Yes, they are entitled to their regular
Labor Standards hourly rate on days declared as special
~o~
Holidays – Termination of Employment
HOLIDAYS
Can a person be forced to work during
a holiday?
The same with instances when required
to work overtime. If you are made to
work, you are paid twice of the daily
rate.
Peculiar situation: teaching personnel
paid per hour
Refer to Jose Rizal College
If two holidays fall on two successive
days, he must be paid for both days.
BUT you must be present or you must
be on leave of absence with pay on the
first holiday otherwise you cannot
claim the second holiday.
Jose Rizal College v. NLRC
Are hourly paid faculty members
entitled to regular holiday pay?
No. Regular holidays specified as such
by law are known to both school and
faculty members as “no class days,”
certainly the latter do not expect
payment for said unworked days and
this was clearly in their minds when
they entered into the teaching
contracts.
Are they entitled to be paid for special
holidays and shortened class days due
to typhoons and the like?
1
1B 09-10
holidays or when classes are called off
or shortened.
Producers Bank v. NLRC
The divisor of 314 is arrived at by
subtracting all Sundays from the total
number of calendar days in a year.
GR: for a 5-day workweek, if the divisor
is 261 and for a 6-day workweek, if the
divisor is 314, then the monthly salary
if the employee already includes
payment of the legal holiday. But this
depends on the circumstances of each
case.
San Miguel Corp. v. CA
There should be no distinction between
Muslims and non-Muslims as regards
payment of benefits for Muslim
holidays.
Asian Transmission Corporation v.
CA
Holiday pay is a legislated benefit
enacted as part of the Constitutional
imperative that the State shall afford
protection to labor. Unlike a bonus,
which is a management prerogative,
holiday pay is a statutory benefit
demandable under the law.
Labadan v. Forest Hills Academy
The provision that a worker is entitled
to twice his regular rate if he is
required to work on a holiday implies
that the provision entitling a worker to
his regular rate on holidays applies
even if he does not work.
 SERVICE INCENTIVE LEAVE AND
OTHER LEAVES
If the company is giving an employee a
benefit of more than 5 days of SIL, then
the employee will not enjoy the benefit.
Suppose 15 days of sick leave by virtue
of a CBA, would employee be entitled to
SIL?
A: Yes. But if vacation leave, employee
will not be entitled because they are of
the same nature. Sick leave is of a
different nature where the employee
cannot work as a consequence of
ailment.
Unlike other leaves granted by law, the
SIL is commutable and can be
converted to cash. Other leaves
provided by the CBA not provided for
by law may be granted out of the policy
or out of agreement. There is no law
which grants sick and vacation leave.
Service charges: amounts which are
charged by hotels, restaurants and the
like which constitutes 10% of the
amount consumed for food.
All service charges are pooled together
and paid to rank-and-file employees.
85% goes to them while 15% goes to
managerial employees. It is paid every
15 days.
If the company decides to remove the
10% service charge in order to lessen
their prices, dapat ibigay ng employer
yung average na narereceive nung
employee na parte ng service charge
dati.
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1B 09-10
Imbuido v. NLRC
An employee is entitled to service
incentive leave after one period of
service (whether continuous or broken)
or its equivalent period, and it is one of
the benefits which would have accrued
if an employee was not otherwise
illegally dismissed, it is fair and legal
than its computation should be up to
the date of reinstatement as provided
in Art. 279.
Auto Bus Transport Systems v.
Bautista
What must be ascertained in order to
resolve the issue of propriety of the
grant of service incentive leave to a bus
driver-conductor is whether or not he is
a field personnel. According to the
Labor Code, “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.
The definition of a "field personnel" is
not merely concerned with the location
where the employee regularly performs
his duties but also with the fact that
the employee’s performance is
unsupervised by the employer. Field
personnel are those who regularly
perform their duties away from the
principal place of business of the
employer and whose actual hours of
work in the field cannot be determined
with reasonable certainty. Thus, in
order to conclude whether an employee
is a field employee, it is also necessary
to ascertain if actual hours of work in
the field can be determined with
reasonable certainty by the employer.
A bus driver-conductor, not being a
field personnel but a regular employee
who performs tasks usually necessary
and desirable to the usual trade of the
company’s business, is entitled to the
grant of service incentive leave.
If the employee entitled to service
incentive leave does not use or
commute the same, he is entitled upon
his resignation or separation from work
to the commutation of his accrued
service incentive leave.
Prescription period: 3 years. It
commences from the time when the
employer refuses to pay its monetary
equivalent after demand or
commutation or upon termination of
the employee’s services, as the case
may be.
Fernandez v. NLRC
Can the claim for service incentive
leave be limited to a certain number of
years?
No. An employee who has served for
more than one year is entitled to
service incentive leave. He may use it
as leave days or he may collect its
monetary value. To limit the award is to
unduly restrict such right.
JPL Marketing Promotions v. CA
Service incentive leave is a yearly leave
benefit of 5 days with pay, enjoyed by
an employee who has rendered at least
one year of service.
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1B 09-10
The difference between the minimum
wage and the actual salary received by
the employees cannot be deemed as
their 13th month pay and service
incentive leave pay as such difference
is not equivalent to or of the same
import as the said benefits
contemplated by law.
Paloma v. PAL
No law provides for commutation of
unused or accrued sick leave credits in
the private sector – commutation is
allowed by way of voluntary endowment
by an employer through a company
policy or by a Collective Bargaining
Agreement.
Sugue v. Triumph International
In the grant of vacation and sick leave
privileges to an employee, the employer
is given leeway to impose conditions on
the entitlement to the same as the
grant of vacation and sick leave is not a
standard of law, but a prerogative of
management – it is a mere concession
or act of grace of the employer and not
a matter of right on the part of the
employee.
13th MONTH PAY
Christmas bonus: provided equal to
13th month
13th month is in the nature of wages
therefore no deductions without the
consent of the employee
Are commissions to be included? In the
case of salesmen, salary +
commissions, are commissions
included in the computation of 13th
month pay?
