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Non-diminution of benefits

Non-diminution of benefits
Employee Wages and Benefits 2010-06-01
Concept
The principle of non-diminution of benefits states that: any benefit and supplement being
enjoyed by employees cannot be reduced, diminished, discontinued or eliminated by the
employer.[1]
This principle is founded on the Constitutional mandate to protect the rights of workers and
promote their welfare, and to afford labor full protection. Said mandate in turn is the basis of
Article 4 of the Labor Code which states that all doubts in the implementation and interpretation
of this Code, including its implementing rules and regulations shall be rendered in favor of
labor.[2]
Benefit and supplement definition
Employee benefits are compensations given to employees in addition to regular salaries or
wages.[3] Some benefits are legally required, e.g., social security benefits, medicare, retirement
benefits, maternity benefits, service incentive leave, etc. Other benefits are offered by the
employer as an incentive to attract and retain employees as well as increase employee morale
and improve job performance.[4]
Supplements include those benefits or privileges granted to an employee for the convenience of
the employer, e.g., board and lodging within the company premises.
Common application
In employment setting, the principle of non-diminution of benefits finds application when a
change initiated by the employer to existing company policies, specially matters concerning
employee benefits, results in reduction, diminution or withdrawal of some or all of the the
benefits already enjoyed by the employees. For example, if the employees of a certain company
is traditionally granted 14th month pay, and the employer subsequently withdrew such benefit,
or reduced its amount, the reduction or withdrawal is objectionable on the ground that it would
result to diminution of benefits.
Requirements
The application of the principle presupposes that a company practice, policy and tradition
favorable to the employees has been clearly established; and that the payments made by the
company pursuant to it have ripened into benefits enjoyed by them.[5]
To ripen into benefits, the following requisites must concur:
1. It should have been practiced over a long period of time; and

Non-diminution of benefits
2. It must be shown to have been consistent and deliberate.[6]
With regard to the length of time the company practice should have been exercised to constitute
voluntary employer practice which cannot be unilaterally withdrawn by the employer, the Court
has not laid down any rule requiring a specific minimum number of years.[7]
1. In the case of Davao Fruits Corporation vs Associated Labor Unions (G.R. No. 85073,
August 24, 1993), the company practice lasted for six years.
2. In Davao Integrated Port Stevedoring Services vs. Abarquez (G.R. No. 102132, March
19, 1993), the employer, for three years and nine months, approved the commutation to
cash of the unenjoyed portion of the sick leave with pay benefits of its Intermittent
workers.
3. In Tiangco vs Leogardo, Jr. (G.R. No. L-57636, May 16, 1983), the employer carried on
the practice of giving a fixed monthly emergency allowance from November 1976 to
February 1980, or three years and four months.
4. In the case of Sevilla Trading Company vs Semana, ibid., the employer kept the practice
of including non-basic benefits such as paid leaves for unused sick leave and vacation in
the computation of their 13th-month pay for at least two (2) years.
In all these cases, the grant of benefits has been held to have ripened into company practice or
policy which cannot be peremptorily withdrawn.
Footnote
1. Arco Metal Products vs. Salvador Uy, G.R. No. 170734, May 14, 2008,
http://sc.judiciary.gov.ph/jurisprudence/2008/may2008/170734.htm.
2. Ibid.
3. benefit: Definition, Synonyms from Answers.com,
http://www.answers.com/topic/benefit.
4. See Ibid.
5. See MERALCO vs Quisumbing, G.R. No. 127598, January 27, 1999,
http://sc.judiciary.gov.ph/jurisprudence/1999/jan99/127598.htm.
6. See Sevilla Trading Co vs Semana, G.R. No. 152456, April 28, 2004,
http://sc.judiciary.gov.ph/jurisprudence/2004/apr2004/152456.htm.
7. See Ibid.

Non-diminution of benefits
Bibliography
1. Arco Metal Products vs. Salvador Uy, G.R. No. 170734, May 14, 2008,
http://sc.judiciary.gov.ph/jurisprudence/2008/may2008/170734.htm.
2. benefit: Definition, Synonyms from Answers.com,
http://www.answers.com/topic/benefit.
3. MERALCO vs Quisumbing, G.R. No. 127598, January 27, 1999,
http://sc.judiciary.gov.ph/jurisprudence/1999/jan99/127598.htm.
4. Sevilla Trading Co vs Semana, G.R. No. 152456, April 28, 2004,
http://sc.judiciary.gov.ph/jurisprudence/2004/apr2004/152456.htm.
Last Edited: Friday, August 19, 2011