cuevas- labor standards reviewer

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CHAPTER THREEHOLIDAYS, SERVICE INCENTIVE& SERVICE CHARGES

#94- RIGHT TO HOLIDAY PAY

HOLIDAY PAY FOR ONLY 11REGULAR HOLIDAYS• Holiday pay is a one-day pay given by law to

an employee even if he does not work on aregular holiday.

• This gift of a day’s pay is limited to each of the eleven regular or legal holidays. It is notdemandable for any other kind of nonworkingday.

• Purpose is to prevent diminution of themonthly income of the workers on account of work interruptions declared by state.

• BUT, to receive holiday pay, certain conditionshave to be met. The employee should nothave been absent without pay on the working

day preceding the regular holiday.• If he was absent without pay, the assumption

is that he would have been absent also on thefollowing day if it were not a holiday.

HOLIDAY PAY OF A PART-TIMER• If the work is partial, the pay should also be

partial.

• DOLE, holiday pay of a part-timer is to bedetermined on a case-to-case basis, which isany of the ff, whichever yields the highestamount:

1. The regular wage per day2. The basic wage on the working daypreceding the regular holiday if theemployee is present or on leave withpay on the last working dayimmediately prior to the regularholiday

3. The average of his basic wages for thelast seven working days for employeeswho are paid by results

4. The basic wage on the particularholiday, if worked

RELATION TO AGREEMENTS• Nothing justifies an employer in withdrawing

or reducing any benefits, supplements, orpayments for unworked regular holidays asprovided in existing individual or collectiveagreement or employer practice or policy.

FORMULAS TO COMPUTE WAGES ONHOLIDAYS1. For REGULAR holidays

(If Regular Workday)• If unworked- 100%

• If worked- 1st

8 hours, 200%-excess of 8 hours, +30% of hourly rate onsaid day

(If Rest Day)• If unworked- 100%

• If worked- 1st 8 hours, +30% of 200%-excess of 8 hours +30% of hourly rate onsaid day

2. For SPECIAL holidays

• If unworked, no pay unless there’s a favorablecompany policy or CBA

• If worked, 1st 8hours, +30% of the daily rateof 100%. Excess of 8 hours, +30% of hourlyrate on said day

• Falling on the employee’s rest day and if worked, 1st 8hours, +50% of the daily rate of 100%. Excess of 8 hours, +30% of hourly rateon said day

3. For SPECIAL WORKING holidays• Employee is entitled only to his basic rate. No

premium pay is required since workperformed on said days is considered work onordinary working days.

EMERGENCY COST-OF-LIVINGALLOWANCE ON A REGULAR HOLIDAY.

Yes.

DIVISOR to convert the salary frommonthly to daily is LOWER THAN 365

• The employee is still monthly-paid and all thedays of the monthincluding legal holidays aredeemed paid if the quotient is equal orgreater than the legal minimum rate

• Employer cannot claim reimbursement of overtime pay

HOLIDAY FALLING ON A SUNDAY

• No legal obligation for the employer to payextra, aside from the usual holiday pay to itsmonthly-paid employees

DOUBLE HOLIDAY:2 REGULAR HOLIDAYS ON SAME DAY

• If unworked, employees entitled to 200%

• If worked, entitled to 300% of his basic wage

SUCCESSIVE REGULAR HOLIDAYS• An employee may not be paid for both

holidays if he absents himself from work onthe day immediately preceding the firstholiday, unless he works on the first holiday,

in which case, he is entitled to his holiday payon the second holiday.

#95. RIGHT TO SERVICE INCENTIVELEAVE• Every covered employee who has rendered at

least one year of service incentive leave of five days with pay

• “At least on year of service” shall meanservice within 12 mos, WON continuous orbroken, reckoned from the date the employeestarted working, including authorized

absences and paid regular holidays, unlessthe number of working days in theestablishment as a matter of practice orpolicy, or provided in the employmentcontract, is less than 12mos, in which casethe period shall be considered as one year forthe purpose of determining entitlement toservice incentive leave

PART-TIME WORKERS• Also entitled, coz rules speak of the no. Of

months in a year for entitlement to said



benefit. They are also entitled to the full fivedays service incentive leave benefit and noton a pro-rate basis.

• Can be commutated, proportionate to thedaily work rendered and the regular dailysalary

EXCLUDED• Field personnel and employees whose

performance is unsupervised by the employerincluding those who are engaged on task orcontract basis, purely commission basis, orthose who are paid in a fixed amount forperforming work irrespective of the timeconsumed in the performance thereof

PIECE-RATE WORKERS• Not entitled.

EXCLUDED EMPLOYER: BURDEN OFPROOF•

Employer’s duty. If he fails to do so, he isdeemed to be covered by the rule

COMMUTATION OF SIL• The SIL shall be commutable to its money

equivalent if not used or exhausted at the endof the year

BASIS OF COMPUTATION• Shall be the salary rate at the date of

commutation. The availment andcommutation of the SIL benefit may be on apro-rata basis

SICK LEAVE &VACATION LEAVE AS VOLUNTARY BENEFITS• Their grant results from the employer’s

discretionary policy or from bargaining withthe employees or their representative.

• Sick leave is not commutable or payable incash on the employee’s option.

PATERNITY & MATERNITY LEAVE• R.A. 8187. Paternity leave of 7 days with full

pay to all married male employees in theprivate and public sectors.

• Available only for the first four deliveries of the legitimate spouse w/ whom the husbandis cohabiting.

• Delivery includes childbirth, miscarriage orabortion.

• Purpose is to enable the husband to lendsupport to his wifeduring the period of recovery and/or in the nursing of the newlyborn child.

