Labor Code Provisions

Ralating to MSMEs

Atty. Luis Gerardo C. Manabat, C.P.A., F.I.C.D.

De La Salle University
The Labor Code
General Principles
 The Labor Code
General Principles

The Philippine Labor Code was originally enacted in 1974 under

Presidential Decree 442 to govern all employment practices and
labor relations in the Philippines.

Labor Laws in the Philippines are largely made up of social justice

measures where the government seeks to balance the need to
protect labor, who have little or no economic power, versus their
employer and promote industrial peace to make the Philippines
more competitive in the international markets.
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 The Labor Code
General Principles

The mandate to protect the labor force comes from the

1987 Constitution where it recognizes and guarantees
the following rights of workers:
• Self-organization, collective bargaining and negotiations, and
peaceful concerted activities including the right to strike in
accordance with the law.

• Security of tenure, humane conditions of work and a living wage

• Participation in policy- and decision-making processes affecting

workers rights and benefits as provided by law.

• A just share in the fruits of production vis-à-vis the right of the

employer to reasonable returns of investments.
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 The Labor Code
General Principles

This makes our Labor Code inherently pro-labor

much like the credo of Pres. Ramon Magsaysay
that “those with less in life, must have more in law.”

But while the law does recognize and give rights and
powers to the employees under the Constitution, it
also recognizes that the employers also have rights
and powers and does not infringe on these so long as
these rights and powers are exercised in good faith
and in accordance with the applicable law and/or
subsisting contract.
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The Labor Code
Provisions
The Concepts of Employment and Employees
 The Labor Code Provisions
Concepts of Employment and Employees

A contract of employment is a special contract entered

into by one (the employee) who offers to render a service to
another (the employer) in exchange for salaries and/or wages.
A contract of employment is consensual in nature and
does not normally require any written document in
order for it to exist.

The Four Fold Test of employment

To determine if there is a contract of employment the following tests are applied:
1) The selection and engagement of the 3) The power to control the employee’s
employee conduct.
2) The payment of wages 4) The power of dismissal
 The Labor Code Provisions
Concepts of Employment and Employees

There different kinds of employees and each of them have their

own rights and benefits. To wit:
A. Regular Employees – employees engaged to
perform activities which are usually necessary or
desirable in the usual business or trade of the
employer. (Sec. 295, Labor Code)
However, when the employment had been fixed for a
specific project or undertaking and the completion or
termination of the work has been determined at the
start or if the employment is seasonal and the work is
only for the season, then the employee is not regular.
 The Labor Code Provisions
Concepts of Employment and Employees

Regular employees are those who are entitled to the full benefits
provided for by law, such as:
1.Security of Tenure
2.SSS, Pag-Ibig and Philihealth Benefits
3.13th Month Pay
4.Rest Days
5.Holiday and Overtime Pay
6.Leave Benefits
a. Service Incentive Leaves
b. Maternity or Paternity Leaves
c. Parental Leaves for solo parents.
 The Labor Code Provisions
Concepts of Employment and Employees

B. Probationary Employees – employees who are

hired on a trial basis where the employee must
demonstrate their ability to perform the job for which
he or she is being hired. (Sec. 296, Labor Code)

In the case of probationary employees, the following

must be kept in mind:
a) Probationary employees are still regular employees
who enjoy security of tenure but may be terminated
if they fail to demonstrate their ability to do the job.
b) The standards for which the employee is to be
evaluated must be clearly laid out.
 The Labor Code Provisions
Concepts of Employment and Employees

The probationary period cannot exceed 6 months,

and if the employee has been employed for longer
than 6 months, they will be considered as full regular
employees with all the benefits thereof.

However, it is not necessary for an employee to

undergo a probationary period to be considered a
regular employee. The probationary status of the
employee must be expressly agreed upon at the point
of employment.
 The Labor Code Provisions
Concepts of Employment and Employees

C. Casual/Contractual Employees – employees who

are not regular, are considered casual or contractual.
(Sec. 295, Labor Code) Their conditions of employment is based

on the terms of their contract.

The most common form of casual or contractual
employees are:
a) Seasonal Employees
b) Project Employees
c) Fixed Term Employees
There is however a concept called “regular contractual” where a contractual
employee who has rendered at least 1 year of service as a contractual employee
whether continuous or broken shall be considered a regular employee for the activity
in which he/she was employed so long as the activity exists.
 The Labor Code Provisions
Concepts of Employment and Employees

Presumptions on the status of employment of an individual

In case of doubt, the employee is considered to be a regular

employee and has all the benefits that come with that status.

