LABOR LAW

FUNDAMENTAL PRINCIPLES AND POLICIES

1. Article II, Section 18 of the Philippine Constitution: The State affirms labor as a primary social economic
force. It shall protect the rights of workers and promote their welfare; and
2. Section 20: The State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments.
3. Article III, Section 8: The right of the people, including those employed in the public and private sectors,
to form unions, associations, or societies for purposes not contrary to law, shall not be abridged;
4. Article XIII, Section 3: The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate
in policy and decision-making processes affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right of labor to
its just share in the fruits of production and the right of labor to its just share in the fruits of production
and the right of enterprises to reasonable returns to investments, and to expansion and growth;

5. Article XIII, Section 13: The State shall establish a special agency for disabled persons for their
rehabilitation, self-development and self-reliance and their integration into the mainstreams of society

6. Article XIII, Section 14: The State shall protect working women by providing safe and healthful working
conditions, taking into account their material functions, and such facilities and opportunities that will
enhance their welfare and enable them to realize their full potential in the service of the nation.

BASIC POLICY
The State shall afford protection to labor, promote full employment, ensure equal work opportunities
regardless of sex, race or creed and regulate the relations between workers and employers. The State shall
assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane
conditions of work.

DEFINITIONS OF TERMS

“Employer" includes any person acting in the interest of an employer, directly or

indirectly. The term shall not include any labor organization or any of its officers or agents
except when acting as employer.
"Employee" includes any person in the employ of an employer. The term shall not be
limited to the employees of a particular employer, unless the Code so explicitly states. It shall
include any individual whose work has ceased as a result of or in connection with any current
labor dispute or because of any unfair labor practice if he has not obtained any other
substantially equivalent and regular employment.
"Labor organization" means any union or association of employees which exists in
whole or in part for the purpose of collective bargaining or of dealing with employers
concerning terms and conditions of employment.
"Legitimate labor organization” means any labor organization duly registered with the
Department of Labor and Employment, and includes any branch or local thereof.
"Bargaining representative” means a legitimate labor organization whether or not
employed by the employer.
"Unfair labor practice" means any unfair labor practice as expressly defined by the
Code.
"Labor dispute" includes any controversy or matter concerning terms and conditions of
employment or the association or representation of persons in negotiating, fixing, maintaining,
changing or arranging the terms and conditions of employment, regardless of whether the
disputants stand in the proximate relation of employer and employee.
"Managerial employee" is one who is vested with the powers or prerogatives to lay

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 down and execute management policies and/or to hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees. Supervisory employees are those who, in the
interest of the employer, effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of independent
judgment. All employees not falling within any of the above definitions are considered rank-and-
file employees for purposes of this Book.
"Voluntary Arbitrator" means any person accredited by the Board as such or any
person named or designated in the Collective Bargaining Agreement by the parties to act as
their Voluntary Arbitrator, or one chosen with or without the assistance of the National
Conciliation and Mediation Board, pursuant to a selection procedure agreed upon in the
Collective Bargaining Agreement, or any official that may be authorized by the Secretary of
Labor and Employment to act as Voluntary Arbitrator upon the written request and agreement of
the parties to a labor dispute.
"Strike" means any temporary stoppage of work by the concerted action of employees
as a result of an industrial or labor dispute.
"Lockout" means any temporary refusal of an employer to furnish work as a result of an
industrial or labor dispute.

"Strike area" means the establishment, warehouses, depots, plants or offices, including the sites or premises
used as runaway shops, of the employer struck against, as well as the immediate vicinity actually used by
picketing strikers in moving to and fro before all points of entrance to and exit from said establishment.

ILLEGAL RECRUITMENT
Any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and
includes referring, contract services, promising or advertising for employment abroad, whether for profit or not,
when undertaken by non-licensee or non-holder of authority.

Syndicated Illegal Recruitment – Illegal Recruitment carried out by a group of three (3) or more persons in
conspiracy or confederation with one another

Large Scale or Qualified – Illegal Recruitment committed against 3 or more persons, individually or as a
group.

Art. 18. Ban on direct-hiring. No employer may hire a Filipino worker for overseas employment except
through the Boards and entities authorized by the Secretary of Labor. Direct-hiring by members of the
diplomatic corps, international organizations and such other employers as may be allowed by the Secretary of
Labor is exempted from this provision.

Art. 22. Mandatory remittance of foreign exchange earnings. It shall be mandatory for all Filipino
workers abroad to remit a portion of their foreign exchange earnings to their families, dependents, and/or
beneficiaries in the country in accordance with rules and regulations prescribed by the Secretary of Labor.

LABOR STANDARDS

All employees in all establishments, whether for profit or not are covered by the labor code except the
following:

1. Government employees
2. Managerial employees
3. Domestic servants
4. Workers paid by results

1.1. Coverage/Exclusions

Art. 82. Coverage.—The provisions of this title shall apply to employees in all
establishments and undertakings whether for profit or not, but not to government employees,
managerial employees, field personnel, members of the family of the employer who are
dependent on him for support, domestic helpers, persons in the personal service of another,
and workers who are paid by results as determined by the Secretary of Labor in appropriate
regulations.

As used herein, “managerial employees” refers to those whose primary duty consists of
the management of the establishment in which they are employed or of a department or
subdivision thereof, and to other officers or members of the managerial staff.
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 “Field personnel” shall refer to non-agricultural employees who regularly perform their
duties away from the principal place of business or branch office of the employer and whose
actual hours of work in the field cannot be determined with reasonable certainty.

Omnibus Rules
Book III, Rule I

Section 2. Exemption.—The provision of this Rule shall not apply to the following
persons if they apply to the following persons if they qualify for exemption under the conditions
set forth herein:
xxx xxx xxx
(b) Managerial employees, if they meet all of the following conditions, namely:
(1) Their primary duty consists of the management of the establishment in
which they are employed or of a department or sub-division thereof;
(2) They customarily and regularly direct the work of two or more employees
therein;
(3) They have the authority to hire or fire other employees of lower rank; or
their suggestions and recommendations as to the hiring and firing and as to the
promotion or any other change of status of other employees are given particular weight.

(c) Officers or members of a managerial staff if they perform the following duties
and responsibilities:
(1) The primary duty consists of the performance of work directly related to
management policies of their employer;
(2) Customarily and regularly exercise discretion and independent
judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial
employee whose primary duty consists of the management of the establishment in
which he is employed or subdivision thereof; or (ii) execute under general supervision
work along specialized or technical lines requiring special training, experience, or
knowledge; or (iii) execute under general supervision special assignments and
tasks; and
(4) Who do not devote more than 20 percent of their hours worked in a
work-week to activities which are not directly and closely related to the performance of
the work described in paragraphs (1), (2), and (3) above.