PARENTAL (SOLO PARENT) LEAVE• R.A. 8972. Parental leave of not more than

7working days every year, to any solo parentemployee who has rendered service of atleast one year.

• He must notify his employer of the availment,within a reasonable time period..and presenta Solo Parent Identification Card

• Unutilized parental leave is not convertible tocash unless otherwise agreed.

#96. SERVICE CHARGES

• All service charges collected by hotels,restaurants and similar establishments shallbe distributed at the rate of 85% for allcovered employees and 15% formanagement.

• The share of the employees shall be equallydistributed among them.

• Rule applies to all employees of coveredemployers, regardless of their positionsm

designations or employment status, andirrespective of the method by which theirwages are paid

RULE IF COLLECTION OF SERVICECHARGE IS ABOLISHED• The share of covered employees shall be

considered integrated in their wages.

• The basis of the amount to be integrated shallbe the average monthly share of eachemployee for the past 12 months immediatelypreceding the abolition or withdrawal of suchcharges.

TIPS• If a restaurant or similar establishment does

not collect service charges but has a practiceor policy of monitoring and pooling tips givenvoluntarily by its customers to its employees,the pooled tips should be monitored,accounted for, and distributed in the samemanner as the service charges.

TITLE TWO- WAGESCHAPTER ONE- PRELIMINARY MATTERS

#97. DEFINITIONWAGE SALARY

Applies to thecompensation formanual labor, skilled orunskilled, paid at statedtimes, and measuredby the day, week,month or season.

Denotes a higherdegree of employment,or a superior grade of services, and implies aposition or office

Indicatesinconsiderable pay for

a lower and lessresponsible characterof employment

Suggests a larger ormore permanent or

fixed compensation formore important service

WAGE INCLUDES SALESCOMMISSIONS• Wage/Salary/Pay is a reward or recompense

for services performed.

• In the computation of the separation pay, thesalary should also include the earned salescommissions.

WAGE INCLUDES FACILITIES ORCOMMODITIES• Wage includes the fair and reasonable value

of board, lodging or other facilitiescustomarily furnished by the employer to theemployee.

• This means that an employer may providefood and housing to his employee’s wages.

• As regards foods and snacks, deduction fromwages should not be more than value of thefood of their value. Remaining 30% has to besubsidized by the employer.



• Fair rental value deduction.

• In order that the cost of facilities furnished bythe employer may be charged against anemployee, his acceptance of such facilitiesmust be voluntary.

FACILITIES DISTINGUISHED FROMSUPPLEMENTS• Facilities shall include articles or services for

the benefit of the employee or his family butshall not include tools of the trade or articlesor service primarily for the benefit of theemployer or necessary to the conduct of theemployer’s business.

• Facilities are wage-deductible, supplementsare not.

SUPPLEMENTS FACILITIESConstitute extraremuneration or specialprivileges or benefitsgiven to or received by

the laborers over andabove their ordinaryearnings or wages.

Items of expensenecessary for thelaborer’s and hisfamily’s existence and

subsistence, so theyform part of the wageand when furnished bythe employer aredeductible therefrom

The criterion is not with the kindof benefit or item given but its purpose.

REQUIREMENTS FORDEDUCTING VALUE OF FACILITIES• Three requirements before the value of a

facility may be deducted from the employee’s

wage.1. Proof must be shown that such facilities arecustomarily furnished by the trade.2. The provision of deductible facilities must bevoluntarily accepted in writing by the employee.3. Facilities must be charged at fair andreasonable value.

SALARY EXCLUDES ALLOWANCES• Allowances in the concept of salaries or

wages. No.

SALARY DISTINGUISHED FROMGRATUITY • A gratuity is something given freely, or

without recompense; a gift whish issomething voluntarily given in return for afavor or services; a tip

• It is that which is paid to the beneficiary forpast services rendered purely out of thegenerosity of the grantor.

• Gratuity pay is not intended to pay a workerfor actual services rendered.

• It is a monetary benefit given to the workers

whose purpose is to reward employees whohave rendered satisfactory and efficientservice to the company.

• While it may be enforced once it forms part of a contractual undertaking, the grant of suchbenefit is not mandatory

FAIR DAY’S WAGE FOR FAIR DAY’SLABOR• Governs the relation between labor and

capital and remains a basic factor indetermining employee’s wages.

• If there is no work performed by the employeethere can be no wage or pay unless thelaborer was able, willing and ready to workbut was prevented by management or wasillegally locked out, suspended or dismissed.

• Where the failure of workers to work was notdue to the employer’s fault, the burden of economic loss suffered by the employeesshould not be shifted to the employer. Each

party must bear his own loss.

EQUAL PAY FOR EQUAL WORK • Employees working in the Phils, if they are

performing similar functions andresponsibilities under similar workingconditions, should be paid under thisprinciple.

AGRICULTURAL WORK • Work on the soil and harvests is agri work.

• When the harvests are processed into finishedproduct or transformed to another product,

that processing work is industrial.• Where the enterprise is highly mechanized

and carries on processing activities notmerely incidental to purely farmingoperations, employees in other than purelyagri work deemed industrial employees.

#98. APPLICATION OF TITLE- does not apply to farm tenancy or leasehold,domestic service and persons working in theirrespective homes in needle work or in anycottage industry duly registered in accordancewith law

Chapter II- MINIMUM WAGE RATES

#99. REGIONAL MINIMUM WAGESMINIMUM WAGE DEFINITION:RATIONALE• “Statutory minimum wage” is the lowest wage

rate fixed by law that an employer can pay hisworkers.

• Compensation which is less than suchminimum rate is considered an underpaymentthat violates the law.

