Labor LaWS and Legislation

The course covers the introduction to the basic concepts and principles
of the Philippine Labor Code as an indispensable tool in human resource
management. Knowing the various labor and social legislation is as
indispensable as knowing the basic laws of the land. The student is given
the opportunity to learn how the various labor laws affect the employer-
employee relationship and the manner business operates, the interplay
of various sectors, the limitations and scope of freedom in the workplace
will influence the culture of the organization.

Management
Is the process of designing and maintaining an internal environment in
which people are working together as a group, effectively and efficiently
towards the attainment of an organizational or group objective.

LABOR LAWS AND LEGISLATION

LECTURE NOTES FOR BME 2102
– BY PROF. ILDEFONSO G. MARIQUIT

A compilation of lectures and review materials in labor relations, labor

standards and welfare legislation prepared for students of BME 2102 –
Labor Relations and Legislation.
LABOR LAWS AND LABOR

LEGISLATION
LAW
- THE LAW GOVERNING
LECTURE NOTES FOR BME 2102
THE RIGHTS AND DUTIES
– BY PROF. ILDEFONSO G. MARIQUIT OF THE EMPLOYER AND
EMPLOYEES WITH
UE. College of Business Administration
RESPECT TO THE
TERMS AND
CONDITIONS OF
Labor in its limited concept, the term “labor” refers to physical EMPLOYMENT AND
or mental exertion necessary to produce goods or services. In its
broader concept, it may include the labor force who are WITH RESPECT TO
temporarily or involuntarily unemployed. LABOR DISPUTES
The term “manpower” as defined in the Labor Code is within the ARISING FROM
context of labor, that is, the portion of the nation’s population
COLLECTIVE
which has actual or potential capability to contribute to the
production of goods and services. BARGAINING
RESPECTING SUCH
Labor Laws on the other hand are sourced from the following:
TERMS AND
1 Statutes passed by the state to promote the welfare of the CONDITIONS
workers and employees and regulate their relations with their
employer.
2 Juridical or decisions of the court applying and interpreting the
aforesaid statutes.
3 Rules and Regulations issued by administrative agencies,
within their legal competence, to implement labor laws.

Labor Legislation – Consists of statutes, regulations and

jurisprudence governing the relations between capital and
labor by:
a. providing for certain terms and conditions of
employment or
b. providing a legal framework within which these terms
and conditions and the employment relationships
may be negotiated, adjusted and administered.
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 Social Legislation – Includes all laws that provide particular kinds of protection or
benefits to society or segments thereof in furtherance of social justice. In that sense, labor
laws are necessarily social legislation.
 promote public welfare

Presidential Decree No. 442 – otherwise known as the “Labor Code of the Philippines.
Art. 2. Date of effectivity. This Code shall take effect six (6) months after its promulgation.

May 1, 1974 – PD No. 442 was signed into law.

November 01, 1974 – effectivity date of the Labor Code.

Law Classification

1. Labor Standards Law – That which sets out the minimum terms, conditions and benefits
of employment that ER’s must provide or comply with and to which EE’s are entitled as a
matter of legal right.
Ex. 8-hour labor law

2. Labor Relations Law – That which defines

 the status, rights and duties
 and the institutional mechanisms
that govern the individual and collective interaction of ER’s and EE’s or their
representatives.

Ex. Book V of Labor Code

3. Welfare Legislation – designed to take care of contingencies which may affect workers,
e.g. where there is loss of income for research beyond the worker’s control. – BENEFITS
* Social Security Law.

Social Justice – is “neither communism, nor despotism, nor atomism nor anarchy, but the
humanization of laws and the equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may at least be approximated.

Social justice means the promotion of the welfare of all the people, the adoption by the
Government of measures calculated to insure economic stability of all the component elements
of society, through the maintenance of a proper economic and social equilibrium in the
interrelations of the members of the community, constitutionally, through the adoption of
measures legally justifiable, or extra-constitutionally, the exercise of powers underlying the
existence of all governments on the time-honored principle of salus populi est suprema lex.”
(Calalang vs. Williams, 70 Phil. 726.)

While social justice is the raison d'etre of labor laws, their basis or foundation is the police
power of the State.
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Police Power – is the power of the government to enact laws, within constitutional limits, to
promote the order, safety, health, morals and general welfare of society.

It is settled that state legislatures may enact laws for the protection of the safety and health of
employees as an exercise of police power.

Art. 2. Date of effectivity. This Code shall take effect six (6) months after its
promulgation.

May 1, 1974 – PD No. 442 was signed into law.

November 01, 1974 – effectivity date of the Labor Code.

Art. 3. Declaration of 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.

