LABOR LAW (BAM210)

MODULES 3&4

BY: RAY ALLEN A. DIZON

OBJECTIVES

→ 1. List the different aspects of labor standards; and

→ 2. Enumerate and discuss the different conditions of employment.

→ 3. Differentiate wage from salary; and discuss principles of commission, facilities, supplements and minimum wage;
and

→ 4. Explain non-diminution of benefits, payment of wages, prohibitions regarding wages, wage order and wage
distortion.
LABOR STANDARDS
→ COVERAGE:

ART. 82 – all employees in all establishments, whether for profit or not are covered; hence, they are entitled to benefits also
known as mandatory benefits, statutory benefits, time benefits, or extra-wage benefits.
EXCLUSIONS:
MOM GF PWD employees,
M – Managerial Employees (one who determines, formulates management policies;)
O – Officers & members of the managerial staff (one who executes management policies);
M – Members of the employer’s family dependent on him for support;
G – Government employees;
F – Field personnel (shall refer to non-agricultural employees who regularly perform duties away from the principal
place of business.)
W – Workers paid by result (they are the piece-rate, workers paid on task basis and purely commission basis);
P – Persons in the personal service of another;
D – Domestic helpers. NOTE: Family driver is not a domestic worker but a regular employee.
MANDATORY BENEFITS UNDER P.D. 442

→ 1. 8-Hour Work

→ 2. Meal Period

→ 3. Nightshift Differential

→ 4. Overtime Pay

→ 5. Rest Period

→ 6. Premium Pay

→ 7. Holiday Pay

→ 8. 13th month Pay

→ 9. Service Charge

→ 10. OSH LAW

LIST OF REGULAR
HOLIDAYS(https://www.officialgazette.gov.ph/nationwide-holidays/)
SPECIAL HOLIDAYS(https://www.officialgazette.gov.ph/nationwide-holidays/)
8-hour work

→ Hours of work shall include:

1. All time which an employee is required: a. to be on duty and b. to be at a prescribed workplace.

2. All time which an employee is suffered or permitted to work.

- Rest periods of short duration during working hours shall be counted as hours of work.

→ 8 hours is maximum, which may be staggered so long as it falls within a 24-hour period. Work in excess of this
maximum becomes OVERTIME WORK.
Meal Period

→ Duration of Meal Period:

General Rule: at least 1 hour time-off for regular meals

Instances where meal period may be at least 20 minute:
a. Work is non-manual in nature or does not involve strenuous physical exertion.
b. Establishment regularly operates not less than 16 hours a day.
c. Where there is an urgent work to be performed on machineries, equipment or installation to avoid
serious loss which the employer would suffer.
d. Work is necessary to prevent serious loss of perishable goods.
Night shift differential

→ Art. 86. An employee shall be paid night shift differential of no less than ten percent (10%) of his regular wage for each hour of work
performed between 10:00PM and 6:00AM.

FORMULAS:

→ Overtime work between 10:00pm and 6:00am

- regular wage PLUS at least 25% and an additional amount of no less than 10% of such overtime rate for each hour of work performed
between 10:00pm and 6:00am.

→ Regular Holiday

- regular wage PLUS no less than 10% of such premium rate for each hour of work performed

→ Ordinary day

- 10% of the regular wage of each hour of work rendered between 10:00pm and 6:00am.

→ Rest day or Special Day

- regular wage PLUS at least 30% and an additional amount of less than 10% of such premium rate for each hour of work performed.
Overtime Pay

→  Is additional compensation for work done beyond the normal work hours on ordinary working days. 

FORMULAS:

Regular work day – Regular wage PLUS 25% of basic hourly rate .

Special days, holiday or rest day – Rate for the first 8 hours on the special day or rest day PLUS at least 30%
thereof.

Regular Holiday – Rate for the first 8 hours on such holiday PLUS at least 30% thereof.
Rest Period

→ (Right to Weekly Rest Day/WRD): Every employer (Er) shall give his employees (Ee) a rest period of not less than
24 consecutive hours after every 6 consecutive normal work days. It shall apply to all Ers whether for operating or
not, including public utilities operated by private persons. Er shall determine and schedule the WRD of his Ee. The
Ee cannot be compelled by the Er to work on his rest day. (LC, Art. 91)
Premium Pay

→ It is an additional compensation given to a covered employee for working on a holiday or rest day.

RATES:

a. On a rest day or special day

- Additional compensation of at least 30% of regular wage.

b. On a special day falling on a rest day

- Additional compensation of at least 50% of regular wage.

c. On a regular holiday

- Not exceeding 8 hours shall be paid atleast 200% of his regular daily wage.

d. On a regular holiday falling on a rest day

- Additional compensation of atleast 30% of his regular holiday rate of 200%.

Holiday Pay

→ This is a one-day pay given by law to an employee even if he does not work on a regular holiday.

General rule: Every worker shall be paid his regular daily wage during regular holidays,

Exception: in retail and service establishments regularly employing less than 10 workers. The employer may
require an employee to work on any holiday but such employee shall be paid twice his regular rate.

