The Labor Code and The Dynamics

Between Employees and Employers

ATTY. J. OSWALD B. LORENZO

Former Labor Arbiter, NCR-NLRC; Professor of Law and Pre-Bar

Reviewer; President, The Center for Law Advocacy and Specialized Studies
(CLASS); former Assistant Secretary, DENR and POEA Director for
Licensing and Past President, National Association of Labor Arbiters
(NALA), Inc.

SOCIAL SECURITY SYSTEM

(RA1161 as amended by RA 8282)

COVERAGE:
Compulsory:
Compulsory upon all employees not over
60 years of age and their employers
In case of domestic helpers, their monthly
income should not be less than one
thousand pesos
Compulsory upon such self- employed
persons as may be determined by the
Commission including but not limited to
the following (Sec 9-A):
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All self employed professionals

Partners and single proprietors
Actors and actresses directors, scriptwriters and
news correspondents who do not fall within the
definition of the term employee in Section 8 (d)
of this Act
Professional athletes, coaches, trainers, and
jockeys
Individual farmers and fishermen

Limitation: Sec. 9 (a)

Any benefit already earned by the employees
under private benefit plans existing at the time
of the approval of the Act shall not be
discontinued, reduced or otherwise impaired

Voluntary:
Spouses who devote
full time to managing the
household and family affairs, unless they are also
engaged in other vocation or employment which is
subject to mandatory coverage, may be covered by
the SSS on a voluntary basis.
Filipinos recruited by foreign based employers for
employment abroad may be covered by the SSS
on a voluntary basis
Employees separated from employment may
continue to pay contributions to maintain his right
to full benefits (Sec. 11)
Self-employed with no income (11-A)
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BY AGREEMENT:
Any foreign government, international
organization,
or
their
wholly-owned
instrumentality employing workers in the
Philippines, may enter into an agreement with
the Philippine government for the inclusion of
such employees in the SSS except those
already covered by their respective civil
service retirement systems (Sec.8 (j (4).

EXCLUDED EMPLOYMENT (SEC. 8 (J)):

Employment purely casual and not for the purpose
of occupation or business of the employer
Service performed on or in connection with an
alien vessel by an employee if he is employed
when such vessel is outside the Philippines.
Service performed in the employ of the Philippine
government or instrumentality or agency thereof.
Service performed in the employ of a foreign
government, international organization, or their
wholly owned instrumentality;
Services performed by temporary employees,
which may be excluded by regulation of the
commission.

EFFECTIVE DATE OF COVERAGE:

Employer: It shall take effect on the first

day of his operation

Employee: On the day of his employment

Self-employed: It shall take effect upon his

registration with SSS
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Definition of Terms
EMPLOYER
Any person natural or juridical, domestic or
foreign, who carries on in the Philippines, any trade
business, industry undertaking or activity of any kind
and uses the services of another person who is under
his orders as regards the employment except the
Government and any of its political subdivisions,
branches or instrumentalities, including corporations
owned or controlled by the Government
Self- employed person shall be both the employer
and employee at the same time
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EMPLOYEE
Any person who performs services for an
employer in which either or both mental and
physical efforts are used and who receives
compensation for such services, where there is
an employer- employee relationship.

Self- employed person shall be both the

employer and employee at the same time
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DEPENDENTS:

The legal spouse entitled by law to receive

support from the member
The legitimate, legitimated or legally
adopted and illegitimate child who is
unmarried, not gainfully employed and has not
reached 21 years of age or if 21 years of age,
he is congenitally incapacitated or while still a
minor has been permanently incapacitated and
incapable of self- support, physically and
mentally and
The parent who is receiving regular support
from the member
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BENEFICIARIES
The dependent spouse until he or she
remarries, the dependent legitimate,
legitimated or legally adopted and
illegitimate children who shall be the
primary beneficiaries of the member
PROVIDED that the dependent illegitimate
children shall be entitled to 50% of the
share of the legitimate, legitimated or
legally adopted children.
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PROVIDED FURTHER in the absence of

the legitimated, legally adopted or legitimate
children, illegitimate children shall be
entitled to 100% of the benefits.
IN THEIR ABSENCE, the dependent
parents who shall be the secondary
beneficiaries.
IN THE ABSENCE OF ALL of the
foregoing, any person designated by the
covered employee as secondary beneficiary.

