INTRO (CLM1) – MODULE 16: Labor Law & Social Legislation

MODULE 16
LABOR LAW AND SOCIAL LEGISLATION
WEEK 13 – 22 October 2018

 CONSTITUTIONAL BASIS. – The 1987 Constitution is

replete with labor-related provisions, but the more commonly
quoted provisions are those found under Section 3, Article XIII, to
wit:

“Section 3. The State shall afford full protection to

labor, local or overseas, organized and unorganized and
promote full employment and equality of employment
opportunities for all.
“It shall guarantee the rights of all workers to self-
organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of
tenure, humane conditions of work and a living wage.
They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be
provided by law.
“The State shall promote the principle of shared
responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes,
including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
“The State shall regulate the relations between
workers and employers, recognizing the right of labor to its
just share in the fruits of production and the right of
enterprises to reasonable returns on investments, and to
expansion and growth.”

 These provisions somewhat sum up what Labor Law

is all about. Through the intervention of the State, a balance has
to be attained between the interests of capital vis-à-vis the
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interests of the laborer or worker. With such an aim in mind, the
country saw the promulgation of the Labor Code of the Philippines,
which provided for a two-tiered approach to labor – labor
standards and labor relations.
Hence, Books I to IV of the Labor Code is mainly
concerned with labor standards, while the remaining Books V to VI
focuses on labor relations.

 Construction in favor of labor – One essential feature

of labor laws is – all doubts in the interpretation and
implementation of the provisions of the Labor Code and other
labor-related statutes shall be resolved in favor of labor (Article 4,
New Labor Code). This statutory pronouncement under the Labor
Code underlines the state’s commitment to the constitutional
mandate of providing full protection to labor since it has affirmed
that labor is a primary social economic force (Section 18, Article II,
1987 Constitution).

 Balance between labor and capital – This

constitutional mandate of construction in favor of labor, however,
should not be taken to mean that capital will always be at the
losing end of the equation. This has to be reconciled with another
constitutional mandate to harmonize and balance the needs and
demands from both labor and capital, since capital is recognized
as having an indispensable role in national development (Section
20, Article II, 1987 Constitution). Both are essential cogs in the
wheels of national development and should be created equally.
Labor laws are there only to protect the rights of Labor
against unscrupulous employers as well as to protect employers
from abusive employees. It should be noted that the protection
provided under the Labor Laws goes both ways, i.e., for the
laborer and the employer.
 ILLUSTRATIVE EXAMPLE: One good example
to illustrate the balance between labor and capital is on the matter
of termination of employment. Under our labor laws, a qualified
employee is granted security of tenure, and cannot be removed
except for authorized and legal causes. This does not mean,
however, that an employer is to be burdened with undesirable
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employees. The Labor Code provides for the grounds where an
employer can rightfully initiate disciplinary proceedings against an
employee, which necessarily include termination of employment.

 LABOR LAWS, ITS MAIN AREAS OF CONCERN. –

(A) LABOR LAWS: These laws govern the rights and

obligations of employers and employees, providing as well for the
rules by which such rights and obligations may be enforced. This
field of law is divided into three main areas of concern – labor
standards, labor relations and social legislation.

(B) SOCIAL LEGISLATION: There is a saying that “those

who have less in life should have more in law”. This statement
encapsulates what social legislation is all about. It refers to
statutes that level the playing field between employers and
employees. Such laws endeavor to strike a balance between the
rights of workers vis-à-vis the underlying goal of employers to
generate profit. More often than not, the lowly employee or worker
is not situated in an equal footing, so to speak, with powerful and
moneyed employers, and thus social legislation seeks to ensure
that workers are afforded what is due them in terms of salary,
benefits, working conditions and the like. Social legislation is also
designed to secure the future of the worker as well as his family
because of what happens to the worker arising from the hazards,
incidents or effects of employment.
 Examples of such laws are as follows:
(1) RA 8187 (Paternity Act)
(2) RA 7610 (Special Protection of Children)
(3) RA 7877 (Anti-Sexual Harassment Act)
(4) RA 7655 (Minimum Wage for House helpers)
(5) RA 8042 (Migrant Workers Act)
(6) RA 8282 (Social Security System Law of 1997)
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(7) RA 8291 (Government Service Insurance System Act of
1997)
(8) RA 7875 (PhilHealth Act)
(9) RA 7641 (Retirement Pay Law)
(10) RA 9231 (Act Against Child Labor)
(11) PD 851 (13th Month Pay Law)