Who are covered

All employees in all establishments

Who are NOT covered

(1) Government employees

See: Civil Service Law
Magna Carta of Public Health Workers (R.A. 7305)

(2) Managerial employees

(a) managerial employees

(b) officers of the managerial staff
(c) members of the managerial staff

(3) Field Personnel

In Union of Filipro Employees vs. Vivar, Jr., [(205 SCRA 200 (1992)], it was held that the phrase
“whose actual hours of work in the field cannot be determined with reasonable certainty” must be read in
conjunction with the meaning of field personnel in Rule IV, Book III of the Implementing Rules, whereby “field
personnel and other employees whose time and performance is unsupervised by the employer.” [Mercidar
Fishing Corp. vs. NLRC, 297 SCRA 440 (1998)] The term “other employees” should NOT be understood as
a separate classification of employees who are not covered under Article 82 of the Labor Code, rather should
be regarded as an amplification of the interpretation of the definition of field personnel as those “whose actual
hours of work in the field cannot be determined with reasonable certainty.” [Auto Bus Transport vs. Bautista,
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458 SCRA 578 (2005)]

N.B.:
Field Personnel are NOT entitled to the following benefits:

a. Overtime pay; [Union Filipro Employees vs. Vivar, Jr., supra, citing San Miguel Brewery vs.
Democratic Labor Organization, 8 SCRA 613 (1963)]
b. Service incentive leave pay [Sec. 1, Rule V, Implementing Rules; Auto Bus Transport vs.
Bautista, 458 SCRA 578 (2005)]
c. 13th month pay [PD 851]

(4) Dependent Family Members

(5) Domestic Workers and Persons in the Personal Service of Another

The definition of domestic servant or househelper contemplates one who is employed in the
employer's home to minister exclusively to the personal comfort and enjoyment of the employer's
family. [Apex Mining Company vs. NLRC, 196 SCRA 251 (1991)]

(6) Piece Workers

Piece workers are those workers paid by results. [Art. 82]

And while the mode of compensation is on piece-rate basis, they are considered as regular
employees for as long as the nature of the tasks they perform are necessary and desirable in the
usual business of the employer, and their employment is not dependent on specific projects or
season.

Normal Hours of Work – the normal hour of work of an employee shall not exceed 8 hours a day.

PURPOSE – to safeguard health and minimize unemployment as employer is forced to resort to more
shiftings.

Compressed Work Week (CWW) – the CWW scheme is an alternative arrangement whereby the normal
workweek is reduced to less than 6 days but the total number of normal hours per week remains at 48 hours.

Meal break – meal periods should not be less than 60 minutes. Shorter meal time must be paid.

Rest Period – compensable 5-20 minutes

Overtime work – service rendered in excess of and in addition to eight hours on ordinary working days, which
are the prescribed work period.

Overtime pay – the amount obtained by multiplying hourly rate by the number of hours worked in excess of
eight hours. (25%)

Art. 87. Overtime Work.—Work may be performed beyond eight (8) hours a day provided that the employee is
paid for the overtime work an additional compensation equivalent to his regular wage plus at least twenty-five
(25%) percent thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate for the first eight hours on a holiday or rest day plus at least thirty (30%)
percent thereof.

Can an employee be compelled to render over time work?

The general rule is that an employee cannot be compelled to render overtime work. The exceptions are
the following:
1. When the country is at war or when any other national or local emergency has been declared by the
chief executive
2. When it is necessary to prevent loss of life or property or in case of imminent danger to public safety
due to an actual or impending emergency in the locality caused by serious accidents, fire, flood,
typhoon, earthquake, epidemic, or other disaster or calamity;
3. When there is urgent work to be performed on machines, installations, or equipment, in order to avoid

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 serious loss or damage to the employer or some other cause of similar nature
4. When the work is necessary to prevent loss or damage to perishable goods

 When the worker wilfully refuses to perform overtime work in any of the above instances, he may
legally be dismissed. It would be an act of insubordination on the part of the worker if he unjustifiably
refuses to render such work.

Art. 88. Undertime not Offset by Overtime.—Undertime work on any particular day shall not be offset by
overtime work on any other day. Permission given to the employee to go on leave on some other day of the
week shall not exempt the employer from paying the additional compensation required in this Chapter.

Night Shift Differential – every employee shall be paid a night shift differential of not less than 10% of his
regular wage

Art. 86. Night Shift Differential.—Every employee shall be paid a night shift differential of not less than ten
percent (10%) of his regular wage for each hour of work performed between ten o’clock in the evening and six
o’clock in the morning.

Night-shift work is more onerous and burdensome, and thus deserves more remuneration than their day time
counterparts. There is no dispute that ordinary and regular normal work is performed in the daytime, and that
night work is exceptional and is only justified in unavoidable circumstances necessary for the business of the
employer.

Part-time work – the law does not prohibit employees to have “normal hours of work” of less than 8 hours a
day. What the law regulates is work hours exceeding 8. It prescribes a maximum but not a minimum. The labor
code does not say that the normal hours of work is or should be 8 hours but that it shall not exceed 8.

Wages – it is 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, which is payable by an employer to an employee under a written or unwritten contract of
employment for work done or to be done or for services rendered or to be rendered and includes the fair and
reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily
furnished by the employer to the employee.

Wage vs. Salary

Wage is the compensation for skilled or unskilled manual labor while salary is paid to white collar workers and
denotes a higher grade of employment. Also, wage is not subject to execution, garnishment or attachment
except for debts related to food, clothing, shelter and medicines, while salary is not exempt from execution,
garnishment or attachment.

Art. 124. Standards/Criteria for minimum wage fixing. The regional minimum wages to be
established by the Regional Board shall be as nearly adequate as is economically feasible to
maintain the minimum standards of living necessary for the health, efficiency and general well-
being of the employees within the framework of the national economic and social development
program. In the determination of such regional minimum wages, the Regional Board shall,
among other relevant factors, consider the following:
(a) The demand for living wages;
(b) Wage adjustment vis-à-vis the consumer price index;
(c) The cost of living and changes or increases therein;
(d) The needs of workers and their families;
(e) The need to induce industries to invest in the countryside;
(f) Improvements in standards of living;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity to pay of employers
(i) Effects on employment generation and family income; and
(j) The equitable distribution of income and wealth along the imperatives of economic and social
development.

Apprentices, Learners and Persons with Disability

Wages of apprentices, learners and handicapped worker shall in no case be less than 75% of the applicable
statutory minimum wages rates.

Weekly Rest Day

It is a rest period of not less than 24 consecutive hours after every 6 consecutive normal work days. Note that
all establishments and enterprises may operate or open for business on Sundays and holidays provided that

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the employees are given the weekly rest day. (30% if worked on scheduled rest day)

Workers preference based on religious grounds, respected

Holiday pay – a form of remuneration accorded to an employee who does not work on regular holidays. If he
works on said regular holidays, he is entitled to an additional compensation over his regular or basic
remuneration known as premium pay.