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Benefits:
Monthly pension
Dependents pension

Retirement benefits

SUSPENSION OF MONTHLY PENSION:

Upon the re-employment or resumption of
self-employment of a retired employee who is
less than 65 years old.
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Death Benefits
Permanent disability benefits
Funeral Benefit
A funeral grant equivalent to Twelve
thousand pesos (P12, 000.00) shall be paid,
in cash or in kind, to help defray the cost of
funeral expenses upon the death of a
member, including permanently totally
disabled member or retiree.
Sickness benefit
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Maternity Leave Benefit

It shall be paid to a female employee who has
paid at least 3 monthly contributions in the twelve
month period immediately preceding the semester
of her childbirth or miscarriage PROVIDED:

That the employee shall have notified her

employer of her pregnancy and the probable date
of her childbirth which notice shall be
transmitted to the SSS.

The full payment shall be advanced by the

employer within 30 days from the filing of the
maternity leave application
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Payment of daily maternity benefits shall be a bar

to the recovery of sickness benefits
The maternity benefits provided under this section
shall be paid only for the first 4 deliveries or
miscarriages
The
SSS shall immediately reimburse the
employer 100% of the benefits advanced by the
latter
If no contributions were remitted by the employer
or no notice was given to SS, the employer shall
be liable for damages equivalent to the benefits
which said employee member would otherwise
have been entitled to.

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 Non-transferability of benefits (Sec. 15)

Such benefits are not transferable and

no power of attorney or other document
executed by those entitled thereto, in favor
of any agent, attorney or any other person
for the collection thereof on their behalf
shall be recognized, except when they are
physically unable to collect personally such
benefits.
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Remittance:
It shall be remitted within the first 10 days
of each calendar month following the
month for which they are applicable or
within such time as the Commission may
prescribe.

For self-employed they shall remit their

contributions quarterly on such dates and
schedules as the Commission may require.
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GOVERNMENT SERVICE
INSURANCE SYSTEM (GSIS)
RA 8291

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COMPULSORY MEMBERSHIP (Sec. 3)

Compulsory for all employees (as defined in
Section 2 (d) of GSIS Law) receiving
compensation who have not reached the
compulsory retirement age, irrespective of
employment status, EXCEPT MEMBERS OF
THE ARMED FORCES AND THE PNP,
subject to the condition that they must settle
first their financial obligations with the
GSIS and contractuals who have no
employer and employee relationship with
the agencies they serve.
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EXCEPT FOR THE MEMBERS OF THE

JUDICIARY AND CONSTITUTIONAL
COMMISSIONS WHO SHALL HAVE LIFE
INSURANCE ONLY, all members of the
GSIS shall have life insurance, retirement
and all other social security protection
such as disability, survivorship, separation
and unemployment benefits.

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Definition of Terms:
Employer:
The national government, its political
subdivisions,
branches,
agencies
or
instrumentalities including GOCCs and
financial institutions with original charters, the
constitutional commissions and the judiciary
Employee or Member:
Any person receiving compensation while
in the service of an employer as defined herein,
whether by election or appointment,
irrespective of status appointment,
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Dependents:
The legitimate spouse dependent for support upon
the member or pensioner
The legitimate, legitimated legally adopted child,
including the illegitimate child who is:
unmarried,
not gainfully employed,
not over the age of majority,
or is over the age of majority but incapacitated
and incapable of self-support due to a mental or
physical defect acquired prior to age of majority
Parents dependent upon the member for support
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Primary Beneficiary:
The legal dependent spouse until he/she remarries

Secondary Beneficiary:
The dependent parents and subject to the restrictions
on dependent children, the legitimate descendants

Disability:
Any loss or impairment of the normal functions of the
physical and/or mental faculty of a member which
reduces or eliminates his/her capacity to continue
with his/her current gainful occupation or engage in
any other gainful occupation.
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Total Disability

Permanent Total Disability

Temporary Total Disability

Permanent Partial Disability

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Benefits:
SEPARATION BENEFITS (SEC. 11):
Separation benefits are given to the:
The member resigns or separates from the
service after he has rendered at least three
(3) years of service but less than fifteen
(15) years or
The member resigns or separates from
office after he has rendered at least fifteen
(15) years of service and is below sixty
(60) years of age at the time of resignation
or separation.
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Separation benefits likewise include:

UNEMPLOYMENT OR INVOLUNTARY
SEPARATION BENEFITS (Sec. 12): shall
be paid to a permanent employee who is
involuntarily separated from the service due to
the abolition of his office or position usually
resulting from reorganization PROVIDED that
he has been paying integrated contributions for
at least one (1) year prior to separation.

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RETIREMENT BENEFITS
PERMANENT DISABILITY BENEFITS

PERMANENT PARTIAL DISABILITY

(Sec. 17)

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IN
THE
ABSENCE
OF
PRIMARY
BENEFICIARIES,
THE
SECONDARY
BENEFICIARIES SHALL BE ENTITLED TO:

Cash payment equivalent to 100% of his average

monthly compensation for each year of service he
paid contributions, but not less than P12,000
PROVIDED that the member is in service at the
time of his death and has at least 3 years of service.