(C) LABOR STANDARDS LAW: The area of labor standards

provides for the basic requirement as provided by law that
employers have to provide for their employees whether in the
workplace or in the matter of wages. These minimum
requirements are established in order to protect workers’ rights as
well as set the standard in all business establishments. In short,
labor standards provide for the conditions of employment in any
business.

 A matter of right – These minimum standards

prescribed by law in relation to work is a matter of right on the part
of the laborer, and non-compliance by an employer of said
minimum standards would be met with the punitive force of the
law.

 Provision for higher but not below the minimum

prescribed – These minimum conditions are normally indicated in
an employee’s employment contract. Some firms or employers
even provide for higher standards than that provided for under the
law. What is important is that the conditions of work, more
particularly the benefits, do not fall below the minimum prescribed
under the Labor Code.

 Workers not covered – These minimum standards

prescribed by law in relation to work applies to employees in all
establishments and undertakings, whether for profit or not,
EXCEPT the following:
(a) Government employees;
(b) Managerial employees;
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(c) Field personnel;
(d) Members of the family of the employer who are dependent
on him for support;
(e) Domestic helpers, or persons in the personal service of
another; and
(f) Workers paid by result.

 Some prescribed minimum conditions – The

conditions regarding employment or work are covered under Book
III of the Labor Code, and are generally categorized into the
following:

 Normal hours of work, including hours worked –

 The Labor Code provides that normal working hours
shall not exceed eight (8) hours a day.
 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. (Arts. 83 & 84, Labor Code)
 The following are other circumstances relative to normal
working hours as provided in the Labor Code:

(a) Compressed Work Week (CWW) is valid, subject to

regulations provided by the Department of Labor
and Employment (DOLE);
(b) Health personnel in government service are not
covered by this provision. Their employment
benefits are governed by Republic Act No. 7305;
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(c) Waiting time is considered hours worked if it is an

integral part of one’s work, or one is engaged by his
employer to wait; and
(d) It is considered hours worked when an employee is
required to remain on call in the employer’s
premises or close thereto that he cannot use the
time effectively for his own purpose.

 Meal periods – The law mandates every employer to give his

employees not less than sixty (60) minutes time-off for their
regular meals (Art. 85, Labor Code).

 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. (Art. 86,
Labor Code).
 Night shift differential pay is given as an incentive
because the employee is rendering work past his
supposed bedtime.

 Overtime work – Work may be performed beyond eight 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 (Art. 87, Labor Code).
 Overtime on a holiday or rest day – Work performed
beyond eight hours on a holiday or rest day shall be paid an
additional compensation equivalent to the rate for the first eight
hours on a holiday or rest day, plus at least thirty percent
(30%) thereof.
 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 under the
Labor Code (Art. 88, Labor Code).
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 Rationale: The value paid for overtime work is more
than the value paid for undertime work. If undertime work is
allowed to be offset by overtime work, the worker will be at a
disadvantage.
 Requirement for overtime –
 An employee cannot, as a rule, be compelled to
render overtime work for his employer, except only under
certain conditions provided under Article 89 of the Labor Code
when an employee may be required by the employer to
perform emergency overtime work.
 It is enough that an employee renders overtime
work. An express instruction from the employer is not a
requirement. However, if overtime work will be rendered on
holidays or rest days, an express instruction from the employer
is required.

