LABOREL

Chapter 1: General Principles of the Labor Code

Labor Code of the Philippines (Art. 1)
- Take effect 6 months after its effectivity (Art. 2)
- Promulgated by Department of Labor and Employment (DOLE) (Art. 5)
- Rules and regulations shall be effective 15 days after its circulation (Art. 5)
- Presidential Decree No. 442
Maximum and Protection to Labor
- Art. 3 – 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 human conditions.
- Employer also has rights and are entitled to respect and enforcement in the interest of fair play
Liberal Interpretation
- All doubts in the implementation, shall be resolved in favor of labor (Art. 4)
- Heavier influence of the employer should be counter-balanced by the law which must accord
sympathy and compassion to the underprivileged employee
- Doctrine of Liberal Construction cannot be applied where the law invoked is clear, unequivocal,
and leaves no room for construction
Non-Diminution of Benefits
- Prohibits the elimination of supplements or other benefits already enjoyed by the employees
under existing laws (Art. 100)
- Supplements or Benefits
o Pay for vacation and special and holidays not worked, paid sick leave, overtime rate in
excess of what is required by law, profit-sharing, family allowances, Christmas and cost-
of-living bonuses, bonus other than those paid as a reward for extra output or time
spent on the job, funeral or bereavement aid, and other benefits stipulated in a CBA
- Collective Bargaining Agreement
o Negotiated contract between a legitimate labor organization and the employer
concerning wages, hours of work, and all other terms and conditions of employment in a
bargaining unit
- Benefits must be characterized by regularity and deliberateness of the grant of benefits over a
significant period of time
- Employer must prove by substantial evidence that the giving of the benefit is done for a long
period of time and that it has been made consistently and deliberately
- Company Practice Requisites
o Employer’s knowledge that he is not required to extend such benefits to employees
o Grant of benefits is consistent and deliberate
o Employer continues to grant his employees the benefit for several years
- Requisites of Diminution of Benefits
o Benefit is founded on a policy or has ripened into a practice for a long period of time
o Practice is consistent and deliberate
o Practice is not due to error in the construction or application of a doubtful or difficult
question of law
o Diminution or discontinuance is done unilaterally by the employer
Management Prerogatives
- Free will of the employer to conduct his own business affairs to achieve his purpose
- Employer is free to regulate, according to his own discretion and judgment all aspects of
employment
o Hiring, work assignments, working methods, time, place, and manner of work, tools to
be used, processes to be followed, supervision of employees, working regulations,
 transfer of employees, work supervision, lay off employees, discipline, dismissal and
recall of work
- Based on the established rule that the law does not authorize the substitution of judgment of
the employer in the conduct of the business
- May be availed of without fear of any liability so long as the following conditions are met
o Exercised in good faith for the advancement of the employer’s interest
o Not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of
malice
- Hiring and Firing of Employees
o Not without limitation – embodied in the constitutional requirement for the protection of
labor and the promotion of social justice
- Discipline of Employees
o Can be justified only if the disciplinary action is dictated by legitimate business reasons
and is not oppressive
- Transfer of Personnel
o Based on employer’s assessment of his employees’ qualifications, aptitudes and
competence, to move the employees around in the various areas of his business
operations
o Must be exercised without grave abuse of discretion