LEAVES
Service Incentive Leave – it is 5 day leave with pay for every employee who has rendered at least 1 year or
service.

 SIL is commutable to its money equivalent if not used or exhausted at the end of the year based on the
salary rate at the date of commutation.

Maternity Leave – a female member who has paid at least 3 monthly contributions to the SSS in the 12 month
period immediately preceding the semester of her childbirth or miscarriage shall be paid a daily maternity
benefit equivalent to 100% of her average daily salary credit for 60 days or 78 days in case of caesarean
delivery.

 Maternity benefits shall be paid only for the first 4 deliveries. (regardless of her civil status)

Paternity Leave – refers to the benefits granted to a married male employee allowing him not to report for
work for 7 days but continues to earn the compensation on the condition that his spouse has delivered a child
or suffered a miscarriage for the purpose of lending support to his wife during her period of recovery and/or
nursing of the newly born child.

Parental Leave/Solo Parent Leave – a solo parent employee can avail a parental leave or solo leave of not
more than 7 working days every year.

Leave for Victims of Violence against Women and Children (RA 9262)
An employee who is a victim of violence (physical, sexual or psychological) is entitled to a paid leave of
up to 10 days in addition to other paid leaves.

Special Leave Benefit for Women

It means a female employee’s leave entitlement of 2 months with full pay from her employer based on
her gross monthly compensation following surgery caused by gynaecological disorders, provided that she has
rendered continuous aggregate employment service of at least 6 months for the last 12 months.

Gynecological Disorders – refer to disorders that would require surgical procedures such as dilatation and
curettage and those involving female reproductive organs such as vagina, cervix, uterus, fallopian tubes,
ovaries, breast, adnexa and pelvic floor. Gynecological surgeries shall also include hysterectomy, ovariectomy
and mastectomy.

13th Month Pay (PD 851) – shall mean 1/12 of the basic salary of an employee within a calendar year.

Women Workers

8.1. Discrimination (Art. 135, LC)

Art. 135. Discrimination prohibited. It shall be unlawful for any employer to

discriminate against any woman employee with respect to terms and conditions of employment
solely on account of her sex.
The following are acts of discrimination:
(a) Payment of a lesser compensation, including wage, salary or other form of
remuneration and fringe benefits, to a female employees as against a male employee, for work
of equal value; and
(b) Favoring a male employee over a female employee with respect to promotion,
training opportunities, study and scholarship grants solely on account of their sexes.

Criminal liability for the willful commission of any unlawful act as provided in this Article
or any violation of the rules and regulations issued pursuant to Section 2 hereof shall be

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 penalized as provided in Articles 288 and 289 of this Code: Provided, That the institution of any
criminal action under this provision shall not bar the aggrieved employee from filing an entirely
separate and distinct action for money claims, which may include claims for damages and
other affirmative reliefs. The actions hereby authorized shall proceed independently of each
other. (As amended by Republic Act No. 6725, May 12, 1989)

b. Stipulation against marriage (Art. 136, LC)

Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require
as a condition of employment or continuation of employment that a woman employee shall not
get married, or to stipulate expressly or tacitly that upon getting married, a woman employee
shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of her marriage.

e. Anti-Sexual Harassment Act (RA 7877)

1. Sexual harassment is an imposition of misplaced superiority which is enough to dampen an

employee's spirit in her capacity for advancement. It affects her sense of judgment, it changes her life. If for
this alone, private respondent should be adequately compensated [Phil. Aeolus, Infra]

The gravamen of the offense in sexual harassment is not the violation of the employee's sexually but
the abuse of power by the employer. Any employee, male or female, may rightfully cry “foul” provided the
claim is well substantiated. Strictly speaking, there is no time period within which he or she is expected to
complain through the proper channels. The time to do so may vary depending upon the needs,
circumstances, and more importantly, the emotional threshold of the employee [Philippine Aeolus
Automotive United Corp., et al. vs. NLRC, et al., G.R. No. 124617, April 28, 2000, Second Division,
Bellosillo, J.]

9. Minor Workers (RA 7678, RA 9231)

Sec. 2. Employment of Children - Children below fifteen (15) years of age shall not be
employed except:
1) When a child works directly under the sole responsibility of his/her parents or legal
guardian and where only members of his/her family are employed: Provided, however, That
his/her employment neither endangers his/her life, safety, health, and morals, nor impairs
his/her normal development: Provided, further, That the parent or legal guardian shall provide
the said child with the prescribed primary and/or secondary education; or
2) Where a child's employment or participation in public entertainment or information
through cinema, theater, radio, television or other forms of media is essential: Provided, That
the employment contract is concluded by the child's parents or legal guardian, with the express
agreement of the child concerned, if possible, and the approval of the Department of Labor and
Employment: Provided, further, That the following requirements in all instances are strictly
complied with:
(a) The employer shall ensure the protection, health, safety, morals and normal
development of the child;
(b) The employer shall institute measures to prevent the child's exploitation or
discrimination taking into account the system and level of remuneration, and the duration and
arrangement of working time; and
(c) The employer shall formulate and implement, subject to the approval and
supervision of competent authorities, a continuing program for training and skills acquisition of
the child.
In the above-exceptional cases where any such child may be employed, the employer
shall first secure, before engaging such child, a work permit from the Department of Labor and
Employment which shall ensure observance of the above requirements.
For purposes of this Article, the term "child" shall apply to all persons under eighteen
(18) years of age."

9.1. Regulation of working hours of a child

Sec. 2-A. Hours of Work of a Working Child. - Under the exceptions provided in
Section 12 of this Act, as amended:
(1) A child below fifteen (15) years of age may be allowed to work for not more than

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 twenty (20) hours a week: Provided, That the work shall not be more than four (4) hours at any
given day;
(2) A child fifteen (15) years of age but below eighteen (18) shall not be allowed to work
for more than eight (8) hours a day, and in no case beyond forty (40) hours a week;
(3) No child below fifteen (15) years of age shall be allowed to work between eight
o'clock in the evening and six o'clock in the morning of the following day and no child fifteen
(15) years of age but below eighteen (18) shall be allowed to work between ten o'clock in the
evening and six o'clock in the morning of the following day."

