LABOR Standards 4

7/28/2019 LABOR Standards 4

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Emergency Overtime Work- Anyemployee may be required by theemployer to perform overtime work in anyof the following cases:

1. when the country is at war or whenany other national or local emergencyhas been declared by the NationalAssembly or the Chief Executive;

2. when it is necessary to prevent lossof life or property or in case of life orproperty or in case of imminentdanger to public safety due to anactual or impending emergency in thelocality caused by serious accidents,fire, flood, typhoon, earthquake,epidemic, or other disaster orcalamity;

3. when there is urgent work to beperformed on machines, installation,or equipment, in order to avoidserious loss or damage to theemployer or some other cause ofsimilar nature;

4. when the work is necessary toprevent loss or damage in perishablegood; and

5. where the completion orcontinuation of the work startedbefore the eighth hour is necessary to

prevent serious obstruction orprejudice to the business oroperations of the employer.

f. Week Rest Period (Art.91)

i. Right to a Weekly Rest Day

Concept of Rest Day- Employeeshould be provided a rest period ofnot

less than 24 consecutive hours

after every 6 consecutive normalwork days.

Weekly rest period is within thepurview of employers prerogative.

The employer shall schedule the weeklyrest day of is employees subject toCBA. However, the employer shallrespect preference of employees as

to their weekly rest day when suchpreference is based on religiousgrounds. But when such preferencewill prejudice the operations of theundertaking and the employer cannotnormally result to order remedialmeasures, the employer may soschedule the weekly rest day thatmeets the employees choice for atleast 2 days a month.

ii. When Employer may RequireWork on a Rest Day (Art. 92)

General Rule- It shall be the duty ofevery employer, whether operating forprofits or not to provide a rest period ofnot less than 24 consecutive hoursafter every 6 consecutive normal workdays to his employees.

Exception:

The employer may require hisemployees to work on any day even ona rest day:1. In cases of urgent work to be

performed on the machinery,equipment or installation, to avoidserious loss which the employerwould otherwise suffer;

2. To prevent loss or damage toperishable goods;

3. In case of actual or impendingemergencies caused by seriousaccident, fire, flood, typhoon,earthquake, epidemic, or otherdisaster or calamity to prevent lossof life and property, or imminentdanger to public safety;

4. Where the nature of the work

requires continuous operations andthe stoppage of work may result inirreparable injury or loss to theemployer; and

5. In the event of abnormal pressureof work due to specialcircumstances, where the employercannot ordinarily be expected toresort to other measures;

6. Under other circumstancesanalogous to the foregoing asdetermined by the Secretary ofLabor.

iii. Compensation for Rest Day,Sunday or Holiday Work (Art.93)

This Article does not prohibit astipulation in the CBA for higherbenefits

a. List of Special Holidays:1. November 1- All Saints Day2. December 31- Last Day of the Year3. All other days declared by law4. Local Holiday (that which declared

by law or Ordinance as holiday of aparticular LGU. This is for thatspecific LGU only, e.g. Quezon CityDay)

b. List of Regular Holidays:

1. January 1- New Years Day


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2. Maundy Thursday (movabledate)

3. Good Friday (movable date)4. April 9- Araw ng Kagitingan5. May 1- Labor Day6. June 12- Independence Day7. National Heroes Day (Last

Sunday of August)

8. November 30- Bonifacio Day9. December 25- Christmas Day10.December 30- Rizal Day11.Eidl Fitr (movable date)

under RA 9177, November13, 2002.

NOTE: There must be no distinctionbetween Muslims and Non-Muslims asregards payment of benefits for MuslimHolidays; wages and other emolumentsare laid down by law and not based onfaith or religion.

REGULARHOLIDAY

SPECIALHOLIDAY

Compensable evenif unworked subjectto certainconditions.

Not compensable ifunworked.

Limited to the 10enumerated by the

Labor Code.

Not exclusive sincea law of ordinance

may provide forother specialholidays.

Rate is twice theregular rate ifworked.

Rate is 130% of theregular wage ifworked.

iii. When Entitled to PremiumPay

If worked- regular wage plus 30%premium pay

If not worked- no compensation/ nopremium

iv. Additional Compensation forWork on a Rest Day, Sunday orHoliday:

DAY RATE OFADDITIONAL

COMPENSATION

Work on ascheduled rest day

30% of regularwage

No regularworkdays and restdays

30% of regularwage for work onSundays andHolidays

Work on SpecialHolidays

30% of regularwage

Holiday Work fallson Scheduled RestDay

50% of regularwage

g. Right to Holiday Pay (Art.94)

Holiday Pay (legal holiday)- A days

pay given by law to an employee evenif he does not work on a regularholiday. It is limited to the 11 regularholiday listed by law. The employeeshould not have been absent withoutpay on the working day preceding theregular holiday.

Premium Pay- Additionalcompensation for work performed on ascheduled rest day or holiday.

i. Rule on Compensability

Compensable whether worked orunworked subject to certain conditions.

Legal holiday falling on a Sunday doesnot create an additional workday norcreate a legal obligation for theemployer to pay extra aside from theusual holiday pay to its monthly paidemployees.

ii. Double Holiday Pay1. 200% of the basic wage- entitledeven if said holiday is unworked. Togive employee only 100% wouldreduce the number of holidaysunder DO No. 3.

2. 300% if he worked on 2 regularholidays falling on the same day(e.g. April 9 and Maundy Thursday)

ILLUSTRATION:a. Single Holiday Rule- provided that

the employee:1. worked;2. was on leave with pay; or3. was on authorized absence on the

day prior to the regular holiday. Successive Regular Holiday- If there

are two successive regular holidays(e.g. Maundy Thursday and GoodFriday), the employee must be presentthe day before the scheduled regular

holiday to be entitled to compensationto both; otherwise, he must work onthe first holiday to be entitled toholiday pay on the second regularholiday.

Wed. Thurs. Fri. Entitledto bePaid?

Present REST

DAY

REGULAR

HOLIDAY

Yes


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Absentwith pay

RESTDAY

REGULARHOLIDAY

Yes

Absentwithoutpay

SPECIALDAY

REGULARHOLIDAY

No

Present SPECIALDAY

Yes

Absent

with Pay

SPECIAL

DAY

Yes

AbsentwithoutPay

SPECIALDAY

No

b. Successive Holiday Rule

Wed. MaundayThurs.

GoodFriday

Entitledto bePaid?

Present REGULAR

HOLIDAY

REGULAR

HOLIDAY

Yes-

BothAbsentwith pay

REGULARHOLIDAY

REGULARHOLIDAY

Yes-Both

Absentwithoutpay

REGULARHOLIDAY

REGULARHOLIDAY

No- Both

Absentwithoutpay

WORKED Yes- butonly totheholidaypay onFriday

h. Right to Service IncentiveLeave (Art. 95)

Concept of Service Incentive Leave(SIL)- 5 days leave with pay for everyemployee who has rendered at least 1year of service.

SIL does not apply to those whoare:1. already enjoying the said benefits;2. already enjoying vacation leave with

pay for at least 5 days;3. employed in establishments

regularly employing less than 10employees; and

4. employed in establishmentsexempted by the Secretary ofLabor.

1 Year of Service- service within 12months, whether continuous or broken,reckoned from the date the employeestarted working including authorizedabsences and paid regular holidaysunless the number of working days inthe establishment, as a matter ofpractice or policy or a provided in theemployment contract, is less than 12months.

SIL is commutable, i.e. convertible tocash the cash equivalent is aimedprimarily at encouraging workers towork continuously and with dedicationto the company.

Part-time workers are entitled to thefull benefit of the yearly 5-days SIL.The reason is that the provisions of

Article 95, Labor Code speak of thenumber of months in a year forentitlement to said benefit.

i. Vacation and Sick Leave

Not statutorily required; matter ofmanagement discretion or a product ofCBA.

