Philippines Labor Code PDF

LABOR CODE OF THE PHILIPPINES Presented by: Dr. Edmond P. Freo, CHRA Certified Human Resource Associate STATE POLICY Section 18. The State affirms labor a primary social economic force. It shall protect the rights of workers and promote their welfare. Article XIII, Section 3 of the 1987 Constitut...

LABOR CODE OF THE PHILIPPINES Presented by: Dr. Edmond P. Freo, CHRA Certified Human Resource Associate STATE POLICY Section 18. The State affirms labor a primary social economic force. It shall protect the rights of workers and promote their welfare. Article XIII, Section 3 of the 1987 Constitution of the Philippines Article XIII, Section 3 of the 1987 Constitution of the Philippines outlines the rights of workers and the role of the state in protecting them: Rights of workers Workers have the right to: Self-organization Collective bargaining and negotiations Peaceful concerted activities Strike in accordance with the law Security of tenure Humane conditions of work A living wage Participate in policy and decision-making processes Management Prerogative By management prerogative is meant the right of an employer to regulate all aspects of employment, such as the Freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of thier work, lay-off and discipline, and dismissal and recall of workers. Management Prerogative is Not Absolute Management prerogative is not unbridled and limitless. Nor is it beyond this court’s scrutiny. Management prerogative cannot justify violation of law or hte pursuit of any arbitrary or malicious motive. Article XIII, Section 3 of the 1987 Constitution of the Philippines Role of the state The state is responsible for: Protecting labor, both local and overseas Promoting full employment opportunities Ensuring that workers' rights are protected at work Employment Contract The starting point of the application of Philippine Labor Code. It refers to the consent of both the employer and the employee whereby the latter agrees to provide services to the former in consideration of payment of salary or wages. Employment Contract An employment contract is a legally binding agreement between an employer and an employee that outlines the terms and conditions of employment. This document serves as the foundation of the employment relationship, providing clarity and security for both parties. Rights of Employee 1) Just and humane condition of work 2) Living wage/minimum wage 3) Hours of Work 4) Days of rest 5) Freedom of Association/Organization 6) Social Security Protection 7) Freedom of Religion Rights of Employee 8) Freedom of Expression 9) Access to justice and remedies 10) Security of tenure Security of tenure Security of tenure in the Labor Code of the Philippines is the right of employees to not be terminated without a just and authorized cause. The employer has the burden of proving that the termination was with cause and due process. Security of tenure key points about security of tenure in the Labor Code: Just cause An employer can only terminate an employee for a just cause, such as fraud or deliberate violation of trust. Reinstatement An employee who is unjustly dismissed is entitled to reinstatement without loss of seniority rights, backwages, and other benefits. Security of tenure key points about security of tenure in the Labor Code: Written notice The employer must provide the employee with a written notice that states the reasons for termination. The employee should also be given ample opportunity to be heard and defend themselves. Regular employment All employees, except those on probation, are considered regular employees, including seasonal and project employees. Termination of Employment The Labor Code of the Philippines allows for the termination of an employee for just cause or authorized cause: Just cause Reasons related to the employee's actions, such as: Serious misconduct Willful disobedience Gross negligence Fraud or breach of trust Commission of a crime against the employer or their representatives Termination of Employment Just cause refers to the wrongdoing committed by the employee on the basis of which the aggrieved party may terminate the employer-employee relationship. Termination of Employment Authorized cause Refers to a cause brought about by changing economic or business condition of the employer. Termination of Employment Authorized cause Reasons related to the company, such as: Installation of a labor-saving device Redundancy Retrenchment to prevent losses Cessation of operations Illness of the employee Termination of Employment Retirement An employee is considered to have retired upon reaching the retirement age stipulated in their employment contract or collective bargaining agreement. The mandatory retirement age is 65 years of age, unless the employee works in underground mining, in which case it is 60 years of age. Termination of Employment When terminating an employee for just cause, the employer must follow the two-notice rule and may need to set up a conference or hearing. The first notice is usually known as a show cause letter or notice to explain. Termination of Employment When terminating an employee for just cause, the employer must follow the two-notice rule and may need to set up a conference or hearing. The first notice is usually known as a show cause letter or notice to explain. Employer-Employee Relationship The Labor Code of the Philippines regulates the relationship between employers and employees, and includes provisions for employee security, termination, and other rights. Here are some key points about employer-employee relationships in the Philippines: Employer-Employee Relationship Four-fold test To determine if an employer-employee relationship exists, the following four elements must be present: Selection and engagement of the employee Payment of wages Power of dismissal Power to control the employee's conduct Employer-employee Relationship Tests a. Selection and engagement of the employer It is the employer who selects and engages/hires an employee. Accordingly, the employer is the one who initiates the hiring and recruitment process, such as sourcing candidates by making job posts or advertise vacancies, conduct assessments and interviews for applicants, and eventually to signing them up as employees via an employment contract. While it may strange to point out the obvious, the reason that this test exists is because this tends to be violated, particularly if there is a third-party involved, such as in the case of contracting and sub-contracting. Employer-employee Relationship Tests b. Payment of wages It is the employer who pays an employee’s wages or salary. Accordingly, the employer prepares a payment system such as a payroll or pay slip as proof of payment to the employees. However, it should be pointed out that “the fact that [the employee’s] name does not appear in the payrolls and pay envelope records