9.2. Employment of the child in public entertainment

Sec. 2. Employment of Children - Children below fifteen (15) years of age shall not be
employed except:
xxx xxx xxx
2) Where a child's employment or participation in public entertainment or information
through cinema, theater, radio, television or other forms of media is essential: Provided, That
the employment contract is concluded by the child's parents or legal guardian, with the express
agreement of the child concerned, if possible, and the approval of the Department of Labor and
Employment: Provided, further, That the following requirements in all instances are strictly
complied with:
(a) The employer shall ensure the protection, health, safety, morals and normal
development of the child;
(b) The employer shall institute measures to prevent the child's exploitation or
discrimination taking into account the system and level of remuneration, and the duration and
arrangement of working time; and
(c) The employer shall formulate and implement, subject to the approval and
supervision of competent authorities, a continuing program for training and skills acquisition of
the child.

9.3. Prohibition of employing minors in certain undertakings and in certain

advertisements

Sec. 14. Prohibition on the Employment of Children in Certain Advertisements. -

No child shall be employed as a model in any advertisement directly or indirectly promoting
alcoholic beverages, intoxicating drinks, tobacco and its byproducts, gambling or any form of
violence or pornography.

12. Apprentices and Learners

RA 7796
TESDA

SEC. 4. Definition of Terms.—As used in this Act:

xxx xxx xxx
(j) “Apprenticeship” training within employment with compulsory related
theoretical instructions involving a contract between an apprentice and an employer an
established period assured by an apprenticeable occupation;
(k) “Apprentice” is a person undergoing for an approved apprenticeable
occupation during an established period assured by an apprenticeship agreement;
(l) “Apprenticeship Agreement” is a contract wherein a prospective employer
binds himself to train the apprentice who in turn accepts the terms of training for a recognized
apprenticeable occupation emphasizing the rights, duties and responsibilities of each party;
(m) “Apprenticeable Occupation” is an occupation officially endorsed by a tripartite
body and approved for apprenticeship by the Authority;
(n) “Learners” refer to persons hired as trainees in semi-skilled and other industrial
occupation which are non-apprenticeable. Learnership programs must be approved by the
Authority [TESDA].

12.1. Distinctions between Learnership and Apprenticeship

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 ART.  58. Definition of Terms. —As used in this Title:
(a)  An “apprentice” is a worker who is covered by a written apprenticeship
agreement with an individual employer or any of the entities recognized under this Chapter
[Ch.1, Title II]

ART. 73. Learners defined.—Learners are persons hired as trainees in semi-

skilled and other industrial occupations which are non-apprenticeable and which may be
learned through practical training on the job in a relatively short period of time which shall not
exceed three (3) months.

ART. 74. When learners may be hired.—Learners may be employed when no

experienced worker, are available, the employment of learners is necessary to prevent
curtailment of employment opportunities, and the employment does not create unfair
competition in terms of labor costs or impair or lower working standards.

APPRENTICESHIP LEARNERSHIP
Period of training not to exceed six months [Art. 61, Not to exceed three (3) months
LC] [Art. 75, LC]
Type of Work Highly technical work in an Semi-skilled and other Industrial
Industry [Art. 60, LC] work [Art. 73, LC]
Qualifications At least 14 years of age with When no experienced worker is
vocational aptitude and capacity, available in the industry [Art. 74,
and ability to comprehend and LC]
follow oral and written instructions
[Art. 59, LC]
Salary Not less than 75% of applicable Not less than 75% of applicable
minimum wage, [Art. 61, LC] minimum wage, [Art. 75, LC]
EXCEPT if training is required by EXCEPT for learners in
the school or training program, or piecework, where salary shall be
requisite for graduation or board paid in according to the
examination. [Art. 72, LC] minimum wage imposed. [Art.
76, LC]

13. Handicapped Workers (RA 7277)

Sec.  4. Definition of Terms. — For purposes of this Act, these terms are defined as
follows:
(a) Disabled persons are those suffering from restriction or different abilities, as a
result of a mental, physical or sensory impairment, to perform an activity in the manner or
within the range considered normal for a human being; 

13.1. Definition of “handicapped workers”

Sec.  4. Definition of Terms. — For purposes of this Act, these terms are defined as
follows:
(d) Handicap refers to a disadvantage for a given individual, resulting from an
impairment or a disability, that limits or prevents the function or activity, that is considered
normal given the age and sex of the individual; 

13.2. Rights of disabled workers

Sec.  5. Equal Opportunity for Employment. — No disable person shall be denied

access to opportunities for suitable employment. A qualified disabled employee shall be
subject to the same terms and conditions of employment and the same compensation,
privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied person.
Five percent (5%) of all casual emergency and contractual positions in the Departments
of Social Welfare and Development; Health; Education, Culture and Sports; and other
government agencies, offices or corporations engaged in social development shall be reserved
for disabled persons.

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 13.4. Incentives for employers

Sec.  8. Incentives for Employers. — (a) To encourage the active participation of the private sector in
promoting the welfare of disabled persons and to ensure gainful employment for qualified disabled persons,
adequate incentives shall be provided to private entities which employ disabled persons.

RETIREMENT PAY LAW (RA 7641)

3.1. Coverage

 RA 7641 or the Retirement Pay Law shall apply to all employees in the private sector,
regardless of their position, designation or status and irrespective of the method by
which their wages are paid. They shall include part-time employees, employees of
service and other job contractors and domestic helpers or persons in the personal
service of another. [Labor Advisory on Retirement Pay Law, October 24, 1996]

Compulsory retirement age

The retirement age is primarily determined by the existing agreement or employment contract. Absent
an agreement, retirement age shall be fixed by law at the age of 65 years, while the minimum age for optional
retirement is set at 60 years. Article 287 of the Labor Code applies only to a situation where (1) there is no
CBA or other applicable employment contract providing for retirement benefits; or there is a CBA or other
applicable employment contract providing for retirement benefits, but it is below the requirement set by law.
The rationale is to prevent the absurd situation where an employee is denied retirement benefits through the
nefarious scheme of employers to deprive employees of the benefits due them under existing labor laws.
[Amelia R. Obusan vs. Philippine National Bank, G.R. No. 181178, July 26, 2010, Nachura, J.]

However, the company retirement plans must not only comply with the standards set by existing labor
laws, but they should also be accepted by the employees to be commensurate to their faithful service to the
employer within the requisite period. Due process only requires that notice of the employer's decision to retire
an employee be given to the employee.

Retirement – is the result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the
former.

Eligibility – The retirement age is primarily determined by the existing retirement plan or agreement providing
for retirement benefits. Absent said agreement, the retirement age is fixed by law to wit:
1. Compulsory Retirement Age – upon reaching sixty five (65) years of age, with at least 5 years of
service
2. Optional Retirement Age – upon reaching 60 years of age, with at least 5 years of service, at the
option of the employee.

Exclusion:
1. Retail, service and agricultural establishments or operations regularly employing not more than 10
employees; and
2. Government and its political subdivisions

RETIREMENT UNDER THE SSS LAW

Under the SSS Law, a member who has paid at least 120 monthly contributions prior to the semester of
retirement shall be entitled to monthly pension as long as he lives, provided that:
1. He has reached the age of 60 years and is already separated from employment or has ceased to be
self-employed; or
2. He has reached the age of 65 years

 Member has the option to receive his first 18 monthly pension in lump sum discounted at a preferential
rate of interest as determined by the SSS.