Benefits are non-cumulative and non-commutative; must be enjoyed by the

employee within 1 year otherwise theyare considered waived or forfeited.Exception is when the laborcontract or the established practiceof the employer providesotherwise.

No employer shall discriminate againstany solo parent employee with respect

to terms and conditions of employmenton account of his/her status. In addition to leave privileges under

existing laws, parental leave of notmore than 7 working days every yearshall be granted to any solo parentemployee who has rendered service ofat least 1 year.

i. Service Charges (Art. 96)

Concept- All service charges collectedby hotels, restaurants, and similarestablishment shall be distributed:1. 85% for all covered employees to

be equally distributed among them.2. 15% for management.

Share of the employees shall be equallydistributed among them. The sharesreferred to herein shall be distributedand paid to employees not less than

once every 2 weeks or twice a monthat intervals not exceeding 16 days.

The 15% management share shall befor disposition by management toanswer for losses and breakages anddistribution to employees receivingmore than P2,000.00 a month at thediscretion of the management in thelatter case.

In case the service charge is abolished,the share of the covered employees


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shall be considered integrated in theirwages.

The basis of the amount to beintegrated shall be the average shareof each employee for the past 12months immediately preceding theabolition or withdrawal of such charge.

Coverage- Apply only to hotels,

restaurants and similar establishmentcollecting service charges. Pooled Tips- Monitored, accounted

for, and distributed in the same manneras service charges.

CASES:

ACE NAVIGATION CO. v s . CA andORLANDO ALONSAGAY G.R. No.140364. August 15, 2000 PUNO

Facts:

Ace Navigation Co. recruited privaterespondent Orlando Alonsagay to work asa bartender on board the vessel M/V"Orient Express" owned by its principal,Conning Shipping Ltd. (Conning). Undertheir POEA approved contract ofemployment, Orlando shall receive a

monthly basic salary of U.S. $450.00, flatrate, including overtime pay for 12 hoursof work daily plus tips of S. $2.00 perpassenger per day. He was also entitled to2.5 days of vacation leave with pay eachmonth. The contract was to last for one(1) year. Petitioners alleged that Orlandowas deployed and boarded M/V "OrientExpress" at the seaport of Hong Kong.After the expiration of the contract on June

13, 1995, Orlando returned to the

Philippines and demanded from Ace Nav,his vacation leave pay. Ace Nav. did notpay him immediately. It told him that heshould have been paid prior to hisdisembarkation and repatriation to thePhilippines. Moreover, Conning did notremit any amount for his vacation leavepay. Ace Nav, however, promised to verify

the matter and asked Orlando to returnafter a few days. Orlando never returned.Orlando filed a complaint before the laborarbiter for vacation leave pay and unpaidtips. Labor Arbiter ordered Ace Nav andConning to pay jointly and severallyOrlando his vacation leave pay. The claimfor tips of Orlando was dismissed for lackof merit. NLRC ordered petitioner andConning to pay Orlando his unpaid tips. CAdenied the petition for certiorari, hence,

this petition.

Issue: WON petitioners are liable to paythe tips to Orlando.

Ruling:

The word tip has several meanings, withorigins more or less obscure, connectedwith "tap" and with "top." in the sense of a

sum of money given for good service. It ismore frequently used to indicate additionalcompensation, and in this sense "tip" isdefined as meaning a gratuity; a gift; a

present; a fee; money given, as to aservant to secure better or more promptservice. A tip may range from pure gift outof benevolence or friendship, to acompensation for a service measured byits supposed value but not fixed by an

agreement, although usually the word is

applied to what is paid to a servant inaddition to the regular compensation forhis service in order to secure betterservice or in recognition of it. Tipping isdone to get the attention and securethe immediate services of a waiter,porter or others for their services.Since a tip is considered a pure gift

out of benevolence or friendship, itcan not be demanded from thecustomer. Whether or not tips will begiven is dependent on the will andgenerosity of the giver. Although acustomer may give a tip as aconsideration for services rendered,its value still depends on the giver.They are given in addition to thecompensation by the employer. Agratuity given by an employer in order

to inspire the employee to exert moreeffort in his work is moreappropriately called a bonus.

In the case at bench, NLRC and CA heldthat petitioners were liable to pay tips toOrlando because of the contract ofemployment. However, the contract ofemployment between petitioners andOrlando is categorical that the monthly

salary of Orlando is US$450.00 flat rate.This already included his overtime paywhich is integrated in his 12 hours ofwork. The words "plus tips of US$2.00 perpassenger per day" were written at theline for overtime. Since payment forovertime was included in the monthlysalary of Orlando, the supposed tipsmentioned in the contract should bedeemed included thereat. The actuations

of Orlando during his employment also


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show that he was aware his monthlysalary is only US$450.00, no more no less.He did not raise any complaint about thenon-payment of his tips during the entireduration of his employment. After theexpiration of his contract, he demandedpayment only of his vacation leave pay. Hedid not immediately seek the payment of

tips. He only asked for the payment of tipswhen he filed this case before the laborarbiter. This shows that the alleged non-payment of tips was a mere afterthoughtto bloat up his claim. The records of thecase do not show that Orlando wasdeprived of any monthly salary. It will nowbe unjust to impose a burden on theemployer who performed the contract ingood faith. Furthermore, it is presumedthat the parties were aware of the plain,

ordinary and common meaning of theword "tip." It is also absurd thatpetitioners intended to give Orlando asalary higher than that of the ship captain.

However, Orlando should be paid hisvacation leave pay. Petitioners denied thisliability by raising the defense that theusual practice is that vacation leave pay isgiven before repatriation. But petitioners

did not present any evidence to prove thatthey already paid the amount. The burdenof proving payment was not discharged bythe petitioners.

CA is reversed.

PHILIPPINE NATIONALCONSTRUCTION CORPORATION vs.NLRC and ROLANDO S. ANGELES G.R.

No. 128345 May 18, 1999 PUNO

Facts:

Private respondents Rolando S. Angelesand Ricardo P. Pablo, Jr. were employedby petitioner corporation as tollwayguards. Their services, however, wereterminated on the ground of seriousmisconduct. Rosario C. Maravilla

complained to the Tollway GeneralManager, Mr. Ibarra G. Paulino, about the"mulcting activities" of some securitypersonnel. Acting on the complaint, Mr.Paulino formed an investigating teamwhich staged an entrapment. They markedone P500.00 bill and two P100.00 bills andhanded to Maravilla with instruction togive it to whoever demands money fromher. Thus, the team, together withMaravilla, boarded the latter's passengerjeepney driven by Eustaquio Paa. TheJeepney was then carrying a cargo ofdogs. The jeepney was stopped by Angeleswho was on duty at that time. He allegedlysuspected them of illegally transportingdogs. Angeles approached the driver,asked for his driver's license and told himto park at the shoulder of the road. Themembers of the investigating team sawprivate respondents accept cash and a

sack containing a dog from Maravilla, afterwhich they allowed the jeepney to leave.Mr. Ibarra issued a Notice of Dismissal toprivate respondents requiring them toanswer the charge of serious misconduct.After conducting a formal investigation,the investigating officer recommended thedismissal of private respondents which wasadopted by Mr. Ibarra issued and issued aNotice of Termination to private

respondents informing them that their

employment shall cease. The Labor Arbiterruled that private respondents' dismissalwas illegal. He held that petitioner failed toprove by clear and convincing evidencethat private respondents committedserious misconduct. However, instead ofordering their reinstatement, the LaborArbiter ordered the payment of separation

pay because of strained relations. He alsoordered petitioner to pay privaterespondents their backwages and mid-yearbonus, which was modified by NLRC.

Issue: WON pay private respondents areentitled to mid-year bonus notwithstandingthe fact that private respondentscommitted grave and serious misconduct.