Duplicators case: stencils
Minimum wage + commissions
Q: Can commissions be included?
A: Yes because it is acquired by actual
market transactions
Boie Takeda: Medical Representatives
Q: Can commissions be considered to
be part of basic wage?
A: No because it is not acquired by
actual market transaction. They are
gratuities.
House of Sarah Lee: they are only given
to rank-and-file employees. Piece rate
workers are also entitled. In the case of
sea-farers, it would depend in the
contract.
Honda Phil Inc v. Samahan ng
Malayang Manggagawa sa Honda
Payments for sick, vacation and
maternity leaves, night differentials,
regular holiday pay and premiums for
work done on rest days and special
holidays are excluded from the
computation of basic salary.
Pro-rating an employee’s 13th month
pay is to undermine the wisdom behind
such grant.
House of Sarah Lee v. Rey
Only rank-and-file employees are
entitled to 13th month pay.
Phil. Agricultural Commercial & this is what the employee receives for a
Industrial Workers Union v. NLRC
4
1B 09-10
Every employee receiving a commission
in addition to a fixed or guaranteed
wage or salary is entitled to 13th month
pay.
NOTE: Drivers and Conductors are
entitled to 13th month pay. The drivers
and conductors are not paid purely by
what they receive as commission. They
are automatically entitled to basic
minimum pay mandated by law in case
the commissions they earned be less
than their basic minimum for eight
hours of work. While commissions may
be in the form of incentives or
encouragement to inspire drivers and
conductors to put more zeal and
industry in their jobs, it is safe to say
that the same are direct renumerations
for services rendered which is the
reason why Vallacar Transit allowed
the drivers and conductors a
guaranteed minimum wage.
Phil. Duplicators, Inc v. NLRC
The salesmen’s commission,
comprising a pre-determined percent of
the selling price of the goods sold by
each salesman, were properly included
in the term “basic salary” for purposes
of computing their 13th month pay.
Boie-Takeda Chemicals Inc v. Dela
Serna
In remunerative schemes consisting of
a fixed or guaranteed wage plus
commission, the fixed or guaranteed
wage is patently the "basic salary" for
standard work period. Commissions
are given for extra efforts exerted in
consummating sales or other related
transactions. They are, as such,
additional pay, which this Court has
made clear do not form part of the
"basic salary." Hence, in determining
13th month pay, such commissions
should be excluded in the computation.
CASE DIGESTS:
Honda Phils., Inc. v. Samahan ng
Malayang Manggagawa ng Honda
FACTS: The issue stems from certain
provisions of the CBA between Honda
Phils and its labor union. The CBA
provided that the company shall
maintain the present practice in the
implementation of the 13th month pay,
the company shall grant a 14th month
pay computed on the same basis as the
computation of the 13th month pay and
the company agrees to continue the
practice of granting, in its discretion,
financial assistance to covered
employees in December in each year of
not less than 100% of basic pay. The
CBA is effective until 2000.
In lieu of the strikes and bargaining
deadlocks, the company issued a
memorandum announcing the new
formula for the computation of the 13th
and 14th month pay and the 31 day
long strike shall be considered as
unworked days for purposes of
computing said benefits. According to
the new formula, the amount
equivalent to 1/12 of the employee’s
basic salary shall be deducted from
these bonuses with a commitment
however that in the event that the
strike is declared legal, Honda shall
pay the amount deducted. Respondent
union opposed the pro-rated
computation of the bonuses.
5
1B 09-10
The Labor Arbiter ruled that the
computation was invalid. The petition
by Honda was also dismissed by the
Court of Appeals.
ISSUE: W/N Honda’s implementation
of pro-rated 13th month pay, 14th
month pay and financial assistance is
invalid
HELD: Petition lacks merit
Honda wanted to implement a pro-
rated computation of the benefits based
on the "no work, no pay" rule.
According to the company, the phrase
"present practice" as mentioned in the
CBA refers to the manner and
requisites with respect to the payment
of the bonuses, i.e., 50% to be given in
May and the other 50% in December of
each year. Respondent union, however,
insists that the CBA provisions relating
to the implementation of the 13th
month pay necessarily relate to the
computation of the same.
A cursory reading of the provisions of
the CBA shows that they did not state
categorically whether the computation
of the 13th month pay, 14th month pay
and the financial assistance would be
based on one full month’s basic salary
of the employees, or pro-rated based on
the compensation actually received.
The arbitrator thus properly resolved
the ambiguity in favor of labor. The
Court of Appeals affirmed the
arbitrator’s finding and added that the
computation of the 13th month pay
should be based on the length of
service and not on the actual wage
earned by the worker.
Under the Revised Guidelines on the
Implementation of the 13th month pay
provided that the minimum 13th month
pay required by law shall not be less
than one-twelfth (1/12) of the total
basic salary earned by an employee
within a calendar year. The revised
guidelines also provided for a pro-
ration of this benefit only in cases of
resignation or separation from work. As
the rules state, under these
circumstances, an employee is entitled
to a pay in proportion to the length of
time he worked during the year,
reckoned from the time he started
working during the calendar year. The
Court of Appeals correctly held that
there being no gap in the service of the
workers during the calendar year in
question, the computation of the 13th
month pay should not be pro-rated but
should be given in full.
It has not been refuted that Honda has
not implemented any pro-rating of the
13th month pay before the instant case.
Honda did not adduce evidence to show
that the 13th month, 14th month and
financial assistance benefits were
previously subject to deductions or pro-
rating or that these were dependent
upon the company’s financial standing.
It was also the company’s practice to
give the bonuses in its full amount.