RETIREMENT UNDER THE GSIS LAW

Notes in labor -JjBA-Page 10
 1. 5 year lump sum and Old Age Pension. Under this option, the retiree can get his/her 5 year worth of
pension in advance. The lump sum is equivalent to 60 months of basic monthly pension (BMP) payable
at the time of retirement. After 5 years, the retiree will start receiving his/her monthly pension; and
2. Cash Payment and Basic Monthly Pension. In option 2, retiree will receive a Cash Payment equivalent
to 18 times the basic monthly pension (BMP) payable upon retirement and then a monthly pension for
life payable immediately after his retirement date.

Conditions:
1. The employee has rendered at least 15 years of service;
2. The employee has at least 60 years of age at the time of retirement; and
3. The employee is not receiving a monthly pension benefit from permanent total disability

 Retirement is compulsory upon reaching 65 years of age with at least 15 years of service. But if he has
rendered less than 15 years of service, he may be allowed to complete the said period.

EMPLOYMENT OF KASAMBAHAY (RA 10361)

Domestic worker or kasambahay – refers to any person engaged in domestic work within an employment
relationship such as, but not limited to, the following: general househelp, nursemaid or “yaya”, cook, gardener,
or laundry person, but shall exclude any person who performs domestic work only occasionally or sporadically
and not on an occupational basis.

Some of the benefits:

1. Standard of treatment – no any kind of abuse
2. Board, lodging and medical attendance – atleast 3 meals per day and humane sleeping arrangements
3. The employer shall provide appropriate rest and assistance to the domestic worker in case of illness
and injuries sustained during service without loss of benefits
4. Guarantee of Privacy
5. Access to outside communication
6. Right to education and training – the employer shall afford the domestic worker the opportunity to finish
basic education and may allow access to alternative learning system and, as far practicable, higher
education or technical and vocational training. The employer shall adjust the work schedule of the
domestic worker to allow such access to education or training without hampering the services required
by the employer.
7. Daily rest period of atleast 8 hours per day
8. Week rest period – atleast 24 consecutive hours of rest in a week
9. Leave benefits – SIL of 5 days with pay
10. Social and Other benefits – payment of SSS and Philippine Health Insurance Corporation (PhilHealth)

Employer-Employee Relationship
Primary Tests: 4-Fold Rule

The elements to determine the existence of an employment relationship are:

(1) the selection and engagement of the employee;
(2) the payment of wages;
(3) the power of dismissal; and
(4) the power to control the employee's conduct.

KINDS OF EMPLOYMENT
1. Probationary Employment
2. Regular Employment
3. Project Employment
4. Seasonal Employment
5. Casual Employment
6. Fixed-term Employment

Probationary Employment – it is employment for a specified period generally not exceeding 6 months for the
purpose of determining whether the employee can qualify for regular employment in accordance with
reasonable standards prescribed by the employer.

As a general rule, the period for probationary employment is 6 months, except

1. 3 years in case of teachers
2. When parties agree to a longer term by virtue of company policy or when the same is required by the
nature of the work

Notes in labor -JjBA-Page 11

  It is a rule on labor law that a probationary employee engaged to work beyond the probationary period
of 6 months or for any length of time set forth by the employer shall be considered as regular employee.

Regular Employee – an employment is deemed regular when:

1. Where the employee has been engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer, or
2. Has rendered at least one year of service, whether such service is continuous or broken, with respect
to the activity in which he is employed.

How can an employee become regular?

1. Regular Employee by Nature of Work – when an employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer;
2. From Casual to Regular – when an employee has rendered as least 1 year of service, whether such
service is continuous or broken, with respect to the activity in which he is employed;
3. From Project to Regular – when the project employee is continuously rehired even after cessation of a
project and the tasks performed by the alleged “project employee” are vital, necessary and
indispensable to the usual business or trade of the employer, the employee is deemed regular;
4. From Contractual to Regular – the repeated rehiring and the continuing need for the services of a
contractual are sufficient evidence of the necessity and indispensability of his services to the
employer’s business or trade;
5. From Seasonal to Regular – when an employee is engaged in work or services seasonal in nature and
the employment is for more than one season.

Project Employee – when the employee is made to work for a specific project or undertaking, the completion
or termination of which has been determined at the time of engagement of the employee. It includes
employment for work or service which is seasonal in nature and is performed for the duration of the season.

Seasonal Employment – it is an employment arrangement where an employee is engaged to work during a

particular season on an activity that is usually necessary or desirable in the usual business or trade of the
employer.

 During off-season, the relationship of employer and employee is not severed; the seasonal employee is
merely considered on leave of absence without pay. Also, seasonal workers who are repeatedly
engaged from season to season performing the same tasks are deemed to have acquired regular
employment.

Casual Employment – an employment arrangement where an employee is engaged to perform activities

which are not necessary or desirable in the usual trade or business of the employer.

Fixed-Term Employment – it is a contract of employment for a definite period that terminates by its own terms
at the end of such period. A fixed-period employee does not become a regular employee because his
employment is coterminous with a specific period of time.

DISMISSAL FROM EMPLOYMENT

Authorized-cause dismissal is a form of terminating E-E relationship with a liability on the part of the
employer to pay separation pay as mandated by law. It does not necessarily imply delinquency or culpability on
the part of the employee. Instead, the dismissal process is initiated by the employer’s exercise of management
prerogative such as installation of labor saving devices, closure of business or implementing a retrenchment
program.
On the other hand, a just-case dismissal implies that the employee has committed, or is guilty of, some
violation against the employer, that is, the employee has committed some serious misconduct, is guilty of fraud
against the employer or he has neglected his duties such as abandonment. Thus, the employee himself
initiated the dismissal process. Payment of separation pay, as a rule, is not required in just-cause dismissal.

Just Causes for the termination of employment

1. Serious misconduct or wilful disobedience by the employee of the lawful order of his employer or
representative in connection with his work
2. Gross and habitual neglect by the employee of his duties
3. Fraud or wilful breach by the employee of the trust reposed in him by his employer or his duly
authorized representative
4. Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family of his duly authorized representative

Notes in labor -JjBA-Page 12

 5. Other analogous to the foregoing
a. Violation of company rules and regulations
b. Theft of property owned by a co-employee as distinguished from company-owned property
which is considered as serious misconduct
c. Incompetence, inefficiency or ineptitude
d. Failure to attain work quota
e. Failure to comply with weight standards of employer
f. Attitude problem
 The determination of whether the cause for terminating employment is analogous to any of those
enumerated by the law will depend on the circumstances of each. To be considered analogous to the
just causes, a cause must be due to the voluntary and/or wilful act or omission of the employee.