 Right to weekly rest periods – The law mandates that 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 consecutive hours after every six consecutive normal
work days.
 Factors such as preference of worker, prerogative of
employer and DOLE regulations shall play a part in the
determination when such rest day will be given.
 However, the employer shall respect the preference of
employees as to their weekly rest day when such preference is
based on religious grounds. (Art. 91, Labor Code.)
 Holiday pay – Holiday pay is a day’s pay given by law to an
employee even if he does not work on a regular or legal holiday as
listed by law. Such grant, however, does not apply to a retail and
service establishment regularly employing less than ten (10)
workers (Art. 94, Labor Code).
 The employer may require an employee to work on any
holiday, but such employee shall be paid compensation
equivalent to twice his regular rate.
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 For holiday pay to be compensable, the employee
should have reported for work on the day preceding the
holiday.

 Service incentive leave – Every employee who has rendered at

least one (1) year of service shall be entitled to a yearly service
incentive leave of five (5) days with pay. (Art. 95, Labor Code).
 Such grant shall not apply to those who are already
enjoying the benefit, those enjoying vacation leave with pay of
at least five (5) days, and those employed in establishments
regularly employing less than ten (10) employees, or in
establishments exempted from granting this benefit by the
Secretary of Labor after considering the viability or financial
condition of such establishment.
 Service Incentive Leave can be converted to cash if not
availed at the end of the year. This is to encourage continuous
work of the employees.
 Vacation and Sick Leaves are not required by law. It is a
management prerogative.

 13th Month Pay – Thirteenth-month pay refers to one-twelfth

(1/12) of the basic salary of an employee within a calendar year.
 All employers are required to pay all their employees,
regardless of the nature of their employment, a thirteenth-
month pay not later than December 24 of every year, provided
that they have worked for at least one (1) month during a
calendar year (P.D. No. 851, 16 December 1975).
 An employee who resigned or was terminated from work
at any time before payment of the 13 th month pay, is still
entitled to said pay in proportion to the time he worked during
the year.

(D) LABOR RELATIONS LAW: Labor Relations Law

refers to laws, rules and regulations which govern the relationship
between employees and their employers, promote the right of the
employees to self-organization and collective bargaining, penalize
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unfair labor practice, and provide modes for the settlement of labor
disputes such as conciliation, mediation, grievance machinery,
voluntary arbitration and compulsory arbitration.

 MANAGEMENT PREROGATIVE. – Management

prerogative refers to the right of management to regulate
according to its own discretion and judgment all aspects of
employment, and if practiced properly and in good faith, is
protected by labor laws. Some of the more common management
prerogatives are as follows:
(a) Right to selection of employees;
(b) Right to discipline employees;
(c) Right to prescribe company rules;
(d) Right to transfer or re-assign employees; and
(e) Right to determine company policy.

 Limitations to its exercise – Management

prerogative, however, is subject to limitations provided by the
following:
(a) Law;
(b) Contract or collective bargaining agreements; and
(c) General principles of fair play and justice.
 EMPLOYER-EMPLOYEE RELATIONSHIP. –

 Importance of determination - The determination of

whether employer-employee relation exists between the parties is
very important.
(a) Entitlement to labor standard benefits (i.e., minimum
wages, hours of work, overtime pay, etc.), or to social
benefits under laws (i.e., social security law, workmen’s
compensation law, etc.), or to termination pay, or to
unionism and other labor relations provisions under the
Labor Code, are largely dependent on the existence of
employer-employee relationship between the parties.
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(b) The existence of employer-employee relationship between
the parties will determine whether the controversy should
fall within the exclusive jurisdiction of the labor agencies or
not. If for example the parties are not employer-employee
of each other, respectively, but perhaps partners or
associates, then any dispute between them will not be
covered by the jurisdiction of labor agencies but by regular
courts.
 NLRC – The National Labor Relations
Commission is a quasi-judicial body attached to the
Department of Labor and Employment (DOLE), which is
tasked to promote and maintain industrial peace by
resolving labor and management disputes involving both
local and overseas workers through compulsory arbitration
and alternative modes of dispute resolution.

