SOME ETHICAL ISSUES IN

EMPLOYER-WORKER
RELATIONS
CHAPTER 2
THE ISSUE OF MININUM WAGE IN THE
PHILIPPINES
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 WORKER
employees and laborers who work for wage
and salary in a business establishment

 A business cannot prosper without the workers

who carry out daily activities of the business.

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ETHICAL ISSUES IN RELATION TO WORKERS
CAN BE SEEN FROM TWO PERSPECTIVES:
▰ Issues focused on ▰ Issues focused on the
employers’ duties workers’ duties
toward the workers toward the employer
▻Contractualization ▻Fiduciary duty
▻Just wage ▻Conflict of interest
▻Right to form a labor ▻Whisteblowing
union 4
 1
ETHICS OF LABOR
CONTRACTUALIZATION
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CONTRACTUALIZATION

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CONTRACTUALIZATION

▰ Legal term: Fixed-term employment

▰ Supreme Court: “a contract of employment for a
definite period which terminates by its own terms
or the end of such period”
▰ Satur Ocampo: “hiring workers for short-term, non-
regular employment without the benefits accorded
by law to regular workers”
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Contractual workers in retail sales job:

▰sales assistant
▰members of the crew
▰security guards
▰janitors
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▰Critics of contractualization in the Philippines
usually point to former Senator Ernesto Herrera’s
penning in 1989 of Republic Act 6715: An Act to
Amend to the Labor Code of the Philippines as the
main culprit for the widespread contractualization
practices.
▰Advocates of RA 6715 respond that it is not RA
6715 but rather it is former President Ferdinand
Marcos’ Presidential Decree 442 (Labor Code of
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the Philippines) that is to blame.
▰Supporters of Herrera explained that PD 442 paved the
way for the Department of Labor and Employment to
issue Department Order 10
▰Department Order 10- opened the floodgates for
rampant contractualization

▰Herrera himself admitted that contractualization is

illegal.
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WHY DO EMPLOYERS WANT TO
CONTRACTUALIZE?
▰To reduce business cost
▰To avoid workers to join unions

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“ Companies and the contracting
agencies described
contractualization as a means to
promote cost efficiency and a way to
avoid having labor unions.

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▰Cost-reduction is a legitimate strategy for business especially because
of many exigencies that businesses in the Philippines are facing.
What becomes ethically questionable is when businesses desire
unreasonably big profits at the expense of the workers.
IF YOU ARE THE WEALTHIEST PERSON IN THE COUNTRY
WITH PROFITS FROM YOUR BUSINESS THAT OVERFLOW IN
YOUR COFFERS, WOULD YOU NOT CAREFULLY STUDY YOUR
POLICIES ON CONTRACTUALIZATION SO THAT THE
WORKERS WOULD ALSO RAISE THEIR STANDARD OF LIVING
JUST LIKE YOU? 13
Some favors and sees nothing wrong about
contractualization. They point to the benefits of the
said practice.
Benefits:
▰Employers do not encounter the ordinary problems
of workers who become lax and less productive
because of the protection of job tenure
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▰Many employers believe that when a worker is contractual, he or she
is likely to be more serious and productive for at least two reasons:
▻Fear of being terminated
▻Aspiration to be rehired
▰Contractualization frees the employees from many headaches
brought by the high cost of employee benefits
▰More workers are given opportunity to work because after five
months, contractual workers would be replaced by a new batch of
contractual workers. 15
Unconscientious contractualization undermines basic
rights of the worker:
▰Right to security of tenure
▰Right to other benefits of workers (insurance, maternity
benefits)
▰Right to organize
▰Right to join unions
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▰Some employers would say that they allow
contractual workers to organize and join
unions.
▰In fact, the law defines clearly that the
contractual worker has several rights of the
same nature with regular workers.
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“The contractual employee shall be entitled to all the
rights and privileges due a regular employee, including
but limited to the right of working conditions and
standards, service incentive leave, rest days, overtimes
and holidays, health, safety, and social welfare benefits,
self-organization and collective bargaining, and security
of tenure.”
▰In reality, workers cannot exercise these rights because
they are afraid of losing their job. 18
▰Critics also say that contractualization of
workers degrade the value of work and the
worker. Work is simply reduced to a commodity
that can easily be bought and sold. The worker is
also reduced to a commodity that can easily be
replaced on the whims and caprice of the
employer. Hence, the contractual worker is
usually marginalized in the workplace.
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▰Further, contractualization violates fundamental
justice. In many instances, the business
establishment accumulates huge profits with the
help of the contractual worker. But the
contractual worker only receives minimum wage
and benefits mandated by the law.