Ruling:

Private respondents are not entitled to themid-year bonus they are claiming. A bonusis a gift from the employer and the grantthereof is a management prerogative.Petitioner may not be compelled to awarda bonus to private respondents whom itfound guilty of serious misconduct. In adecided case, it has been held that abonus is a gratuity or an act of liberality of

the giver which the recipient has no rightto demand as a matter of right. It issomething given in addition to what isordinarily received by or strictly due therecipient. The granting of a bonus isbasically, a management prerogativewhich cannot be forced upon theemployer who may not be obliged toassume the onerous burden ofgranting bonuses or other benefits

aside from the employee's basic


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salaries or wages. A bonus, however,is a demandable or enforceableobligation when it is made part of thewage or salary or compensation of theemployee. Whether or not a bonus forms

part of wages depends upon thecircumstances and conditions for its

payment. If it is additional compensation

which the employer promised and agreedto give without any conditions imposed forits payment, such as success of businessor greater production or output, then it is

part of the wage. But if it is paid only ifprofits are realized or if a certain level ofproductivity is achieved, it cannot beconsidered part of the wage. Where it isnot payable to all but only to someemployees and only when their laborbecomes more efficient or more

productive, it is only an inducement forefficiency, a prize therefor, not a part ofthe wage.

In the case at bench, private respondentsin this case neither alleged nor adducedevidence to show that the bonus they areclaiming is a regular benefit which hasbecome part of their compensation. Thus,the presumption is that it is not a

demandable obligation from the employerand the latter may not be compelled togrant the same to underservingemployees.

Petition is granted.

PRODUCERS BANK OF THEPHILIPPINES vs. NLRC andPRODUCERS BANK EMPLOYEES

ASSOCIATION G.R. No. 100701 March28, 2001 GONZAGA-REYES

Facts:

Producers Bank of the Philippines, abanking institution, has been providingseveral benefits to its employees since

1971 when it started its operation. Amongthe benefits it had been regularly giving isa mid-year bonus equivalent to anemployee's one-month basic pay and aChristmas bonus equivalent to anemployee's one whole month salary (basicpay plus allowance). When the lawgranting a 13th month pay, took effect, thebasic pay previously being given as part ofthe Christmas bonus was applied ascompliance to the 13th Month Law, theallowances remained as Christmas bonusFrom 1981 up to 1983, the bank continuedgiving one month basic pay as mid-yearbonus, one month basic pay as 13th monthpay but the Christmas bonus was nolonger based on the allowance but on thebasic pay of the employees which ishigher. In the early part of 1984, the bankwas placed under conservatorship but itstill provided the traditional mid-year

bonus. By virtue of an alleged MonetaryBoard Resolution No. 1566, bank onlygave a one-half (1/2) month basic pay ascompliance of the 13th month pay andnone for the Christmas bonus. Privaterespondent Producers Bank EmployeesAssociation with NLRC charging petitionerBank with diminution of benefits, non-compliance with Wage Order No. 6 andnon-payment of holiday pay. In addition,

private respondent prayed for damages.

Labor Arbiter Nieves V. de Castro foundprivate respondent's claims to beunmeritorious and dismissed its complaint.NLRC granted all of private respondent'sclaims, except for damages.

The issues are discussed in seriatim.

B o n u s e s

Ruling:

A bonus is an amount granted andpaid to an employee for his industryand loyalty which contributed to thesuccess of the employer's businessand made possible the realization ofprofits. It is an act of generositygranted by an enlightened employerto spur the employee to greaterefforts for the success of the businessand realization of bigger profits. Thegranting of a bonus is a managementprerogative, something given in additionto what is ordinarily received by or strictlydue the recipient. Thus, a bonus is not ademandable and enforceableobligation, except when it is madepart of the wage, salary or

compensation of the employee.However, an employer cannot beforced to distribute bonuses which itcan no longer afford to pay. To holdotherwise would be to penalize theemployer for his past generosity.

In the case at bench, it was established bythe labor arbiter and NLRC and admittedby both parties that petitioner was placed

under conservatorship by the Monetary


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Board. Petitioner was not onlyexperiencing a decline in its profits, butwas reeling from tremendous lossestriggered by a bank-run which began in1983. In such a depressed financialcondition, petitioner cannot be legallycompelled to continue paying the sameamount of bonuses to its employees. Thus,

the conservator was justified in reducingthe mid-year and Christmas bonuses ofpetitioner's employees. To hold otherwisewould be to defeat the reason for theconservatorship which is to preserve theassets and restore the viability of thefinancially precarious bank. Ultimately, it isto the employees' advantage that theconservatorship achieve its purposes forthe alternative would be petitioner'sclosure whereby employees would lose not

only their benefits, but their jobs as well.

1 3t h

Mo n t h P a y

Ruling:

PD 851, which was issued by PresidentMarcos on 16 December 1975, requires allemployers to pay their employeesreceiving a basic salary of not more than P

1,000 a month, regardless of the nature ofthe employment, a 13th month pay, notlater than December 24 of every year.However, employers already paying theiremployees a 13th month pay or itsequivalent are not covered by the law.Under the Revised Guidelines on theImplementation of the 13th Month PayLaw, the term "equivalent" shall beconstrued to include Christmas bonus,

mid-year bonus, cash bonuses and other

payments amounting to not less than 1/12of the basic salary. The intention of thelaw was to grant some relief - not toall workers - but only to those notactually paid a 13th month salary orwhat amounts to it, by whatever namecalled. It was not envisioned that adouble burden would be imposed on

the employer already paying hisemployees a 13th month pay or itsequivalent whether out of puregenerosity or on the basis of a bindingagreement. To impose upon anemployer already giving hisemployees the equivalent of a 13th

month pay would be to penalize himfor his liberality and in all probability,the employer would react bywithdrawing the bonuses or resist

further voluntary grants for fear thatif and when a law is passed giving thesame benefits, his prior concessionsmight not be given due credit.

In the case at bench, even assuming thetruth of private respondent's claimsregarding the payments received by itsmembers in the form of 13th month pay,mid-year bonus and Christmas bonus, it is

noted that, for each and every yearinvolved, the total amount given bypetitioner would still exceed, or at least beequal to, one month basic salary and thus,may be considered as an "equivalent" ofthe 13th month pay mandated by PD 851.Thus, petitioner is justified in crediting themid-year bonus and Christmas bonus aspart of the 13th month pay.

Ho l i d a y P a y

Article 94 of the Labor Code provides thatevery worker shall be paid his regulardaily wage during regular holiday andthat the employer may require anemployee to work on any holiday butsuch employee shall be paid acompensation equivalent to twice hisregular rate. In this case, the Labor

Arbiter found that the divisor used bypetitioner in arriving at the employees'daily rate for the purpose of computingsalary-related benefits is 314. This findingwas not disputed by the NLRC. However,the divisor was reduced to 303 by virtue ofan inter-office memorandum issued on 13August 1986. Private respondent admitsthat, prior to 18 August 1986, petitionerused a divisor of 314 in arriving at thedaily wage rate of monthly-salaried

employees. Private respondent alsoconcedes that the divisor was changed to303 for purposes of computing overtimepay only. Apparently, the divisor of 314 isarrived at by subtracting all Sundays fromthe total number of calendar days in ayear, since Saturdays are considered paidrest days, as stated in the inter-officememorandum. Thus, the use of 314 as adivisor leads to the inevitable conclusion

that the ten legal holidays are alreadyincluded therein. The reduction of thedivisor to 303 was done for the solepurpose of increasing the employees'overtime pay, and was not meant toexclude holiday pay from the monthlysalary of petitioner's employees. In fact, itwas expressly stated in the inter-officememorandum- that the divisor of 314 willstill be used in the computation for cashconversion and in the determination of the


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daily rate. Thus, based on the records ofthis case and the parties' own admissions,SC holds that petitioner has complied withthe requirements of Article 94 of the LaborCode.

NLRC is set aside.