Phil. Agricultural Commercial and
Industrial Workers Union v. National
Labor Relations Commission
FACTS: Phil. Agricultural Commercial
and Industrial Workers Union is the
bargaining agent of the rank and file
employees of Vallacar Transit. They
instituted a complaint with the NLRC
for the payment of 13th month pay in
6
1B 09-10
behalf of the drivers and conductors of
Vallacar Transit on the ground that
although the drivers and conductors
are compensated on a “purely
commission” basis as described in the
CBA, they are automatically entitled to
the basic minimum pay mandated by
law should the commission be less
than the basic minimum for eight
hours work.
In Vallacar Transit’s position paper,
they contend that since the drivers and
conductors are compensated on a
purely commission basis, they are not
entitled to 13th month pay pursuant to
the exempting provisions enumerated
in par. 2 of the Revised Guidelines on
the Implementation of the 13th Month
Pay Law. They further contended that
Sec. 2 of Art. XIV of the CBA expressly
provided that drivers and conductors
paid on a purely commission are not
legally entitled to 13th month pay.
The Labor Arbiter dismissed the
complaint. The appeal of the petitioner
to the NLRC was also dismissed.
ISSUE: W/N bus drivers and
conductors are entitled to 13th month
pay
HELD: Yes, they are entitled to 13th
month pay.
RATIONALE:
13th Month Pay Law (PD 851)
Sec. 1 of the 13th Month Pay law
provides that all employers are required
to pay all their employees receiving
basic salary of not more than
1,000/month, regardless of the nature
of the employment, a 13th month pay
not later than Dec. 24 of every year.
Rules and Regulations of PD 851
The Rules and Regulations of PD 851
provided that the basic salary shall
include renumerations or earning paid
by an employer to an employee for
services rendered.
Memorandum Order 28
Memorandum Order 28 issued by Pres.
Aquino modified to the extent that all
employers are required to pay all their
rank and file employees a 13th month
pay not later than Dec. 24 of every
year. In connection with the order, the
Minister of Labor and Employment
issued an Explanatory Bulletin which
provides that employees who are paid a
fixed or guaranteed wage plus
commission are also entitled to 13th
month pay.
Drivers and Conductors are entitled to
13th month pay
From the cited provisions, it is clear
that every employee receiving a
commission in addition to a fixed or
guaranteed wage or salary is entitled to
a 13th month pay. It is immaterial
whether the employees concerned are
paid a guaranteed wage plus
commission or a commission with
guaranteed wage.
The drivers and conductors are not
paid purely by what they receive as
commission. They are automatically
entitled to basic minimum pay
mandated by law in case the
commissions they earned be less than
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1B 09-10
their basic minimum for eight hours of
work. While commissions may be in the
form of incentives or encouragement to
inspire drivers and conductors to put
more zeal and industry in their jobs, it
is safe to say that the same are direct
renumerations for services rendered
which is the reason why Vallacar
Transit allowed the drivers and
conductors a guaranteed minimum
wage.
Philippine Duplicators v. NLRC
FACTS: The Third Division of the
Supreme Court rendered a decision
dismissing the Petition for
Certiorari filed by Philippine
Duplicators or the Duplicators case
wherein the Court upheld the decision
of NLRC, which affirmed the order of
the Labor Arbiter directing petitioner to
pay 13th month pay to private
respondent employees computed on the
basis of their fixed wages plus sales
commissions. It also denied the Motion
for Reconsideration.
Phil. Duplicators filed a Second Motion
for Reconsideration. Petitioner invoked
the Court’s decision in the consolidated
cases of Boie-Takeda and Fuji Xerox
Corp. In the said decision, the Second
Division of the Court declared null and
void the second paragraph of Sec.5(a)
of the Revised Guidelines issued by the
Secretary of Labor. The said paragraph
provides that employees who are paid a
fixed or guaranteed wage plus
commission are also entitled to the
mandated 13th month pay, based on
their total earnings during the calendar
year on both their fixed or guaranteed
wage and commission. Petitioner
contends that the decision in the
Duplicators case should now be
considered as abandoned by the Boie-
Takeda decision. Petitioner prays that
the decision rendered in Duplicators be
set aside and another be entered
directing the dismissal of the money
claims of Phil. Duplicator’s Employees’
Union. The case was then referred to
the Supreme Court en banc.
ISSUE: W/N the Duplicators case be
set aside
HELD: No
Doctrine of Stare Decisis
The decision rendered in Boie-Takeda
cannot serve as a precedent under the
doctrine of stare decisis because it was
decided a month after the Court
rendered the decision on the
Duplicators case. The petitioner’s
Motion for Reconsideration of the
decision was also denied with finality.
The petitioners did not allege the
validity of the Revised Guidelines on
the Implementation of the 13th Month
Pay Law either in its Petition for
Certiorari or in its Motion for
Reconsideration. In fact, the
petitioner’s counsel relied on these
guidelines and asserted their validity in
opposing the decision rendered by the
NLRC.
Decision in Boie-Takeda is not directly
opposite or contrary to the Duplicators
case
In the Duplicators case, the sales
commissions received for every
duplicating machine sold constituted
part of the basic compensation or
renumeration of the salesmen of Phil.
8
1B 09-10
Duplicators for doing their job. The
Third Division correctly held that the
sales commissions were an integral
part of the basic salary structure of
Phil. Duplicators’ employees-salesmen.
These commissions are not overtime
payments, profit-sharing payments nor
any other fringe benefit. Thus, the
salesmen’s commissions, comprising of
a pre-determined percent of the selling
price of the goods sold by each
salesman, were properly included in
the term “basic salary” for purposes of
computing their 13th month pay.
In Boie-Takeda the commissions "paid
to or received by medical
representatives of Boie-Takeda
Chemicals or by the rank and file
employees of Philippine Fuji Xerox Co.,"
were excluded from the term "basic
salary" because these were paid to the
medical representatives and rank-and-
file employees as "productivity
bonuses." The Second Division
characterized these payments as
additional monetary benefits not
properly included in the term “basic
salary” in computing their 13th month
pay.
