before the scheduled regular holiday to be entitled to compensation to both otherwise, he must work on
the first holiday to be entitled to holiday pay on the second regular holiday.
 ART 95. RIGHT TO SERVICE INCENTIVE LEAVE
☛ SERVICE INCENTIVE LEAVE (SIL) - Five (5) days leave with pay for every employee who has rendered
at least one (1) year of service.
☛ BUT DOES NOT APPLY TO THOSE WHO ARE: already enjoying the said benefits; or enjoying vacation
leave with pay for at least 5 days those employed in establishments regularly employing less than 10 employees
those employed in establishments exempted from granting this benefit by the Secretary of Labor.

TITLE II WAGES
CHAPTER I PRELIMINARY MATTERS

ART 97. DEFINITION

☛ WAGE - the remuneration or earnings, however designated, capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, piece, or commission basis or other method or calculating the
same, which is payable by an employer to an employee under a written or unwritten contract of employment for
work done or to be done or for services rendered or to be rendered and includes the fair and reasonable value of
board, lodging, or other facilities customarily furnished by the employer to the employee.

CHAPTER II MINIMUM WAGE RATES

ART 100. PROHIBITION AGAINST ELIMINATION OR DIMUNITION OF BENEFITS

☛ LEGAL REQ’TS. BEFORE FACILITIES CAN BE DEDUCTED FROM THE EMPLOYEES’ WAGES:
1. Proof that such facilities are customarily furnished by the trade;
2. Voluntarily Accepted in writing by the employee
3. Charged at Fair & Reasonable Value

☛ THE NON-DIMINUTION RULE -the benefits being given to employees cannot be taken back or reduced
unilaterally by the employer because the benefit has become part of the employment contract, written or
unwritten.

☛ BONUS - A supplement or employment benefit given under certain conditions, such as success of the
business or greater production or output. As a rule, it is an amount granted voluntarily to an employee for his
industry and loyalty which contributed to the success and realization of profits of the employer’s business.
Therefore, from a legal point of view, it is not a demandable and enforceable obligation. Unless, it was
promised to be given without any conditions imposed for its payment, as such, it is deemed part of the wage.

☛ 13 TH MONTH PAY (OR “ITS EQUIVALENT”) -additional income based on wage required by P.D. 851
which is equivalent to 1/12 of the total basic salary earned by an employee within a calendar year.
- may be given anytime but not later than Dec. 24

COVERAGE: - All rank-and-file employees regardless of their designation or employment status and
irrespective of the method by which their wages are paid, are entitled to this benefit, provided, that they have
worked for at least one (1) month during the calendar year.

FORMS:
1. Christmas bonus
2. midyear bonus
3. profit sharing payments; and
4. other cash bonuses amounting to not less than 1/12 of its basic salary.