• This article recognizes that there areminimum wage rates for agri and for non-agriemployees, and these are determined foreach region and by the regional wage boards.

NEED FOR MARGIN OVER THEMINIMUM WAGE• The minimum must be fair and just. The

minimum wage can by no means imply onlythe actual minimum.

• Some margin must be provided over andabove the minimum to take care of

contingencies.

ABILITY TO PAY IMMATERIAL• The employer cannot exempt himself from

liability to pay minimum wages coz of poorfinancial condition of the company, thepayment of minimum wages not beingdependent on the employer’s ability to pay.



EMPLOYEES NOT ESTOPPED TO SUEFOR DIFFERENCE IN AMOUNT OFWAGES• A laborer who accepts a lower wage than

what the law sets as minimum wageforlaborers shall be entitled to receive thedeficiency.

EXEMPTIONS• Household or domestic helpers, including

family drivers and persons in the personalservice of another

• Homeworkers engaged in needlework

• Workers employed in any establishment dulyregistered with the National CottageIndustries and Devt. Authority

• Workers in any duly registered cooperative

COOPERATIVES MAY STILL BEEXEMPTED FROM THE MIN WAGELAW

EXEMPTION OF BMBE’s• “Barangay Micro Business Enterprises”, serve

as seedbeds for developing entrepreneurship

RETAIL & SERVICE ESTABLISHMENTS• R.A. 6727, Wage Rationalization Act, provides

for the statutory min wage rate of all workersin private sector

• It must show that regulary employs not morethan 10 workers for it to be exempted fromcoverage of this law

#100. PROHIBITION AGAINSTELIMINATION OR DIMINUTION OFBENEFITS

NONDIMINUTION OF BENEFITS• So that the rule against diminution of

supplements or benefits may apply, it mustbe shown that:1. The grant of the benefit is founded on a

policy or has ripened into a practice over along period

2. The practice is consistent and deliberate3. The practice is not due to error in the

construction or application of a doubtful ordiff question of law

4. The diminution or discontinuance is doneunilaterally by the employer

• Grant of benefits paid by the company to itsintermittent workers which has ripened into apractice may no longer be withdrawn, like, forexample: Food or meal allowance;Noncontributory retirement plan; monthlyemergency allowance.

EXCEPTIONS TO THENONDIMINUTION RULE:

NOT ESTABLISHED PRACTICE; MISTAKE IN APPLICATION OF LAW • Payments to be considered such should have

been practiced over a long period of time andmust be shown to have been constant anddeliberate.

• Absent clear administrative guidelines, theemployer cannot be faulted for erroneousapplication of the law.

NEGOTIATED BENEFITS• These are not within the prohibition of Art.

100 coz as products of bilateral contract, theycan only be eliminated or diminsihedbilaterally.

• What the law forbids is elimination ormodification done unilaterally by theemployer.

• A party to the CBA may propose changeswithin 60 days before it expires. The changesmay not always be to add to but also tosubtract from, or otherwise modify theexisting benefits.

ACROSS-THE-BOARD SALARY

INCREASE NOT NECESSARILY A

COMPANY PRACTICE•

Art. 100 is not violated if the giving of across-the-board pay increase is discontinued whensuch provision is removed from CBA throughnegotiation.

• Similarly, the giving of across-the-boardsalary increases so as to rectify a salarydistortion caused by compliance with a wageorder cannot be said to have ripened into acompany pratice

• If there is no salary distortion to cure, theprevious acb method cannot be demanded asif it were a legal obli

BENEFIT ON REIMBURSEMENT BASIS.

• Example, Per Diem or Monthly Ration of Gasoline.

• Elimination of an existing benefit in exchangefor an equal or better one does not violateArt. 100

RECLASSIFICATION OF POSITION;

PROMOTION• Reclassification from rank-and-file to

supervisory. The position holders lose

overtime pay and other benefits, but Art. 100is not violated.

• Promotion produces the same effect.

• But promotion and reclassification must bedone with good faith

• The personnel movement should not beintended to circumvent the law to depriveemployees of the benefits they used toreceive.

CONTINGENT OR CONDITIONAL

BENEFITS; BONUS•

A bonus is not a demandable and enforceableobli. But it is so when it is made part of thewage. In such a case, the latter would be afixed amount and the former would be acontingent one dependent upon therealization of profit.

• WON bonus forms part of wages dependsupon the circumstances and conditions for itspayment. If it is an additional compensationwhich the employer agreed to give withoutany conditions imposed for its payment, suchas success of biz, then it is part of the wage.



• But, of there is no agreement that bonusforms part of the employee’s compensation,then bonus would depend on the profit to berealized.

EQUITY OR LONG PRACTICE AS BASISOF BONUS• While normally discretionary, the grant of a

gratuity or bonus by reason of its long and

regular concession, may be regarded as partof regular compensation.

SERVICES RENDERED AS BASIS OFBONUS• Employees whose employment has been

terminated may still demand payment of service award under company policy and,proportionately, of the anniversary andperformance bonuses, considering that theyalready had rendered the service required.

• The right is not defeated by a “release and

quitclaim”

13TH MONTH PAY

WHEN CBA BONUS DEEMED APARTFROM, NOT “EQUIVALENT” OF 13TH

MONTH PAY • If the Christmas bonus was included in or

considered as the equivalent of the 13th-month pay, there would be no need for aspecific provision on Xmas bonus in the CBA.

• BUT if the CBA provided for a bonus in

graduated amounts depending on the lengthof service of the employee, the intention isclear that the bonus provided in the CBA wasmeant to be in addition to the legalrequirement.

13TH MONTH PAY DEEMEDWRITTEN IN CONTRACT• The absence of an express provision in the

CBA obligating employer to pay this isimmaterial.

