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ILLEGAL DISMISSAL + OT and other benefits + Job contracting Jose Katindig, a security guard, was caught sleeping on the job while on duty at the Barako Coffee Factory. As a result, he was dismissed from employment by the Bantayan Security Agency, an independent contractor. At the time of his dismissal, Jose had been serving as a watchman in the factory for many years, often at stretches of up to 12 hours, even on Sundays and holidays, without overtime, nighttime and rest day benefits. He thereafter filed a complaint for illegal dismissal and non-payment of benefits against Barako Coffee Factory, which he claimed was his actual and direct employer. As the Labor Arbiter to hear the case, how would you correctly resolve the following: a. Jose’s charge of illegal dismissal b. Jose’s claim for OT and other benefits; ANSWER a. This is a case involving permissible job contracting. Jose’s charge of illegal dismissal against Barako will not prosper. Bantayan, an independent contractor, is Jose’s direct employer. Barako is only Jose’s indirect employer (Art. 109, Labor Code). By force of law, there is in reality no employer-employee relationship between Barako and Jose [Baguio v. NLRC, 202 SCRA 465 (October 4, 1991). b. Jose’s claim for OT and other benefits should be paid by Barako. The Labor Code provides that in the event that the contractor or subcontractor fails to pay the wages of his employees, the employer shall be jointly and severally liable to the extent of the work performed under the contract in the same manner and extent that he is liable to employees directly employed by his contractor or subcontractor for any violation of any provision of the Labor Code. 2. WAGES Can an employer and an employee enter into an agreement reducing or increasing the minimum percentage provided for nigh differential pay, overtime pay, and premium pay? ANSWER: While as a general rule, the parties may enter into any kind of stipulation in a contract and the same shall be considered as the law between them, however, it must be emphasized that a labor contract is not an ordinary contract since it is impressed with public interest. Thus, the parties are prohibited to enter into any stipulation which may result in the reduction of any employee benefits. In the instant case, the reduction by the employer, even with the consent of the employee, of the legally-mandated minimum percentage of such benefits as night differential pay, overtime pay and premium pay, is not valid. (Article 100, Labor Code…)
However, the same may not be said on the matter of increasing said benefits. The employer and the employee are not prohibited under the law to enter into an agreement for the increase of whatever benefit being mandated by law fr the simple reason that any such increase certainly redounds to the benefit of the employee. Thus, the employer and the employee may legally and validly agree to increase the minimum percentage provided for night differential pay, overtime pay, and premium pay. 3. DOMESTIC EMPLOYEES OF THE RESTHOUSE Nova Banking Corporation has a resthouse and recreational facility in the highlands of Tagaytay City for the use of ifs top executive and corporate clients. The resthouse staff includes a caretaker, two cooks and a laundrywoman. All of them are reported to the Social Security System as domestic or household employees of the resthouse and recreational facility and not of the bank. Can the bank legally consider the caretaker, cooks and laundrywoman as domestic employees of the resthouse and not of the bank? ANSWER No, they are not domestic employees. They are bank employees because the resthouse and recreational facility are business facilities as they are for use of the top executives and clients of the bank [Article 141, Labor Code; Apex Mining Co. Inc vs. NLRC, 196 SCRA 251 (1991)]; Traders Royal Bank vs. NLRC, G.R. No. 127864, December 22, 1999] 4. EMPLOYMENT OF WOMEN An exclusive school for girls, run by a religious order, has a policy of not employing unwed mothers, women with live-in partners, and lesbians. Is the policy violative of any provision of the Labor Code n employment of women? SUGGESTED ANSWER: No, the policy does not violate the Labor Code. The practice is a valid exercise of management function. Considering the nature and reason for existence of the school, it may adopt such policy as will advance its laudable objectives. In fact, the policy accords with the constitutional precept of inculcating ethical and moral values in schools. The school policy does not discriminate against women solely on the accound of sex (Art.135, Labor Code) nor are the acts prohibited under Art. 137 of the Labor Code. ALTERNATIVE ANSWER: The school violated A137(2) of the Labor Code which states that: “It shall be unlawful for any employer to discharge such woman on account of pregnancy.” The pregnancy here could obviously have resulted from love and such only lends substance to the saying that “the heart has reasons of its own which reason does not know”, a matter that cannot “be so casually equated with immorality.” (Chua-Qua vs. Clave, 189 SCRA 117 (1990).