 How established – To establish an employer-

employee relationship, a contract of employment is necessary.
This can be in writing, or there may only be an oral agreement.

 Four-fold test to determine its existence – The usual

test to determine the existence of an employer-employee
relationship is the so-called four-fold test. In applying this test, the
existence of four (4) elements that are determinative of such a
relationship are generally considered, to wit:
(a) Right to hire or to the selection and engagement of the
employee.
(b) Payment of wages and salaries for services.
(c) Power of dismissal or the power to impose disciplinary
actions.
(d) Power to control the employee with respect to the means
and methods by which the work is to be accomplished.
This is known as the “Control Test.”
 Of the above-mentioned elements, the “control test”
is considered the most important element in determining
the existence of employment relation. The “control test”
refers to the employer’s power to control the employee’s
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conduct not only as to the result of the work to be done, but
also with respect to the means and methods by which the
work is to be accomplished.
 It should be noted that control by the employer need
not be actually exercised in order to be determinative of an
employer-employee relationship. It is sufficient that such
power is reserved to the employer although the use of the
same has never arisen.

 READ THIS CASE IN ITS ORIGINAL TEXT:

South East International Rattan, Inc. vs. Jesus Coming,
G.R. No. 186621, 12 March 2014.

 KINDS OF EMPLOYEES –

(A) REGULAR EMPLOYEES – Typically, regular employees

are those who are entitled to benefits such as: SSS, Pag-IBIG,
PhilHealth, 13th month pay, holiday pay, overtime pay, vacation
leave, and other benefits provided by law.
 Regular employees by nature of work –It is
commonly believed that all employees must serve at least six
months before they become regular. This is untrue. Under the
Labor Code, so long as an employee performs any function that is
necessary and desirable in the ordinary course of business, then
such employee is deemed regular regardless of the term of his
service. The only way to prevent such an employee from
becoming regular on his first day would be to hire him on a
probationary basis.
 Regular employees by years of service – Any
employee who has rendered at least one year of service, whether
continuous or intermittent, is deemed regular with respect to the
activity he performed and while such activity actually exists (Art.
281, Labor Code).

 READ THIS CASE IN ITS ORIGINAL TEXT:

Moises De Leon vs. NLRC,
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G.R. No. 70705, 21 August 1989.

 Security of tenure – Regular employees enjoy

security of tenure. Their employment may only be terminated for
just causes or authorized causes set out in the law. In addition,
regular employees enjoy procedural due process, where the
employee must be informed of the grounds for termination, and be
given the opportunity to present his defense or evidence.
Thereafter, the employee must be notified of the employer’s
decision to terminate his services. This is also referred to as the
“two-notice rule” where the employer must send a first notice to
the erring employee composed of the formal charge and the
opportunity to defend himself. The second notice is the notice of
termination.

(B) PROBATIONARY EMPLOYEES – Probationary

employees are those hired for a trial (or probationary) period
during which the employee must demonstrate the ability to perform
the job for which he has been hired. Upon doing so, at the end of
the probationary period, the employee becomes a regular
employee.
 Probationary period – Under the law, (a) a
probationary period must not exceed six (6) months and (b) at the
start of this period, the employer must inform the employee of the
standard by which his performance will be evaluated. If any of
these requirements are not met, then the probationary
employment is void and the employee is deemed regular from day
one. It is advisable therefore to properly document the
probationary employment to ensure that all legal requirements
have been met.
 Security of tenure – It is important to remember that
probationary employees also enjoy security of tenure during the
probationary period, and the employment may not be terminated
without a substantive reason and compliance with the
aforementioned two-notice rule.
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(C) CONTRACTUAL EMPLOYEES – Contractual employees

are employees whose period and condition of employment are
dependent on the provisions of their contract. The Labor Code
does not explicitly permit contractual or fixed-term employment,
but the courts have ruled that so long as the term in the contract is
not used to pre-emptively end the employment and deny the
employee’s security of tenure, then it is valid.
 Security of tenure – It should be noted that
contractual or fixed-term employees enjoy the right to security of
tenure while the contract is in effect.

