title 2 wages.docx

Labor Standards Reviewer (based on AZUCENA) 2014

Title 2 WAGES

Chapter 1

Art 97. Definitions

a.) Person – an individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons

b.) Employer – any person acting directly/indirectly in the interest of an ER in relation to an EE & shall include the Gov’t & all its branches, subd., & instrumentalities, all gov’t-owned/-controlled corps. & institutions, as well as non-profit private institutions/orgs.

c.) Employee - any individual employed by an ERd.) Agriculture – includes farming in all its branches, and among other things, includes the

cultivation & tillage of soil, dairying, the production, cultivation, growing & harvesting of any agricultural & horticultural commodities, the raising of livestock or poultry, and any practices performed by a farmer on a farm as an incident to or in conjunction with such farming operations, but does not include the manufacturing or processing of sugar, coconuts, abaca, tobacco, pineapples or other farm products.

e.) Employ – includes to suffer or permit to workf.) Wage – paid to any EE; shall mean the remuneration or earnings, however designated, capable

of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, w/c is payable by and ER to an EE under a written/unwritten contract of ENT for work done or to be done, or for services rendered and includes the fair and reasonable value, as determined by the Sec of Labor, of board, lodging, or other facilities customarily furnished by the ER to the EE.

Includes commissions – the recompense compensation/reward of an agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amt of his transactions or on the profit of the principal

Sonco v NLRC: Zuelig was made to pay the terminated EE (due to retrenchment), separation pay based not only on the basic salary, but also on the commissions, transpo & emergency living allowances. Even if commissions were in the form of incentives or encouragement, still these commissions are direct remunerations for services rendered w/c contributed to the increase of income of the ER. The nature of work of a salesman & the reason for such type of remuneration for services rendered demonstrate that commissions are part of their wage or salary. (Some salesmen do not receive any basic salary but depend on commissions & allowances or commissions alone, although an EE-ER relationship exists).

Includes facilities or commodities – fair & reasonable value of board, lodging, or other facilities customarily furnished by the ER to the EE.An ER may provide, for instance, food & housing to his EEs but he may deduct their values from the EES’ wages to be determined by the Sec of Labor.

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Snacks70% - deducted from wages (must be authorized in writing)30% - subsidized by the ER

Lodging facility – the cost of operation & maintenance, including adequate depreciation plus amt of capital invested by the ER, provided that if the total is more than the fair rental value ( or the fair price of the commodities or facilities offered for sale)

Fair rental value -shall be the reasonable cost of the operation & maintenance. Rate of depreciation & depreciated amt – those arrived at under good accounting practices Good accounting practices – shall NOT include accounting practices w/c have been rejected by

the BIR for IT purposes Depreciation – shall include obsolescence

In order that the cost of facilities furnished by the ER may be charged against an EE, his acceptance of such facilities must be voluntary

Excludes allowances –Fair & reasonable value – shall NOT include any profit to the ER or to any person affiliated w/ the ER

Wages Salaryo Compensation for manual labor,

skilled/unskilled, paid at stated times, and measured by the day, week, month, or season

o Denotes a higher degree of ENT, or a superior grade of services, and implies a position or office

o Indicates considerable pay for a lower and less responsible character of ENT

o Suggestive of a larger and more permanent or fixed compensation for more important service

o Has a less extensive meaning than salary; being ordinarily restricted to sums paid as hire or reward to domestic or menial servants and to sums paid to artisans, mechanics, laborers, and other EEs of like class

o Compensation of clerks, officers of pub corps, and pub offices.

TN In many situations, however, and as the SC states, they are in essence synonymous

Facilities Supplementso Include articles or services for the benefit

of the EE or his family but shall NOT include tools of the trade or articles or service primarily for the benefit of the ER or necessary to the conduct of the ER’s business

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o Wage-deductible o Not wage-deductibleo Benefit/privilege part of the laborer’s basic

wages,o Benefit/privilege given to the EE w/c

constitutes an extra renumeration above & over his basic or ordinary earning or wage

**Rule VII-A Wages (Memo. Circular 2, Nov. 4, 1992)

TN The distinction bet a facility & a supplement is in the purpose, (not the kind) of the item.

State Marine Corp & Royal Line, Inc. v Cebu Seamen’s Assoc, inc: The vessel crew were provided w/ free meals by the ship owners (petitioner), not part of their wages but as a necessary matter in the maintenance of the health & efficiency of the crew during the voyage. They should not be deducted from their wages. The deductions should be returned to them.

Atok-Big Wedge Assoc v Atok-Big Wedge: Supplements constitute extra remuneration or special privileges or wages, while facilities on the other hand, are items of expense necessary for the laborer’s & his family’s existence & substinence, so that by express provision of law, they form part of the wage and when furnished by the ER are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same.

Requirements for Deducting Value of Facilities

1. Proof must be shown that such facilities are customarily furnished by the trade (ex. Company policy or guideline showing that the meal & lodging are part of the salary);

2. The provision of deductible facilities must be voluntarily accepted in writing by the EE;

3. Facilities must be charged at fair & reasonable value.

Mabeza v NLRC: The ER failed to meet any of the requirements. More significantly, the food & lodging or the electricity & water consumed by the EE were not facilities, but supplements. Hotel workers are required to work different shifts and are expected to be available at various odd hours, their ready availability is a necessary matter in the operations of respondent’s hotel.

Gratuity - Given freely or w/o recompense; a gift; something voluntarily given in return for a favor or services; a bounty; a tip.- gratuity pay is not intended to pay a worker for actual services rendered. It is a money benefit given to the workers whose purpose is ―to reward EEs who have rendered satisfactory & efficient service to the company.‖- Not mandatory & not part of labor standard law

“A fair day’s wage for fair day’s labor.” – if there is no work performed by the EE, there can be no wage or pay unless the laborer was able, willing and ready to work but was prevented by the mgt or was illegally locked out, suspended or dismissed.

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“Equal pay for equal work.” – EEs working in the PH, if they are performing similar functions & responsibilities under similar working conditions, should be paid under the principle of ―equal pay for equal work.

International School Alliance of Educators v Quisumbing: IS hires as members of the faculty, 1)foreign-hires and 2) local-hires. The school grants foreign-hires salary of 25% more than that of local-hires due to a) the dislocation factor, and b) limited tenure. SC: If an ER accords EEs the same position & rank, the presumption is that these EEs perform equal work. There is no showing that foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar functions & responsibilities w/c they perform under similar working conditions. The ―dislocation factor‖ and ―limited tenure‖ cannot serve as valid bases for the distinction in salary rates, and are adequately compensated by certain benefits accorded them w/c are not enjoyed by local-hires (housing, transpo, shipping, taxes, home leave allowance).The state has the right and duty to regulate the relations between labor and capital. These relations are not merely contractual but are so impressed with public interest that labor contracts, collective bargaining agreements included must yield to the common good. Should such contracts contain stipulations that are contrary to public policy courts will not hesitate to strike down these stipulations.

Agricultural Work Industrial Worko Work on the soil and its harvests o When the harvests are processed into

finished product or transformed to another product

o Lower rate o Higher rateo (Agricultural EEs) o (industrial EEs)

Agricultural Activities

Preparation of the soil, planting of ramie stalks and transporting them to the stripping sheds, stripping the fibers w/ the use of decorticating machines run by electricity, drying the wet fibers, passing them through the brusher to cleanse them of impurities and baling the fiers for the market

Planting & harvesting sugar cane & other chores incidental to ordinary farming operations Tillage of the soil, raising of crops including discovery of plant pests and their eradication by

means of insecticides Fishpond business farmhands employed to cultivate the vegetable garden of a non-agricultural corp are not

agricultural workers

Art 98. This title shall NOT apply to:

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1. Farm tenancy or leasehold;

2. Domestic service

3. Persons working in their respective homes in needle work or

4. In any cottage industry duly registered in accordance w/ law.

5. BMBE (according to atty. )

Chapter 2 MINIMUM WAGE RATES

Art 99. REGIONAL MINIMUM WAGES

The minimum wage rates for agricultural and non-agricultural EEs and workers in each and every region of the country shall be those prescribed by the Regional Tripartite Wages and Productivity Boards

Statutory Minimum Wage – the lowest wage rate fixed by law that an ER can pay his workers. Compensation w/c is less than such minimum rate is considered an underpayment that violates the law.

determined for each region by the regional wage boards provided w/ margin to take care of contingencies, such as increase of prices of

commodities and increase in wants and to provide means for a desirable improvement in EE’s mode of living (A person’s needs increase as his means increase.)