FOOD, ETC, NOT SUBSTITUTEFOR 13TH MONTH PAY 14TH MONTH PAY NOT LEGALLY DEMANDABLE• This is a misnomer coz it is basically a bonus

and therefore is gratuitous in nature.

• The granting of this is a managementprerogative which cannot be forced upon theemployer.

COMPUTATION OF 13TH MONTH PAY;EXCLUSIONS•

This shall mean 1/12 of the “basic salary”(excludes all other fringe benefits such as costof living allowances) of an employee within acalendar year.

ARE COMMISSIONS INCLUDED IN THECOMPUTATION?• Depends on what kinds of commissions are

involved. If the commissions may be properlyconsidered part of the basic salary, theyshould be included in computing the 13th

month pay.

• If the commissions are not integral part of thebasic salary, then they should be excluded.

PROPORTIONATE 13TH MONTH PAY • An employee who has resigned or whose

service were terminated at any time forpayment of the 13th-month pay is entitled tothis monetary benefit in proportion to thelength of time he worked during the year,

reckoned from the time he started workingduring the calendar year up to the time of hisresignation or termination from the service.

DISTRESSED EMPLOYER• The rules implementing 13th Month Pay

provide that a distressed employer shallqualify for exemption from the requirement of the decree only upon authorization from theSec of DOLE.

NONSTRIKEABLE•

Difference of opinion on how to compute the13th month pay does not justify a strike. It is anonstrikeable issue and a strike held on thatground is illegal.

EXCLUSION: GOVERNMENTEMPLOYEES• P.D. No. 851 shows no intention to cover

persons in govt service

SEAFARERS• A seafarer is a contractual, not regular

employee. At such, they are not entitled tothe 13th month pay. This Decree contemplatesthe situation of land-based workers. And notseafarers who generally earn more.

#101. PAYMENT BY RESULTS

WORKERS PAID BY RESULTS, INGENERAL• Art. 101 speaks of workers whose pay is

calculated not on the basis of time spent onthe job but of the quantity or quality or the

kind of work they turn out. They are paid byresults. They do nontime work1. Those whose time and performance is

supervised by the employer (there is anelement of control and supervision overthe manner as to how the work is to beperformed),ex. Piece-rate worker in companypremises, where the ouput may be easilycounted

2. Those whose time and performance isunsupervised by the employer (none,because the control, if any, is merely over

the result of the work itself)e.x. pakiaw and takay system, job is to beperformed in bulk where the output iseasily counted

BASIS OF OUTPUT PAY RATE• The basis shall be the performance of an

ordinary worker of minimum skill or ability

• An ordinary worker of minimum skill or abilityis the average worker of the lowest producinggroup representing 50% of the total number



of employees engaged in similar employmentin an establishment.

• Where the output rates do not conform withthe prescribed standards, employees shall beentitled to receive under such prescribedstandards and that actually paid them by theemployer.

LEGAL SUFFICIENCY OF THE PIECE

RATE• Piece-rate workers may be categorized into

two:1. Those who are paid piece rates which are

prescribed in Piece Rate Orders issued by DOLE.(Wages are determined by simplymultiplying the number of piecesproduced by the rate per piece. Notcovered by rules on hours of work.Whatever they produce by the end of theday shall determine their actual earningseven if the work day exceeds eight hours)

2. Those who are paid output rates which are prescribed by the employer and are not yet approved by DOLE.(The number of pieces produced ismultiplied by the rate per piece asdetermined by the employer. If theresulting amount is equivalent to or morethan the applicable statutory minimumdaily rate in relation to the number of hours worked, the worker will receive suchamount. If amount is less, employer isrequired to pay the difference between

the resulting amount and the applicablelegal min rate)

ENTITLEMENT OF PIECE-RATEWORKERS TO NIGHT DIFFERENTIAL& SERVICE INCENTIVE LEAVE• Do not apply to employees whose time and

performance is unsupervisedby theemployersm including those who are engagedon task or contract basis, or those who arepaid a fixed amount for performing workirrespective of the time consumed in the

performance.• Workers paid by results whose time and

performance are supervised by the employerare entitled to the benefits.

ENTITLEMENT TO HOLIDAY PAY • A piece-rate employee is entitled to holiday

pay which shall not be less than his averagedaily earnings for the last seven actualworking days immediately preceding theregular holiday, provided that in no case shallthe holiday pay be less than the applicablestatutory minimum wage.

ENTITLEMENT TO 13TH-MONTH PAY • Yes, provided that the piece-rate worker

should have rendered at least one monthwork or service during the calendar year.

BENEFITS PAYABLE TO PIECE-RATEWORKERS

1. The applicable statutory min daily rate2. Yearly service incentive leave of 5 days

with pay

3. Night shift differential pay4. Holiday pay5. Meal and rest periods6. Overtime pay (conditional)7. Premium pay (conditional)

8. 13th month pay9. Other benefits granted by law

CHAPTER III- PAYMENT OF WAGES

#102. FORMS OF PAYMENT• No employer shall pay the wages of an

employee by means of promissory notes,vouchers, coupons, tokens, chits or any objectother than legal tender, even when expresslyrequested by the employee.

• Payment of wages by check or money ordershall be allowed when such manner of payment is cutomary on the date of theeffectivity of Labor Code.

PROOF OF WAGE PAYMENT• Employer has the burden to prove payment

• Every employer must keep a payroll, showingthe length of time to be paid, amount. Theemployee must sign the payroll.

#103. TIME OF PAYMENT• Wage shall be paid at least once every two

weeks or twice a month at intervals notexceeding 16 days.