1987 Constitutional Provision

regarding Labor
Article XIII Section 3. (Social Justice and Human Rights) states that:

“ 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
negotiation and peaceful concerted activities, including the right to strike in accordance with
law. They shall be entitled to security of tenure, humane condition of work, and a living wage.
They shall also participate in policy and decision-making process 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

The Basic Policy of the Labor Code

1. Protection to labor;
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 2. Promote full employment;

3. Ensure equal work opportunities regardless of sex, race or creed, and

4. Regulate the relations between workers and employers

Rights of Workers Under Art. 3 of the Labor Code

1. Self-organization;

2. Collective bargaining;

3. Security of tenure; and

4. Just and humane conditions of work

Constitutional Basis of the Labor Code

 Art. II, Sec. 18 - the 1987 Constitution declares as a state policy: “The State affirms
labor as a primary social economic force. It shall protect the rights of workers and
promote their welfare.”

 Art. III, Sec. 18, par. 2 – no involuntary servitude

 Art. IX-B, Sec. 2, Par. 1 – CSC embraces all branches... agencies of government,
including GOCCs with original charters.

 Art. IX-B, Sec. 2, par. 3 – No officer or employee shall be removed or suspended

except for cause provided by law

 Art. IX-B, Sec. 5 – standardization of compensation of government officials and

employees.

 Art. XII, Sec. 6 – the right to own, establish economic enterprises subject to the duty of
the State to promote distributive justice

 Art. XII, Sec. 12 – preferential use of Filipino labor

 Art. XII, Sec. 14, par. 2 – practice of all professions shall be limited to Filipinos

 Art. XII, Sec. 16 – Congress shall not provide for the formation, organization, or
regulation of private corporations

 Art. XIII, Sec. 1 – protect and enhance right to human dignity, reduce social, economic
and political irregularities, and remove cultural inequalities by equitably diffusing wealth
and political power for the common good
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  Art. XIII, Sec. 2 – promotion of social justice shall include the commitment to create
economic opportunities

 Art. XIII, Sec. 3, par. 1 – protection to labor, local and overseas, organized and
organized, and promote full employment and equality of employment opportunities for
all

 Art. XIII, Sec. 3, par. 2 – guarantee the rights of all workers:

(1) self-organization;

(2) collective bargaining and negotiations;

(3) peaceful concerted activities, including the right to strike in accordance with law;

(4) security of tenure;

(5) humane conditions of work;

(6) living wage;

(7) participate in policy and decision-making processes affecting their rights and
benefits

 Art. XIII, Sec. 3, par. 3 – shared responsibility: voluntary modes in settling disputes

 Art. XIII, Sec. 3, par. 4 – 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
enterprises to reasonable returns on investments and to expansion and growth.
(Constitutional balance between the rights of workers and employers)

Job is a property, and no person shall be deprived of life, liberty, and property without due
process.

Art. 4. Construction in favor of labor. All doubts in the implementation and interpretation
of the provisions of this Code, including its implementing rules and regulations, shall
be resolved in favor of labor.

The Supreme Court adopts the liberal approach which favors the exercise of labor rights.

The labor law is liberally construed in favor of the workers and strictly construed against the
employers.

Those who have less in life should have more in law.

Management Rights
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It should not be supposed that every labor dispute will be automatically decided in favor of
labor. Management has also its own rights which are entitled to respect and enforcement in
the interest of simple fair play.

The law, in protecting the rights of the laborer, authorizes neither oppression nor self-
destruction of the employer.

 Right to Return of Investments (ROI) – the employer has the right to recover his
investments and to make profit. The Constitution provides that the State shall regulate
the relations between workers and employers, recognizing the right of labor to its just
share... and the right of enterprises to reasonable returns on investments, and to
expansion and growth.

 The Right to Prescribe Rules – employers have the right to make reasonable rules
and regulations for the government of their employees, and when employees, with
knowledge of an established rule, enter the service, the rule becomes part of the
contract of employment.

 The Right to Select Employees – an employer has a right to select his employees and
to decide when to engage them. The State has no right to interfere in a private
employment; it cannot interfere with the liberty of contract with respect to labor except in
the exercise of the police power. If the employer can compel the employee to work
against the latter's will, this is servitude. If the employee can compel the employer to
give him work against the employer's will, this is oppression.

 Right to Transfer or Discharge Employees – the employer has the perfect right to
transfer, reduce or lay off personnel in order to minimize expenses and to insure the
stability of the business, and even to close the business, provided the transfer or
dismissal is not abused but is done in good faith and is due to causes beyond control.
To hold otherwise would be oppressive and inhuman.

Civil Code provisions regarding contract of labor (Article 1700-17011, Civil Code of the
Philippines)

Article 1700. The relationship between capital and labor are not merely contractual. They are so
impressed with public interest that labor contract must yield to the common good. Therefore, contract
are subject to the special laws on the labor unions, collective bargaining, strikes, and lockouts, closed
shop, wages, working conditions hours of labor and similar subjects.