Effects:

1. Benefits all wage earners by setting a floor below w/c their pay cannot fall

2. raises the standard of competition among ERs, since it would protect the fair-minded ER from the competition of the ER who pays his workers a wage below subsistence;

3. is a pre-req. to the adoption of the SSS, w/c requires contributions from EEs themselves

Ability to pay immaterial

ER cannot exempt himself from liability to pay minimum wages because of poor financial condition of the company

The payment of minimum wage not being dependent on the employer’s ability to pay. Lack of funds is not a valid defense because the payment of minimum wage is a

mandatory statutory obligation

EEs not estopped to sue for difference in amount of wages

the acceptance by an EE of the wages paid him w/o objection does not give rise to estoppel precluding him from suing for the difference bet the amt. received and the amt. he should have received pursuant to a valid minimum wage law

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Exemptions to the coverage of the Rule on minimum wages

1. Household or domestic helpers, including family drivers and persons in the personal service of another;

2. Homeworkers engaged in needle-work;

3. Workers employed in any establishment duly registered w/ the National Cottage Industries and Devt Authority in accordance w/ RA 3470 provided that such workers perform the work in their respective homes;

4. Workers in any duly registered cooperative when so recommended by the Bureau of Cooperative Dev’t and upon approval by the Sec of DOLE, provided however, that such recommendation shall be given only for the purpose of making the cooperative viable and upon finding and certification of said Bureau supported by adequate proof, that the cooperative cannot resort to other remedial measures w/o serious loss or prejudice to its operation except through its exemption from the requirements of the Rules. The exemption shall be subj to such terms & conditions and for such period of time as the Sec of Labor may prescribe.

5. Barangay Micro Business Enterprises (BMBE) (under RA 9178/BMBE Law), provided that all EEs covered under this Act shall be entitled to

The same benefits given to any regular EE such as social security and health care benefits. BMBEs are also exempt from income tax.

BMBE – any business entity or enterprise engaged in the production, processing or manufacturing of products or commodities, including agro-processing, trading and services, whose total assets including those arising from loans but exclusive of the land on w/c the particular business entity’s office, plant and equipment are situated, shall not be more than P3M. (comprises no less than 90% of Ph ERs)

6. Retail Service Establishments (by virtue of RA 6727/Wage Rationalization Act)

a. regularly employing not more than 10 workers; and

b. upon application w/ and as determined by the Regional Board in accordance w/ the RRs of the Commission.

If not granted, EEs shall receive the approp compensation due them + 1% interest per month retroactive to the effectivity of the Act.

Burden of proving such exemption rests on the ER.

Exemptions from holiday pay and SIL apply to establishments employing “less than ten” employees meaning 1-9. On the other hand, the minimum wage exemption specifies “not more than ten”

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employees, meaning 1-10. With nine or fewer employees the establishment is exempt from HP and SIL, while with ten or fewer employees the establishment is exempt from the minimum wage standard.

7. Other exemptions by provisions of Wage Orders by the Regional Tripartite Wage & Productivity Board

Art 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS

So that the rule against diminution of supplements/benefits may apply, it must be shown that:

1. The grant of the benefit is founded on a policy or has ripened into a practice over a long period;

2. The practice is consistent and deliberate;

3. The practice is not due to error in the construction or application of a doubtful or difficult question of law; and

4. The diminution or discontinuance is done unilaterally by the ER.

Food/Meal Allowance

Cebu Autobus Co v United Cebu Autobus EEs Assoc: the company used to pay its drivers and conductors, aside from their regular salary, a certain percentage of their daily wage, as allowance for food. Discontinued by ER upon effectivity of Minimum Wage Law. CIR: ---company practice

Nonconributory Retirement Plan

Nestle PH Inc. v NLRC: The fact that the retirement plan is noncontributory, does not make it a nonissue in the CBA negotiations. The EEs have a vested right over the existing benefits voluntarily granted to them by their ER. The latter may not unilaterally withdraw, eliminate or diminish such benefits.

Monthly Emergency Allowance

R. Tiangco & V. Tiangco v Hon. Leogardo: ERs, fishing operator and fish broker, discontinued paying the batillos (who work by unloading the fish from the vessels, dependent on arrival of the vessels, hence they work only a few days a month averaging 4 hrs. a day) a fixed monthly emergency allowance (which they had been paid as a matter of practice/verbal agreement between the parties, the discontinuance of the practice and/or verbal agreement between the petitioners and private respondents contravened the provisions of the LC)--illegal.

Full 13th month pay

Arco Metal Products v Samahan ng Manggagawa: Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued, or eliminated by the employer. The principle of non-diminution of benefits is founded on the constitution mandate to “protect the

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rights of workers and promote their welfare”, and to afford labor full protettion. xxx ER cannot shrink away from its responsibility by merely claiming that its acts of giving full 13th month pay to EEs who have not worked for the full year is a mistake. It has become practice.

Exceptions to the Non-Diminution Rule1. Correction of error;2. Negotiated benefits;3. Wage order compliance;4. Benefits on reimbursement basis;5. Reclassification of position;6. Contingent benefits or conditional bonus; and7. Productivity incentives.

Not established practice; Mistake in App of Law Globe Mackay v NLRC: ER had been computing the COLA by multiplying P3/day by 30 days. Upon

effectivity of Wage Order #6, and in virtue thereof, it used 22 days or actual days of work. Union disagreed and claimed 30 days basis as company practice. SC: Not voluntary company practice. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been consistent & deliberate and not merely an erroneous application of the law.

Samahang Manggagawa sa Top Form v NLRC: Granted that the ER had granted an across-the-board wage increase pursuant to RA 6727, that single instance may not be considered an established company practice.

Negotiated benefits Benefits initiated through negotiation bet ER & EEs, such as CBAs, are not w/in the prohibition of Art 100 because, as products of bilateral contract, they can only be eliminated or diminished bilaterally. What the law forbids is elimination/modification done unilaterally by the ER.

Wage Order Compliance – the giving of across-the-board salary increases so as to rectify a salary distortion caused by compliance w/ a wage order cannot be said to have ripened into a company practice.

Pag-asa Steel Works v CA: To ripen into a company practice that is demandable as a matter of right, the giving of the increase should not only be by reason of a strict legal (as Wage Order) or contractual obligation (CBA), but by reason of an act of liberality on the part of the ER. Hence, even if the company continuously grants a wage increase as mandated by a wage order or pursuant to CBA the same would not automatically ripen into company practice.

Benefit on Reimbursement Basis – Per diem allowance – a daily allowance given for each day when an EE is away from his

home base; intended to cover their cost of lodging & subsistence when on duty outside of their permanent stationif the EE did not leave his permanent station and spent

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nothing for meals & lodging outside thereof, then he is not entitled to per diem as there is nothing to be reimbursed

Monthly ration of gas given to certain managerial EEs is not part of their basic salary. Its temporary revocation does not constitute a diminution of the EE’s fringe benefits.

The elimination of an existing benefit in exchange for an equal or better one does not violate Art 100.

Reclassification of Position; Promotion From rank-and-file to supervisory - the position holders lose OT pay and other benefits but Art

100 is not violated. But, promotion & position reclassification must be done in GF. National Sugar Refineries Corp v NLRS & NBSR Union: ER implemented a Job Evaluation program

affecting all EEs. Respondents were reclassified from rank-and-file to supervisory/managerial positions. Because of that, they lost their OT, rest day & holiday pay but it was also shown that they received upward adjustments in basic pay & allowances. SC: This reclassification is in essence a promotion w/c is one of the jurisprudentially recognized exclusive prerogatives of mgt, provided in is done in GF. Union failed to prove BF on the part of the ER.

Promotion – the advancement from one position to another with an increase in duties & responsibilities as authorized by law and usually accompanied by an increase in salary

Contingent/Conditional Benefits; Bonus Art 100 is n/a to a benefit whose grant depends on the existence of certain conditions, so that

the benefit is no demandable if those preconditions are absent.

Bonus – an amt. granted & paid to an EE for his industry & loyalty w/c contributed to the success of the ER’s business and made possible the realization of profits. It is an act of generosity.

it is not a demandable and enforceable oblig. BUT! It is so when it is made a part of the wage/salary. In such a case, the latter would be a fixed amt. and the former would be a contingent one dependent upon the realization of profit

WON bonus forms part of wages: depends on the circumstances and conditions for its payment.

a. If it is an addt’l compensation w/c the ER promised and agreed to give w/o any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage.

b. If it is paid only if profits are realized on a certain amt of productivity achieved, it cannot be considered part of the wages.

c. Where it is not payable to all but only to laborers and only when the laborer becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefor, not a part of the wage.

Luzon Stevedoring Corp case: An ER cannot be forced to distribute bonuses w/c it can no longer afford to pay. To hold otherwise would be to penalize the ER for his past generosity.

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American Wire & Cable Daily Rated EEs Union v AWC Co Inc & the CA: For a bonus to be enforceable, it must have been promised by the ER and expressly agreed by the parties, or it must have had a fixed amt and had been a long and regular practice on the part of the ER.

Equity or Long Practice as Basis of Bonus Ph Education Co. Inc v CIR: even if a bonus is not demandable for not being part of the salary of

the EE, the bonus may nevertheless be granted on equitable consideration. Marcos v NLRC:if one enters into a contract of ENT under an agreemt that he shall be paid a

certain salary by the week or some other stated period and, in addition, a bonus, in case he serves for a specified length of time, there is not reason for refusing to enforce the promise to pay the bonus, if the EE has served during the stipulated time, on the ground that it was a promise of mere gratuity.