• The payment of wages which cannot becompleted in two weeks shall be subject totwo conditions, in absence of a CBA or

arbitration award1. That payments are made at intervals not

exceeding 16 days in proportion to theamount of work completed

2. That final settlement is made uponcompletion of the work

#104. PLACE OF PAYMENT• As a general rule, the place of payment shall

be at or near the place of undertaking.Payment in a place other than the workplaceshall be permissible only under the followingcircumstances:

1. By reason of actual or impendingemergencies caused by fire, flood, epedemicor other calamity rendering payment thereatimpossible

2. When the employer provides freetransportation to the employees back andforth

3. Under any other analogous circumstances,provided that the time spent by theemployees in collecting their wages shall beconsidered as compensable hours worked.

• No employer shall pay his employees in anybar or club, drinking establishment, massage

clinic, dance hall or gambling place• Upon written permission of the majority of the

employees, all private establishments andother entities with 25 employees or morelocated within 1km to a bank shall pay thewages and other benefits through it.

#105. DIRECT PAYMENT OF WAGES• Wages shall be paid directly to the workers to

whom they are due, except:



1. In cases of force majeure rendering suchpayment impossible

2. Where the worker has dies, in which casewages may be paid to worker’s heirswithout the necessity of intestateproceedings.

#106. CONTRACTOR ORSUBCONTRACTOR• In the event that the contractor or

subcontractor fails to pay the wages of hisemployees in accordance with the Code, theemployer shall be jointly and severally liablewith his contractor or subcontractor to suchemployees to the extent of the workperformed under the contract, in the smaemanner and extent that he is liable toemployees directly employed by him.

• There is “labor-only” contracting where theperson supplying workers to an employerdoes not have substantial capital, and theworkers placed by such persons are

performing activities which are directlyrelated to the principal business of suchemployer.

• The person or intermediary shall beconsidered merely as an agent of theemployer who shall be responsible to theworkers in the same manner and extent as if the latter were directly employed by him.

DEFINITION OF CONTRACTING ORSUBCONTRACTING• An arrangement where a principal agrees to

put out or farm out with a contractor orsubcontractor the performance of a specific

job, work, or service within a definite orpredetermined period, regardless of WONsuch job, work, or service is to be performedwithin or outside the premises of theprincipal.

FOUR FEATURES OF LEGITIMATECONTRACTING1. Parties2. Specific Job3. Period

4. Location

#107. INDIRECT EMPLOYER

#108. POSTING OF BOND

#109. SOLIDARY LIABILITY

• Trilateral relationship in legitimatecontracting. Three parties involved in thisarrangement:1. Principal- any employer who puts out or

farms out a job, service or work to acontractor or subcontractor

2. Contractor or subcontractor- any person orentity engaged in a legit con or subconarrangement

3. Contractual employee- one employed by acon or subcon to perform or complete a

job, service or work pursuant to anarrangement bet the latter and a principal

• Between principal and contractor’semployee’s no employer-employee

relationship exists coz the contractor is anbizman.

• But this relationship will exist betweenprincipal and workers where the contractingarrangement is not legit. It is unlawful if it isonly labor-contracting or against public policy.In labor-only contracting, there is nocontracting and no contractor, only arepresentative to gather and supply people.

1ST SET OF PROHIBITION: LABOR-ONLY CONTRACTING• Not really contracting cos the arrangement is

merely to recruit or place people to beemployed, supervised, or paid by another,who is therefore the employer.

• Prohibited coz it is an attempt to evade theobli of an employer.

• A labor-only contractor is not a full-fledgedbusinessman, he has no discrete, adequatelycapitalized, dully registered business and if hehas, the people he gathers are not under his

control or supervision.• Essential element of LOC- when the

arrangement is merely to recruit, supply orplace workers to perform a job, work, orservice for a principal.

• Two confirming elements:1. Lack of substantial capital or investment

and performance of activities directlyrelated to the principal’s main business.

2. Contractor does not excercise control overthe performance of the employees

SUBSTANTIAL CAPITAL• Refers to capital stocks and subscribed

capitalization in the case of corporations,tools, equipment, implements, machineriesand work premises, actually and directly usedby the contractor or subcontractor in theperformance or completion of the job, work orservice contracted out.

RIGHT TO CONTROL• Refers to the right reserved to the person for

whom the service of the contractual workersare performed, to determine not only the end

to be achieved, but also the manner andmeans to be used in reaching that end.

• “Exclusive servicing”- does not necessarilymean being under the control or employmentof the entity being served, thus therelationship may still be classified asindependent contractorship coz the elementof control is absent.

CONTROL OVER FORMER EMPLOYEES• Employees may resign their jobs to become

contractors to their former employer, but thelatter should cease controlling the means andmethod of doing the work allegedlycontracted, otherwise the result is labor-onlycontracting.

2nd SET OF PROHIBITIONS:ARRANGEMENTS THAT VIOLATEPUBLIC POLICY • Contracting in bad faith to the prejudice of

regular employees1. Labor-only contracting



2. Contracting that terminates the employmentof regular employees, or reduces their workhours, or reduces or splits a bargaining unit, if such contracting out is not done in good faithand not justified by biz exigencies

3. Contracting with a cabo (labor con by a laborunion)

4. Con with in-house agency5. Con coz of a strike or lockout

6. Con that constitutes UMPL under Art. 248

3rd SET OF PROHIBITIONS:EXPLOITATIVE ACTS UNDER SEC.6 OFD.O. #18-02• Taking undue advantage of the econ situation

or lack of bargaining strength of thecontracting employee or undermining hissecurity of tenure by:

1. Req contractual employee to performfunctions currently being performed by theregular employee of principal, or contractor orsubcontractor

2. Requiring him to sign as a precondition toemployment or continued employment, anantedated resignation letter, blank payroll,waiver of labor standards, etc.