AUTO BUS TRANSPORT SYSTEMS vs.ANTONIO BAUTISTA G.R. No. 156367May 16, 2005 CHICO-NAZARIO

Facts:

Antonio Bautista has been employed bypetitioner Auto Bus Transport Systems,Inc. (Autobus), as driver-conductor.Respondent was paid on commission basis,7% of the total gross income per travel, ona twice a month basis. While respondentwas driving Autobus No. 114, the bus hewas driving accidentally bumped the rearportion of Autobus No. 124, as the lattervehicle suddenly stopped at a sharp curvewithout giving any warning. Respondentaverred that the accident happenedbecause he was compelled by themanagement to go back to Roxas, Isabela,although he had not slept for almost 24

hours, as he had just arrived in Manilafrom Roxas, Isabela. Respondent furtheralleged that he was not allowed to workuntil he fully paid the amount representing30% of the cost of repair of the damagedbuses and that despite respondents pleasfor reconsideration, the same was ignoredby management. After a month,management sent him a letter oftermination. Respondent instituted a

Complaint for Illegal Dismissal with Money

Claims for nonpayment of 13th month payand service incentive leave pay againstAutobus. Petitioner, on the other hand,maintained that respondents employmentwas replete with offenses involvingreckless imprudence, gross negligence,and dishonesty. To support its claim,petitioner presented copies of letters,

memos, irregularity reports, and warrantsof arrest pertaining to several incidentswherein respondent was involved. TheLabor Arbiter dismissed the complaint,however, petitioner was ordered to payprivate respondent his 13th month pay andSIL. NLRC maintained the award of SILwhich was affirmed by CA, hence, thispetition.

Issue: WON private respondent is entitled

to service incentive leave;

Ruling:

Under the law, every employee who hasrendered at least one year of service shallbe entitled to a yearly service incentiveleave of five days with pay. This rule shallapply to all employees except: (d) Field

personnel and other employees whose

performance is unsupervised by theemployer including those who are engagedon task or contract basis, purelycommission basis, or those who are paid ina fixed amount for performing workirrespective of the time consumed in the

performance thereof .

A careful perusal of said provisions oflaw will result in the conclusion that

the grant of service incentive leave

has been delimited by the IRR of theLabor Code to apply only to thoseemployees not explicitly excluded bySection 1 of Rule V. According to theIRR, Service Incentive Leave shall notapply to employees classified as "fieldpersonnel." The phrase "otheremployees whose performance is

unsupervised by the employer" must notbe understood as a separateclassification of employees to whichSIL shall not be granted. Rather, itserves as an amplification of theinterpretation of the definition of fieldpersonnel under the Labor Code asthose "whose actual hours of work in thefield cannot be determined with reasonablecertainty." The same is true withrespect to the phrase "those who are

engaged on task or contract basis, purelycommission basis." Said phrase shouldbe related with "field personnel,"applying the rule on ejusdem generisthat general and unlimited terms arerestrained and limited by the particularterms that they follow. Hence, employeesengaged on task or contract basis orpaid on purely commission basis arenot automatically exempted from the

grant of service incentive leave,unless, they fall under theclassification of field personnel.

It is necessary to stress that the definitionof a "field personnel" is not merelyconcerned with the location where theemployee regularly performs his duties butalso with the fact that the employeesperformance is unsupervised by theemployer. Thus, in order to conclude


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whether an employee is a fieldemployee, it is also necessary toascertain if actual hours of work in thefield can be determined withreasonable certainty by the employer.In so doing, an inquiry must be madeas to whether or not the employeestime and performance are constantly

supervised by the employer.

In the case at bench, as observed by theLabor Arbiter, in each and every depot,there is always the Dispatcher whosefunction is precisely to see to it that thebus and its crew leave the premises atspecific times and arrive at the estimatedproper time. The driver was thereforeunder constant supervision while in theperformance of this work. He cannot be

considered a field personnel. Respondentis a regular employee who performs tasksusually necessary and desirable to theusual trade of petitioners business.Accordingly, respondent is entitled to thegrant of service incentive leave.

Petition is denied.

C. PLANAS COMMERCIAL vs. NLRC and

ALFREDO OFIALDA G.R. No. 144619November 11, 2005 AUSTRIA-

MARTINEZ

Facts:

Private respondents Ofialda, Morente andAllauigan et.al filed a complaint forunderpayment of wages, nonpayment ofemployees other benefits petitioners C.

Planas Commercial and Marcial Cohu.

Private respondents alleged that petitionerMarcial Cohu, owner of C. PlanasCommercial, is engaged in wholesale ofplastic products and fruits of differentkinds with more than 24 employees; thatprivate respondents were hired bypetitioners as helpers/laborers; that theywere paid below the minimum wage law

for the past 3 years; that they wererequired to work for more than 8 hours aday without overtime pay; that they neverenjoyed holiday pay and did not have arest day as they worked for 7 days aweek; and they were not paid SIL payalthough they had been working for morethan one year. Private respondent Ofialdaasked for NSD as he had worked from 8p.m. to 8 a.m. the following day for morethan one year. Petitioners admitted that

private respondents were their helpers.Petitioners averred that privaterespondents were not entitled to holidayand SIL pays for they were employed in aretail and service establishment regularlyemploying less than ten workers. TheLabor Arbiter dismissed the money claims.Private respondents filed their appeal withthe NLRC. However, pending the appeal,private respondents Morente and Allauigan

filed their respective motions to dismisswith release and quitclaim before theNLRC. NLRC ordered petitioners to payprivate respondents an amountrepresenting their combined salarydifferentials, holiday pay, and SIL pay,which was affirmed in toto by CA.

Issue: WON petitioner is exemptedfrom paying the minimum wage andthe SIL pay.

Ruling:

R.A. No. 6727 known as the WageRationalization Act provides for thestatutory minimum wage rate of allworkers and employees in the privatesector. Section 4 of the Act provides for

exemption from the coverage and for aretail/service establishment to beexempted from the coverage of theminimum wage law, it must be shownthat the establishment is regularlyemploying not more than 10 workersand had applied for exemptions withand as determined by the appropriateRegional Board in accordance with theapplicable rules and regulationsissued by the Commission. Likewise

the Labor Code and its IRR provide for theexclusive list of who are exempted fromthe payment of SIL pay, one of theexempted is an establishment employingless than 10 employees. Therefore, it wasincumbent upon the employer-establishment to prove that it belonged toa class excepted by law from the generalrule. Specifically, it was the duty of theemployer to prove that there were less

than 10 employees in the company. Inthe case at bench, petitioners had notshown any evidence to show that they hadapplied for such exemption and if they hadapplied, the same was granted.

CA is modified.

D. WAGES


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a. Definition of Terms:

1. Person- means an individual,partnership, association, corporation,business trust, legal representatives, orany organized group of persons.

2. Employer- includes any person actingdirectly or indirectly in the interest of

an employer in relation to an employeeand shall include the government andall its branches, subdivisions andinstrumentalities, all government-owned or controlled corporations andinstitutions, as well as non-profitprivate institutions, or organizations.

3. Employee- includes any individualemployed by an employer.

4. Agriculture- includes farming in all itsbranches and, among other things,

includes cultivation and tillage of soil,dairying, the production, cultivation,growing and harvesting of anyagricultural and horticulturalcommodities, the raising of livestock orpoultry, and any practices performedby a farmer on a farm as an incident toor in conjunction with such farmingoperations, but does not include themanufacturing or processing of sugar,

coconuts, abaca, tobacco, pineapples orother farm products.

5. Employ- includes to suffer or permit towork.

6. Wage- paid to any employee shallmean the remuneration or earnings,however designated, capable of beingexpressed in terms of money, whetherfixed or ascertained on a time, task,piece, or commission basis, or othermethod of calculating the same, which

is payable by an employer to anemployee under a written or unwrittencontract of employment for work doneor to be done, or for services renderedor to be rendered and includes the fairand reasonable value, as determinedby the Secretary of Labor andEmployment, of board, lodging, or

other facilities customarily furnished bythe employer to the employee.7. Fair and reasonable value- shall not

include any profit to the employer, orto any person affiliated with theemployer.