Services Rendered as Basis of Bonus EEs whose ENT has been terminated may still demand paymt of service under company policy

and of the bonuses. The R is not defeated by a ―release & quitclaim‖ LG Marcos v NLRC & Insular Life: The fact that an EE has signed a satisfaction receipt for his

claims does not necessarily result in the waiver thereof. The law does not consider as valid any agreement whereby a worker agrees to receive less compensation than what he is entitled to recover. A deed of release or quitclaim cannot bar an EE from demanding benefits to w/c he is legally entitled.

No Profit, No Bonus Traders Royal Bank v NLRC: The matter of giving the EEs bonuses over & above their lawful

salaries & allowances is entirely dependent on the profits, if any, realized by the bank from its operations during the past year. Since the fiscal condition having declined, the bank may not be forced to distribute bonuses w/c it can no longer afford to pay and, in effect, be penalized for its past generosity to its EEs.A bonus is “gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right.” “It is something given in addition to what is ordinarily received by or strictly due to the recipient.” The garanting of bonus is bascally a management prerogative which cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee’s basic salaries or wages.

Productivity Incentives - bonus that comes from productivity gain, or improved output without increasing input

-RA 6971: EE’s share is in the nature of salary bonus proportionate to increases in current productivity over the average for the preceding 3 consecutive years.

Not gratuitous; it is a benefit claimable only on the basis of predefined output level Contingent/conditional; if they are not given because the preconditions are absent, Art 100 is

not violated except perhaps if there is contractual commitment to the contrary.

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PD 851: 13TH MONTH PAY

Adds 1-month pay to the usual 12-month earnings. BUT, does not change the EE’s basic wage. Hence, OT pay, restday pay, SSS contributions & other roll-up or add-on payroll costs do not increase.

Requires at least 1 month service during the calendar year SCOPE: all rank-and-file EEs, regardless or salary rate. EXC: managerial & supervisory EEs

EXCEPTION: ERs who are already paying their EEs a 13thMP ―or its equivalent‖ are not covered by the decree. (the intent of the law was to grant addt’l income to EEs not already receiving the samenot to all EEs but only to the unfortunate ones who are not paid a 13thmonth salary or what amounts to it, by whatever name called)

―its Equivalent‖ – shall include Xmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12 of the basic salary. When an ER pays less than 1/12 of the EE’s basic salary, the ER shall pay the difference. - Dole PH Inc v Leogardo

EXC: shall not include cash & stock dividends, CO LAs, & all other allowances regularly enjoyed by the EEs, as well as nonmonetary benefits (food, free electricity, etc)

Framanlis Farms Inc. v Minister of Labor: Such benefits in the form of food or free electricity are not the proper substitute for the 13thMP required by law. Neither may year-end rewards for loyalty & service be considered in lieu of 13thMP

EXC: If the bonus was included in or considered as the equivalent of the 13thMP, there would be no need for a specific provision of such bonus in the CBA. But if the CBA did provide for a bonus in graduated amts depending on the length of service, for example, the intention is clear that the bonus provided in the CBA was meant to be in addition to the legal requirement of 13thMP.

13thMP – deemed incorporated in the CBA, employment contract. The absence of an express provision obligating the ER to pay 13thMP to the EEs is immaterial

14th MP – basically a bonus, and gratuitous;

- mgt prerogative & cannot be forced upon the ER; not legally demandable

Exclusions in the Computation of 13th MP

13thMP = 1/12 of the basic salary of the EE w/in a calendar year

Q: What does “basic salary” include?

A: Basic salary shall include all renumerations or earnings paid by an ER to an EE for services rendered

Not included (fringe benefits)

COLAs granted pursuant to PD 525/LOI 174, profit-sharing payments and all allowances and

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monetary benefits w/c are not considered or integrated as part of the regular or basic salary of the EE

OT Pay

Fringe benefits – all allowances & monetary benefits w/c are not considered/integrated as part of the basic salary

The items excluded by the decree may be included through established practice or agreement binding on the ER

Q: Are commissions included in the computation?

A: It depends.

1. If the commissions may properly be considered part of the basic salary, they should be included in computing the 13THMP

Ph Duplicators Inc v NLRC: the sales commission earned by the sales men constitute part of their compensation, considering that the ER pays them a small fixed/guaranteed wage; the greater part being composed of the sales/incentive commissions earned on actual sales closed by them

Sales commissions – are intimately related or directly proportional to the extent or energy of an EE’s endeavors; paid upon the specific results achieved by a salesman-EE; it is a percentage of the sales closed by a salesman & operates as an integral part of such salesman’s bsic pay.

2. If they are NOT integral part of the basic salary, then they shld be excluded.

Boie-Takeda Case: the commissions paid to medreps were excluded from the term ―basic salary‖ because these were paid to them as ―productivity bonuses‖. They are generally tied to the productivity or capacity for revenue production of a corp; such bonuses closely resemble profit-sharing payments and have no clear direct or necessary relation to the amt of work actually done by each indiv EE.

The commissions pd by Boie to its medreps could not have been sales commissions. Medreps are not salesmen; they do not effect any sale of any article at all. They are EEs engaged in the promotion of pharmaceutical products or med devices manufactured by their ER. They promote such products by visiting identified physicians & inform such physicians orally/w/ the aid of brochures, of the existence & chem composition of the pharma product. The addt’s payments given to them were not in fact commissions but rather in the nature of profit-sharing bonuses.

Guaranteed wage/commission – EEs whose income is guaranteed by way of wages and/or commissions are entitled to a 13thMP based on their earnings that include commissions.

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Ph Agricultural Commercial & Industrial Workers Union v NLRC: the bus drivers & conductors of respondent transic co. (allegedly paid on purely commission basis) are entitled to 13thMP on both their fixed & guaranteed wage and commission in the case of a bus conductor paid on commission only as supported by his pay slips w/c indicated the varying amount of commissions he received each trip not included in 13THMP

Q: Is Teachers’ Overload Pay Included?

A: Yes. It is considered part of their basic pay for the purposes of computing 13thMP

GR: Payments for overload work w/in 8 hrs form part of the basic wage, & therefore are to be included in the computation of 13thMP.

Overload – the load in excess of the normal load of private school teachers as prescribed by the DECS or the policies, rules & standard of particular private schools.

Normal load- 8hrs per working day

Overload work ≠ Overtime work

Overtime work Overload worko Work rendered in excess of the normal

working hrs. of 8 in a dayo May be performed either w/in or outside 8

hrs. in a day

Proportionate 13thMP

- an EE who has resigned or was dismissed at any time before the time for payment of the 13thMP is entitled to this monetary benefit in proportion to the length of time he worked during the year. unless otherwise stipulated in the CBA

Distressed Employer – exempted from paying 13thMP upon prior authorization from the Sec of DOLE

Difference of opinion in the computation of 13thMP is a nonstrikeable issue. a strike held on this ground is illegal.

Gov’t Employees – not covered by 13thMP

Seafarers – not covered by 13thMP; because they are contractual, not regular EEs. Their ENT is governed by their Contract of Enlistment w/c was approved by the POEA. It does not provide for 13thMP.

Art 101. PAYMENT BY RESULTS (Piecework)

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The Sec of Labor shall regulate the payment of wages by results, including pakyao, piecework and other noontime work, in order to ensure the payment of fair & reasonable wage rates, preferably through time & motion studies or in consultation w/ reps of workers & ER’s orgs.

Workers paid by results – workers whose pay is calculated not on the basis of time spent on the job but of the quantity & quality or the kind of work they turn out. (nontime work).

stress is placed on the unit of work produced or the quantity thereof a uniform amount is paid per unit accomplished

Categories of Piece-rate workers

A. As to presence of control

1. Those whose time & performance is supervised by the ER;

piece-rate workers, esp when they work in company premises (shoes, handicraft, garment)

2. Those whose time & performance is unsupervised by the ER.

Pakyaw & takay basis – commonly practiced in the agricultural industry (planting, harvesting per hectare of land)

Pakyaw more aptly used when the job/work to be performed is in bulk/volumes w/c are difficult to quantify

Piece-rate Common where the output may easily be counted or measured

*Payment by result is not determinative of EE-ER Relationship. It is merely a method of compensation and does not define the essence of the relation.

Basis of Output Rate; Process to set the Standard

1. On petition of any interested party, or upon its initiative, the DOLE shall use all available reps of ERs & workers’ orgs, to determine whether the EEs in any industry/enterprise are being compensated in accordance w/ the min wage reqmts

2. The basis for the establishment of rates per pc, output or contract work shall be the performance of an ordinary worker of min skill/ability.

3. An ordinary worker of min skill/ability is the average worker of the lowest producing group representing 50% of the total # of EEs engaged in similar ENT in a particular establishment, excluding learners, apprentices & handicapped workers employed therein.

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4. Where the output rates established by the ER do not conform w/ the standards prescribed herein, or w/ the rates prescribed by the DOLE in an approp order, the EEs shall be entitled to the diff bet the amt to w/c they are entitled to receive under such prescribed standards/rates and that actually paid them by the ER.