5. CHOOSING BARGAINING REPRESENTATIVE Distinguish between “Certification Election”, “Consent Election,” and “Runoff Election” (6%) ANSWER Certification election requires a petition for a Certification Election filed by a union or employer. A med-arbiter grants the petition and an election officer is designated by the regional director to supervise the election (Art. 256, 257, 258, Labor Code) Consent election is held by agreement of the unions with or without participation of the med-arbiter [Warren Manufacturing Workers Union vs. BLR, 159 SCRA 387 (1988)] Run-off election takes place between the unions who received the two highest number of votes where not one of the unions obtained the majority of the valid votes cast, provided that the total union votes is at least 50% of the votes cast. (Art. 256, Labor Code). 6. BENEFITS GIVEN TO EMPLOYEES/ FACILITIES…WAGES Osh Kosh Kaposh, an unorganized manufacturer of children’s apparel with around 1,000 workers, suffered losses for the first time in history when its US and European customers shifted their huge orders to China and Bangladesh. The management informed its employees that it could not longer afford to provide transportation shuttle services. Consequently, it announced that a nominal fare would be charged depending on the distance traveled by the workers availing of the service. Was the Osh Kosh Kaposh Company within its rights to withdraw this benefit which it had unilaterally been providing to its employees? Select the best answer and briefly explain your reasons therefore. (a) Yes, because it can withdraw a benefit that is unilaterally given; (b) Yes, because it is suffering losses for the first time; (c) Yes, because this is a management prerogative which is not due to any legal or contractual obligation; (d) No, because this amounts to a dimunition of benefits which is prohibited by the Labor Code (e) No, because it is a fringe benefit that has already ripened into a demandable right or entitlement. SUGGESTED ANSWER: (c) yes, because this is a management prerogative which is not due to any legal or contractual obligation – The facts of the case do not state the circumstances through which the shuttle service may be considered as a benefit that ripened into a demandable right. There is no showing that the benefit had been deliberately and consistently granted, i.e., with the employer’s full consciousness that despite its not being bound by law or contract to grant it, it just the same granted the benefit.
OPTIONAL ANSWERS: (c) Management prerogative which is not due to any legal or contractual obligation: An employer cannot be forced to continue giving a benefit, which is unilaterally given as a management prerogative, when it can no longer afford to pay for it. To hold otherwise would penalize the employer for his past generosity. [Producers Bank of the Philippines vs. NLRC, 355 SCRA 489 (2001)] Other answers: (a) The shuttle service was not payable pursuant to a contract. For a benefit, supplement, or facility provided by the employer to ripen into a demandable legal or contractual obligation, it must be shown that it was given over a long period of time. It must be consistent. It must be with deliberate intent of the employer so as to make it amount to established practice. [Globe Mackay Cable and Radio Corp vs. NLRC, 163 SCRA 71 (1988)]. The Labor Code also provides that facilities must be customarily provided by the employer to make their fair and reasonable value form part of the wage. The shuttle service must be part of the consideration for accepting the employment. In one case decided by the Supreme Court, where the employees were assigned in a remote place away from civilization, it was held that the fair and reasonable value of housing, board, and recreational facilities was part of the wage. Such facilities were considered part of the incentive for agreeing to be assigned in a remote and secluded place of work [Millares vs. NLRC, 305 SCRA 500 (1999)]. Hence in that case, they could not be withheld unilaterally by the employer without causing dimunition of benefits for the employee. No similar fact is present in the problem given. It is not alleged how long this shuttle service has been provided by the company. It does not appear to be part of the incentive for accepting the employment. In the Manila Bank case, it was also held that there is nothing to compel the employer to be liberal and generous to its employees in granting benefits when the employer is suffering financial loss. 7. HOLIDAYS/WAGES/PAYROLL REINSTATEMENT During the open forum following your lecture before members of various unions affiliated with a labor federation, you were asked the following questions: (a) Araw ng Kagitingan and Good Friday are among the 10 paid regular holidays under Article 94 of the Labor Code. How much will an employee receive when both holidays fall on the same day? SUGGESTED ANSWER The employee will receive 200% of his regular daily wage when both regular holidays fall on the same day and he does not work. The law provides that he shall receive his regular daily wage for each regular holiday. The employee will receive 100% for Araw ng Kagitingan and 100% for Good Friday. If he works on that day, he is entitled to 400% of his regular daily wage; otherwise, there will be diminution of benefits [Asian Transmission Corp vs. CA, 425 SCRA 478 (2004)]
(b) May a rank-and-file employee, who is not a member of the union representing his bargaining unit, avail of the wage increases which the union negotiated for its members? SUGGESTED ANSWER YES. The beneficiaries of a CBA include non-union members; otherwise, there will be discrimination which is prohibited by law. [New Pacific Timber and Supply co., Inc vs. NLRC, 328 SCRA 242 (2000) (c) What is meant by “payroll reinstatement” and when does it apply?