(D) SEASONAL and PROJECT EMPLOYEES – Seasonal

employees are employed for seasonal work. Project employees
are called to work only for the accomplishment of a particular
project. The period of employment is co-terminus with the season
or the project, as the case may be. In both cases, the employment
is for a temporary period at the end of which the employee ceases
to work for the employer.
 Security of tenure – During the seasonal or project
employment, the employee enjoys security of tenure and may not
be terminated without cause.

 TERMINATION OF EMPLOYMENT – Termination of

employment refers to the cessation of the services of the
employee by management either through just or authorized
causes. The employee’s constitutional right to security of tenure,
wherein the employer cannot terminate his services without just or
authorized causes, applies both to regular and non-regular
employees.

(A) Just causes for termination. – Under Article 297 of the

Labor Code, the employer may terminate the services of the
employee under the following just causes:
 Serious misconduct or willful disobedience by the employee of
the lawful orders of his employer or representative in
connection with his work;
 Gross and habitual neglect by the employee of his duties;
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 Fraud or willful breach by the employee of the trust reposed in
him by his employer or duly authorized representative;
 Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family
or his duly authorized representative; and
 Other causes analogous to the foregoing.

(B) Authorized causes for termination. – An authorized cause

refers to an economic circumstance not due to the employee’s
fault. Under Article 298 the employer is authorized to terminate
the employment of an employee due to the following authorized
causes:
 Installation of labor-saving devices, also known as
“Automation/Robotics”;
 Redundancy;
 Retrenchment to prevent losses; and
 Closure or cessation of business

(C) Precondition to valid termination. –

(C.1) Due process in case of just causes; the “two-notice rule” –

The employer is required by law to furnish employees with two
written notices before termination of their employment due to any
of the just causes under Article 297 of the Labor Code. Thus, the
following steps must be observed; otherwise, the dismissal is
illegal:

 The first written notice to be served on the

employees should contain the specific causes or grounds for
termination against them, and a directive that employees are given
the opportunity to submit their written explanation within a
reasonable period. The notice should specifically mention which
company rules, if any, are violated and/or which among the
grounds under Article 297 of the Labor Code is being charged
against the employees.
 After serving the first notice, the employees should
schedule and conduct a hearing or conference wherein the
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employees will be given the opportunity to (a) explain and clarify
their defense to the charge against them; (b) present evidence in
support of their defense; and (c) rebut the evidence presented
against them by the management. During the hearing or
conference, the employees are given the chance to defend
themselves personally, with the assistance of a representative or
counsel of their choice.
 After determining that termination is justified, the
employer shall serve the employees a written notice of termination
indicating that: (a) all the circumstances involving the charge
against the employees have been considered; and (b) grounds
have been established to justify the severance of their
employment.

(C.2) Due process in case of authorized causes – To effect the

termination of any employee for any of the authorized causes, the
employer must serve a WRITTEN NOTICE on the worker and the
Department of Labor and Employment at least one (1) month
before the intended date thereof.

* * * END * * *

HAPPY READING & LEARNING! 

SOURCES of NOTES:

The discussions outlined in this module have

been collectively lifted from the cases cited and
commentaries made by the authors in the
references cited below:

1. David Robert C. Aquino. Introduction to Law. (Quezon

City: Central Book Supply, Inc., 2017).
INTRO (CLM1) – MODULE 16: Labor Law & Social Legislation
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2. Rodelio T. Dascil. Threshold to the Legal Profession: An

Introductio to Law (Manila: Rex Book Store, 2013).
3. Rolando A. Suarez. Introduction to Law ((Manila: Rex
Book Store, 2017).
4. http://www.laborlaw.usc-law.org/2009/08/06/tests-of-
employment-relations/
5. https://eleal.ph/guerilla-guide-for-startups/index.php/ix-
labor-law-basics/

FOOD FOR THOUGHT

“Wisdom, compassion, and courage

are the three universally recognized moral qualities of
men.”
Confucius