The "commissions" paid by the Boie-
Takeda Company to its medical
representatives could not have been
"sales commissions" in the same sense
that Philippine Duplicators paid its
salesmen sales commissions. Medical
representatives are not salesmen; they
do not effect any sale of any article at
all. In common commercial practice,
medical representatives are employees
engaged in the promotion of
pharmaceutical products or medical
devices manufactured by their
employer. They promote such products
by visiting identified physicians and
inform them of the existence and
chemical composition and virtues of
particular products of their company.
They commonly leave medical samples
with each physician visited; but those
samples are not "sold" to the physician
and the physician is, as a matter of
professional ethics, prohibited from
selling such samples to their patients.
Thus, the additional payments made to
Boie-Takeda's medical representatives
were not in fact sales commissions but
rather partook of the nature of profit-
sharing bonuses.
The doctrine in Boie-Takeda is that
additional payments made to
employees to the extent they partake of
the nature of profit-sharing payments
are properly excluded from the term
basic salary“ for purposes of computing
the 13th month pay due to employees.
Such additional payments are not
commissions within the meaning of the
second paragraph of Sec. 5(a) of the
Revised Guidelines Implementing 13th
Month Pay.
The Supplementary Rules and
Regulations Implementing PD 851
subsequently issued by Labor Minister
Ople clarified the scope of items
excluded in the computation of the 13th
month pay. Overtime pay, earnings and
other renumerations which are not part
of the basic salary shall not be included
in the computation of the 13th month
pay. The particular types of earnings
and renumeration are or are not
properly included or integrated in the
basic salary are questions to be
resolved on a case to case basis. In
principle, where these earnings and
remuneration are closely akin to fringe
9
1B 09-10
benefits, overtime pay or profit-sharing
payments, they are properly excluded
in computing the 13th month pay.
However, sales commissions which are
effectively an integral portion of the
basic salary structure of an employee
shall be included in determining his
13th month pay.
Productivity bonuses and sales
commissions may have an incentive
effect. Productivity bonuses are
generally tied to the productivity or
profit generation of the employer
corporation. Productivity bonuses are
not directly dependent on the extent an
individual employee exerts himself. A
productivity bonus is something extra
for which no specific additional services
are rendered by any particular
employee and hence not legally
demandable, absent a contractual
undertaking to pay it.
Sales commissions, on the other hand,
such as those paid in Duplicators, are
intimately related to or directly
proportional to the extent or energy of
an employee's endeavors. Commissions
are paid upon the specific results
achieved by a salesman-employee. It is
a percentage of the sales closed by a
salesman and operates as an integral
part of such salesman's basic pay.
Boie-Takeda Chemicals, Inc. v. De la
Serna
FACTS:
In Boie-Takeda
A routine inspection was conducted in
Boie-Takeda Chemicals by Labor and
Development Officer Reynaldo Ramos
under Inspection Authority. Finding
that Boie-Takeda had not been
including the commissions earned by
its medical representatives in the
computation of the 13th month pay,
Ramos served a Notice of Inspection
Results on Boie-Takeda requiring to
effect restitution or correction of the
underpayment of 13th month pay
within ten (10) calendar days from
notice.
Boie-Takeda wrote the Labor
Department contesting the Notice of
Inspection Results, and expressing the
view "that the commission paid to our
medical representatives are not to be
included in the computation of the
13th month pay since the law and its
implementing rules speak of REGULAR
or BASIC salary and therefore exclude
all other remunerations which are not
part of the REGULAR salary." It pointed
out that, "if no sales is made under the
effort of a particular representative,
there is no commission during the
period when no sale was transacted, so
that commissions are not and cannot
be legally defined as regular in nature.
Regional Director Luna Piezas directed
Boie-Takeda to appear before his office
but no one appeared from Boie-Takeda.
The matter was resolved on the basis of
the evidence at hand. Director Piezas
ordered Boie-Takeda to pay its medical
representatives the underpayment of
their 13th month pay. Boie-Takeda
appealed the order to Acting Labor
Secretary Dionisio de la Serna who
affirmed the order with modifications.
In Fuji Xerox
10
1B 09-10
A similar routine inspection was
conducted in Phil. Fuji Xerox Corp. The
Notice of Inspection Results noted that
there was an underpayment of the 13th
month pay. Director Piezas issued an
order directing the Senior Labor
Employment Officer to compute the
deficiency. Fuji appealed the order to
the Office of the Secretary of Labor.
Undersecretary Trajano denied the
appeal.
ISSUE: W/N the respondent labor
officials in computing the 13th month
pay committed grave abuse of
discretion amounting to lack of
jurisdiction by giving effect to Sec. 5 of
the Revised Guidelines on the
Implementation of the 13th month pay
promulgated by Sec. Drilon.
PETITIONER’S CONTENTION
They maintain that under P.D. 851, the
13th month pay is based solely on
basic salary. As defined by the law
itself and clarified by the implementing
and Supplementary Rules as well as
Supreme Court decisions,
remunerations which do not form part
of the basic or regular salary of an
employee, such as commissions,
should not be considered in the
computation of the 13th month pay.
This being the case, the Revised
Guidelines on the Implementation of
the 13th Month Pay Law issued by then
Secretary Drilon providing for the
inclusion of commissions in the 13th
month pay, were issued in excess of the
statutory authority conferred by P.D.
851. Petitioners further contend that
assuming that Secretary Drilon did not
exceed the statutory authority
conferred by P.D. 851, still the Revised
Guidelines are null and void as they
violate the equal protection of the law
clause.
RESPONDENT’S CONTENTION
P.D. No. 851, otherwise known as the
13th Month Pay Law has already been
amended by Memorandum Order No.
28 issued by President Corazon C.
Aquino so that commissions are now
imputed into the computation of the
13th Month Pay. They add that the
Revised Guidelines issued by then
Labor Secretary Drilon merely clarified
a gray area occasioned by the silence of
the law as to the nature of
commissions; and worked no violation
of the equal protection clause of the
Constitution, said Guidelines being
based on reasonable classification.