→ RATE:

100% of the regular daily wage

13th Month Pay

→ Additional income based on wage required by P.D. 851 requiring all Ers to pay their Ees a 13th month pay w/c is
equivalent to 1/12 of the total basic salary earned by an Ee within a calendar year. It is imposed as a ‘minimum
service requirement’ that the employee should have worked for at least one (1 month) during a calendar year.
Service Charge

→ These are charges collected by hotels, restaurants and similar establishments at the rate of 85% for covered Ees
equally distributed among them, and 15% for the management to answer for losses and breakages. (LC, Art. 96)
WAGES (module 4)
NO WORK, NO PAY PRINCIPLE

→ Aklan Electric Cooperative Incorporated (AKELCO) v. NLRC, Retiso, G.R. No. 121439, January 25, 2000.
The Supreme Court stated that:

→ “The age-old rule governing the relation between labor and capital, or management and employee
of a “fair day’s wage for a fair day’s labor” remains as the basic factor in determining employees’
wages. If there is no work performed by the employee there can be no wage or pay unless, of
course, the laborer was able, willing and ready to work but was illegally locked out, suspended or
dismissed, or otherwise illegally prevented from working, a situation which we find is not present
in the instant case. It would neither be fair nor just to allow private respondents to recover
something they have not earned and could not have earned because they did not render services
at the Kalibo office during the stated period.”
“EQUAL PAY FOR EQUAL WORK” PRINCIPLE

→ The long honored legal truism of "equal pay for equal work," meaning, "persons who work with
substantially equal qualification, skill, effort and responsibility, under similar conditions, should be paid
similar salaries," has been institutionalized in our jurisdiction. Such that "if an employer accords employees
the same position and rank, the presumption is that these employees perform equal work" as "borne by
logic and human experience." The ramification is that "(i)f the employer pays one employee less than the
rest, it is not for that employee to explain why he receives less or why the others receive more. That would
be adding insult to injury. The employer has discriminated against that employee; it is for the employer to
explain why the employee is treated unfairly." (International School Alliance of Educators v. Quisumbing, et
al., G.R. No. 128845, June 1, 2000)
Commission and its inclusion in basic salary

→ Commission is a fee paid based on percentage of the sale made by an employee or agent, as distinguished from
regular payments of wages or salary. It’s included in the basic salary if it is comprised of a pre-determined
percentage of the selling price of the goods. It’s excluded from the basic salary if it is paid as productivity bonus or it
has no clear relation to the amount of work actually done by an employee.
FACILITIES VS. SUPPLEMENTS

→ In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and
over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the
laborers’ basic wages, it is a facility.
REGIONAL MINIMUM WAGE

→ The lowest wage rate fixed by law that an employer can pay his workers. Compensation which is less than such
minimum rate is considered an underpayment that violates the law. The minimum wage fixed by law is mandatory;
thus it is non-waivable and non- negotiable.
Non-diminution of benefits

→ Nothing in the Labor Code shall be construed to eliminate or in any way diminish supplements, or other employee
benefits being enjoyed at the time of the promulgation of the Code (LC, Art. 100) Benefits being given to Ees cannot
be taken back or reduced unilaterally by the Er because the benefit has become part of the employment contract,
whether written or unwritten, except for corrections of error, contingent benefit or conditional bonus, wage order
compliance, benefits on reimbursement basis, reclassification of position, negotiated benefits and productivity
incentives. (LC, Art. 127)
Payment of wages

→ No employer shall pay the wages of an employee by means of promissory notes, vouchers, coupons, tokens, tickets,
chits, or any object other than legal tender. Payment of wages by check or money order shall be allowed if it is
customary on the date of the effectivity of the Code, necessary because of special circumstances, etc. Wages shall be
paid at least once every (2) weeks, or twice a month at intervals not exceeding 16 days, at or near the place of
undertaking and shall be paid directly to the workers to whom they are due. (LC, Art. 102-111).
Prohibitions regarding wages

→ Employer shall not force, compel or oblige his employees to purchase merchandise, commodities or other property
from any other person, or otherwise make use of any store services of such employer or any other person. (LC, Art.
112)

→ Wage deduction – No employer, in his own behalf or in behalf of any person, shall make any deduction from the
wages of his employees. An employer will not be liable for violation of the prohibition wage deduction for absences
or tardiness incurred by the employee. (LC, Art. 113)
Wage order

→ This is an order issued by the Regional Tripartite Wage and Productivity Board (RTWPB). It establishes the
minimum wage rates to be paid by employers in the region, which shall in no case be lower than the applicable
statutory minimum wage rates. Any wage order issued may not be disturbed for a period of 12 months from its
effectivity, and no petition for wage increase shall be entertained within the same period. (LC, Art. 123)
Wage distortion

→ A situation where an increase in wage results in the elimination or severe contraction of intentional quantitative
differences in wage or salary rates between and among- the employee-groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure based on skills, length of service or other logical bases of
differentiation. (LC, Art. 124)

→ Wage “distortion” occurs when the usual differentials in wage rates between groups of
employees in an establishment are drastically reduced or eliminated due to mandated wage
increases.
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