SERIOUS MISCONDUCT OR WILLFUL DISOBEDIENCE

Serious misconduct is an improper or wrong conduct. It is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, wilful in character, and implies wrongful intent and
not mere error in judgment. For misconduct to be considered serious, it must be of such grave and aggravated
character and merely trivial or unimportant.

 The misconduct must relate to the performance of the employee’s duties and that it must show that the
employee has become unfit to continue working for the employer.
 The employee’s assailed conduct has been wilful or intentional, the wilfulness being characterized by a
“wrongful and perverse attitude”

Examples of Serious Misconduct

1. Where the records clearly show that the employee has not only been charged with the offense of
highgrading but also has been warned 21 times for absences without official leave, these repeated acts
of misconduct and wilful breach of trust by an employee justify his dismissal and forfeiture of his right to
security of tenure.
2. Destroying the properties of the company, assaulting the company’s House Officer while under the
influence of liquor, within the company premises during working hours, constitutes just cause for the
dismissal of the pin boy on the ground of serious misconduct.
3. Fighting within company premises and challenging a superior to a fight constitute serious misconduct, a
just cause for dismissal. Also, the fight which was staged in full view of other employees and visitors
and disturbed the work in the office amounts to serious misconduct.
4. A pilot should follow religiously reasonable rules and regulations such as the liquor ban.
5. Touching the female subordinate’s hand and shoulder, caressing her nape constitute sexual
harassment which is serious misconduct for she was placed in a “hostile, intimidating or offensive
environment”. It is the right of an employer to protect its employees from oversexed superiors.

Examples of Willful Disobedience

1. Employee’s refusal to carry on legitimate orders which would prejudice reputation and goodwill of the
company constitutes a conspiracy against its existence and is a just cause for dismissal.
2. The unauthorized use of company vehicle constitutes a just cause for termination, it being the second
infraction despite previous warning and reminder. Worse, he allowed the use of the vehicle for personal
purposes while he and his companions were under the influence of liquor resulting in substantial harm
on the part of the employer when they met a vehicular accident due to such misconduct.
3. Refusal to obey the lawful order of transfer, it being a company policy and practice

GROSS AND HABITUAL NEGLECT OF DUTIES

Gross negligence implies want of care in the performance of one’s duties. Habitual neglect imparts
repeated failure to perform one’s duties for a period of time, depending on the circumstances. The neglect to
perform one’s duties must not only be gross but also habitual.

Examples:
1. Habitual absenteeism without leave is sufficient to justify the termination of an employee. Habitual or
prolonged absences constitutes gross negligence or abandonment.
2. A company guard was found sleeping at his post and warned not to repeat the offense on pain of
dismissal. When caught sleeping again, the employer lawfully dismissed him.
3. Violation of no-smoking rule justifies dismissal. However, the nature of the business of the employer
must be taken in to account. Thus, a no-smoking rule must be strictly enforced in places where highly-
combustible materials are stored such as an oil depot, gasoline station, paint store, etc. The violation
might result in a fire that might raze the entire establishment to the ground. Thus, the offense deserves
a stiff penalty of dismissal.

Notes in labor -JjBA-Page 13

 ABANDONMEN the deliberate and unjustified refusal of an employee to
T resume his employment, without any intention of
returning. It is a form of neglect of duty. [Sugue vs.
Triumph International (Phils.), Inc., infra]

GROSS The want or absence of even slight care or diligence

NEGLIGENCE amounting to a reckless disregard of the safety of a
person or property. In evinces a thoughtless disregard
of consequences without exerting any effort to avoid
them. [Metro Transit Organization, Inc. vs. NLRC,
October 17, 1996; Philippine Aeolus United
Corporation vs. NLRC, supra]

HABITUAL The repeated failure to perform one’s duties for a period

NEGLECT of time. [Chua vs. NLRC, G.R. No. 146780, March 11,
2005 citing JEB & Associates vs. NLRC, 254 SCRA 457
(1996)]

TARDINESS/ Habitual tardiness and absenteeism are forms of neglect

ABSENTEEISM of duty.  Lack of initiative, diligence, and discipline to
come to work on time everyday exhibit the employee’s
deportment towards work, which is inimical to the
general productivity and business of the employer. [R.B.
Michael Press vs. Galit, G.R. No. 153510, February
13, 2008]

FRAUD
Fraud in its general sense, is deemed to comprise anything calculated to deceive, including all acts,
omissions, and concealment involving a breach of legal or equitably duty, trust, or confidences justly reposed,
resulting in damage to another, or by which an undue and unconscientious advantage is taken of another.
Deceit is a species of fraud.

LOSS OF CONFIDENCE
There is loss of confidence when the employer has reasonable ground or has some basis to believe
that the employee is responsible for the misconduct and the nature of his participation renders him unworthy of
the trust and confidence demanded by his position.

Breach of trust – a wilful violation of trust. A breach is wilful if it is done intentionally knowingly and purposely
without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly and
inadvertently.

Examples:
1. The act of a head supervisor in initiating and leading the boycott, thereby disrupting and impairing
company operations, is sufficient reason for the company to lose its trust and confidence on her,
considering that she was a managerial employee whose position carries the corresponding highest
degree of responsibility in improving and upholding the interests of the company and in exemplifying
the utmost standard of discipline and good conduct among her co-employees, thereby justifying the
termination of her employment.
2. The failure of the cashier to account for the shortage of company funds constitutes just cause for his
dismissal.
3. An employer has the right to dismiss a managerial employee for breach of trust and loss of confidence,
where the latter became a habitual absentee from his job, neglected his duties and responsibilities,
became lax in directing and supervising the workforce, used company property for his business outfit,
gave instructions to company staff to give priority to his job orders, pirated regular customers of the
company and manipulated price quotations during the canvassing of bids to favor his outfit.

Positions of trust and confidence

A position of trust and confidence is one where a person is entrusted with confidence on delicate
matters, or with the custody, handling, or care and protection of the employer’s property.
The basic premise for a valid dismissal on account of wilful breach of trust is that the employee
concerned holds a position of trust and confidence, and it is his breach of this trust that results in the

Notes in labor -JjBA-Page 14

employer’s loss of confidence in the employee. The act complained of must be “work-related” to show that the
employee is unfit to continue working for the employer.