HELD: Petition granted, second
paragraph of Sec.5(a) of the Revised
Guidelines on the Implementation of
the 13th Month Pay law is null and void
Memorandum Order no. 28
Memorandum Order no. 28 did not
repeal PD 851. It merely modified Sec.
1 by removing the 1,000 salary ceiling.
The benefit is still to be computed on
the basic salary of the employee-
recipient provided under PD 851. The
interpretation given to the term “basic
salary” in PD 851 applies equally to
“basic salary” under Memorandum
Order 28.
The term "basic salary" is to be
understood in its common, generally-
accepted meaning, i.e., as a rate of pay
for a standard work period exclusive of
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1B 09-10
such additional payments as bonuses
and overtime.
In remunerative schemes consisting of
a fixed or guaranteed wage plus
commission, the fixed or guaranteed
wage is patently the "basic salary" for
this is what the employee receives for a
standard work period. Commissions
are given for extra efforts exerted in
consummating sales or other related
transactions. They are, as such,
additional pay, which this Court has
made clear do not form part of the
"basic salary."
In including commissions in the
computation of the 13th month pay,
the second paragraph of Section 5(a) of
the Revised Guidelines on the
Implementation of the 13th Month Pay
Law unduly expanded the concept of
"basic salary" as defined in P.D. 851. It
is a fundamental rule that
implementing rules cannot add to or
detract from the provisions of the law it
is designed to implement.
Administrative regulations adopted
under legislative authority by a
particular department must be in
harmony with the provisions of the law
they are intended to carry into effect.
They cannot widen its scope. An
administrative agency cannot amend
an act of Congress.
EMPLOYMENT OF WOMEN
PT&T v. NLRC
The policy of not accepting or
considering as disqualified from work
any woman worker who contracts
marriage runs afoul of the test of and
the right against discrimination
afforded all women workers by our
labor laws and by no less than the
Constitution. While it is true that the
parties to a contract may establish any
agreements, terms and conditions that
may deem convenient, the same should
not be contrary to law, morals, good
customs, public order or public policy.
Lakpue Drug Inc v. Belga
Failure on the part of the employee to
formally inform the employer of her
pregnancy can not be considered as
grave misconduct directly connected to
her work as to constitute just cause for
her separation.
EMPLOYMENT OF HOUSEHELPERS
Apex Mining Company, Inc v. NLRC
Laundrywoman not actually serving the
family of the employer but working in
the staffhouses or within the premises
of the business of the employer is a
regular employee and not a domestic
helper.
NOTE: The term househelper shall refer
to any person, whether male or female,
who renders services in and about the
employer’s home and which services
are usually necessary or desirable for
the maintenance and enjoyment
thereof, and ministers exclusively of the
employer’s family.
Barcenas v. NLRC
The work that petitioner performed in
the temple could not be categorized as
mere domestic work. Thus, We find
that petitioner, being proficient in the
Chinese language, attended to the
12
1B 09-10
visitors, mostly Chinese, who came to
pray or seek advice before Buddha for
personal or business problems;
arranged meetings between these
visitors and Su and supervised the
preparation of the food for the temple
visitors; acted as tourist guide of
foreign visitors; acted as liaison with
some goverment offices; and made the
payment for the temple's Meralco,
MWSS and PLDT bills. Indeed, these
tasks may not be deemed activities of a
household helper. They were essential
and important to the operation and
religious functions of the temple.
Cuajao v. Chua Lo Tan
Vacation leave of four days a month
entitled to a family driver is deemed
waived if not demanded at its
opportune time and allowed to lapse
over the years in silence. Privilege of
vacation leave can neither be
accumulated nor converted to cash.
APPRENTICES
Nitto Enterprises v. NLRC
In apprenticeship agreements, prior
approval by the Department of Labor
and Employment of the proposed
apprenticeship program is a condition
sine qua non before an apprenticeship
agreement can be validly entered into.
Where the apprenticeship agreement
has no force and effect, the worker
hired as apprentice should be
considered as a regular employee.
Century Canning Corporation v. CA
Prior approval from the Technical
Education and Skills Development
Authority (TESDA) is necessary to
ensure that only employers in the
highly technical industries may employ
apprentices and only in apprenticeable
occupations.
HANDICAPPED WORKERS
Bernardo v. NLRC
The Magna Carta for Disabled Persons
mandates that a qualified disabled
employee should be given the same
terms and conditions of employment as
a qualified able-bodied person.
NOTE: In this case, the fact that the
employees were qualified disabled
persons necessarily removes the
employment contracts from the ambit
of Art. 80. Since the Magna Carta
accords them the rights of qualified
able-bodied persons, they are covered
by Art. 280 of the Labor Code.
Nakpil v. Manila Towers
Development Corporation
Building owners may be compelled to
provide access ramps for disabled
persons.
TERMINATION OF EMPLOYMENT
Aurelio v. NLRC
Loss of confidence as a ground for
dismissal does not require proof
beyond reasonable doubt.
NOTE: In loss of trust and confidence,
there must be a cause; the employee
must have committed a work-related
13
1B 09-10
offense. The act committed must have
reference to the work.
Managerial: belief that the conduct was
committed is sufficient
Rank-and-file: higher degree of proof is
required; proof of actual involvement
Golden Thread Knitting v. NLRC
The characterization of an employee’s
services as no longer necessary or
sustainable and therefore properly
terminable is an exercise of business
judgment on the part of the employer.
It is not enough for a company to
merely declare that it has become
overmanned – it must produce
adequate proof that such is the actual
situation in order to justify the
dismissal of the affected employees for
redundancy.
In selecting the employees to be
dismissed, a fair and reasonable
criteria must be used, such as but not
limited to:
a. Less preferred status
b. Efficiency
c. Seniority
The utterances by an employee of
obscene, insulting or offensive words
against a superior justify his dismissal
for gross misconduct, but the dismissal
will not be upheld where it appears
that the employee’s act of disrespect
was provoked by the employer.
