INTRO (ALM1) – MODULE 16: Labor Law & Social Legislation

MODULE 16
LABOR LAW AND SOCIAL LEGISLATION
WEEK 13 – 23 & 25 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
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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 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
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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 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
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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)
(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.
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 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;
(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
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(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;
(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.
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 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).
 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
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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.
 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.
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 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 13th 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 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;
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(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.
(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
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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 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:

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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,
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
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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.

(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.
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 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;
 Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative;
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 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 employees will
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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:
INTRO (ALM1) – MODULE 16: Labor Law & Social Legislation
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1. David Robert C. Aquino. Introduction to Law. (Quezon City:

Central Book Supply, Inc., 2017).
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