The following positions are considered as positions of trust and confidence:

1. Bookkeeper or accounting clerk – as it carries with it the duty to observe proper company procedures in
the fulfilment of her job as it relates closely to the financial interest of the company; involves accounting
procedures and preparation of vouchers
2. Purchaser – a purchaser in the procurement department who converted the company’s money to his
own personal use can be legally dismissed.
3. Accountant – the position of the accountant being of a high degree of responsibility requiring trust and
confidence and relating to the financial interests of the company, her non-observance of normal
company procedures with respect to the fund under her control and custody constitutes breach of trust
and confidence authorizing the employer to dismiss her.
4. Cashier
5. Bank teller
6. Ship captain
7. Managerial employees

Abandonment – is the deliberate and unjustified refusal of an employee to resume his employment.
1. Failure to report for work or absence without valid or justifiable reason; and
2. Clear intention to sever Employee-Employer relationship being manifested by some overt acts

AUTHORIZED CAUSES OF TERMINATION

1. Installation of labor-saving device or automation
2. Redundancy
3. Retrenchment (downsizing)
4. Closure or cessation of operation of the establishment or undertaking

Installation of labor-saving device

The law authorizes an employer, to terminate the employment of any employee due to the installation
of labor saving devices. The installation of these devices is a management prerogative, and the courts will not
interfere with its exercise in the absence of abuse of discretion, arbitrariness, or maliciousness on the part of
the management.

The installation of labor-saving devices contemplates the installation of machinery to effect economy
and efficiency in the method of production. It is a management prerogative to terminate employment
relationship by replacing “muscle” power with “machine” power in order to effect economy and efficiency in the
method of production. The switch from “men” employment to “mechanical” employment has economically
dislocated many workers. Thus, it is proper for the management to pay the displaced workers in order to tide
them over in the meantime while they are looking for other jobs.

Requirement under the law:

1. Written notice to the employee and to the DOLE at least 1 month before the intended date of
termination;
2. Payment of separation pay;
3. Good faith in the discharge of employees; and
4. Reasonable criteria to be used in implementing automation

Redundancy
Redundancy exist where the services of an employee are in excess of what is reasonably demanded
by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of
a position/s may be the outcome of a number of factors such over hiring of employees, decreased volume of
business, or dropping of a particular product line or service activity previously manufactures or undertaken by
the enterprise.

 An employer has no legal obligation to keep more employees than are necessary for the operation of its
business.

Requirement under the law:

1. Written notice served on both the employees and the DOLE at least 1 month prior to the intended date
of retrenchment;
2. Payment of separation pay

Notes in labor -JjBA-Page 15

 3. Good faith in abolishing the redundant position; and
4. Fair and reasonable criteria in ascertaining what positions are to be declared redundant and
accordingly abolished

Retrenchment (downsizing)
Retrenchment is an exercise of management’s prerogative to terminate the employment of its
employees –n masse, either to minimize or prevent losses, or when the company is about to close or cease
operations for causes not due to business losses.
It also referred to as the reduction of personnel usually due to poor financial returns so as to cut down
on costs of operations in terms of salaries and wages to prevent bankruptcy of the company. The purpose of
retrenchment is to save a financially, ailing establishment from eventually collapsing.

 Lay-off, used interchangeably with retrenchment, is the termination of employment resorted to by the
employer, through no fault of nor with prejudice to the employees, during periods of business recession,
industrial depression, seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of
materials, conversion of the plant for a new production program, or the introduction of new methods or
more efficient machinery, or of automation.

Requirements of valid retrenchment

Retrenchment is an exercise of management prerogative which the court upholds if compliant with
certain substantive and procedural requirements, namely:

1. The written notice is served on the employees and the DOLE at least 1 month prior to the intended date
of retrenchment; and
2. That the retrenched employees receive separation pay equivalent to 1 month pay or at least ½ month
pay for every year or service.
3. That a fair and reasonable criteria be used in carrying out the retrenchment program;
4. That proof of the alleged financial losses suffered by the company be produced
5. Good faith in effecting the retrechment

 The employer must prove compliance with all the foregoing requirements. Failure to prove the first
requirement will render the retrenchment illegal and make the employer liable for the reinstatement of
its employees and payment of full backwages.

Criteria in selecting employees for dismissal

1. Fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among
the employees, such as less preferred status, efficiency, seniority, physical fitness, age and financial
hardship for certain workers; or
2. Last in, first out (LIFO) rule – what is contemplated in the LIFO rule is that when there are 2 or more
employees occupying the same position in the company affected by retrenchment program, the last
one employed will necessarily be the first to go.
3. Less-preferred status (temporary employee)
4. Efficiency rating
5. seniority

CLOSURE
Closure or cessation of business is the complete or partial cessation of the operations and/or shut-
down of the establishment of the employer. It is carried out to either stave off the financial ruin or promote the
business interest of the employer.
An employer may however close or cease his business operations or undertaking even if he is not
suffering from serious business losses or financial reverses. And it would be stretching the intent and spirit of
the law if we were to unjustly interfere in management’s prerogative to close or cease its business operations
just because said business operation or undertaking is not suffering from any loss.

Requirements:
1. service of written notice to the employees and the DOLE at 1 month before the intended date thereof;
2. the cessation of business operations is bona fide in character;
3. payment to the employees of separation pay

TERMINATION DUE TO DISEASE

Notes in labor -JjBA-Page 16

 When an employee suffers from a disease and his continued employment is prohibited by law or
prejudicial to his health or to the health of his co-employees, the employer shall terminate his services.

Requirements for the termination of employment on the ground of disease or illness

1. The continued employment of the employee is prohibited by law or prejudicial to his health as well as
the health of his co-employees
2. There is a certification by a competent public health authority that the disease is of such a nature or at
such stage that is cannot be cured within a period of 6 months, even with proper medical treatment;
3. Notice to the employee and the DOLE as least 1 month prior to the intended date of termination
4. Separation pay of 1 month or ½ month of every year of service

 If cases where the disease of the worker can be cured within 6 months, the employer shall not
terminate the employee but shall ask the latter to take a leave.

Due process – substantive due process mandates that an employee can only be dismissed based on just or
authorized causes. On the other hand, procedural due process requires further that he can only be dismissed
after he has been given an opportunity to be heard. The import of due process necessitates the compliance
with these two aspects.

Procedure to be followed in the dismissal of the employee based on just cause

1. A written notice served on the employee specifying the ground or grounds for termination, and giving to
the said employee reasonable opportunity within which to explain his side;
NOTE: Reasonable Opportunity means every kind of assistance that management must accord to the
employees to enable them to prepare adequately for their defense. This should be construed as a
period of at least 5 calendar days from receipt of the notice to give the employees an opportunity to
study the accusation against them, consult a union official or lawyer, gather date and evidence, and
decide on the defenses they will raise against the complaint.