8. Fair Days Wage for a Fair DaysLabor- If there is no work performedby the employee, there can be notwage or pay unless the laborer wasable, willing, and ready to work but

was prevented by management or wasillegally locked out, suspended ordismissed.

9. Equal Pay for Equal Work- Personswho work with substantially equalqualifications, skills, effort andresponsibilities under similarconditions, should be paid similarsalaries. If an employer accordsemployees same position and rank, the

presumption is that these employeesperform equal work.

NOTE: Wage is compensation for manuallabor; while Salary corresponds to higherdegree of employment.

What does wage or salary include?1. commission;2. facilities;

3. commodities/ supplementsThey are

deemed included in the termSALARY if the following conditionsconcur:

a. that the grant thereof isunconditional;

b. consistent and deliberate over a

period of time;c. customarily given such that theemployee expects to receive thesame.

Commission- direct remunerationsreceived by an agent, salesman,executor, broker, or trustee calculatedas a percentage on the amount of histransactions or on the profit to theprincipal.

Facilities- shall include all articles or

services for the benefit of the employeeor his family but shall not include toolsof the trade or articles or servicesprimarily for the benefit of theemployer or necessary to the conductof the employers business.

i. Legal Requirements beforeFacilities can be Deducted from

the Employees Wages:1. Proof must be shown that such

facilities are customarily furnishedby the trade;

2. The provision of deductible facilitiesmust be voluntarily accepted inwriting by the employee; and

3. The facilities must be charged at fairand reasonable value.

Gratuity- something given freely orwithout recompense to reward


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employees who have renderedsatisfactory and efficient service to thecompany.

Facilities Supplements

Items of expensenecessary for thelaborers and his

familys existenceand subsistence.

Constitute extraremuneration orspecial privileges or

benefits given to orreceived by thelaborers over andabove their ordinaryearnings wages.

Part of the wage Independent of thewage

Deductible from thewage

Not wage deductible

ii. Application of Provisions onWages

The provisions on wages do not apply tothe following:

1. farm tenancy or leasehold;2. household or domestic helpers;3. homeworkers engaged in needle

work;4. workers employed in any

establishment duly registered withthe National Cottage IndustryDevelopment Authority;

5. workers in duly registeredcooperatives.

b. Regional Minimum Wages(Art. 99)

Minimum wage rates for agriculturaland non-agricultural employees andworkers in each and every region of thecountry shall be those prescribed bythe Regional Tripartite Wages andProductivity Boards.

Minimum Wage- lowest wage ratefixed by that an employer can pay his

employees. The employer cannot exempt himselffrom liability to pay minimum wagesbecause of poor financial condition ofthe company; the payment of minimumwage is not dependent on theemployers ability to pay (De Racho vs.Municipality of Iligan, GR No. L-23542).

The acceptance by an employee of thewages paid him without objection does

not give rise to estoppel precluding himfrom suing for the difference betweenthe amount received and the amounthe should have received pursuant to avalid minimum wage law where it doesnot appear that the employer changedhis position to his own prejudice.

c. Prohibition againstElimination or Diminution

of Benefits (Art. 100)

Non-Diminution Rule- Nothing in theLabor Code shall be construed toeliminate or in any way diminishsupplements, or other employeebenefits being enjoyed at the time ofpromulgation of this Code.

Benefits being given to employeescannot be taken back or reducedunilaterally by the employer because

the benefit has become part of theemployment contract, written orunwritten.

The rule is applicable if it is shown thatthe grant of the benefit is:1. based on an express policy, or2. has ripened into practice over a long

period of time and the practice is

consistent and deliberate, and it isnot due to an error in theconstruction/ application of adoubtful or difficult question of law.

But even in cases of error, it should beshown that the correction is being donesoon after the discovery of the error.

Bonus- A supplement or employmentbenefit given under certain conditions,such as success of the business orgreater production or output.

As a rule, it is an amount grantedvoluntarily to an employee for hisindustry and loyalty which contributedto the success and realization of profitsof the employers business.

Therefore, from a legalpoint of view, it is not demandable andenforceable obligation unless it waspromised to be given without anyconditions imposed for its payment in

which case it is deemed part of thewage.

An employee who has resigned orwhose services were terminated at anytime before the payment of the 13th

month pay is entitled to this monetarybenefit in proportion to the length oftime he worked during the yearreckoned from the time of hisresignation or termination from service.


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i.13th Month Pay or itsEquivalent-

Additional income based on wagerequired by PD 851 which is equivalentto 1/12 of the total basic salary earnedby an employee within a calendar year.

It may be given anytime but not laterthan December 24.

a. Coverage All rank-and-file employees regardlessof their designation or employmentstatus and irrespective of the methodby which their wages are paid, areentitled to this benefit, provided, thatthey have worked for at least 1month during the calendar year.

b. Forms1. Christmas bonus;2. midyear bonus;

3. profit sharing payments; and4. other cash bonuses amounting to

not less than 1/12 of its basicsalary.

It must always be in the form of legaltender.

Difference of opinion on how tocompute the 13th month pay does notjustify a strike.

Free rice, electricity cash and stock

dividends, COLA are NOT propersubstitutes for the 13th month pay.ii. 14th Month Pay

A misnomer because it is basically abonus and gratuitous in character.

Granting thereof is a managementprerogative which can not be forcedupon the employer.

iii. Productivity Incentives Act of1990 (RA 6971, November 22,1990)

Kind of bonus that comes fromproductivity gain.

Aims to institute productivity atcompany level and the sharing ofproductivity gain between employersand employees.

Nature of salary bonus is proportionateto increase in current productivity.

Employees whose positions arereclassified from rank and file tosupervisory lose overtime pay andother benefits under Articles 82-96.Promotion produces the same effect.But the promotion and positionreclassification must be done in goodfaith. The personnel movement shouldnot be intended to circumvent the lawto deprive employees of the benefitsthey used to receive.

d. Payment by Results (Art.101)

i. Categories of Piece-RateWorkers (as to the presence ofcontrol)

1. those who work directly under thesupervision of their employer(piece-rate worker)

2. those who work away from theemployers work premises and arenot directly supervised by theemployer (pakiaw or takay)ii. Categories of Piece-Rate (asto the rate of payment)

1. those who are paid piece rates asprescribed in piece rate orders bythe DOLE.

2. those who are paid output rateswhich are prescribed by the

employer and are not yet approvedby the DOLE.iii. Workers Paid on Piece-RateBasis

Those who are paid a standard amountfor every piece or unit of workproduced that is more or less regularlyrelicated, without regard to the time

spent in producing the same.iv. Benefits Payable to Piece-Rate Workers Whose Work isDirectly Supervise by theEmployer

1. Applicable statutory minimum dailyrate.

2. Yearly service incentive leave of 5days with pay.

3. NSD Pay4. Holiday Pay

5. Meal and Rest Periods6. OT Pay (conditional)7. Premium Pay (conditional)8. 13th Month Pay9. Other benefits granted by law,

individual or collective bargainingagreements or company policyand practice.

The rules implementing the Labor Codeon NSD and SIL do not apply to

employees whose time andperformance is unsupervised by theemployers, including those who areengaged on task or contract basis,purely commission or those who arepaid a fixed amount for performingwork irrespective of the time consumedin the performance thereof.

e. Forms of Payment (Art.102)


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Employer cannot pay his workers bymeans of:1. promissory notes;2. vouchers;3. coupons;4. tokens;5. tickets;

6. chits; or7. any object other than legal tender General Rule- Payment by legal

tender Exceptions- payment by check or

money order may be allowed if thesame is:a. customarily on the date of effectivity

of the Labor Code;b. necessary because of special

circumstances as determined by the

Secretary of Labor;c. stipulated in the CBA; ord. where the following conditions are

met:e. there is a bank or other facility for

encashment within the radius of1km from the work place;

f. the employer, or any of his agent orrepresentatives, does not receiveany pecuniary benefit directly or

indirectly from the arrangement;g. the employees are given reasonabletime during banking hours towithdraw their wages from the bankwhich time shall be considered ascompensable hours worked if doneduring working hours; and

h. the payment by check is with thewritten consent of the employeesconcerned if there is no CBA

authorizing the payment of wagesby bank checks.

f. Time of Payment (Art. 103)

When to Pay?- At least once ever 2weeks; or twice a month at intervalsnot exceeding 16 days.