The circumstances that an employee
lost no time in filing a complaint for
illegal dismissal against the employer is
incompatible with the charge of
abandonment.
NOTE: Abandonment is a difficult
ground to prove. Mere absence does not
suffice. It is necessary that by the
employee by some overt act manifested
that there is no intent to go back to
work. Complaint of illegal dismissal
negates abandonment for as long as
there is no re-instatement. Serious
misconduct is a work-related offense.
Maya Farms Employees Organization
v. NLRC
Last In, First Out (LIFO) Rule: when
there are two or more employees
occupying the same position in the
company affected by the retrenchment
program, the last one employed will
necessarily be the first to go.
Asian Alcohol Corp. v. NLRC
Retrenchment and redundancy are just
causes for the employer to terminate
the services of workers to preserve the
viability of the business.
Requirements for valid retrenchment
must be proved by clear and convincing
evidence:
(1) that the retrenchment is reasonably
necessary and likely to prevent
business losses, which, if already
incurred, are not merely de minimis,
but substantial, serious, actual and
real, or if only expected, are reasonably
imminent as perceived objectively and
in good faith by the
employer;
(2) that the employer served written
notice both to the employees and to the
Department of Labor and Employment
at least one month prior to the intend
date of retrenchment;
14
1B 09-10
(3) that the employer pays the
retrenched employees separation pay
equivalent to one month pay or at least
1/2 month pay for every year of service,
whichever is higher;
(4) that the employer exercises its
prerogative to retrench employees in
good faith for the advancement of its
interest of its interest and not to defeat
or circumvent the employees' right to
security of tenure; and
(5) that the employer used fair and
reasonable
criteria in ascertaining who would be
dismissed and who would be retained
among the employees, such as status
(i.e., whether they are temporary,
casual, regular or managerial
employees), efficiency,
seniority, physical fitness, age, and
financial hardship for certain workers.
The phrase “retrenchment to prevent
losses” means that retrenchment must
be undertaken by the employer before
losses are actually sustained.
NOTE: In the case of succession
employer, when a company is bought
by another, is the new employer liable
for money claims? Are they bound by
the CBA of the old employer?
The answer depends on how the
company was acquired.
If it is acquired through the sale of
shares of stock, the new employer must
respect the CBA and others. On the
other hand, if the sale is not by shares
of stock but by deed of sale you
enumerate all things to be bought.
Labor (CBA) contracts are contracts in
persona so that when parties acted in
good faith, the new employer is not
liable for money claims.
North Davao Mining Corp. v. NLRC
Art. 283 of the Labor Code do not
obligate an employer to pay separation
benefits when the closure is due to
losses.
NOTE: Are companies required to pay
their employees their separation pay
due to cessation of business
operations? The answer must be
qualified. Not necessarily required if it
is due to serious business losses
wherein the company is already
bankrupt hence there are no more
assets to pay employee’s separation
pay. However, in the case of Cheniver
where the company was not suffering
serious business losses, the company
must pay the employee’s separation
pay.
Cheniver Deco Print Technics Corp.
v. NLRC
The phrase “closure or cessation of
operation of an establishment or
undertaking not due to serious
business losses or reverses” under Art.
283 of the Labor Code includes both
the complete cessation of all business
operations and the cessation of only
part of a company’s business.
Even though the transfer of a company
plant is due to a reason beyond the
control of the employer, it still has to
accord its employees some relief in the
form of severance pay.
Resignation is inconsistent with the
filing of a complaint. Resignation must
15
1B 09-10
be voluntary and made with the
intention of relinquishing the office,
accompanied with an act of
relinquishment.
Colegio de San Juan de Letran-
Calamba v. Villas
Misconduct is improper or wrongful
conduct. It is the transgression of some
established and definite rule of action,
a forbidden act, a dereliction of duty,
willful in character and implies
wrongful intent and not mere error of
judgment.
In the case at bar, assuming arguendo
that the respondent failed to report for
work on the agreed date and enroll
during the first semester, the most
respondent could be charged with was
simple misconduct.
Jose S. Santos, Jr. v. NLRC
To constitute immorality, the
circumstances of each particular case
must be holistically considered and
evaluated in light of prevailing norms of
conduct and applicable laws.
When a teacher engages in extra-
marital relationship, especially when
the parties are both married, such
behavior amounts to immorality,
justifying his termination from
employment.
NOTE: The rule before is that even
there is just cause but the employer did
not complied with the twin
requirements of due process, the
termination is invalid and the employer
is ordered to reinstate the employee.
But this was abandoned in Serrano
and modified in Agabon. In the case of
Santos, there was just cause and due
process was observed therefore the
termination is valid.
Viola Cruz v. NLRC
For a disease to be a valid ground for
the dismissal of the employee, the
continued employment of such
employee is prohibited by law or
prejudicial to his health or the health of
his co-employees, and there must be a
certification by a competent public
health authority that the disease is of
such nature or at such a stage that it
cannot be cured within a period of six
(6) months, even with proper medical
treatment.
Since the burden of proving the validity
of the dismissal of the employee rests
on the employer, the latter should
likewise bear the burden of showing
that the requisites for a valid dismissal
due to a disease have been complied
with. In the absence of the required
certification by a competent public
health authority, this Court has ruled
against the validity of the employee's
dismissal.
Ferrer v. NLRC
When good standing with the
employee’s union is a condition for
employment and such good standing
was allegedly tainted by an employee,
the latter has the right to due process.
In case the union failed to investigate
on such matter, it is the duty of the
company to conduct an investigation
on the veracity of such allegations.
16
1B 09-10
NOTE: In this case, since the union
and the company did not comply with
the twin requirements of notice, the
employee was illegally dismissed.
Agabon v. NLRC
Minimum penalty for non-compliance
with due process but with existence of
valid cause to terminate an employee is
set at 30,000. It is dependent upon the
circumstances of each case.