It is up to the employer to prove that the employee is not a

regular employee.
 The Labor Code Provisions
Concepts of Employment and Employees

Security of Tenure:
This right of the employee against termination of his/her
employment except for just or legal cause, and only
after due process. This right is also sometimes referred
to as Job Security.

This right protects the employee from arbitrary or

whimsical termination of employment without any
justifiable reason. This right also protects the employee
from being coerced to do something against their will
just to make sure they are not terminated.
 The Labor Code Provisions
Concepts of Employment and Employees

Security of Tenure:
This right of the employee against termination of his/her
employment except for just or legal cause, and only
after due process. This right is also sometimes referred
to as Job Security.

This right protects the employee from arbitrary or

whimsical termination of employment without any
justifiable reason. This right also protects the employee
from being coerced to do something against their will
just to make sure they are not terminated.
 The Labor Code Provisions
Concepts of Employment and Employees

Security of Tenure:
Just Causes for Termination:
1.Serious Misconduct or willful disobedience by the employee of the
lawful orders of the employer or representative in connection with
his/her work.
2. Gross and habitual neglect by the employee of his duties
3. Fraud or willful breach by the employee of the trust reposed
to him by his employer or representative.
4. Commission of a crime or offense by the employee against
the employer or any immediate member of his family or
representative.
5. Other analogous causes.
 The Labor Code Provisions
Concepts of Employment and Employees
Security of Tenure:
Authorized Causes for Termination:
1.Installation of labor-saving devices.

2. Redundancy

3. Retrenchment to prevent losses

4. Closing or cessation of operation of the establishment or
undertaking
5. Disease, where the continued employment of the afflicted
employee is prohibited by law or is prejudicial to his health
as well as to the health of his co-employees.
In case of retrenchment, separation pay need to be paid to the employee.
 The Labor Code Provisions
Concepts of Employment and Employees

Security of Tenure:
If an employee is terminated without falling into the
previous causes, then the termination is considered to
be illegal and entitles the employee to:
• Reinstatement to their employment with no loss of
seniority rights and other privileges; or
• Payment of full back pay from the time they were
illegally dismissed.

Due process must also be observed in termination

proceedings or it would be considered illegal.
 The Labor Code Provisions
Concepts of Employment and Employees

Security of Tenure:
Due Process is a two-part requirement of law in order to
justify the process of termination.
• Substantive Due Process:
Meaning that the termination was made for the causes
indicated by law.

• Proceedural Due Process:

Meaning that the termination was made in accordance
with the processes prescribed by law to give the
employee a fair opportunity to be heard and put up a
defense if needed.
 The Labor Code Provisions
Concepts of Employment and Employees

Special Classes of Employees…

There are some classes of employees that have been specifically
provided for by the Labor Code that requires specific treatment.

Employment of Women
• Women are prohibited from being engaged in night
work unless allowed by the following rules
– 10 pm to 6 am in industrial undertakings
– 12 midnight to 6 am in commercial/non-industrial work
• It is unlawful to discriminate against any woman with
respect to terms and conditions of employment solely
on account of their sex. (Art. 133, Labor Code)
 The Labor Code Provisions
Concepts of Employment and Employees

Employment of Women
• Employers must provide their female employees with:
– Seats proper for women and permit them to use such
seats when they are free from work.
– Separate toilets, lavatories and dressing rooms
– Nursery in the workplace for the benefit of women
employees including lactating rooms

• Stipulations against marriage for the continuance of

employment is prohibited by law nor is pregnancy a
ground for termination of employment.
 The Labor Code Provisions
Concepts of Employment and Employees

Employment of Children
• Minimum employable age is 15, provided that those
below 15 must be directly under the sole responsibility
of the parents/guardians and the work does not
interfere with the child’s schooling or development
• For hazardous jobs, the minimum age is increased to
18 years.

Note at Child Labor is still frowned upon by society and

the international community.
 The Labor Code Provisions
Concepts of Employment and Employees

Employment of Apprentices and Learners

Apprenticeship and Learners Agreements may be entered into for
the purpose of training the employee for the skills they wish to
become adept at.
– Highly technical industries have apprentices
– Non-apprenticeable skills that can be learned in a relatively short
period of time (3 months at most) have learners.

The main purpose of this types of employees are to

encourage employers to develop the manpower through
hands on training
 The Labor Code Provisions
Concepts of Employment and Employees

Employment of Handicapped (PWD) Workers

To give handicapped (PWD) individuals an opportunity
for employment and become productive members of
society, they are allowed to be employed in such work
that they can perform provided it is not done as a form
of unfair labor practice.

Apprentices, Learners and Handicapped Workers may be

paid wages less than the minimum wage but in no case
should it be below 75%.
 End of Module 3

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