B. As to Rate of Payment

1. Those that are paid piece rates w/c are prescribed in Piece Rate Orders issued by DOLE

# of pieces x rate per pc

These workers are not covered by the Rule on Hours of Work (no premium & OT pay)

2. Those that are paid output rates w/c are prescribed by the ER and are not yet approved by the DOLE.

# of pcs x rate per pc as determined by the ER.

a.) If the resulting amt. is ± than the statutory min daily rate in rel to the # of hrs worked, the worker will rcv such amt.

b.) BUT, if the amt. is less than the applicable legal rate, it is possible that the rates per pc are not in accordance w/ the standards. In that case, the ER is required by law to pay the difference.

Entitlement of Piece-Rate Workers to NSD and SIL

a. Unsupervised – no OT/SIL

b. Supervised – entitled to OT/SIL

- The yearly commutation/cash conversion of the SIL should be based on their average daily earnings earned during the yr by the actual number of working days or the statutory min rate, whichever is higher.

GR: the amt earned during the year may exclude COLA, OT pay, and premium pay, holiday pay, NSD and company fringe benefits there is agreement to the contrary

Illustration of the computation

Total wages earned for 1 yr ÷ 12 = ave monthly earning

AME ÷ 30*** = Daily Earnings

DE x 5 = five-day incentive pay

*** should be the actual days of work in a month

Entitlement to Holiday Pay

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shall not be less than his average daily earnings for the last 7 actual working days immediately preceding the regular holiday. Provided however, that in no case shall the holiday pay be less than the applicable statutory min wage rate

Entitlement to 13thMP

GR: PD 851 exempts from payment of 13thMP ERs of those who are paid a fixed amt for performing specific work, irrespective of time consumed in the perf thereof,except where the workers are paid on piece-work basis (those who are paid a standard amt for every pc/unit of work produced that is more/less regularly replicated, w/o regard to the time spent in producing the same) in w/c case the ER shall grant the 13thMP to such EEs.

The piece-rate worker should have rendered at least 1 month work/service during the calendar yr.

Not Entitled to HP,ND, SIL, 13thMP

1. Field personnel2. Unsupervised employees3. Engaged on task/contract basis4. Purely commission basis5. Paid a fixed amt for performing work irrespective of the time consumed

Not Entitled to OT Pay

1. Paid on piece-work2. Paid on takay3. Paid on pakyaw4. Paid on task basis if their output rates are in accordance w/ the standards under Sec 8

Rule 7 Book 3, or where such rates have been fixed by the Sec of Labor

Benefits Payable to Piece-Rate Workers

1. Statutory minimum wage (MW)2. Yearly service incentive leave of 5 days w/ pay (SIL)3. Night shift differential (ND)4. Holiday pay (HP)5. Meal & rest periods (Meal/rest)6. Overtime pay (conditional) (OT)7. Premium pay (conditional) (PP)8. 13thMonth pay (13th)9. other benefits granted by law, by indiv/CBA or company policy/practice (CBA)

BWC Guidelines Summary

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The rate-per-pc to be paid to a worker should be submitted to DOLE for approval. DOLE decides whether the outpu-and-pay proposal of the ER fairly & reasonably meets the legal

MW, based on the output of ave. workers doing same products under comparable conditions. If DOLE approves the proposal it becomes the standard (quota). Because the DOLE-approved

standard is presumed fair & reasonable, a piece-rater who does not reach the quota will earn less than the legal MW and not w/ the pay formula. In such case the ER need not make up the diff bet the legal MW and the wage actually earned.

On the other hand, if the outpu-and-pay scheme has not been approved by DOLE, or does not conform w/ DOLE-issued orders, then the ER maybe required to pay the shortfall bet the actual earning and the prescribed MW.

The piece-rate pay formula needs DOLE’s approval so ast to protect the worker’s right to be paid or to earn at least the MW, and at the same time, to help the ER obtain the corresponding work ouput.

Chapter 3 PAYMENT OF WAGES

Art 102. FORMS OF PAYMENT

Proof of Wage payment – ER has burden of proof

The IRs require every ER to keep a payroll. Among other things, it must show the length of time to be paid, the pay rate, the amt actually paid, and so on. AND the EE should sign the payroll.

ER cannot pay his workers by means of:

1. Promissory notes2. Vouchers3. Coupons4. Tokens5. Tickets6. Chits7. Any obj other than legal tender

Even when expressly requested by the EE.

GR: Payment by legal tenderEXC: Payment by check or money order may be allowed if the same is:

1. Customary on the date of effectivity of the LC;2. Necessary because of special circs as determined by the Sec of Labor;3. Stipulated in the CB; or4. Where the ff conditions are met

a.) There is a bank or other facility for encashment w/in 1km radius;b.) The ER, or any of his agents or reps, does not rcv any pecuniary benefit

directly/indirectly from the arrangement;

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c.) The EEs are given reasonable time during banking hrs to withdraw their wages from the bank w/c time shall be considered as compensable hours worked if done during working hrs; and

d.) The payment by check is w/ the written consent of the EEs concerned if there is no CBA authorizing the payment of wages by bank checks.

Art 103. TIME OF PAYMENT

GR:1. . At least once every 2 weeks; or2. 2. Twice a month at intervals not exceeding 16 days.

EXCEPTION:

1. In case of force majeure or other circs beyond the ER’s control, payment must be made immediately after such occurrence has ceased.

2. If engaged to perform a task w/c cannot be completed in 2 weeks and in the absence of CBA or arbitration award.

a.) Payment shall be made at intervals not exceeding 16 days, in proportion to the amt of work completed;

b.) That final settlement is made upon completion of work.

Art 104. PLACE OF PAYMENT

GR: At or near the place of undertakingEXCEPTION:1. When payment cannot be effected at or near the place of work by reason of deterioration of

peace & order conditions, or by reason of actual or impending emergencies caused by fire, flood or other calamity rendering paymt thereat impossible;

2. When the ER provides for free transpo to the EEs back and forth; and3. Under any other analogous circs.

Prohibition: No ER shall pay his EEs in a bar, night or day club, drinking establishment, massage clinic, dance hall or other similar places or in places where games are played w/ stakes of money or thins representing money except in the case of persons employed in such places.

Requisites for Payment thru Banks (Wage Rationalization Act)

1. There must be written permission of the majority of the EEs concerned in an establishment;

2. The establishment must have 25/more EEs; and

3. The establishment must be located w/in 1 km radius to the bank

Requisites of Payment thru ATM

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1. The ATM sys of paymt is w/ the written consent of the EE concerned;

2. The EEs are given reasonable time to withdraw their wages from the bank facility w/c, if done during working hrs, shall be considered as compensable hrs worked;

3. The sys shall allow the EE to rcv their wage w/in the period & the amt prescribed under the LC;

4. There is a bank/ATM facility w/in 1km radius from the workplace;

5. Upon the request of the concerned EE, the ER shall issue a record evidencing paymt of wages, benefits & deductions for a particular pd;

6. The ATM sys of paymt shall neither result in diminution of benefits & privileges of the EE nor shall the latter incur addt’l expenses in the process; and

7. The ER shall assume full responsibility in case the wage protection provisions of law & regulations are not complied w/ under the arrangemt

Art 105. DIRECT PAYMENT OF WAGES

GR: Wages shall be paid directly to the workers to whom they are due.Exceptions:

1. Payment through another person

a. In case of force majeure rendering such payment impossible provided said person is under written authority given by the worker for the purpose;

b. When authorized under existing law, including payments for insurance premiums of the EE and union dues where the R to check-off has been recognized by the ER in accordance w/ a CBA or authorized in writing by the indiv EEs concerned.

2. Payment through the heirs of the worker

In case the worker has died, ER may pay wages of the deceased worker to the heirs of the latter w/o the necessity of intestate proceedings.

Procedure

1) Claimants shall execute an affidavit attesting their relationship to the deceased and the fact that they are his heirs, to the exclusion of all others (Affidavit of Next of Kin);

2) In case of a minor heir, affidavit shall be executed on his behalf by his natural guardian or next of kin;

3) Affidavit shall be presented to the ER who shall make payment through the Sec of Labor or his rep;

4) The representative shall act as referee in dividing the amt. paid among the heirs; and

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5) Payment of wages under this Art shall absolve the ER of any further liability w/ respect to the amt paid.

3. Payment through a family member of the workers family

Where the ER is authorized in writing by the EE to pay his wages to a member of his family

Summary of Legal Prohibitions on Wages

1) Payment of wages in non-cash form;

2) Payment of wages in night and day clubs, bars & other similar places;

3) Non-diminution of wages; and

4) Non-interference by the ERs in the EE’s disposition of their wages.

Summary of Rules on Payment of Wages

What must be paid?

✓Legal Tender.

✗ promissory notes, vouchers, coupons, tokens, tickets, chits, or any other obj other than legal tender

When?

Once every 2 weeks, or Twice a month at intervals of at least 16 days

Where?