NOTE: SC relaxed in this ruling. In
Wenphil, the SC said that provided the
termination was for a just case but
there was no due process, the
termination is valid but failure to
comply with due process, the employer
is penalized PhP1,000 for non-
compliance with due process.
In Serrano, if there was no due process
given but there is just or authorized
cause, the employer will be penalized
by backwages from the time of
termination and finality of judgment.
What are the reliefs available to the
employee who was illegally terminated?
Reinstatement without loss of seniority
rights, backwages, attorney’s fees, and
damages (nominal, moral, exemplary).
In case of reinstatement, if the position
is no longer available and there is no
equivalent position available, the relief
is separation pay in lieu of
reinstatement.
Roguero v. PAL
Serious misconduct is defined as "the
transgression of some established and
definite rule of action, a forbidden act,
a dereliction of duty, willful in
character, and implies wrongful intent
and not mere error in judgment." For
serious misconduct to warrant the
dismissal of an employee, it (1) must be
serious; (2) must relate to the
performance of the employee's duty;
and (3) must show that the employee
has become unit to continue working
for the employer.
It is of public knowledge that drugs can
damage the mental faculties of the
user. Roquero was tasked with the
repair and maintenance of PAL's
airplanes. He cannot discharge that
duty if he is a drug user. His failure to
do his job can mean great loss of lives
and properties. Hence, even if he was
instigated to take drugs he has no right
to be reinstated to his position. He took
the drugs fully knowing that he was on
duty and more so that it is prohibited
by company rules. Instigation is only a
defense against criminal liability. It
cannot be used as a shield against
dismissal from employment especially
when the position involves the safety of
human lives.
The order of reinstatement is
immediately executory.
Hyatt Taxi Services, Inc v. Catinoy
After the 30-day period of preventive
suspension, the employee must be
reinstated to his former position
because suspension beyond this
maximum period amounts to
constructive dismissal.
Constructive dismissal does not always
involve forthright dismissal or
diminution in rank, compensation,
benefit and privileges. There may be
17
1B 09-10
constructive dismissal if an act of clear
discrimination, insensibility, or disdain
by an employer becomes so unbearable
on the part of the employee that it
could foreclose any choice by him
except to forego his continued
employment.
Alfaro v. Court of Appeals
Voluntary resignation is defined as the
act of an employee, who finds himself
in a situation in which he believes that
personal reasons cannot be sacrificed
in favor of the exigency of the service;
thus, he has no other choice but to
disassociate himself from his
employment.
The claim of petitioner that he was
illegally dismissed cannot be sustained,
considering that his voluntary
resignation has been indubitably
established as a fact by the three
tribunals below. Indeed, illegal
dismissal and voluntary resignation are
adversely opposed modes of
terminating employment relations, in
that the presence of one precludes that
of the other.
Intertrod Maritime, Inc v. NLRC
Resignation once accepted and being
the sole act of the employee may not be
withdrawn without the consent of the
employer. The mere fact that they did
not accept such withdrawal did not
constitute illegal dismissal for
acceptance of the withdrawal of the
resignation was the employer’s sole
prerogative.
NOTE: There must be acceptance by
the employer of the resignation and
there must be the consent of the
employer if the employee (who has
resigned) wants to return to work.
San Miguel Corp. v. Del Rosario
An employee who was illegally
dismissed is entitled to reinstatement
and backwages.
Association of Integrated Security
Force of Bislig-ALU v. CA
An employer may close or cease his
business operations even if he were not
suffering from business losses or
financial reverses.
Heavylift Manila, Inc. v. CA
An employee’s attitude problem is a
valid ground for termination. It is a
situation analogous to loss of trust and
confidence that must be duly proved by
the employer.
What is required is substantial
evidence to support the termination on
the ground of attitude problems. The
mere mention of negative feedback
from her team members and the letter
dated Feb. 23, 1999, are not proof of
her attitude problem. The letter did not
constitute the required notice because
it did not inform her of the specific acts
complained of and their corresponding
penalty. The letter never gave the
respondent an opportunity to explain
herself thus denying her of due
process.
King of Kings Transport, Inc v.
Mamac
18
1B 09-10
In order to enable the employees to
intelligently prepare their explanation
and defenses, the notice should contain
a detailed narration of the facts and
circumstances that will serve as basis
for the charge against the employees –
a general description of the charge will
not suffice.
A verbal appraisal of the charges
against an employee does not comply
with the first notice requirement.
NOTE: 24 hours is not ample
opportunity to explain. There must be
at least 5 days to consult with a lawyer
and prepare an answer. The complaint
against the employee must include the
rules violated and the penalty for its
violation. It must also narrate in
particular detail these charges against
the employee and should no longer be
in general statements.
Citibank v. NLRC
Where the notice of charges given to an
employee is inadequate, the charges
being too general to enable the
employee to intelligently and
adequately prepare her defense, the
dismissal could not be in accordance
with due process.
NOTE: if the employee was only
reinstated in the payroll (payroll
reinstatement), the employee must
reimburse the wages he received if the
SC did not decide in his favor. If the
employee was actually reinstated, there
is no need for reimbursement. But this
is an empty victory for the employer.
How could you expect the employee to
return his wages?
Payroll reinstatement is an ancilliary
remedy.
Side issue: reinstatement. Is it effective
immediately?
When the Labor Arbiter rules that the
employee must be reinstated, the order
is immediately executory. It is the duty
of the employer to reinstate the
employee. But he has a choice if the
reinstatement be actual or payroll.
Flight Attendants and Stewards
Assoc. of the Phils v. PAL
The law speaks of serious business
losses or financial reverses – sliding
incomes or decreasing gross revenues
are not necessarily losses, much less
serious business losses within the
meaning of the law.
The employer must also exhaust all
other means to avoid further losses
without retrenching its employees.
Retrenchment is a means of last resort.