Article 17001. Neither capital nor labor shall act oppressively against the other, or impair the interest
or convenience of the public.

Article 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of
the safety and decent living for the laborer.
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 Article 1703. No contract which practically amount to involuntary servitude, under guise whatsoever
shall be avoid.

Article 1705 The laborers wage shall be paid in legal currency.

Article 1707. The laborers wages shall be a lien on the goods, manufactured or work done.

Article 1709. The employer shall neither seize nor retain any tool or other articles belonging to the
laborer.

Who is an employer under the labor Code?

Ans. In its ordinary meaning an employer is one who hires the services of another and pays
him compensation. Under the labor Code, it includes any person acting in the interest of an employer
directly or indirectly. An employer may be a natural or juridical person.

Who is an employee under the Labor code?

Ans. The term “employees” refers to any person in the employee of an employer. It shall not be
limited to the employees of a particular employer. It include any person whose work has ceased as a
result of or in connection with any current disputes or because of any unfair labor practice if he has not
obtained any other substantially equivalent and regular employment. An employee is always a
natural being.

Enumerate the classes of workers mentioned under the Labor code.

1. Apprentices, learner and handicapped workers provided for in Article 59-81

2. Managerial, supervisory and clerical employees as defined under Article 212 (m).

3. Workers paid by result mentioned in Articles 82 and 102.

What are the factors generally considered in determining the existence of employer-employee
relationship?

Ans. The factors that are generally considered are the following.

1. The selection and engagement of the employee;

2. The payment of compensation;

3. The power of dismissal;

4. The employer’s power to control the employee with respect to the means and methods by which
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 the work is to be accomplished.

Note: that the among the foregoing factors, the most important index of determining the existence
of the employer-employee relationship is the so called “control test” that is whether controls or has
reserved the right to control the employees not only as to the result of the work to be done but also to the
means and method by which the same is to be accomplished.

Stated otherwise, an employers employee relationship exist where the person for whom the
services are performed reserves the right to control not only the end to be achieved but also the means
to be used in reaching such end (Dy Khe Beng vs. International labor and Maritine Union of the
Philippines et all., No L-32205 May 25, 1979)

Case:
a) Nathalie was engaged in the manufacturing baskets. She hired pieceworkers to make baskets
according to her specifications. Are this piece workers her employees? Why?

b) The shoe shiner at JOMAR Custom-built Shoes had their own customers from whom they
collected the fee for the job; they then divided the proceeds share and share alike with JOMAR. Are
they piece workers of JOMAR? Explain.

c) Claire signed a contract with Jomar computer Co. binding herself to work for the latter for a period of
five years for a fixed period of five years. In her first year of employment she was sent to United States
at company expense for further training. A few months after she come back to the Philippines, she
transferred and was employed by another company. Considering that she breached his contract by
getting employed in another firm, can she be compelled to go back to Jomar Co. to work for the
unexplored portion o his contract? Why?

d) At the time Nathalie, was hired as a plant manager, the candle factory was able to close in a few
months time due to business losses; she decided for herself on what to be done and work at her own
pleasure; she was not subject to definite hours or condition of work and was entitled to a percentage of
the net profits that the company realized, if any. May Nathalie be considered an employee of the candle
factory? Why?

Contract Workers
Contracting – employer contracts with person for the former’s work or who, not being an
employer, contracts with an independent contractor for performance of any work, task, job, or
project, wherein principal is deemed an indirect employer.

Types of Contracting

1. Job Contracting – contractor carries on an independent business and undertakes the contract
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on his own account under his own responsibility, according to his own manner and method, free
from the control and direction of his employer or principal.

2. Labor-only contracting- any person who undertakes to supply workers to an employer shall
be deemed to be engaged in labor-contracting where such person; a) does not have any
substantial capital or investment; and b) the worker recruited and placed by such persons are
performing activities directly related to the principal business or operation of the employer in
which employees are habitually employed.

Job contracting is allowed by law; labor-only contracting is prohibited as contrary to public

policy to promote full-employment.

Finding that a contractor is a labor-only contractor is equivalent to a finding that there

exist an employer-employee relationship between the owner of the project and the employees
of the labor only contractor since that relationship is defined and prescribed by the law itself.

EMPLOYMENT OF
NON- RESIDENT ALIENS
The following provisions of the Labor Code governs the employment of non-resident
aliens in our country.

ART. 40 Employment permit of non-resident aliens. Any alien seeking admission To the
Philippines for employment purposes and any domestic or foreign employer Who desires to
engage an alien for employment in the Philippines shall obtain an employment permit from the
Department of Labor.

The employment permit may issued to a non-resident alien or to the applicant employer after to
the determination of the non-availability of a person in the Philippines who is competent, able and
willing at the time of application to perform the services for which the alien is desired.