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The argument for questionable practices of labor contractualization in
the Philippines find support in the recommendation of DOLE to
seriously consider the need to revisit and revise the Labor Code of the
Philippines.
▰Review the Labor Code provisions on contracting and subcontracting
and security of tenure to discuss, among others:
▰Guaranteeing the right to security of tenure, self-organization and
collective bargaining;
▰Imposing stricter penalties for violators;
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▰Clarifying through collective bargaining and/or tripartite mechanisms
what activities may or may not be contracted out;
▰Allowing subcontracting that is done in good faith and due to the
exigencies of business;
▰Intensifying enforcement of labor standards and policies on
contracting and subcontracting; and
▰Reviewing the proposal on definite and indefinite period of
employment
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▰It is not far-fetched to assume that one of the main
reasons why poor Filipinos decide to work abroad even if
it is against their wishes and despite the many dangers
that accompany it, is the absence of job security of labor
contractualization.
▰Kabataan Party-list representative Raymond Palatino:
“If there are employment opportunities in the country, the
youth would no longer have to stop schooling and work
abroad.” 23
 2
THE ISSUE OF JUST
WAGE
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The Issue Of Just Wage

▰ arises mainly because the employer and worker usually

come from opposing interests
▻ main interest of the employer- to reduce the cost of
his or her business
▻ main interest of the worker- to increase his or her
wage
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▰Using the ideas of other prominent business ethicists,
Manuel Velasquez identifies seven factors that must be
considered in determining a fair and just wage:
1. Comparative Wage
2. Capability of the Business
▻When the business is already profitable, the owner has
the moral duty to also increase the salary of his or her
workers
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3. Nature of the Job
“Jobs that involve greater health risks, offer less security,
requires more training or experience, impose heavier
physical or emotional burdens, or take greater effort should
carry higher levels of compensation.”
4. Laws on Minimum Wage
▻A business owner must be sensitive enough to see
whether a minimum wage is sufficient for the needs of his
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or her workers.
5. Relative proportionality and similarity of the nature of
the job of the workers within the organization
▻Substantial difference in salary between two employees
who perform similar work duties may lead to the loss of
morale among the employee with lower salary.
6. Fairness of wage negotiations
▻Collective Bargaining Agreement or CBA between the
employers and the workers must be done in good faith
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7. Cost of living within the specific locality where his or her
business operates
▻ Living Wage
William Shaw: “amount of money a full-time employee
needs to afford the necessities of life, support a family, and
live above the poverty line”
▻ Opposed to the minimum wage
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▰We must remember that in determining a just wage, one
consideration cannot be absolutized in favor of the other
considerations. Rather, the business owner is tasked to be
prudent in combining and relating these various concerns.
▰The worker is a human person usually with a family to feed
and support.
▰The right to a just and fair wage must be recognized not
just because of its legal foundation but because it is rooted
in an ethical relationship between employer and worker.
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 3
THE RIGHT TO FORM
UNION AND TO STRIKE
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▰The relationship between the employer and
the worker is not always smooth and
harmonious. The employer is usually more
powerful.

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 Labor union

▰ usually the most effective mechanism that gives power

and leverage to the workers
▰ assures that workers are not exploited, abused, and
subjected to inhuman working conditions
▰ an association of employees that advances member
interests through collective bargaining with an
employer 33
▰The right to organize is a part of the fundamental human rights
enshrined in the 1948 United Nation’s Universal Declaration of
Human Rights (UDHR).
▰Article 20 of the UDHR states: “Everyone has the right to freedom of
assembly and association.”
▰Furthermore, our 1987 Philippine Constitution reiterates this right.
▰Article 3 or the bill of rights declares: “The right of people, including
those employed in the public and private sectors, to form unions,
associations, or societies for purposes not contrary to law shall
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not be abridged.”
▰Workers usually form labor unions in order to achieve their
legitimate concerns and to participate meaningfully in
matters that directly affect their lives as workers.
▰Democrito Mendoza, a former president of the Trade Union
Congress of the Philippines summarized the objectives of a
union in these words: DECENT WORK, DECENT PAY,
DECENT LIVES
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 Main objectives of Union