At or near the place of undertaking

How?

Directly to the EE

Art 106. CONTRACTOR OR SUBCONTRACTOR

Whenever an employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this code.

In the event that the contractor or subcontractor fails to pay the wages of the employees in accordance with this code, the ER shall be jointly and severally liable with his contractor or subcontractor to such EEs to the extent of the work performed under the contract, in the same manner and extent that he is liable to the employees directly employed by him.

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The Sec. of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job-contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the ER for purposes of this Code, to prevent any violation or circumvention of any provision of this code.

There is “labor – only” contracting where the persons applying worker to an ER does not have any substantial capital or investment in the form of tools, equipment, machineries, work premises, among others and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such ER. In such cases, the person or intermediary shall be considered merely as an agent of the ER who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

Types of Contractors under the Law

1. Job Contracting or Subcontracting – an arrangement whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service w/in a definite or predetermined period, regardless or whether such job, work, or service is t be performed or completed w/in or outside the premises of the principal

Existence of Trilateral Relationship

under this legitimate contracting the ff. CONTRACTS exist:

a. Contract for specific job, work or service bet the principal & the contractor/subcontractor; and

b. Contract of ENT bet the contractor/subcontractor and its workers.

Hence, the PARTIES involved are:

I. Principal - refers to any ER, whether person or entity including the gov’t agencies and gov’t-owned and controlled corporations, who/which puts out or farms out a job, service or work to a contractor.

II. Contractor/subcontractor- refers to any person or entity, including a cooperative, engaged in a legitimate contracting or subcontracting arrangement providing either services, skilled workers, temporary workers or a combination of services to a principal under a Service Agreement.

III. Contractual workers-include on employed by a contractor to perform or complete a job, work or service pursuant to a Service Agreement with a principal.

Laws applicable between:

Principal & Contractor Civil Code & pertinent commercial laws

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Contractor & his EEsLabor Code & special labor laws Principal & contractor’s EEs no EE-ER Relationship

BUT ER-EE Relationship will exist bet the Principal & the Workers where the contracting arrangement is not legitimate, as in labor-only contracting

Elements of Independent Contractor Job Contracting

1. The sub/contractor carries on a distinct and independent business and undertakes to perform the job on his own account and under his own responsibility, according to its own manner and method and free from the control & direction of the principal in all matters connected w/ the performance of the work except to the results thereof;

2. The sub/contractor has substantial capital or investment in tool, equipment and machineries, work premises and other materials necessary in the conduct of his business;

3. The agreement bet the principal and sub/contractor assures the contractual EEs entitlement to all labor & health standards, free exercise of the R to self-org, security of tenure and social & welfare benefits;

4. Must be properly registered as such in accordance w/ DO #18-02. (The absence of registration only gives rise to the presumption that the contractor is engaged in labor-only contracting a presumption that can be refuted.)

2. Labor-only Contracting – an arrangement where the sub/contractor merely recruits, supplies or places workers to perform a job, work or service for a principal (ESSENTIAL ELEMENT), and ANY of the ff ELEMENTS is present:

a. Lack of substantial capital/investment AND performance of activities directly related to the principal’s business (confirming element);

b. The contractor does not exercise the right of control over the performance of the contractual EE (confirming element); or

c. prohibited acts( mitch pls be noted katong prohibited acts nga giingon ni madam or )

LOC = Essential Element + either or both confirming element/s

Labor-only contracting is wrong & prohibited bcoz it is an attempt to evade the obligs of an EEr:

a) To respect EE’s R to unionize;

b) R to ENT standards;

c) R to security of tenure

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Substantial capital – capital stocks and subscribed capitalization in the case of corps, tools, equipment, implements, machineries and work premises, actually & directly used by the sub/contractor in the performance or completion of the job, work or service contracted out.

o Paid up capital stocks/shares of at least 3M corporation, partnerships and cooperatives

o Net worth of at least 3M single propreitorship The law does not require both substantial capital and investment in the form of tools,

equipment, machineries, etc. One is not a labor – only contractor if one has substantial capital although without investment in

tools, equipment, etc.

Right to control –refers to the right reserved to the person for whom the service of the contractual workers are performed, to determine not only the end to be achieved, but also the manner & means to be used in reaching that end.

Insular life v NLRC: ―exclusive servicing‖ esp springing from a regulation issued by the Insurance Commission, and not from an intention by the alleged ER, does not necessarily mean being under the control or ENT of the entity being served. The relship may still be classified as independent contractorship because the element of control is absent.

- EEs may resign from their jobs to become contractors to their former ER, but the latter should cease controlling the means & method of doing the work allegedly contracted, otherwise, the result is LOC.

Summary of Prohibited Labor Contracting

1. Labor-only contracting;

2. Contracting that terminates the ENT of regular EEs, or reduces their work hrs, or reduces/splits a bargaining unit, if such contracting out is not done in GF & not justified by business exigencies;

3. Contracting w/ a Cabo – person/s or labor group w/c, in the guise of a labor org, supplies workers to an ER w/ or w/o any monetary or other consideration whether in the capacity of an agent of the ER or as an ostensible independent contractor;

4. Contracting w/ in-house agency;

5. Contracting because of a strike/lockout;

6. Contracting that constitutes ULP under Art 248.

JOB CONTRACTING

LABOR-ONLY CONTRACTING

The ER/principal is merely an indirect ER, by operation of law, of his contractor’s EEs

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The ER/principal is treated as direct ER of the contractor’s EEs in all instances (contractor

is deemed agen of the ER)

The law creates an ER-EE relshp for a limited purpose, i.e. to ensure that the EEs are paid their wages

The statute creates an ER-EE relshp for a comprehensive purpose, i.e. to prevent a circumvention of labor laws

The principal becomes solidarily liable w/ the contractor in the even the latter fails to pay the EEs wages and for violation of labor standard laws. The liability, however does not extend to the paymt of backwages or separation pay of EEs who are illegally dismissed

The principal becomes solidarily liable w/ the contractor not only for unpaid wages but also for all the rightful claims of the EEs under the LC AND ANCILLARY LAWS

Permissible

Prohibited by law

Presence of substantial capital or investment

None

Note: The principal shall be SOLIDARILY liable w/ the contractor in the event of any violation of any provision of the LC, including failure to pay wages. This will not prevent the principal from claiming reimbursement from the contractor.

Note: The principal shall be deemed the ER of the contractual EE in any of the ff cases as declared by competent authority:

1. Labor-only contracting; and

2. Contracting arrangement falling w/in the prohibitions

Art 107. INDIRECT EMPLOYER

Any person, partnership, association or corporation which, not being n ER, contracts w/ an independent contractor for the performance of any work, task, job or project.

4 Features of Legitimate Contracting

1. Parties – a principal (contractee) enters into a contract w/ a contractor, or if the principal is himself a contractor, he enters into contact w/ a sub-contractor. A contracted job may be subcontracted, partly or wholly, unless prohibited in the contract.

2. Specific job – the contract calls for the performance or completion of a specific job, work or service;

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3. Period – such job, work or service is to be performed or completed w/in a definite or predetermined period; and

4. Location – the contracted job, work or service may be performed or completed inside or outside the premises of the principal

An independent contractor is one who exercises:

1. Independent ENT;

2. Contracts to do a pc of work accdg to his own methods; and

3. Is not subj to control of ER result

The labor contractor is legit if:

1. He is a job contractor; and

2. Is properly registered w/ DOLE as the same

Judicial Notice of Job Contracting

- The Court has already taken judicial notice of the general practice adopted in several gort & private institutions and industries of hiring independent contractors to perform special services. These services range from janitorial, security and even technical or other specific services. While these services may be considered directly related to the principal business

of the ER, nevertheless, they are not necessary in the conduct of the principal business of the ER.

A manpower company may be a LOC in one case but an independent contractor in another.

Coca-cola Bottlers Ph v Hingpit: Lipercon was adjudged to be a LOC in a previous case (Guarin v Lipercon), for lacking the substantial capital. But not so in the present case, where it has been able to establish its characted as an independent contractor. Aside form hiring its own EEs and paying the workers their salaries, it also exercised supervision & control over them, w/c is the most important aspect in determining ER-EE Relshp.

Art 108. POSTING OF BOND

- An ER or indirect ER may require the sub/contractor to furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due the EEs should the sub/contractor, as the case may be fail to pay the same.

- Where the ER fails to require the contractor to post a bond, the ER must answer for whatever liabilities the contractor may have incurred to his EEs. This is w/o prejudice to its seeking reimbursement from the contractor for whatever amt it will have to pay the EEs.

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Art 109. SOLIDARY LIABILITY

The provision of existing laws to the contrary notwithstanding, every ER or indirect ER shall be held responsible w/ his sub/contractor for any violation of any provision of the LC. For purposes of determining the extent of their civil liability under this Ch, they shall be considered as direct ERs.

The existence of ER-EE Relshp is a precondition to entitlement to labor standards & labor relatios Rs.