2. A hearing or conference during which the employee concerned, with the assistance of counsel if the
employee so desires, is given opportunity to respond to the charge, present his evidence or rebut
evidence presented against him; and

3. A written notice of termination served on the employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination. In case of termination, the
foregoing notices shall be served on the employee’s last known address

Reliefs in Illegal dismissal

1. Reinstatement or separation pay in lieu thereof; and
2. Payment of backwages

Reinstatement – is a restoration to a state from which one has been removed or separated
 Reinstatement and re-employment are not synonymous. Although both terms refer to restoration of
employment, the former connotes an obligation; while the latter, is discretionary on the part of the
employer to place the employee affected in the position he previously held.

Strained Relation Rule – SRR is when the employer can no longer trust the employee and vice-versa, or
these were imputations of bad faith to each other, reinstatement could not effectively serve as a remedy. This
doctrine applied only to positions which require the trust and confidence.
 Under the circumstances where the employment relationship has become so strained to preclude a
harmonious working relationship, and that all hopes at reconciliation are nil after reinstatement, it would
be more beneficial to accord the employee backwages and separation pay.

Backwages – the relief given to an employee to compensate him for lost earnings during the period of his
dismissal.

Preventive Suspension – a disciplinary measure for a protection of the company’s pending investigation of
any alleged malfeasance committed by the employee. It is not a penalty. It is adopted if the continued
employment poses a serious and imminent threat to life and property of the employer or of his co-employees.
1. Preventive suspension should not last for more than 30 days. The employee should be made to resume
his work after 30 days.
2. However, the same can be extended provided the employer pays the suspended employee his wages
and other benefits.

Notes in labor -JjBA-Page 17

Voluntary Resignation – the act of an employee, who finds himself in a situation in which he believes that
personal reasons cannot be sacrificed in favour of the exigency of the service; thus, he has no other choice but
to disassociate himself from his employment.

Constructive Dismissal – defined as quitting because continued employment is rendered impossible,

unreasonable or unlikely, as an offer involving demotion in rank and a diminution in pay. In case of a floating
status, there is also constructive dismissal if bona fide suspension of the operation of the business or
undertaking exceeds 6 months.
 After the 30-day period of preventive suspension, the employee must be reinstated to this former
position because suspension beyond the maximum period amounts to constructive dismissal.

CONSTRUCTIV Termination by reason of a bonafide suspension of

E DISMISSAL operation of a business or undertaking that exceeds
six months. Otherwise stated, if the employee was
forced to remain without work or assignment for a
period exceeding six months, then he is in effect
constructively dismissed.

A bona fide suspension of the employer’s operation of a business or undertaking for a period
not exceeding six (6) months does not amount to termination of employment, but only a
temporary displacement of employees. The paramount consideration should be the dire
exigency of the business of the employer that compels it to put some of its employees
temporarily out of work. [Pido vs. NLRC, G.R. No. 169812, February 23, 2007]

BUT,
If the operation of the business is resumed within six months, it shall be the duty of the
employer to reinstate his employees to their former positions without loss of seniority rights.

PROVIDED,
That the employee should indicate his desire to resume his work not later than one (1) month
from resumption of operation/undertaking; or relief from military or civic duty.

 Constructive dismissal occurs when there is cessation of work because continued employment is
rendered impossible, unreasonable, or unlikely as when there is a demotion in rank or diminution in pay or
when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee
leaving the latter with no other option but to quit.

When Off-detailing becomes Constructive Dismissal

 Temporary “off-detail” or “floating status” is the period of time when security guards are in
between assignments or when they are made to wait after being relieved from a previous post until
they are transferred to a new one. It takes place when the security agency's clients decide not
to renew their contracts with the agency, resulting in a situation where the available posts
under its existing contracts are less than the number of guards in its roster. It also happens
in instances where contracts for security services stipulate that the client may request the
agency for the replacement of the guards assigned to it even for want of cause.

HOWEVER,
 An employee who was placed on temporary “off-detail” on the ground of poor performance
and inefficiency, allegations of which were never made known to him, and instead was
given to various assignments amounts to constructive dismissal. Assignment to different
posts despite repeated errors and poor performance is considered condonation, which the
employer cannot invoke to justify placing the employee on temporary “off-detail”.

Preventive Suspension

 Preventive suspension is imposed on an employee under investigation if he poses a

serious threat to the life and property of the employer and of his co-workers. [Gatbonton vs.
NLRC, G.R. No. 146779, January 23, 2006, 479 SCRA 416] The rule on preventive
suspension is found in Secs. 8 and 9, Rule XXIII, DO 19, June 21, 1997.

 As a general rule, the employee is not entitled to wages during the period of a valid

Notes in labor -JjBA-Page 18

 preventive suspension. However, if preventive suspension is found to be without basis, the
employer is required to pay the illegally suspended employee his backwages for the period of
his suspension.

REMEMBER that

 Preventive suspension pending investigation is not a penalty.

 It is a measure intended to enable the disciplining authority to investigate charges

against respondent by preventing the latter from intimidating or in any way influencing
witnesses against him.
 If the investigation is not finished and a decision is not rendered within that period, the
suspension will be lifted and the respondent will automatically be reinstated.

 Preventive suspension lasts only for a period of 30 days, and beyond this period, such
suspension may amount to constructive dismissal.

HOWEVER,
 There are cases where a violation of the 30-day suspension period may entail payment
of indemnity of P1,000.00 or P3,000.00

 While another view is that the period exceeding 30 days shall be compensable, thus,
the extension will not give rise to constructive dismissal. The preventive suspension
beyond 30 days shall be upheld provided the employee's wages and benefits are paid
in the interim.

 An employee who was preventively suspended pending an investigation is treated like an

employee on approved vacation leave without pay. The period of preventive suspension shall
effectively interrupt the continuity of his government service.

 Imposition of preventive suspension does not amount to termination of employment. Preventive

suspension is justified where the employee's continued employment poses a serious and imminent threat to
life or property or of the employee's co-workers, and does not amount to illegal dismissal.

Management Prerogative
Under the doctrine of management prerogative, every employer has the inherent right to regulate,
according to his own discretion and judgment all aspects of employment including hiring, work assignments,
working methods, the time, place and manner of work, work supervision transfer of employees, lay-off of
workers, and discipline, dismissal, and recall of employees.
1. Transfer of employees
2. To impose discipline
3. Productivity standard
4. Grant of bonus
5. Change of working hours

RIGHT TO SELF-ORGANIZATION

It is the right of the employees to form, join or assist in the formation of a labor organization of their own
choosing for purposes of collective bargaining through representatives of their own choosing and to engage in
lawful concerted activities for purposes of collective bargaining or for their mutual aid and protection.
 It also includes the freedom not to join a labor union.

Right to Peaceful Concerted Activities

It is a joint undertaking of workers designed to secure better terms and conditions of employment
through the machinery of collective bargaining and negotiations for their mutual benefit and protection. Ex.
Strike, lockout

Notes in labor -JjBA-Page 19

Notes in labor -JjBA-Page 20