3. Req him to sign a contract fixing the period toa term shorter than the term of contractbetween the principal and the con or subcon,unless the contract is divisible into phases forwhich substantially different skills are

required and made known to the employee atthe time of engagement

EXTENT OF EMPLOYER’S LIABILTY ININVALID CONTRACTING & VIOLATIONOF OTHER PROHIBITIONS...total!

LEGITIMATE LABOR CONTRACTING1. If he carries on a distinct and independent biz

and undertakes to perform the job on its ownaccount and under its own responsibility, freefrom the control of the principal in all matters

connected with the performance of the workexcept as to the results thereof.

2. He has substantial capital or investment3. The agreement between the principal or

contractor or subcon assures the contractualemployees entitlement to all labor andoccupational safety and health standards,free excercise of the right to self organization,security of tenure and social and wealthbenefits.

So a labor contractor is a legit, if he is a jobcontractor and not a labor-only contractor and if

he is properly registered

EXTENT OF PRINCIPAL’S LIABILITY INLEGIT CONTRACTING• A legit contractor is an employer. Principal is

solidarily liable with him in the event of anyviolations of the Labor Code, including thefailure to pay wages.

• When a contractor fails to pay the wages of his employees, the employer who contractedthejob becomes jointly and severally liable

with the contractor to the extent of the workperformed under the contract, as if suchemployer were the employer of thecontractor’s employees.

• Jointly and severally liable means being liablefor an entire liability.

• If liability is invested with punitive character,the liability of contractor should solely be thatof the contractor in the absence of proof that

the principal conspired with the contractor inthe commission of the illegal dismissal.

RIGHTS OF CONTRACTUAL EMPLOYEES1. Safe and healthful working conditions2. Labor standards3. Social security and welfare benefits4. Self-organizations, CBA & Peaceful concerted

action5. Security of tenure

Also, certain conditions must be expresslystipulated in the employment contract:

1. Specific description of the job to be performed2. Place of work and terms and conditions of employment

3. Term or duration of employment

Contractor or subcon shall inform the contractualemployee of the terms or conditions on or beforethe first day of his employment.

#110. WORKER PREFERENCE INCASE OF BANKRUPTCY • In the event of bankruptcy or liquidation of an

employer’s business, his workers shall enjoy

first preference as regards their wages andother monetary claims, any provisions of lawto the contrary notwithstanding. Such unpaidwages and monetary claims shall be paid infull before claims of the government andother creditors may be paid.

#111. ATTORNEY’S FEES• In cases of unlawful witholding of wages, the

culpable party may be assessed attorney’sfees equal to 10% of the wages recovered.

• It is unlawful to demand or accept amountbeyond such

• Awarded attorney’s fee may not exceed 10%but between lawyer and client, quantummeruit may apply or as much as he deserves,esp where a lawyer is employed without aprice for his services agreed on.

CHAPTER IVPROHIBITION REGARDING WAGES

#112. NON-INTERFERENCE INDISPOSAL OF WAGES• No employer shall limit or otherwise interfere

with the freedom of any employee to disposeof his wages. He shall not in any manner,force, compel or oblige his employees topurchase merchandise, commodities or otherproperties from the employer or from anyother person, or otherwise make use of anystore or service of such employer.

#113. WAGE DEDUCTION• No employer is allowed except:



1. In cases where the worker is insured with hisconsent by the employer and the deduction isto recompense the employer for the amountpaid by him as premium on the insurance.

2. For union dues3. Where he is authorized by law

a. For value of meals and other faciltiesb. Insurancec. Indebtedness, where it is due &

demandabled. Witholding taxe. If one is member of a legally established

cooperativef. SSS, Medicare & Pag-ibig contributions

PAYMENT TO THIRD PERSON• Employee’s payment of obli to a third person

is deductible form the employee’s wages if the deduction is authorized in writing by theemployee.

• The employer may agree to make thededuction but is not obliged to do so.

#114. DEPOSITS FOR LOSS ORDAMAGE#115. LIMITATIONS• Payments for lost or damaged equipment is

deductible from the employee’s salary if 4conditions are met:

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

2. The employee is given ample opportunity toshow cause why deduction should not bemade.

3. The amount of the deduction is fair andreasonable and shall not exceed the actualloss or damage.

4. The deduction from the employee’s wagedoes not exceed 20% of the employee’swages in a week.

• Deductions for unpaid absences are allowed.If the employee is monthly-paid, theequivalent daily rate should be determinedfirst before making the deduction.

• Monthly rate times 12 divided by the numberof days considered paid in a year.

#116. WITHOLDING OF WAGES ANDKICKBACKS PROHIBITED

#117. DEDUCTION TO ENSUREEMPLOYMENT

#118. RETALIATORY MEASURES• Unlawful for an employer to refuse to pay or

reduce wages and benefits, discharge or inany manner discriminate against anyemployee who has filed any complaint orinstituted any proceedingunder the codem

has testified or os about to testify in suchproceedings.

• Is this article strikeable? In fine, a wageviolation is unlawful and may be pursued in amoney claim. But the violation itself is notstrikeable, unless the retaliation is of the kindconsidered as ULP.