submitted by [the employer] negate the existence of employer-employee relationship. For a payroll to be utilized to disprove the employment of a person, it must contain a true and complete list of the employee.” (South East International Rattan, Inc. v. Coming, G.R. No. 186621, 12 March 2014). Employer-employee Relationship Tests c. Power of dismissal It is only the employer who can dismiss an employee. Dismissal is one of the disciplinary actions that an employer may impose on an erring employee for violations which constitute or amounts to a just cause. Similarly, if there are authorized causes, an employer is empowered to separate employees from employment provided that separation pay is given to the affected employees. If there is no employer-employee relationship between the parties such as in a freelancer or independent contractor agreement, the Company would not be able to exercise the power of dismissal. Instead, the Company’s options are limited to the grounds for rescission or termination of their contractual relationship based on breach of contract. Employer-employee Relationship Tests d. Control “Control” – refers to the active supervision and control over an individual who is doing the job, work, or service, such as giving orders, directives, or instructions, as well as determining or dictating the means and manner of doing the work, and even what tools or instruments to use. In an employment relationship, the employer has active supervision and control of their employees who are doing the job, work, or service. This is a natural and logical consequence considering that the employer is responsible and liable for the actions of their employees in the performance of their work. Employer-employee Relationship Tests Not every form of control is indicative of employer-employee relationship. A person who performs work for another and is subjected to its rules, regulations, and code of ethics does not necessarily become an employee. As long as the level of control does not interfere with the means and methods of accomplishing the assigned tasks, the rules imposed by the hiring party on the hired party do not amount to the labor law concept of control that is indicative of employer-employee relationship. (Royal Homes Marketing Corporation v. Alcantara, G.R. No. 195190, 28 July 2014) Economic Dependency Test The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business. The benchmark of economic reality in analyzing possible employment relationships for purposes of the Labor Code ought to be the economic dependence of the worker on his employer. Kinds of Employees Essentially, the Labor Code classified four (4) kinds of employees, namely: (1) regular employee (2) project employee (3) season employees (4) casual employees Fixed term employees Jurisprudence has added a fifth kind - fixed- term employees or those hired only for a definite period of time. End of contract. Regular employees Regular employee is one who has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. At Least One Year That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered as regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. Casual employees becoming regular employees Only casual employees performing work that is neither necessary nor desirable to the usual business and trade of the employer are required to render at least one (1) year of service to attain regular status. Employees who perform functions which are necessary and desirable to the usual business and trade of employer attain regular status from the time of engagement. Illegal Dismissal An action for illegal dismissal or when one is arbitrarily and unjustly deprived of his job or means of livelihood is essentially a complaint for “injury to rights”. Violation of security of tenure. Award of Reinstatement and Backwages An employee who has been illegally dismissed after the shall be entitled to reinstatement, full backwages and other benefits for the entire period that he was out of work and until actual reinstatement. Separation Pay in Lieu of Reinstatement In addition to full backwages, the Court has also repeatedly ruled that in cases where reinstatement is no longer feasible due to strained relations, then separation pay may be awarded instead of reinstatement. The separation pay, as an alternative to reinstatement, should be equivalent to one (1) month salary for every year of service. Separation Pay in Lieu of Reinstatement 1) Old Age (65 y/o) 2) The position no longer exists 3) The establishment is taken over by another company 4) Insolvency of the employer 5) Closure of business 6) Strained relations Probationary Employees are Entitled to Security of Tenure Employees who are on their period of probation enjoy security of tenure in the sense that during their probationary employment they cannot be dismissed except for cause. However, upon expiration of their contract of employment, probationary academic personnel cannot claim security of tenure and compel their employers to renew their employment contracts. Probationary Period for Private School Teachers The legal requisites, for acquisition by a teacher of permanent employment, or security of tenure, are as follows: 1) the teacher is a full time teacher; 2) the teacher must have rendered three (3) consecutive years of service. 3) such service must have been satisfactory. Probationary Period for Private School Teachers The legal requisites, for acquisition by a teacher of permanent employment, or security of tenure, are as follows: 1) the teacher is a full time teacher; 2) the teacher must have rendered three (3) consecutive years of service. 3) such service must have been satisfactory. Due Process for Dismissing Employees The employer must furnish the employee with two written notices before the termination of employment can be effected. Failure to GIve 2 Notices If the employer fails to observe the twin requisites of notice and hearing not only makes the dismissal of an employee illegal regardless of his alleged violation, but is also violative of the employee’s right to due process. First Notice The first apprises the employee of the particular acts or omissions for which his dismissal is sought. Directive to Explain The notice must also direct the employee to submit his or her written explanation within a reasonable period from the receipt of the notice. Period to Explain This should be construed as a period of at least five 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 data and evidence, and decide on the defense they will raise against tyhe complaint. Second Notice The second informs the employee of the employer’s decision to dismiss him. Hearing Requirement The requirement of a hearing is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted. Burden of Proof The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. Burden of Proof The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.