In case of force majeure or othercircumstances beyond the employerscontrol, payment must be madeimmediately after such occurrence hasceased.

If engaged to perform a task whichcannot be completed in 2 weeks and inthe absence of CBA:a. payment shall be made at intervals

not exceeding 16 days, in proportionto the amount of work completed;

b. that final settlement is made uponcompletion of the work.

g. Place of Payment (Art.104)

Where to Pay?- At or near the placeof undertaking.

Exceptions:1. When payment cannot be effected

at or near the place of work byreason of deterioration of peace andorder conditions, or by reason ofactual or impending emergenciescaused by fire flood or othercalamity rendering payment thereatimpossible.

2. When the employer provides for freetransportation to the employeesback and forth; and

3. Under any other analogouscircumstances

No employer shall pay his employees inany bar, night or day club, drinkingestablishment, massage clinic, dancehall, or other similar places or in placeswhere games are played with stakes ormoney or things representing money

except in the case of persons employedin said places. Requisites of Payment through

Banks:1. There must be written permission of

the majority of the employeesconcerned in an establishment;

2. The establishment must have 25 ormore employees; and

3. The establishment must be locatedwithin 1km radius to the bank.

Payment through ATM is allowed.

h. Direct Payment of Wages(Art. 105)

General Rule- Wages shall be paiddirectly to the workers to whom theyare due:

Exceptions:1. payment through another person

in case of force majeurerendering such paymentimpossible provided saidperson is under writtenauthority given by the workerfor the purpose;

when authorized underexisting law, includingpayments for insurancepremiums of the employeeand union dues where the


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right to check-off has beenrecognized by the employer inaccordance with a CBA orauthorized in writing by theindividual employeesconcerned.

2. payment through heirs of worker in case where the worker has

died employer may paywages of the deceasedworker to the heirs of thelatter without the necessity ofintestate proceedings.

Procedure:1. claimants shall execute an

affidavit attesting theirrelationship to the deceased andthe fact that they are his heirs,to the exclusion of all others;

2. in case of a minor heir, affidavitshall be executed on his behalfby his natural guardian or nextof kin;

3. affidavit shall be presented tothe employer who shall makepayment through the Secretaryof Labor or his representatives.

4. the representative shall act asreferee in dividing the amount

paid among the heirs;5. payment of wages under thisArticle shall absolve theemployer of any further liabilitywith respect to the amount paid.

3. payment through member ofworkers family

Where the employer isauthorized in writing by theemployee to pay his wages toa member of his family.

Whatmust

bepaid?

Legal tender; promissory notes,vouchers, coupons, tokens,tickets, chits, or any otherobject other than legal tender isprohibited.

When? Once every 2 weeks or twice amonth at intervals not

exceeding 16 days.Where? At or near the place orundertaking.

How? Directly to the employeeentitled thereto

i. Non-Interference in Disposalof Wages

Article 1705, NCC- The laborers wagesshall be paid in legal currency.Article 1706- Withholding of the wages,except for a debt due, shall not be madeby the employer.Article 1707- The laborers wages shallbe a lien on the goods manufactured orthe work done.Article 1708- The laborers wages shallnot be subject to execution or attachmentexcept for debts incurred for food, shelter,

clothing and medial attendance.Article 1709- The employer shall neitherseize nor retain any tool or other articlesbelonging to the laborer.

Prohibitions Regarding Wages:1. Payment of wages with less

frequency than once a month;2. Limitations/ interference by the

employer with the employees

freedom to dispose of his wages;

3. Forcing, compelling/obligingemployees to purchase merchandise,commodities, or other properties fromthe employer or from any otherperson, or to make use of any storeor service of such employer or anyother person;

4. Withholding wages;

5. Deduction of wages asconsideration of a promise ofemployment or retention inemployment;

6. Refusal to pay/reduction of wagesand benefits, discharge/discriminationagainst any employee as retaliatorymeasures against any employee whohas filed any complaint or institutedany proceedings against hisemployer.

j. Wage Deductions (Art. 113)

General Rule- Wage deduction isstrictly prohibited.

Exceptions (allowable deductions):a. with employees consent:1. SSS payments;2. PHILHEALTH payments;3. Contributions to PAG-IBIG Fund;

4. Value of meals and other facilities;5. payments to third persons withemployees consent;

6. deduction of absencesb. without employees consent:1. workers insurance acquired by the

employer;2. union dues, where the right to

check-off has been recognized bythe employer;


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3. cases where the employer isauthorized by law or regulationsissued by the Secretary of Labor;

4. debts of the employee to theemployer which have become dueand demandable.

k. Deposits for Loss or

Damage (Art. 114)

General Rule- No employer shallrequire his worker to make deposits forthe reimbursement of loss of ordamage to material, equipment, ortools supplied by the employer.

Exception- When the trade,occupation or business of the employerrecognizes or considers the practice ormaking deductions or requiring

deposits necessary or desirable.i. Requisites of Deduction forLoss or Damage:

1. the employee is clearly shown to beresponsible for the loss or damage;

2. the employee is given ampleopportunity to show cause whydeduction should not be made;

3. the amount of the deduction is fairand reasonable and shall not exceed

the actual loss or damage; and4. the deduction from the employeeswage does not exceed 20% of theemployees wages in a week.ii. 10 Commandments for theEmployer:

1. No employer shall interfere with theemployees freedom to dispose hiswages;

2. No employer shall force, compel oroblige employees to purchase

merchandise, commodities or otherproperty from the employer or fromany other person or otherwise makeuse of any store or services of suchemployer or any other person.

3. No employer shall make anydeductions from the employeeswages except when authorized;

4. No employer shall require theworker to make deposits from whichdeductions shall be made forreimbursement of loss of or damageto tools, materials, or equipmentsupplied by the employer exceptwhen the employer is engaged insuch business requiring suchdeposits as determined by theSecretary of Labor.

5. No employer shall make any

deduction from the employeesdeposits for the actual amount ofthe loss or damage unless theemployee has been heard thereonand his responsibilities has beenclearly shown;

6. No employer shall withhold anyamount from the wages unlessauthorized to do so.

7. No employer shall induce the

employee to give up any part of hiswages by force, stealth,intimidation, threat or dismissal orby any other means without theworkers consent;

8. No employer shall make deductionsas consideration of a promise ofemployment or retention ofemployment;

9. No employer shall refuse to pay orreduce the wages and benefits or

otherwise discharge the employeewho has filed any complaint underthis Title, or has testified or is aboutto testify in such proceedings;

10.No employer shall make anystatement report or record knowingsuch statement; report, or record tobe false in any material respect.

l. Wage Studies, Agreementsand Determination

Art. 120. Creation of National Wagesand Productivity Commission. There ishereby created a National Wages andProductivity Commission, hereinafterreferred to as the Commission, which shallbe attached to DOLE for policy andprogram coordination. (As am. by RepublicAct No. 6727, June 9, 1989).