In the absence of secondary beneficiaries , the

benefits under this paragraph shall be paid to the
legal heirs
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FUNERAL BENEFITS:
It shall not be less than twelve thousand
pesos (P12,000.00) PROVIDED that it shall
be increased to at least eighteen thousand
pesos (P18,000.00) after five years and shall
be paid upon death.

LIFE INSURANCE BENEFITS:

All employees except members of the AFP
and the PNP shall be compulsorily covered
with life insurance.

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Adjudication of Claims and Disputes

PRESCRIPTION OF CLAIMS
Claims for benefits under the Act except for life and
retirement shall prescribe AFTER 4 YEARS FROM THE
DATE OF THE CONTINGENCY.

JURISDICTION
GSIS shall have the exclusive and original jurisdiction
to settle any dispute arising under the Act and any other
laws administered by the GSIS.
Appealable under Rule 43 and 45 Of the 1997 Rules of
Civil Procedure. The appeal shall not stay the execution of
the order or award unless ordered by the Boards, CA, or SC
and the appeal shall be without prejudice to the special civil
action of certiorari when proper.
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13TH MONTH PAY LAW

(P.D. 851)

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SEC. 2.

DEFINITION OF CERTAIN TERMS

"THIRTEENTH-MOTH PAY" - shall mean one

twelfth (1/12) of the basic salary of an employee within
a calendar year;
"BASIC SALARY" - include all remunerations or
earnings paid by an employer to an employee for
services rendered but may not include:
Cost-of-living allowances
Profit-sharing payments, and
All allowances and monetary benefits which are
not considered or integrated as part of the regular
or basic salary of the employee at the time of the
promulgation of the Decree on December 16,
1975.
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WHAT CAN BE CONSIDERED AS

13TH MONTH PAY:
Christmas bonus
Midyear bonuses
Cash bonuses

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SEC. 3.
EMPLOYERS COVERED
- The Decree shall apply to all employers except to:
a. Distressed employers, - such as:
those which are currently incurring substantial
losses; or
in
the case of non-profit institutions and
organizations, where their income, whether from
donations, contributions, grants and other earnings
from any source, has consistently declined by more
than forty (40%) percent of their normal income for
the last two (2) years, subject to the provision of
Section 7 of this issuance;
b. The Government and any of its political subdivisions,
including GOCCs except those corporations operating
essentially as private subsidiaries of the Government
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c. Employers already paying their employees 13month pay or more in a calendar year of its
equivalent at the time of this issuance;
d. Employers of household helpers and persons in
the personal service of another in relation to such
workers; and
e. Employers of those who are paid on purely
commission, boundary, or task basis, and those
who are paid a fixed amount for performing a
specific work, irrespective of the time consumed
in the performance thereof, except where the
workers are paid on piece-rate basis in which
case the employer shall be covered by this
issuance insofar as such workers are concerned.
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WORKERS PAID ON PIECE-RATE BASIS

refer to those who are paid a standard amount for
every piece or unit of work produced that is more or
less regularly replicated, without regard to the time
spent in producing the same.
"ITS EQUIVALENT" (as used in paragraph c)
hereof) shall include:
Christmas bonus
mid-year bonus
profit-sharing payments and
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other cash bonuses amounting to not less

than 1/12th of the basic salary but shall
not include cash and stock dividends, cost
of living allowances and all other
allowances regularly enjoyed by the
employee, as well as non-monetary
benefits.
Where an employer pays less than
1/12th of the employees basic salary, the
employer shall pay the difference.
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SEC. 4.
EMPLOYEES COVERED
Except as provided in Section 3 of this issuance, all
employees of covered employers shall be entitled to
benefit provided under the Decree who are receiving
not more than P1,000 a month, regardless of their
position, designation or employment status, and
irrespective of the method by which their wages are
paid, provided that they have worked for at least one
month during the calendar year.
WHO ARE EXCLUDED FROM COVERAGE:
government employees
household helpers
employees paid purely on commission basis
employees already receiving 13th month pay
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SEC. 5. OPTION OF COVERED

EMPLOYERS
A covered employer may pay one-half of the
13th-month pay required by the Decree before
the opening of the regular school year and the
other half on or before the 24th day of
December of every year.
In any establishment where a union has been
recognized or certified as the collective
bargaining agent of the employees therein, the
periodicity or frequency of payment of the
13th month pay may be the subject of
agreement.
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SEC. 7.
EXEMPTION OF DISTRESSED
EMPLOYERS
Distressed employers shall qualify for exemption
from the requirement of the Decree upon prior
authorization by the Secretary of Labor.