• The article applies to implicit or unspokentestimony by an employee

#119. FALSE REPORTING

CHAPTER V- WAGE STUDIES. WAGEAGREEMENTSAND WAGE DETERMINATION

#120. CREATION OF NAT.WAGES&PRODUCTIVITY COMMISSION

#121. POWERS AND FUNCTIONS OFTHE COMMISSION

#122. CREATION OF REGL.TRIPARTITE WAGES & PRODUCTIVITY BOARDS

#123. WAGE ORDER

#124. STANDARDS FOR MINIMUMWAGE FIXING• The method for minimum wage adjustment is

“salary-ceiling method” where wageadjustment is applied to employees receivinga certain denominated salary ceiling.

• “Floor wage” order does not require across-the-board pay increase

WAGE DISTORTION• A situation where an increase in prescribed

wage rates results in the elimination or severecontraction of intentional qualitative

differences in wage rates among employeegroups in an establishment so as toeffectively obliterate the distinctionsembodied in wage structure based on skills,length of service.

• There is no legal req that in the rectification

• There is no distortion if the employees whosewages are being compared are located in diff regions

• Distortion Adjustment Formula:Existing Minimum Wage = % PrescribedWage IncreaseActual Salary of Employee

#125. FREEDOM TO BARGAIN

• No wage order shall be construed to preventworkers in particular firms or enterprises of industries from bargaining for higher wageswith their respective employer.

#126. PROHIBITION AGAINSTINJUNCTION#127. NON-DIMINUTION OFBENEFITS

CHAPTER VI- ADMINISTRATION ANDENFORCEMENT

#128. VISITORIAL & ENFORCEMENTPOWER

#129. RECOVERY OF WAGES, SIMPLEMONEY CLAIMS & OTHER BENEFITS• Regional Director is empowered to hear such

cases provided the ff requisites are present:



1. The claim is presented by an employee, or aperson employed in domestic or householdservice

2. The claim arises from employer-employeerelations

3. The claimant does not seek reinstatement

4. The aggregate money claim of each claimantdoes not exceed P5,000.

• In the absence of these requisites, the Labor

Arbiter shall have exclusive orig jurisdictionover claims arising from employer-employeerelations.

• It is not required that the complainant be anemployee at the time the complaint is filed. Itis enough that the claim arises fromemployment.

TITLE THREEWORKING CONDITIONS FOR SPECIALGROUPS OF EMPLOYEES

CHAPTER I-EMPLOYMENT OF WOMEN

#130. NIGHTWORK PROHIBITION• No woman, regardless of age shall be

employed or permitted to work with orwithout compensation:a. In any industrial undertaking between

10pm and 6am on the following day.b. In any commercial or non-industrial

undertaking, other than agriculturalbetween midnight and 6am in the morningof the ff day

c. In any agricultural undertaking at

nighttime unless she is given a period of rest of not less than 9 consecutive hours.

#131. EXCEPTIONS• Prohibitions in 130 shall not apply in any of

the ff cases:a. In cases of actual or impendingemergencies, or in cases of force majeure orimminent danger to public safety.b. In case of urgent work to be performed onmachineries, equipment to avoid installationto avoid serious loss which the employerwould sufferc. Where the work is necessary to preventserious loss of perishable goodsd. Where the woman employee holds aresponsible position of managerial ortechnical nature, or where the womanemployee has been engaged to providehealth and welfare servicee. Where the nature of the work requires themanual skill and dexterity of women workersand cannot be performed with equalefficiency by male workersf. Where the women employees areimmediate members of the family operating

the establishment or undrtaking.g. Under other analogous cases

#132. FACILITIES FOR WOMEN• Provide seats proper for women

• Establish separate toilet rooms

• Establish a nursery

• Determine minimum age and other standrdsfor retirement

#133. MATERNITY LEAVE BENEFITS

• Maternity leave qualifications:1. The female member should be employed at

the time of delivery, miscarriage or abortion2. She must have given the required notification

to SSS thru her employer3. Her employer must have paid at least three

months of maternity contributions within the12-minth period immediately before thesemester of contingency.

•

Every pregnant woman in the private sector,WON married is entitled.

• This benefit is granted to employee in lieu of wages and may not be included in computingthe employee’s 13th month pay for thecalendar year.

• Another statutory leave is “Battered WomanLeave” for 10 days.

#134. FAMILY PLANNING BENEFITS

#135. DISCRIMINATION PROHIBITED• It shall be unlawful for any employer to

discriminate against any woman employeewith respect to terms and conditions foremployment solely on account of her sex

• Act of discrimination:1. Payment of a lesser compensation, including

wage, salary or other form of renumeration,and fringe benefits, to a female employee asagainst a male employee, for work of equalvalue.

2. Favoring a male employee over a femaleemployee with respect to promotion, trainingopportunities, study and scholarship grantssolely on account of their sexes.

#136. STIPULATION AGAINSTMARRIAGE• It shall be unlawful for an employer to require

as a condition of employment or continuationof employment that a woman employee shallnot get married or to stipulate expressly ortacitly that upon getting married a womanemployee shall be deemed resigned orseparated or to actually dismiss, discharge,discriminate or otherwise prejudice a womanemployee merely by reason of her marriage.

#137. PROHIBITED ACTS• It shall be unlawful for any employer

1. To deny any woman employee theirbenefits or discharge any womanemployed by him, to prevent her fromenjoying any of the benefits

2. To discharge such woman on account of her pregnancy, or while on leave or inconfinement due to her pregnancy

3. To discharge or refuse the admission of such woman upon returning to her workfor fear that she may again be pregnant

#138. CLASSIFICATION OF CERTAINWOMEN WORKERS• Any woman who works in any night club,

cocktail oounge, massage clinic, bar , etc shallbe considered asan employee of suchestablishment...