Art. 121. Powers andfunctions of the Commission. TheCommission shall have the followingpowers and functions: a. To act as thenational consultative and advisory body tothe President of the Philippines andCongress on matters relating to wages,incomes and productivity;b. To formulate policies and guidelines onwages, incomes and productivity

improvement at the enterprise, industryand national levels;c. To prescribe rules and

guidelines for the determination ofappropriate minimum wage andproductivity measures at the regional,provincial, or industry levels;d. To review regional wage levels set bythe Regional Tripartite Wages andProductivity Boards to determine if theseare in accordance with prescribed


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guidelines and national developmentplans; e. Toundertake studies, researches and surveysnecessary for the attainment of itsfunctions and objectives, and to collectand compile data and periodicallydisseminate information on wages andproductivity and other related information,

including, but not limited to, employment,cost-of-living, labor costs, investments andreturns;

f. To review plans andprograms of the Regional Tripartite Wagesand Productivity Boards to determinewhether these are consistent with nationaldevelopment plans; g. Toexercise technical and administrativesupervision over the Regional TripartiteWages and Productivity Boards;

h. Tocall, from time to time, a national tripartiteconference of representatives ofgovernment, workers and employers forthe consideration of measures to promotewage rationalization and productivity; and

i. To exercisesuch powers and functions as may benecessary to implement this Act.

Art. 122. Creation of

Regional Tripartite Wages andProductivity Boards. There is herebycreated Regional Tripartite Wages andProductivity Boards, hereinafter referred toas Regional Boards, in all regions,including autonomous regions as may beestablished by law. The Commission shalldetermine the offices/headquarters of therespective Regional Boards.

The Regional Boards shallhave the following powers and functions in

their respective territorial jurisdictions:a. To

develop plans, programs and projectsrelative to wages, incomes andproductivity improvement for theirrespective regions;

b. To determine and fixminimum wage rates applicable in their

regions, provinces or industries thereinand to issue the corresponding wageorders, subject to guidelines issued by theCommission; c. Toundertake studies, researches, andsurveys necessary for the attainment oftheir functions, objectives and programs,and to collect and compile data on wages,incomes, productivity and other relatedinformation and periodically disseminatethe same; d. To

coordinate with the other Regional Boardsas may be necessary to attain the policyand intention of this Code; e. Toreceive, process and act on applicationsfor exemption from prescribed wage ratesas may be provided by law or any WageOrder; and f. Toexercise such other powers and functionsas may be necessary to carry out theirmandate under this Code.

m.Wage Order

Wage Order- An order issued by theRegional Tripartite Wages andProductivity Board whenever theconditions in the region so warrantafter investigating and studying allpertinent facts and based on thestandards and criteria prescribed by theLabor Code, the Regional Board

proceeds to determine whether to issuethe same or not.

Effectivity of Wage Order- It shalltake effect after 15 days from itscomplete publication in at least onenewspaper of general circulation in theregion.

Frequency of a Wage Order- A Wage

Order issued by the Board may not bedisturbed for a period of 12 monthsfrom its effectivity and no petition forwage increase shall be entertainedduring said period, except, when theCongress itself issues a law increasingwages.

n. Standards/ Criteria ForMinimum Wage Fixing

Art. 124. Standards/Criteria forminimum wage fixing. The regionalminimum wages to be established by theRegional Board shall be as nearly adequateas is economically feasible to maintain theminimum standards of living necessary forthe health, efficiency and general well-being of the employees within theframework of the national economic andsocial development program. In the

determination of such regional minimumwages, the Regional Board shall, amongother relevant factors, consider thefollowing: a.The demand for living wages;

b. Wage adjustment vis--visthe consumer price index; c. Thecost of living and changes or increasestherein; d. The needs of workersand their families; e. Theneed to induce industries to invest in the


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countryside;f. Improvements in

standards of living; g.The prevailing wage levels;

h. Fair return of the capitalinvested and capacity to pay of employers;

i.Effects on employment generation and

family income; and j. The equitabledistribution of income and wealth alongthe imperatives of economic and socialdevelopment. Art. 125.Freedom to bargain. No wage order shallbe construed to prevent workers inparticular firms or enterprises or industriesfrom bargaining for higher wages withtheir respective employers. (As amendedby Republic Act No. 6727, June 9, 1989)

WAGE DISTORTION- A situationwhere an increase in prescribed wagerates results in the elimination or severcontraction of intentional quantitativedifferences in wage or salary ratesbetween and among employee groupsin an establishment as to effectivelyobliterate the distinctions embodied insuch wage structure based on skills,length of service or other logical bases

of differentiation. Correction of Wage Distortion:

a. Unionized Establishment1. Negotiate to correct the distortion2. Any dispute arising therefrom

should be resolved throughgrievance procedure under theirCBA.

3. If the dispute remains unresolved,through voluntary arbitration.

b. Establishment without Union

1. The employer and workersshall endeavor to correct thedistortion;

2. Any dispute arising therefromshall be settled through theNCMB and

3. If it remains unresolved after10 days of conciliation, it

shall be referred to the NLRC.NOTE: Wage Distortion is non-strikaable.Q. Is the employer legally obliged tocorrect a wage distortion?A. It appears so. Article 124, Labor Codeprovides that the employer and the unionshall negotiate to correct the distortions.If there is no union, the employer and theworkers shall endeavor to correct suchdistortions.Q. Must the previous pay gaps be

restored?A. While that is the aim, it need notnecessarily be restored to the last peso.An appreciable differential, a significantpay gap should suffice as correction of thedistortion.

CMP FEDERAL SECURITY AGENCY vs.NLRC and VALENTIN TAPIS G.R. No.

122107 June 2, 1999 BELLOSILLO

Facts:

Between 1988 to 1992 privaterespondents Valentin Tapis et.al. wereemployed by petitioner as security guardsand assigned to its various clients.Respondent individuals filed a complaintagainst petitioner for illegal dismissal,underpayment of wages, and non-payment

of other benefits. The alleged illegaldismissal was premised on privaterespondents lack of assignment forseveral months. On the other hand,petitioner interposed the defense ofprematurity of the complaint due to thefact that it was filed even before the lapseof the 6 months floating period allowed

security agencies in posting assignments.The Labor Arbiter Labor Arbiteracknowledged that "the complaint forillegal dismissal was prematurely filed buthe found that private respondents wereconstructively dismissed and were thusawarded back wages, separation pay,differentials and the return of the cashbonds. NLRC reversed the Labor Arbiterand deleted the back wages andseparation pay. However, it maintained

the differentials and the return of the cashbonds.

Issue: WON NLRC erred in not re-computing the wage differentials despitethe fact that re-computation could not beavoided because of the modification of thedecision of the Labor Arbiter on illegaldismissal.

Ruling:

As held by the Labor Arbiter: For lack ofevidence (payrolls and time cards),complainants are entitled to theirmonetary claims from the time theystarted working with the respondents tilltheir last detail or assignment but limitedto the prescriptive period of three years.Their wage differentials should becomputed under the minimum standard


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rate for employees who are tasked to work12 hours a day including Sundays andHolidays. However, the salaries, overtime

pay and 13th month pay received by thecomplainants should be deducted to arriveat the proper wage differentials.

This simply means that the basis for

the differentials was never extendedto cover the period when back wageswere allowable. That this should bethe case is explained by the verynature of back wages which demandsthat the period covered refers to theduration of unemployment, for backwages are the earnings lost by reasonof the unjustified dismissal. Wagedifferentials, on the other hand, areaccrued and unpaid wages which

necessarily require the employment ofthe wage earner at the time the wagedifferentials accrued. It would naturallyfollow that the differentials were nevercomputed to include the time for which theback wages were awarded as erroneouslycontended by petitioner.

NLRC is affirmed.

VI. POST EMPLOYMENT

A. Kinds of Employment

1. REGULAR EMPLOYMENT (Art. 280)

Regular Employment- One whereinan employee is engaged to performactivities which are usually necessary

or desirable in the usual business ortrade of the employer.

Except:1. where the employment has been

fixed for a specific project orundertaking the completion ortermination of which has beendetermined at the time ofengagement of the employee; or

2. where the work or services to beperformed is seasonal in nature andthe employment is for the duration ofthe season.

He is regular employee at the point ofhiring.

i. Who are considered RegularEmployee?