SEC. 9.
ADJUDICATION OF CLAIMS
Non-payment of the thirteenth-month pay provided
by the Decree and these rules shall be treated as
money claims cases and shall be processed in
accordance with the Rules Implementing the Labor
Code of the Philippines and the Rules of the National
Labor Relations Commission.
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SEC. 10. PROHIBITION AGAINST

REDUCTION OR ELIMINATION OF
BENEFITS
Nothing herein shall be construed to
authorize any employer to eliminate, or
diminish in any way, supplements, or
other employee benefits or favorable
practice being enjoyed by the employee
at the time of promulgation of this
issuance.
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PRIVATE SCHOOL TEACHERS

Private school teachers, including faculty
members of colleges and universities, are
entitled to 1/12 of their annual basic pay
regardless of the number of months they
teach or are paid within a year.
OVERTIME PAY
Overtime
pay, earnings
and
other
remunerations which are not part of the basic
salary shall not be included in the
computation of the 13-month pay.
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Is it necessary that a woman be impregnated by

her legitimate spouse?
No. it is immaterial who the father is.
Every pregnant woman in the private sector,
whether married or unmarried, is entitled to the
maternity leave benefits.

45

EXTENSION OF MATERNITY
LEAVE [ART 133 (b)]
the maternity leave shall be extended
without pay on account of illness medically
certified to arise out of the pregnancy,
delivery, abortion, or miscarriage, which
renders the woman unfit for work , unless she
has earned unused leave credits from which
such extended leave may be charged.
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PATERNITY LEAVE
(RA 8187 , July 5,1996)
Grants paternity leave of 7 days with full pay,
consisting of basic salary, to all married male
employees in the public and private sector.
Available only for the first 4 deliveries of the
legitimate spouse with whom the husband is
cohabiting; the term delivery includes childbirth,
miscarriage or abortion.
In the event that such leave was not availed of,
said leave shall not be convertible to cash.
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PURPOSE: to enable the husband to lend support to

his wife during the period of recovery and/ or in the
nursing of the newly born child.
CONDITIONS FOR ENTITLEMENT:
He is an employee at the time of the delivery of
his child;
He is cohabiting with his spouse at the time she
gives birth or suffers a miscarriage;
He has applied for paternity leave with his
employer;
His wife has given birth or suffered a miscarriage;
the term wife refers to the lawful wife which
means the woman who is legally married to the
male employee concerned.
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APPLICATION OF LEAVE:
Must be made:
within
a reasonable time from the
expected date of delivery by the pregnant
spouse.
within such period as may be provided
by company rules & regulations or
CBA.
prior application for leave shall NOT be
required in case of miscarriage.
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EMPLOYMENT OF MINORS

50

ART. 139. MINIMUM EMPLOYABLE AGE

GENERAL RULE: No child below 15 shall
be employed.
CONDITIONS ON THE EMPLOYMENT
OF A CHILD BELOW 15:

When the child works directly under the

sole responsibility of his/her parents or legal
guardian who employs members of his/her
family only under the following conditions:
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employment does not endanger the

childs life, safety, health and morals;

employment does not impair the

childs normal development; and

the parent/legal guardian provides the

child with the primary and/or
secondary education prescribed by
DECS.
52

Where the childs employment or

participation in public entertainment or
information through cinema, theater,
radio, or television is essential,
provided that:
employment
does not involve
advertisements
or
commercials
promoting
alcoholic
beverages,
intoxicating drinks, tobacco and its
by-products or exhibiting violence;
53

There is a written contract

approved by the DOLE; and
The conditions prescribed for the
employment of minors {above
stated} are met.
Any person between the ages of
15 and 18 may be employed in any
non-hazardous work.

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NON-HAZARDOUS
WORK
OR
UNDERTAKING
one where the employee is not exposed
to any risk which constitutes an imminent
danger to his safety and health.
HAZARDOUS WORKPLACES:
where the nature of the work exposes the
workers to dangerous environmental
elements, contaminants or work conditions;
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where the workers are engaged in construction

work, logging, fire-fighting, mining, quarrying,
blasting, stevedoring, dock work, deep-sea
fishing, and mechanized farming;
where
the workers are engaged in the
manufacture or handling of explosives and
other pyrotechnic products;
where the workers use or are exposed to heavy
or power-driven machinery or equipment; and
where the workers use or are exposed to powerdriven tools

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END
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