Extent of Principal’s Liability in Legitimate Contracting

- solidarily liable in the event of any violation of any provisions of the LC

1. For wages and money claims – if the sub/contractor fails to pay the wages of his EEs in accdance w/ the LC, the ER shall be jointly & severally (solidarily) liable w/ his contractor to such EEs to the extent of work performed under the contract, in the same manner & extent that he is liable to EEs directly employed by him.

He cannot escape this liability even if he has paid the workers’ wage rate in accordance w/ the contract w/ the contractor. The EEs are not privy to the contract. Also, the labor standard legislations are considered written in every contract. Similarly, legislated wage increases are deemed amendments to the contract. Thus, ERs cannot hide behind their contracts in order to evade their or their contractor’s liability for noncompliance w/ the statutory min wage, w/o prejudice to his R to recover whatever amount he paid from the contractor.

2. a) Reimbursement – the joint & several liability of the contractor & the principal under Arts 106, 107 & 109 of the LC is mandated to assure compliance of the provisions including the statutory min wage. The contractor is made liable by virtue of his status as the direct ER; and the principal is made the indirect ER of the contractor’s EEs for purposes of paying the EEs their wages should the contractor fail to do so.

- where no ER-EE Relshp exists bet the parties, as to reimbursement bet the principal & the contractor, the RTC has jurisdiction

b) Payment before Reimbursement – but one may seek reimbursement only AFTER it has paid the EEs.

c) For Other Violations – qualified or limited liability; if the liability is for failure to pay the min wage, or the SIL, or other benefits derived from or provided for by law, the principal is equally liable w/ the contractor as if the principal were the direct ER.

BUT, if the liability is invested w/ punitive character, such as an award for backwages & separation pay because of an illegal dismissal of the contractor’s EE, the liability should be solely that of the contractor in absence of proof that the principal conspired w/ the contractor in the commission of the illegal dismissal.

Rights of Contractual EEs (EEs of a legitimate contractor)

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1. Safe & healthful working conditions;

2. Labor standards such as SIL, rest days, OT Pay, holiday pay, 13thMP, & separation pay;

3. SS & welfare benefits;

4. Self-orgs, CB and peaceful concerted action; and

5. Security of tenure.

Certain conditions required expressly stipulated in the ENT Contract

1. Specific description of the job, work or service to be performed by the contractual EE;

2. The place of work and terms & conditions of ENT, uncluding a statement of the wage rate applicable to the indiv contractual EE; and

3. The term/duration of ENT, w/c shall be coextensive w/ the contract of the principal & contractor or w/ the specific phase for w/c the contractual EE is engaged, as the case may be.

The sub/contractor shall inform the contractual EE of the foregoing terms & conditions on or before the 1st day of his ENT.

Security of Tenure:

a. in cases of termination of ENT prior to the expiration of the contract bet the principal & the sub/contractor, the R of the contractual EE to separation pay or other related benefits shall be governed by applicable laws & jurisprudence on termination of ENT.

b. Where the termination results from expiration of contract bet the principal & the contractor, or from completion of the phase of the job for w/c the EE is engagednot entitled to separation pay. however, this shall be w/o prejudice to completion bonuses or other emoluments, incl retirement pay as may be provided by law/contract bet the principal & the contractor.

Security of tenure requires procedural due process for termination of ENT.

No security of tenure for casual EEs.

Registration of Contractors

Requirements:

1. Submission of annual reports

a. Sworn undertaiking that the sss, Home Devt Mutual Fund, PhilHealth, EEs Compensation Commission (ECC), and BIR remittances

2. They are subj to routine inspection by the DOLE

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Effect of Nonregistration:

GR: The absence of registration gives rise to the presumption that the contractor is engaged in LOC,

But, if the contractor directly supervises the workers & imposes disciplinary action, he qualifies as a legit contractor despite nonregistration w/ DOLE.

Art. 110. WORKER PREFERENCE IN CASE OF BANKRUPTCY

- Workers shall enjoy first preference as regards their unpaid wages & other monetary claims, any provision of law to the contrary notwithstanding.

- Unpaid wages earned by EEs before the declaration of bankruptcy or judicial liquidation of the ER’s business shall be given first preference & shall be paid in full before other creditors may establish any claim to share in the assets of the employer.

- Not only unpaid wages, but also other monetary claims to w/c even claims of the govt must be deemed subordinate.

n/a in case the ER-corp is under rehabilitation.

Conditions:

1. Formal declaration of insolvency or bankruptcy;

2. General judicial liquidation proceedings of the ER’s business; and

3. Filing of claims by workers.

Art 111. ATTORNEY’S FEES

Rules:

1. In cases of unlawful withholding of wages, the culpable party may be assessed atty’s fees equivalent to 10% of the amt of wages recovered.

2. It shall be unlawful for any person to demand or accept, in any judicial or admin proceedings for the recovery of the wages, atty’s fees w/c exceed 10% of the amt of wages recovered.

Concepts of Atty’s Fees

a. Ordinary – reasonable compensation paid to a lawyer by his client for the legal services he has rendered.

b. Extraordinary – indemnity for damages ordered by the court to be paid by the losing party in a litigation, and is not to be paid to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as an addtl compensation or as a part there of.

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GR: Awarded atty’s fee may not exceed 10%, but bet lawyer & client quantum meruit may apply. Quantum meruit – as much as he deserves.

Basis:

1. The time spent & the extent of services rendered or required;2. The novelty & difficulty of the questions involved;3. The importance of the subject matter;4. The skill demanded;5. The probability of losing other ENT as a result of acceptance of the proferred IBP chapter to w/c

the lawyer belongs;6. The amt involved in the controversy and the benefits resulting to the client from the services;7. The contingency of certainty of compensation;8. The character of ENT, whether occasional or established; and9. The professional standing of the lawyer.

2 Kinds of Cases where Atty’s Fees may be Assessed:

1. Cases arising from unlawful withholding of wages; and

2. Cases arising from CBAs.

3. Claims for death benefits (Heirs of Aniban) : Art 111 does not limit the award of atty’s fees to cases of unlawful withholding of wages only. What it explicitly prohibits is the award of atty’s fees w/c exceed 10% of the amt of wages recovered.

Non-lawyers not entitled to Atty’s FeesGR: Although the law allows non-lawyers to appear before the NLRC or any Labor Arbiter, this does not mean that they are entitled to atty’s fees. Entitlement to atty’s fees presupposes the existence of ER-EE Relationship, and this cannot exist unless the client’s rep is a lawyer.Union Service Fee –non-lawyers may represent their org or members. The said labor federations & local unions have a valid claim to atty’s fees.

PAO lawyers are disqualified from being awarded atty’s fees.

Chapter IV Prohibition Regarding Wages

Art. 112. Non-interference in disposal of wages

No ER shall limit or otherwise interfere with the freedom of any EE to dispose of his wages. He shall not in any manner force, compel or oblige his employees to purchase merchandise, commodities or other properties from the ER or from any other person, or otherwise make use of any store or service of such ER or any other person.

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1. Civil Code Provisions

a. Art 1705 CC: paid in legal currencyb. Art 1706 CC: withholding of wages, except for a debt due, shall not be made by the employerc. Art 1707 CC: Labor’s wages shall be a lien on goods manufactured or work done.d. Art 1708 CC: wages not subject to execution or attachment, except for debts incurred for food,

shelter, clothing and medical attenda.cee. Art 1709 CC: Employer shall neither seize nor retain any tool or other articles belonging to the

laborer.

Art. 113. Wage Deduction

No ER, in his own behalf or in behalf of any person shall make any deduction from the wages of is EEs, except:

(a) In case where the worker is insured with his consent by the ER, and the deduction is to recompense the ER for the amount paid by him as premium on the insurance.

(b) For union dues, in cases where the right of the worker or his union to check – off has been recognized by the ER or unauthorized in writing by the individual worker concerned; and

(c) In cases where the ER is authorized by law or regulations issued by the Sec. of labor.

Wage deduction

Authorized deductions by law:

a. Value of means and other facilitiesb. Premium paid by employer where insured with employee’s consentc. Union to check off recognized by employer/ authorized in writing by indiv employeed. Employee is indebted to employer, due & demandablee. Subject to exection for debts incurred for food, shelter clothing and medical attendancef. Withholding taxg. Salary deductions cooperativeh. SSS, Medicare, Pag-ibig

Payment to 3rd person

Authorized in writing by employee Employer agrees to make deduction but not obliged to do so. Employer must not receive any pecuniary benefit, directly or indirectly from transaction.

Deductions for absences

Deductions for unpaid absences are allowed.

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Reduced pay because of reduced work days

Right to reduce workdays

Art. 114. Deposits for Loss or Damage

No ER shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss or dam=ge to tools, materials or equipment supplied by the ER, except when the ER is engaged in such trades, occupations or business whre the practice of making deductions or requiring deposits is a recognized one, or is necessary or desirable as determined by the Sec. of labor in appropriate rules and regulations.