1. Those who have been engaged toperform activities which are usually

necessary or desirable in the usualbusiness or trade of the employer.2. Casual employees who have rendered atleast 1 year of service is continuous orbroken; they are considered regularemployees with respect to the activities inwhich they are employed; theiremployment shall continue while suchactivity exists.3. A probationary employee who is allowed

to work after the probationary period.4. Learners who have been allowed orsuffered work during the first 2 months iftraining is terminated by the employerbefore the end of the stipulated periodthrough no fault of the learner.

i. Test in Determining RegularEmployment:

a. Reasonable ConnectionRule

The primary standard of determininga regular employment is thereasonable connection between theparticular activity performed by theemployee in relation to the usualbusiness or trade of the employer.

The test is whether the activityperformed by the employee is usuallynecessary or desirable in the usualbusiness or trade of the employer.The connection can be determined byconsidering the nature of the workperformed and its relation to thescheme of the particular business ortrade in its entirety (de Leon vs.NLRC, 171 S 615).

Additionally, an employee is regularbecause of the nature of work and thelength of service, not because of the

mode or even the reason for hiringthem (Prudential Bank vs. Reyes, 352S 316)

Whether the work undertaken by theemployee is necessary or desirablecan be assessed by looking at theservices rendered and its relation tothe general scheme under which thebusiness or trade is pursued(Magsalin vs. National Organization of

Working Men, May 9, 2003).

2. PROJECT EMPLOYMENT

Project Employment- Where theemployment has been fixed for aspecific project or undertaking thecompletion or termination of which hasbeen determined at the time of theengagement of the employee.

i. Test of Project Employment


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The principal test for determiningwhether an employee is projectemployee is whether or not suchemployee is assigned to carry out aspecific project or undertaking, theduration and scope of which werespecified at the time the employeewas engaged for that project

A common basic requisite is that thedesignation of named employee asproject employees and theirassignment to a specific project areeffected and implemented in goodfaith.

The services of project areconterminous with the project. Theymay be terminated upon the end orcompletion of that project or phasethereof for which they were hired. The

employer has no obligation to pay themseparation pay.

The contract workers are notconsidered regular employees, theirservices being needed only when thereare projects to be undertaken. Therationale of the rule is that if a projecthas already been completed, it wouldbe unjust to require the employer tomaintain them in the payroll while they

are doing absolutely nothing exceptwaiting until another project is begun. Members of a work pool from which a

construction company draws its projectemployees, if considered employee ofthe construction company while in thework pool, are non-project employeesor employees for an indefinite period. Ifthey are employed in a particularproject, the completion of the projector any phase thereof will not mean

severance of employer-employeerelationship.

ii. When project employee mayacquire the status of regularemployee?

1. there is a continuous rehiring of theproject employees ever aftercessation of a project; and

2. the tasks performed by the allegedproject employee are vital,necessary and indispensable to theusual business or trade of theemployer.

3. SEASONAL EMPLOYMENT

Seasonal Employment- Seasonalworkers are those who are called to

work from time to time according tothe occurrence of varying need during aseason, and are laid off aftercompletion of the required of work.

Nature of ER- EER- The nature of therelationship of the seasonal workerswith their employer is such that duringoff season they are temporarily laid offbut during the season of work, they arere-employed. They are not, strictly

speaking, separated from the servicebut merely considered as on leave ofabsence without pay until they are re-employed. Their employmentrelationship is never severed but onlysuspended.

Seasonal workers who work for morethan one season are deemed to haveacquired regular employment(Hacienda Fatima vs. National

Federation of Sugarcane Workers,January 28, 2003).

4. CASUAL EMPLOYMENT

Under Article 280, Labor Code, CasualEmployment is one whereemployment is neither regular norseasonal or fixed for a specific project.

Employment is casual when and whereit is not permanent nor periodicallyregular, but occasional or by chance,and not in the usual course of theemployers trade or business.

An employee who has rendered at least1 year of service, whether such serviceis continuous or broken, shall beconsidered a regular employee withrespect to the activity in which he is

employed and his employment shallcontinue while such activity exists.

Casual employees who are dismissedfrom their employment before theexpiration of the 1-year period, cannotlawfully claim that they are illegallydismissed.

The status of regular employmentattaches to the casual employee on theday immediately after the end of his

first year of service.

5. FIXED PERIOD EMPLOYMENT(Termed Employment)

Employment that will last only for adefinite period, as agreed by theparties, is not per se illegal or againstpublic policy even if this kind ofemployment is not mentioned in Art.280, Labor Code.


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Fixed-term Employment- those towhich the parties by free choice haveassigned a specific date of terminationof employment. To be valid, the partiesmust have knowingly and voluntarilyagreed thereto.

Where from the circumstances it isapparent that the periods have beenimposed to preclude acquisition oftenurial security by the employee, theyshould be struck down or disregardedas contrary to public policy.

6. PROBATIONARY EMPLOYMENT

Article 281- Probationary employmentshall not exceed 6 months from the datethe employee started working, unless it iscovered by an apprenticeship agreement

stipulating a longer period. The services ofan employee who has been engaged on aprobationary basis may be terminated fora just cause or when he fails to qualify asa regular employee in accordance withreasonable standards made known by theemployer to the employee at the tie of hisengagement. An employee who is allowedto work after a probationary period shallbe considered as a regular employee.

Probationary Employee- is one whois no trial by an employer during whichthe employer determines whether ornot he is qualified for permanentemployment.

Probationer enjoys security of tenureand he cannot be removed fromemployment before his contractexpires, except for cause provided forby law.

General Rule- probationary period ofemployment is 6 months.

Exceptions:1. When the parties voluntary agreed

to a longer period; or2. When the parties lawfully agreed

for an extension to give anemployee a second chance.

Requisites for acquisition ofpermanent employment of PrivateSchool Teachers:1. full-time teacher;2. must have rendered at least 3

consecutive years of service; and3. such service must have been

satisfactory.

CASES:

RICARDO S. MEDENILLA v s .PHILIPPINE VETERANS BANK G.R. No.127673. March 13, 2000 PURISIMA

Facts:

Petitioners were employees of thePhilippine Veterans Bank (PVB). Theirservices were terminated as a result of theliquidation of PVB pursuant to the order of

the Monetary Board of the Central Bank.On the same day of their termination,petitioners were rehired through PVBsBank Liquidator, Antonio T. Castro, Jr..However, all of them were required to signemployment contracts which providedthat: (1) The employment shall be strictlyon a temporary basis and only for theduration of the particular undertaking forwhich a particular employee is hired; (2)Such temporary employment will not

entitle an employee to any benefits exceptthose granted by law; (3) The Liquidatorreserves the right to terminate theservices of the employee at any timeduring the period of such employment ifthe employee is found not qualified,competent or, efficient in the performanceof his job, or have violated any rules andregulations, or such circumstances andconditions recognized by law. Petitionersreceived a uniform notice of dismissaleffective a month from the date of receipt,which notice contained the reasonsjustifying the termination: (a) To reducecosts and expenses in the liquidation ofclosed banks; (b) The employment wereon strictly temporary basis." Petitionersinstituted a case for illegal dismissal. LaborArbiter ruled in favor of the petitioners

which was reversed by NLRC.

Issue: WON NLRC erred in ruling thatthere was a valid fixed-period ofemployment of the petitioners.

Ruling:

In a decided case, it has been held thatthe two guidelines by which fixed contracts

of employment can be said NOT tocircumvent security of tenure, are either:1 . Th e f i x e d p e r i o d o f e m p l o y m e n t

w a s k n o w i n g l y an d v o l u n t a r i l y ag r e e d

u p o n b y t h e p a r t i e s , without any force,duress or improper pressure being broughtto bear upon the employee and absent anyother circumstances vitiating his consent;or 2. I t s a t i sf a c t o r i l y a p p e a r s t h a t t h e em p l o y e r an d em p l o y e e d e al t w i t h

e a ch o t h e r o n m o r e o r l e ss e q u a l

LABOR Standards 4

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Transcript of LABOR Standards 4