▰ Democratization of wealth- labor union’s objective of ensuring

that the workers receive just wage and safe working conditions
▰ Democratization of power- labor union’s objective of
balancing the power between the employer and the employee.
In the absence of labor union, the employer is generally more
powerful than the worker. If there is a union, there is a sort of
equality and interdependence between the employer and the worker.
Humanizing the work class - pertains to the function of labor union
36 to
 Main objectives of Union

“Labor Unions perform an essential equalizing function, leveling

the playing field between powerful business owners and
organizational managers, who seek to minimize employee wages
and benefits and dictate workplace rules, and individual employees
who lack the powers to adequately represent their own interests.
Unions typically arise in circumstances where employees are
continually dissatisfied with wages, benefits, and working
conditions. They counteract managerial power by providing a
unified employer voice.” -Denis Collins 37
 Main objectives of Union

▰ Through labor union, workers can actively and meaningfully

participate in the formation of policies and business decisions that
would greatly affect their working conditions and their lives.
Breaking from a culture of silence, workers find voice with the help
of supportive labor union leaders.
▰ Labor leaders must raise the consciousness of the workers with
regard to their dignity. Equally important is raising the awareness
of the society in general. Ultimately, people must not consider
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laborers as inferior individuals.
 Collective Bargaining Agreement

▰ written contract that stipulates, among others the

specific rights, benefits, and duties of the workers
▰ can only happen when there is a union
▰ major factor for the avoidance of employment-at-will,
protecting workers from being fired except for “good
cause”
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Employment-at-Will

▰ traditional absolute right of the employer to fire an

employee whenever the former wants without any
consideration for a just cause and due process for
firing
▰ At present, it is no longer an acceptable practice

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▰When all attempts to reach agreement between the
employer and worker fail, the workers usually resort to a
labor strike.
▰Strike occurs when an organized body of workers
withholds its labor to force the employer to comply with its
demands
▰Just as the right to organize and form a union is a basic
right of the workers, the right to strike is also a basic right.
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William Shaw cited the work of Austin Fagothey and Milton
Gonsalves to explain the condition for a morally justified labor
strike.
▰There must be a just cause such as unjust wages and inhuman
working conditions
▰There must be proper authorization from the members of the union
and from the proper government body (DOLE)
▰The labor strike must be the last resort, which means that all
attempts and efforts by both parties had already been exhausted,
yet there remains a deadlock in the CBA 42
▰Some employers may view the labor union as a
counterproductive and as a hindrance to the success of a
business. However, building a healthy relationship between
the employer and the labor union would actually in turn,
improve worker’s efficiency and productivity. Furthermore,
a smoothly functioning labor union contributes to a steady
workforce and a more stable economy in general. Thus, a
labor union is a valuable component in the aspiration to
reduce the inherent tensions between capital and labor.
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 4
FIDUCIARY DUTY OF THE
EMPLOYEE
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▰If the employees have fundamental rights to ensure that
their work and working condition improve their lives
and well-being, they have also corresponding moral
duties toward the employer that they serve.

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▰The basic principle that underlies the duties of the
employees toward the employer is captured in what is
now famously known as the theory of agency.
▰Online Legal Dictionary: “a consensual relationship
created by contract or by law where one party, the
principal, grants authority for another party, the agent, to
act on behalf of and under the control of the principal to
deal with a third party.”
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EMPLOYEE
▰agent
▰acts in behalf of the principal
▰has specific duties toward his or principal

EMPLOYER
▰principal
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 Fiduciary Duty

▰ legal and technical term to refer to the obligations of the

employee to always act on behalf of his or her employer
▰ one’s obligation to carry out the tasks entrusted to him or
her
▰ Online Business Dictionary: “a legal obligation of one
party to act in the best interest of another. The obligated
party is typically a fiduciary, that is, someone entrusted
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FIDUCIARY RELATIONSHIP
▰relationship of trust between two parties