TN Article 114 provides the rule on deposits for loss or damage to tools, materials or equipment’s supplied by the Er. It does not permit, for instance, the P15.00 daily deposits which the taxi drivers are required to make to defray any shortage in their “boundary”. No Showing that the DOLE Sec recognized such deposit as a “practice” in taxi industry. Hence, illegal. (5-J Taxi v. NLRC)

Art. 115. Limitations

No deductions from the deposits of a EE for the actual amt. of the loss or damage shall be made unless the EE has been heard thereon, and his responsibility has been clearly shown.

Deductions for Loss or Damage

employee clearly shown to be responsible for loss or damage employee given ample opportunity to show cause why deduction should not be made deduction fair and reasonable and shall not exceed actual loss or damage deduction not exceed 20% of employee’s wages in a week

Art. 116 Withholding of wages and kickbacks prohibited

It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or any other means whatsoever without the worker’s consent.

The withholding of pay even for only one payroll period, the Court ruled, violated Articles 113 and 116 of the labor code and amounted to constructive dismissal despite the alleged resignation letter.

Art. 117 Deduction to Ensure employment

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It shall be unlawful to make any deduction from wages of any employee for the benefit of the ER or his representative or intermediary as consideration of a promise of employment or retention in employment.

Art. 118 Retaliatory Measures

It shall be unlawful for an ER to refuse to pay or reduce the wages and benefits, discharge or in any manner discriminated against any EE who has filed any complaint or instituted any proceeding under this Title or has testifies or is about to testify is such proceedings.

The dismissal of an EE is illegal where it was shown to be a consequence of his having filed a complaint against his ER who pays a subminimum wage.

Is Violation of article 118 strikeable? Acts under Art 118 are broad, and can lead to a ULP case if employer retaliated

against testifying employee. If ULP, striekable. Reprisal for Silent Testimony

Art. 118 presupposes explicit testimony, it is believed that it equally applies to implicit or unspoken testimony by an EE.

A violation of Art. 118 consist in the ER’s retaliatory or discriminatory act against an EE who testified or refused to testify. The violation does not arise from what the EE did or did not do but from what the ER did to the EE.

Art. 119. False Reporting

It shall be unlawful for any person to make any statement, report or record filed or kept pursuant to the provisions of this Code knowing such statement, report or record to be false in any material respect.

Records an ER must keep:

1. Length of time to be paid2. Rate of pay per month, week, day, or hours, piece, etc.;3. Amount due for regular work4. Amount due for overtime work5. Deductions made from the wages; and6. Amount actually paid.

Chapter V. Wage studies, wage agreements and wage determination

Art. 120 Creation of National Wages and Productivity Commission

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There is hereby created a National Wages and Productivity Commission, hereinafter referred to as the Commission, which shall be attached to the Department of Labor and Employment (DOLE) for policy and program coordination. (As amended by Republic Act No. 6727, June 9, 1989).

National Wages and Productivity Commission created by RA 6727.

Art. 121. Powers and Functions of the Commission

The Commission (NWPC) shall have the following powers and functions:

a) To act as the national consultative and advisory body to the President of the Philippines and Congress on matters relating to wages, incomes and productivity;

b) To formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise, industry and national levels;

c) To prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial, or industry levels;

d) To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with prescribed guidelines and national development plans;

e) To undertake studies, researches and surveys necessary for the attainment of its functions and objectives, and to collect and compile data and periodically disseminate information on wages and productivity and other related information, including, but not limited to, employment, cost-of-living, labor costs, investments and returns;

f) To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether these are consistent with national development plans;

g) To exercise technical and administrative supervision over the Regional Tripartite Wages and Productivity Boards;

h) To call, from time to time, a national tripartite conference of representatives of government, workers and employers for the consideration of measures to promote wage rationalization and productivity; and

i) To exercise such powers and functions as may be necessary to implement this Act.

The Commission shall be composed of the Secretary of Labor and Employment as ex-officio chairman, the Director-General of the National Economic and Development Authority (NEDA) as ex-officio vice-chairman, and two (2) members each from workers’ and employers’ sectors who shall be appointed by the President of the Philippines upon recommendation of the Secretary of Labor and Employment to be made on the basis of the list of nominees submitted by the workers’ and employers’ sectors, respectively, and who shall serve for a term of five (5) years. The Executive Director of the Commission shall also be a member of the Commission.

The Commission shall be assisted by a Secretariat to be headed by an Executive Director and two (2) Deputy Directors, who shall be appointed by the President of the Philippines, upon the recommendation of the Secretary of Labor and Employment.

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The Executive Director shall have the same rank, salary, benefits and other emoluments as that of a Department Assistant Secretary, while the Deputy Directors shall have the same rank, salary, benefits and other emoluments as that of a Bureau Director. The members of the Commission representing labor and management shall have the same rank, emoluments, allowances and other benefits as those prescribed by law for labor and management representatives in the Employees’ Compensation Commission. (As amended by Republic Act No. 6727, June 9, 1989)

Art. 122. Creation of the RTWPB

Regional Tripartite Wages and Productivity Boards Regional Boards

Commission determines the ofiices/headquarters

REGIONAL BOARD shall Composed of:

DOLE Regional Director NEDA Regional Director DTI Regional Director

2 – workers 2 – employers

While the RTWPB has the power to issue wage orders under Art 122 (b) of the Labor Code, such orders are subject to the guidelines prescribed by the National Wages and Productivity Commission (NWPC), who has the power to prescribe the rules and guidelines for the determination of appropriate wages in the country.

Art. 123 Wage Order

Whenever conditions in the region so warrant, the Regional Board shall investigate and study all pertinent facts; and based on the standards and criteria herein prescribed, shall proceed to determine whether a Wage Order should be issued. Any such Wage Order shall take effect after fifteen (15) days from its complete publication in at least one (1) newspaper of general circulation in the region.

In the performance of its wage-determining functions, the Regional Board shall conduct public hearings/consultations, giving notices to employees’ and employers’ groups, provincial, city and municipal officials and other interested parties.

Any party aggrieved by the Wage Order issued by the Regional Board may appeal such order to the Commission within ten (10) calendar days from the publication of such order. It shall be mandatory for the Commission to decide such appeal within sixty (60) calendar days from the filing thereof.

The filing of the appeal does not stay the order unless the person appealing such order shall file with the Commission, an undertaking with a surety or sureties satisfactory to the Commission for the payment to the employees affected by the order of the corresponding increase, in the event such order is affirmed. (As amended by Republic Act No. 6727, June 9, 1989)

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Wage Order shall take effect after fifteen (15) days from its complete publication in at least one (1) newspaper of general circulation in the region.

RB shall conduct public hearings/consultations, giving notices to employees’ and employers’. Any party aggrieved may appeal such order to the Commission within ten (10) calendar days

from the publication of such order. Mandatory of the Commission to decide such appeal within sixty (60) calendar days from the

filing. filing of the appeal does not stay the order UNLESS the person appealing shall post a surety

bond.

Issuance of wage order within 30 days after conclusion of last hearing, the Board shall dececide the merits of the petition xxx no case the wage order be lower than the minimum statutory wage rates.

Frequency of Wage Order Not be disturbed for a period of 12 months from effectivity and no petition for wage increase shall be entertained within the said period.

RTWPB, NOT NWPC, APPROVES A WAGE ORDER

Wage-fixing order by the board does not need prior approval by the Commission. What requires is to conduct a public hearing over the petition to decide with 3o days after last

hearing and to furnish the commission a copy of the decision on the petition or the wage order. What need prior approval are the Implementing rules and regulations which the board has to

prepare within 10dys from the issuance of the wage order.

APPEAL NWPC guidelines allow any party aggrieved by a wage order to appeal in to the commission within 10 days after the publication.

Article 121 (c ) and (d) and article 122(b) clearly grant the NWPC not the RTWPB, the power to prescribe the rules and guidelines for the determination of minimum wage and productivity measures. While the RTWPB has the power to issue wage orders under article 122 (b) of the labor code such orders are subject to the guidelines prescribed by the NWPC.

PUBLIC HEAARING AND PUBLICATION IS MANDATORY

IN the case of Cagayan sugar milling co vs. Sec of Labor, SC said R02-02 A was struck down in violation of article 123 of LC on the ground that it was passed without the required public consultation and newspaper publication.

Art. 124. Standards/Criteria for Min Wage Fixing

Standards/Criteria for Min wage fixing:

a) Living Wageb) Consumer price indexc) Cost of living

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d) Needs of workers and their familiese) Induce industries to invest in countrysidef) Improvements in standards of livingg) Prevailing wage levels h) Fair return of capitali) Effects on employment generation and family incomej) Equitable distribution of income and wealth

Where the application of any prescribed wage increase resulted to wage distortions the ER and union shall negotiate to correct the distortions.

Any dispute arising from Wage distortion: (ORGANIZE)

Collective bargaining agreement

Voluntary arbitration decide disputes within 10 calendar days from the time said disputes was referred to VA

National conciliation and Mediation Board if it remains unresolved, after 10 calendar days of conciliation

NLRCmandatory within 20 C.D. from time said dispute is submitted to compulsory arbitration.