• R.A. 7877 “Anti-Sexual Harassment Act of 1995”

• Persons liable any person having authority,influence or moral ascendancy over another



in a work or training, who demands, requestsor requires any sexual favor from another

• Sexual Harassment in a Work-RelatedEnvironment:

1. The sexual favor is made as a condition in thehiring

2. The acts would impair the employee’s rightsor privileges

3. The acts would result in an intimidating,

hostile, or offensive envi for employee

CHAPTER II- EMPLOYMENT OFMINORS

#139. MINIMUM EMPLOYABLE AGE• No child below 15 years shall be employed,

except where he works directly under the soleresponsibility of his parents or guardian, andhis employment does not un any wayinterfere with his schooling. Provided:

1. That his employment doesn’t endanger hislife, health morals or impairs his normaldevelopment

2. That he is provided with the prescribedprimary/secondary education

• Where a child’s employment in publicentertainment or info is essential, theemployment contract must be concluded bythe child’s parents or legal guardian with theexpress agreement of the child concerned,and with the approval of DOLE.

HOURS OF WORK OF A WORKINGCHILD

• Child below 15 may work for more than 20hours a week, provided this shall not be morethan 4 hours on any given day

• No child below 15 but below 18 shall beallowed to work for more than 8 hours a dayand in no case, beyond 40 hours a week

• No child below 15 shall be allowed to workbetween 8pm and 6am of the ff day and nochild 15yrs of age but below 18 shall beallowed to work between 10pm and 6am inthe morning of the ff day.

PROHIBITION AGAINST WORSTFORMSOF CHILD LABOR• All forms of slavery

• Using, exposing of a child for prostitution

• Use, etc. for illicit activities, including theproduction and trafficking of illegal drugs andvolatile substances

• Work which is by its nature or by thecircumstances in which it is carried out, ishazardous or likely to be harmful to thehealth, safety or morals of children

• No child shall be employed in any

advertisment directly or indirectly promotingalchoholic beverage, tobacco, gambling orany for of violence or pornography.

• Any person between the ages 15-18 and upmaybe employed in hazardous work

RIGHT TO SELF-ORGANIZATION• Working children have the same freedom as

adults to join the collective bargaining unionof their own choosing

EDUC ASSISTANCE PROGRAM• The management may allow time without loss

or reduction of wages for working childrenwith special talents to enable them to pursueformal studies

EMPLOYMENT OF POOR BUTDESERVING STUDENTS

#140. PROHIBITION AGAINST CHILDDISCRIMINATION• No employer shall discriminate against any

person in respect to terms and conditions of employment on account of his age.

CHAPTER III- EMPLOYMENT OFHOUSEHELPERS#141. COVERAGE• Definition of “Domestic or Household

Service”- mean services in the employer’s

home which is usually necessary or desirablefor the maintenance and enjoyment, includingministering to the personal comfort andconvenience of the members of theemployer’s household, including service of family drivers

#142. CONTRACT OF DOMESTICSERVICE• Must not last for more than 2 years but may

be renewed for such periods as may beagreed upon by the parties

#143. MINIMUM WAGE• 800 for those in urbanized cities

• 600 in other chartered cities & first-classmunicipalities...Provided that the employers shall review theemployment contracts of their householdhelpers every 3 years with the end of improving the terms and conditions

• Those household helpers who are receiving atleast P1thousand shall be covered by SSS andbe entitled to all the benefits providedthereunder

#144. MINIMUM CASH WAGE• Basic cash wages which shall include lodging,

food and medical attendance

#145. ASSIGNMENT TO NON-HOUSEHOLD WORK • No household helper shall be assigned to work

in a commercial, industrial, or agriculturalenterprise at a wage or salary lower than thatprovided for agri or non-agri workers asprescribed

#146. OPPORTUNITY FOREDUCATION• If under 18, the employer shall give this. The

cost for education shall be part of thehousehelper’s compensation unless there is astipulation to the contrary.

#147. TREATMENT OFHOUSEHELPERS



• Just and humane manner. In no case shallemployer use physical violence onhousehelper

#148. BOARD, LODGING & MEDICALATTENDANCE• Employer shall furnish this free of charge

#149. INDEMNITY FOR UNJUSTTERMINATIONOF SERVICE• If the period of service is fixed, neither

employer or househelper may terminatebefore the term’s expiration of the term,except for a just cause.

• If he is unjustly dismissed, he shall be paidthe compensation already earned plus that for15 days by way of indemnity.

• If the househelper leaves without justifiablereason, he shall forfeit any unpaid salary duehim not exceeding 15 days.

CHAPTER IV- EMPLOYMENT OFHOMEWORKERS

#153. REGULATION OF INDUSTRIALHOMEWORKERS

#154. REGULATIONS OF SEC OFLABOR• Designed to assure the minimum terms and

conditions of employment applicable to

industrial homeworkers or field personnelinvolved

#155. DISTRIBUTION OF HOMEWORK • The “employer” of homeworkers includes any

person, natural or artificial, who for hisaccount or benefit, or on behalf of any personresiding outside the country, directly orindirectlyor through any employee, agent,contractor, subcontractor or anyother person:

1. Delivers, or causesto be delivered, any goods,articles or materials to be processed orfabricated in or about a home and thereafter

to be returned or disposed of in accordancewith his directions.

2. Sells any goods, articles, materials to beprocessed or fabricated in or about a homeand then rebuys them after such processingor fabrication either himself or through someother person.

• It is the employer’s duty to pay and remitSSS, Medicare and ECC premiums

• Complaints for violation of labor standardsand the terms and conditions for employmentinvolving money claims of homeworkers not

exceeding P5T per homeworker shall be heardand decided by the Regional Director.

• Beyond this amount, the case falls under the jurisdiction of a Labor Arbiter in the NLRC.

cuevas- labor standards reviewer

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