FIDUCIARY
▰Latin word: Fidere meaning “To trust”
▰a person who has been entrusted with the care of another’s
property or other valuables and who has a responsibility to
exercise discretionary judgment in this capacity solely in
the interest of this person’s interest 49
 THREE MAIN PRINCIPLES
ACCORDING TO JOHN
BOATRIGHT:
▰Candor- agent’s moral duty to be always truthful and honest to his
or her principal
▻The employer or the owner of the business has the largest stake on
the business because of his or her investment of money, time,
effort, and other psychological factors. If the business fails, it is
the owner who usually incurs the greatest loss. Thus, the fiduciary
must always disclose all relevant and vital information to the
principal. 50
 THREE MAIN PRINCIPLES
ACCORDING TO JOHN
▰Care- duty ofBOATRIGHT:
the employee to take good care of all the assets
entrusted to him or her by the owner of the business.
▻Company theft even of small things is a violation of the duty of
care expected from the employee. Protection of copyrights, patent
rights, trade secrets, and other intellectual properties is also
expected from the employee. The employee must not be negligent
with regard to company time, company property, and other
company assets.
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 THREE MAIN PRINCIPLES
ACCORDING TO JOHN
▰Loyalty BOATRIGHT:
▻The duty of loyalty is a very broad obligation that covers many
things.
▻Pertains to the employee’s obligation to act in the interest of the
beneficiary and to avoid taking any personal advantage of the
relationship.

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 5
CONFLICT OF INTEREST

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 CONFLICT OF INTEREST

▰ an actual or potential violation of fiduciary duty of

loyalty to the business owner
▰ exists when the independence and impartiality of
decision-makers is compromised due to competing
interests influencing the outcome of a decision, for
personal benefit in particular
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 EXAMPLES OF CONFLICT OF
INTEREST
▰A human resource manager interviewing a job applicant who
happens to be his or her godson
▻The manager has a personal interest to extend care toward
somebody who is close to him or her. This personal interest
conflicts with the interest of the business owner who wants the
best qualified candidate for the job position
▰Purchasing officer favouring buying supplies from company that he
or she is also a part-owner
▰Nepotism- favouring one’s relatives and friends 55
 EXAMPLES OF CONFLICT OF
INTEREST ACCORDING TO
▰Self-dealing
JOHN BOATRIGHT
▻The employee uses his or her position to gain personal profits to
the detriment of the company where he or she has the duty of
loyalty and care
“If a director would benefit from the sale of land or real estate to the
corporation, the deal must be an economically prudent deal for the
corporation. The director must not promote such a real estate
transaction if only the director benefits, while the corporation would
gain more from an alternative transaction.” 56
 EXAMPLES OF CONFLICT OF
INTEREST ACCORDING TO
▰Acceptance
JOHN BOATRIGHT
of bribes
▻It is not only the bribed employee that may lose
integrity when caught; the company’s reputation at
stake as well.
▻A dilemma may arise when one finds it difficult to
distinguish between a bribe and a gift.
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 EXAMPLES OF CONFLICT OF
INTEREST ACCORDING TO
JOHN BOATRIGHT
▰Direct competition
“The employee may even use the knowledge, skills, and other
assets that he or she gets form the company in order to use it for his or
her own business undertaking.”
▰Use of confidential information
▻Examples of confidential and valuable information:
▻Trade secrets and patent rights 58
 6
WHISTLEBLOWING

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▰The employee has the moral duty to be loyal to the
employer. But what if the employee discovered company
activities and operations that are illegal, unethical, and
harmful to the public or to the environment?
▰In some instances, the employee has the moral duty to
break its loyalty towards the company and think of his or
her greater responsibility towards the public.
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WHISTLEBLOWING

▰ an attempt by a member or a former member of an

organization to disclose wrong doing in or by the
organization.

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 WHISTLEBLOWING
For Velasquez, whistleblowing is morally justifiable under certain conditions.
▰ Whistleblower must have sufficient and accurate evidences of the
wrongdoing.
▰ The whistleblower must have already exhausted all means to resolve
the issue internally with his or her superiors.
▰ There should be a high probability that whistleblowing would be lead
to the correction of the wrongdoing.
▰ The wrongdoing must be something so serious that it justifies the
potential harmful effects to the whistleblower and his or her family and
to 62
 EFFECTS OF
▰Financial Effect
WHISTLEBLOWING
of Whistleblowing
The whistleblower may lose his or her job.

▰Psychological and Physical Effects

(1) Restless sleep (2) Fatigue (3) Headache (4) Insomnia
(5) Increased smoking (6) Anger (7) Anxiety
(8)Disillusionment
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▰Whistle blowing is not an easy thing to do. The
whistleblower may be compared to a dwarf who fights
the giant that is the corporation. It takes a lot of moral
courage and heroism to risk your job, career, and
reputation for something you truly believe to be morally
upright.

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THANK YOU!

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