TN The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any increase in prescribed wage rates pursuant to the provisions of law or wage order.

Wage distortion – situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage of salary rates among employee groups, obliterating the distinctions as to skills, length of service or other logical bases of differentiation.

Distortion adjustment formula (Metro Bank v. NLRC) (mitch WALA KO KAHUMAN ANI)

Minimum wage / actual salary = % x prescribed increase = distortion adjustment

See also equitable bank case

Art. 125. Freedom to bargain

No wage order shall be construed to prevent workers in particular firms or enterprises or industries from bargaining for higher wages with their respective employers. (As amended by Republic Act No. 6727, June 9, 1989)

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Art. 126. Prohibition against injunction

No preliminary or permanent injunction or temporary restraining order (TRO) may be issued by any court, tribunal or other entity against any proceedings before the Commission or the Regional Boards. (As amended by Republic Act No. 6727, June 9, 1989)

Art. 127. Non-diminution of benefits

No wage order issued by any regional board shall provide for wage rates lower than the statutory minimum wage rates prescribed by Congress. (As amended by Republic Act No. 6727, June 9, 1989)Art.

Chapter VI Administration and Enforcement

Art. 128. Visitorial and Enforcement Power

a) The Secretary of Labor and Employment or his duly authorized representatives, including labor regulation officers, shall have access to employer’s records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto.

b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. (As amended by Republic Act No. 7730, June 2, 1994).

An order issued by the duly authorized representative of the Secretary of Labor and Employment under this Article may be appealed to the latter.

In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. (As amended by Republic Act No. 7730, June 2, 1994)

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c) The Secretary of Labor and Employment may likewise order stoppage of work or suspension of operations of any unit or department of an establishment when non-compliance with the law or implementing rules and regulations poses grave and imminent danger to the health and safety of workers in the workplace. Within twenty-four hours, a hearing shall be conducted to determine whether an order for the stoppage of work or suspension of operations shall be lifted or not. In case the violation is attributable to the fault of the employer, he shall pay the employees concerned their salaries or wages during the period of such stoppage of work or suspension of operation.

d) It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective the orders of the Secretary of Labor and Employment or his duly authorized representatives issued pursuant to the authority granted under this Article, and no inferior court or entity shall issue temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement orders issued in accordance with this Article.

e) Any government employee found guilty of violation of, or abuse of authority, under this Article shall, after appropriate administrative investigation, be subject to summary dismissal from the service.

f) The Secretary of Labor and Employment may, by appropriate regulations, require employers to keep and maintain such employment records as may be necessary in aid of his visitorial and enforcement powers under this Code.

If employer-employee relationship still exists – regional director has power to order and administer, after due notice and hearing, compliance with labor standards provision of Labor Code/other laws

DOLE regional director must endorse case to Labor arbiter

Where employer contests finding of labor standards and welfare officers and

Raises issues which cannot be resolved without considering evidentiary matters

That are not verifiable in the normal course of inspection.

Regional director can enforce a labor standards law even if the compliance issue is not raised in the complaint. (Aboitiz Shipping v. dela Serna)

See also Univ of Immaculate Conception case

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But Regional director without authority to declare an order or law unconstitutional; only duty to enforce the laws, which stands valid.

Double Indemnity

Fine of double prescribed wage increase when employer refuses or fails to pay prescribed adjustment in wage rates. (RA 6727).

Based on unpaid benefits, where benefits defined to be prescribed wage rates which employer failed to pay upon effectivity of wage order, exclusive of other wafe related benefits.

Labor Standards Cases

DOLE Regional Director exercises both visitorial and enforcement power over labor standard cases – emplowered to adjudicate money claims, provided employer-employee relationship exists and finding are not contested by employer (Maternity Children’s Hospital v. sec of labor)

Art. 129. Recovery of wages, simple money claims and other benefits

Money claims arising from complaint/routine inspection

Regional director refers case to Labor Standards and Welfare Officer for field inspection. LSWO to submit report to Regional Director through the Chief of the Labor Standards Enforcement Division (LSED) with 24 hrs after investigation or within a reasonable period as determined by Regional Director.

Restitution

Plant Level restitution may be effected for money claims not exceeding P50T. Report submitted to Regional Director for verification and confirmation.

Compromise agreement

In writing, signed by parties in the presence of Regional Director or his duly authorized rep.

Hearing

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Where no proof of compliance submitted by employer after 7 days from receipt of inspection, Regional director to summon employer & complainants to a summary investigation.

Enforcement under Art 128 are beyond injunctive power of an inferior court.

Appeal

Appealable to DOLE sec. Then to CA through certiorari.

DO 57-04 New system for enforcement of labor laws

3 approaches

(1) self-assessment – voluntary compliance applicable for shops >= 200 workers or those with CBA

(2) Inespection – 10 to 199 workers; hazardous, construction projects; labor standards complaints

(3) advisory - < 10 workers; micro business enterprises; not punitive; assistance to increase productivity; relaxed

DOLE may delegate to Lgu the inspection of safety (ex boiler).

Title III Working Conditions for Special Groups of employees

Chapter I Employment of Women

Nightwork prohibition (Art 130)

Exceptions (Art 131)

Most call centers are exempt DOLE Secretary exemption (under Art 131 (g))

Art. 132 Facilities for Women

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Art. 133. Maternity Leave (obsolete)

Maternity leave benefits (now under SSS law)

Pre-req: at least 3 monthly contributions in 12 month period immediately preceding semester of childbirth or miscarriage:

60 days salary credit

78 days in case of caesarian delivery

Paternity Leave (RA 8187) – legit married, living with spouse

Maternity leave benefits apply to married or unmarried women.

Art. 134. Family Planning Services; Incentives for Family Planning

Art. 135. Discrimination Prohibited

Discrimination prohibited

solely on account of her sex

RA 7192 provides that “the state recognizes the role of women in nation-bldg and shall ensure the fundamental equality before the law of women and men. The State shall provide women rights and opportunities equal to that of men.” To attain this policy: (1) substantial portion of Official Devt Funds set aside & utilized by agencies to support programs & activities for women; (2) All govt depts. Ensure that women benefit equally & participate directly in devt programs & projects of said depts.; and (3) All depts. And agencies shall review & revise regulations, circulars, issuances and procedures to remove gender bias therein.

Art. 136. Stipulation against marriage

Stipulation against marriage

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Nondiscrimination policy against women for T&C of employment.

See star paper case

Prohibited acts: (Art 137)

1) Deny any woman employee benefits or dischrage woman for purpose of preventing her from enjoying benefits under this code

2) Discharge woman on acct of her pregnancy

3) Refuse admission of such woman upon returning to work for fear that she may again be pregnant

Art 138 Classification of certain women workers

Any woman working in any night club, cocktail lounce, massage clinic, bar or similar establishment, under the effective control of the employer for a substantial period of time condiered employee of such establishment

Zialcita v. PAL (1977) – OP decision

We cannot agree to the respondent PAL’s proposition that termination from employment of flight attendants on account of marriage is a fair and reasonable standard designed for their own health, safety, protection and welfare, as no basis has been laid therefore. Actually, respondent claims that its concern is not so much against the continued employment of the flight attendant merely by reason of marriage but rather on the consequence of marriage – pregnancy. Xxx The sweeping intendment of the law, be it on special or ordinary occupations is reflected in the whole text and supported by Art 135 that speaks of nondiscrimination on the employment of women.

PT&T v. NLRC

Similar to the Zialcita case except that the employer did not admit that the employee was dismissed because she was married. The cause of the dismissal, the employer insisted, was her dishonesty in stating in the job application that she was single though in fact she was not.

PT&T’s policy that married women are not qualified for employment in PT&T is not only in derogation of the provisions of Art 136 on the right of women to be free from any kind of stipulation against marriage in connection with her employment, but it likewise assaults good morals and public policy tending as it

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does to deprive a woman of the freedom to choose her statusl, a privilege that by all accounts inheres in the individual as an intangible and inalienable right.

Gualberto v. Marinduque Mining (1978) – CA Case

Whether pre-employment agreement or company policy, the policy of the firm to consider, due to lack of facilities for married women, female employees as separated the moment they get married, is void. No employer may require female applicants for jobs to enter into preemployment agreements that they would be dismissed once they get married.

Art. 137. Prohibited Acts

Art. 138. Classification of Certain Women Workers.

Sexual Harassment

RA 7877

Victim may be male or female.

Elements: DRR AIMA

Demand/Request/Require sexual favor

Authority, influence or moral ascendancy over victim

Punishes sexual harassment if same is:

(1) work related

(2) education related

(3) training related

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Excluded:

Salewoman-Client relations but RPC, Independent Civil Actions

Employee-employee but file case with company based on company rules

Duty of employer or head of office

To prevent or deter the commission of acts of sexual harassment and provide procedures for resolution or prosecution of acts of sexual harassment

To promulgate rules and regulations prescribing procedure for investigation of secual harassment cases and admin sanctions therefor

To create committee on decorum and investiation of cases on sexual harassment

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title 2 wages.docx

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