For an enterprise registered is preferred areas of investments, said employment permit may be
issued upon recommendation of the government agency charged with the supervision of the said
registered enterprise.

ART 41. Prohibition against transfer of employment.-(a) After the issuance of an employment
permit, the alien shall not transfer to the another job or change his employer without prior approval of
the Secretary of Labor.
(b) Any non- resident alien who shall take up employment in violation of the provision of this
Title and its implementing rules and regulations shall be punished in accordance with the provision of
Articles 289 and 290 of the Labor Code.

In addition, the alien worker shall be subject to deportation after service of his sentence.

ART42. Submission of list. –Any employer employing non-resident foreign nationals of the
effective date of this Code shall submit a list of such nationals to the Secretary of Labor within thirty (30)
days after such date indicating their names, citizenship, foreign and local addresses, nature of
employment and status of stay in the country. The Secretary of Labor shall then determine if they are
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entitled to an employment permit.

APPRENTICESHIP
State the objective of the State regarding Apprenticeship.

ART. 57.- Statement of Objectives.- This Title aims:

(1) To help meet the demand of the economy for trained manpower;

(2) To establish a national apprenticeship program through the participation of employers, workers and
government and non-government agencies; and

(3) To establish apprenticeship standard for the protection of apprentices.

ART 58.- Definitions of terms.- As used in title:

(a) “Apprenticeship” means practical training on the job supplemented by the related theoretical
instruction.

(b) 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.

(c) An “apprenticeship occupation” means any trade , form of employment or occupation which requires
more than three (3) months of practical training on the job supplemented by the related theoretical
instruction.

(d) “Apprenticeship agreement” is an employment contract wherein the employer binds himself to train
the apprentice in turn accept the terms of training

Enumerate the qualifications of an apprentice.

ART 59.- Qualification of apprentice,- To qualify as a apprentice, a person shall:

(a) Be at least fourteen (14) years of age;

(b) Posses vocational aptitude and capacity for appropriate test; and

(c) Posses the ability to comprehend and follow oral and written instructions.

Trade and industry association may recommend the Secretary of Labor appropriate educational
requirements for different educations.

Who may hire an apprentice?

ART 60.- `Employment of apprentices only employers in the highly technical industries may employ
apprentices and only in apprenticeable occupations approved by the minister of Labor and
Employment.

What are the contents of an appreticeship contract or agreement?

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 ART 61.- Contents of apprenticeship agreements.- Apprenticeship agreements, including the main
rates of apprentices, shall conform the rule issued by the Minister of Labor and Employment. The
period of apprenticeship shall not exceed six months Apprenticeship agreement providing for wage
rate below the legal minimum wage which is no case shall start rate below 75 per cent of the applicable
minimum wage, may be entered into only in accordance with apprenticeship programs duly approved
by the Minister of Labor and Employment. The Ministry shall develop standard model programs of
apprenticeship.

LEARNERS
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.

When may the employer hire the services of a learner?

ART 74 – When learners may be hired. – Learners may be employed when no experienced workers
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 cost or impair or
lower working standards.

ART 75 – Learnership agreement. – Any employer desiring to employ learner shall enter into a
learningship agreement with them, which agreement shall include:

(a) The names and addresses of the learners;

(b) The duration of the learningship period, which shall not exceed three (3) months;
(c) The wages or salary rates of the learners which shall begin at not less than seventy five percent
(75%) of the applicable minimum wage ;and
(d) A commitment to employ the learner if they so desire as regular employees upon completion of the
learnership. All learners who have allowed or suffered work during the first two (2) months shall be
deemed regular employees if training is terminated by the employer before the end of the stipulated
period through no fault of the learner.
The learnership agreement shall be subject to inspection by the Secretary of Labor, or his duly
authorized representative.

ART 76 – Learners in piecework. – Learners employed in piece or incentive-rate jobs during the training
period shall be paid in full for the work done.

ART 77 – Penalty clause. – Any violation of this Chapter or its implementing rules and regulations shall
be subject to the general penalty clause provided for in this Code.

HANDICAPPED WORKERS
ART 78 - Definition. – Handicapped workers are those whose earning capacity is impaired by age or
physical or mental deficiency or injury.

ART 79 – When employable. – Handicapped workers may be employed wherein their employment is
necessary to prevent curtailment of employment opportunities and when it does nor create unfair
competition and labor cost or impair or lower working standards.
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ART 80 – Employment agreement. – Any employer who employs handicapped workers shall enter into
an employment agreement with them, which agreement shall include :
(1) The names and addresses of the handicapped workers to be employed;
(2) The rate to be paid the handicapped workers which shall be not less than seventy five (75%) per
cent of the applicable legal minimum wage;
(3) The duration of the duration period; and
(4) The work to be performed by handicapped workers.

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