SUGGESTED ANSWER Payroll reinstatement is a form of reinstatement which an employer may opt to exercise in lieu of an actual reinstatement. Here, the illegally dismissed employee is to receive his basic pay without the obligation of rendering any service to the employer. This occurs when a Labor Arbiter decides that an employee was illegally dismissed and as a consequence awards a reinstatement, pursuant to Article 279 of the Labor Code. Such award of reinstatement, according to Article 223 of the Code, is immediately executory even pending appeal. (d) Under what conditions may a “compressed work week” schedule be legally authorized as an exception to the “eight-hour a day” requirement under the Labor Code? SUGGESTED ANSWER A “compressed work week” may be authorized under the following conditions: (a) the employee voluntarily agrees to it (b) there is no diminution in their weekly or monthly take home pay or fringe benefits (c) The benefits are more than or at least commensurate or equal to what is due the employees without the compressed work week. (d) overtime pay will be due and demandable when they are required to work on those days which should have ceased to be working days because of the compressed work week schedule. (e) no strenuous physical exertion or that they are given adequate rest periods (f) it must be for a temporary duration as determined by the department of labor 8. PROJECT EMPLOYEES, REGULAR EMPLOYEES Peter Paco was a mason employed by the El Grande Construction Company. Everytime that El Grande had a project, it would enter into an
employment contract with Paco for a fixed period that coincided with the need for his services, usually for a duration of three to six months. Since the last project involved the construction of a 40-storey building, Paco was contracted for 14 months. During this period, El Grande granted wage increases to its regular employees, comprised mostly of engineers and rank-andfile construction workers as a result of the just concluded CBA negotiations. Feeling aggrieved and discriminated against, Paco and other similarly-situated project workers demanded that the increases be extended to them, inasmuch as they should now be considered regular employees and members of the bargaining unit. If you were El Grande’s legal counsel, how would you respond to this demand? (5%) ANSWER As legal counsel for El Grande, I would argue that the employment of Paco was fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of his engagement. Rendering 14 months of work does not make him a regular employee, when to begin with, he was employed for a specific project, i.e., which is the construction of a particular 40storey building. The rule on more than 1 year of service making the employment regular applied only to casual employees; hence, Paco does not belong to the bargaining unit of regular employees. 9. PATERNITY BENEFITS Bart Cruz had been an employee of Singko Company for the last 10 years. His wife of six years died last year. They had four (4) children. He remarried to his co-employee, Connie. In October this year, Bart’s new wife is expected to give birth to her first child. He has accordingly filed his application for paternity leave, conformably with the provisions of the Paternity Leave Law which took effect in 1996. The HRD manager of A Company denied his application, on the ground that Bart had already used up his entitlement under that law. Bart argued that he has a new wife who will be giving birth for the first time, therefore, his entitlement to paternity leave benefits would begin to run anew. a. SUGGESTED ANSWER Bart’s contention is correct. The law provides that every married male is entitled to a paternity leave of seven (7) days for the first four (4) deliveries of the legitimate spouse with whom he is cohabiting (Section 2, RA 8187). Connie is Bart’s legitimate spouse with whom he is cohabiting. The fact that Connie is his second wife and that Bart had 4 children with his first wife is beside the point. The important fact is that this is the first child of Connie with Bart. The law did not distinguish and we should therefore not distinguish. The paternity leave was intended to enable the husband to effectively lend support to his wife in her period of recovery and/or in the nursing of the newly-
born child (Sec. 3, RA 8187). To deny Bart this benefit would be to defeat the rationale of the law. ANOTHER SUGGESTED ANSWER THE HRD Manager is correct. Since it is conceded that Bart earlier availed of four (4) paternity leaves when his first wife gave birth to their four (4) children, he clearly “already used up his entitlement under the law.” His new wife’s giving birth for the first time would not matter as the benefit given by Section 2 of RA 8187 is an exhaustible benefit granted to a father “fort he first four (4) deliveries of the legitimate spouse with whom he is cohabiting”. b. Is Connie entitled to maternity leave benefits ANSWER YES, if Connie, as a female employee, has paid at least three (3) monthly contributions in the twelve-month period immediately preceding the semester of her childbirth (Sec. 14-A, RA 1161, as amended); otherwise, she is not entitled to the benefit.
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