The fact that PAL underwent corporate
rehabilitation does not automatically
justify the retrenchment of its cabin
crew personnel.
The hiring of new employees and
subsequent rehiring of “retrenched”
employees constitute bad faith. The
failure of the employer to resort to
other less drastic measures than
retrenchment seriously belies its claim
that retrenchment was done in good
faith to avoid losses.
By discarding the cabin crew
personnel’s previous years of service
and taking into consideration only one
year’s worth of job performance for
evaluation, PAL did away with the
19
1B 09-10
concept of seniority, loyalty and past
efficiency and treated all cabin
attendants as if they were on equal
footing, with no one more senior than
the other.
Postigo v. Phil. Tuberculosis Society
PTSI is a private corporation thus the
petitioners are employees in the private
sector hence entitled to the benefits of
RA 7641.
Employees of government-owned and
controlled corporations under the
Corporation Code are governed by the
provisions of the Labor Code.
Leopard Integrated Services Inc v.
Macalinao
Most contracts for security services
stipulate that the client may request
the replacement of the guards assigned
to it and a relied and transfer order in
itself does not sever employment
relationship between a security guard
and his agency.
Yrasuegui v. PAL
The obesity of a cabin crew, when
placed in the context of his work as a
flight attendant, becomes an analogous
cause under Art. 282(e) of the Labor
Code that justifies his dismissal from
service.
Bona Fide Occupational Qualification:
employment in particular jobs may not
be limited to persons of a particular
sex, religion or national origin unless
the employer can show that sex,
religion or national origin is an actual
qualification for performing the job.
BFOQ is valid provided that it reflects But this case provides an XPN to the
an inherent quality reasonably second requisite. When the certification
necessary for satisfactory job came from the physician of the
performance employee, the certificate can be relied
on.
Meiorin Test:
a. The employer must show that it
adopted the standard for a
purpose rationally connected to
the performance of the job;
b. The employer must establish that
the standard is reasonably
necessary to the accomplishment
of that work-related purpose; and
c. The employer must establish that
the standard is reasonably
necessary in order to accomplish
the legitimate work-related
purpose

Santos v. Servier Phils

The receipt of retirement benefits does

not bar the retiree from receiving
separation pay. Retirement benefits
and separation pay are not mutually
exclusive unless there is no specific
prohibition against the payment of both
benefits in the retirement plan and/or
in the CBA.

NOTE: in this case, there being a

provision in the Retirement Plan, the
petitioner is entitled only to either the
separation pay under the law or
retirement benefits under the Plan and
not both.

Requirements for valid termination by

reason of ailment:
1. Illness cannot be cured within 6
months
2. Certification by a public health
officer

20
1B 09-10
 FINALS COVERAGE
 What are “Facilities”?
Facilities include articles or services for
the benefit of the employee or his
family.
 Difference between wages and
salaries
Wages are compensation paid to blue
collar workers, i.e., for skilled or
unskilled manual labor paid at stated
daily, weekly, monthly or seasonal
periods
Salaries are paid to white collar
workers and denote a higher grade of
employment, a superior grade of
services and a position of office
 What is a “Living Wage”?
It is one which is 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.
 Who are excluded from the
coverage of Wages?
a. Persons in the personal service of
another;
b. Homeworkers engaged in
needlework;
c. Workers employed in cottage
industries duly registered in
accordance with law and who
perform the work in their homes;
d. Workers in duly registered
cooperatives as recommended by
21
1B 09-10
the Bureau of Cooperative
Development and approved by
the Secretary of Labor; and
e. Farm Tenancy or lease hold.
 Minimum Wage
 Wage distortions
Wage distortion involves four elements:
a. An existing hierarchy of positions
with corresponding salary rates
b. A significant change in the salary
rate of a lower pay class without
a concomitant increase in the
salary rate of a higher one
c. The elimination of the distinction
between the two levels
d. The existence of the distortion in
the same region of the country
 What are the provisions that
protect the wages of
employees?
a. Prohibition as to deduction from
wages without authorization,
except only as authorized by law
b. Prohibition as to withholding of
wages and kickbacks
c. Freedom of disposition of wages
by employees
d. Payment of wages in legal tender
e. Direct payment of wages to
employee
f. Direction as to period of payment
of wages
g. Direction as to place of payment
of wages
 Worker‟s preference in case of
bankruptcy
Preferential right given to workers original charter because they are
under Art. 110 may be invoked only governed by the Civil Service
during bankruptcy or insolvency Law. XPN: employees of
proceedings against the employer. government owned and
(1) In our jurisdiction, bankruptcy controlled corporations organized
or insolvency (or general judicial under the Corporation Code are
liquidation) proceedings provide covered by the provisions of the
the only proper venue for the Labor Code
enforcement of a creditor’s (2) Managerial Employees
preferential right such as that (3) Managerial Staff
established by Art. 110. (4) Field Personnel
(2) Art. 110 cannot be viewed in (5) Family Members
isolation of, and must always be (6) Domestic Helpers and Persons in
reckoned with, the provisions of the personal service of another
the Civil Code on concurrence (7) Workers paid by Results
and preference of credits, viz.,
Articles 2241 to 2245.  Who are considered as
(3) What Art. 110 of the Labor Code managerial staff?
established is not a lien, but a
preference of credit in favor of (1) Their primary duty consists of
employees. Unlike a lien, a the performance of work directly
preference of credit does not related to management policies of
create a charge upon any their employer
particular property of the debtor. (2) They customarily and regularly
This simply means that during exercise discretion and
bankruptcy or insolvency independent judgment
proceedings against the (3) They regularly and directly assist
properties of the employer, the the managerial employee whose
employees have the advantage of primary duty consists of the
having their unpaid wages management of a department of
satisfied ahead of certain claims the establishment in which they
which may be proved therein. are employed
(4) They execute, under general
 Hours of Work supervision, work along
specialized or technical lines
 Principles in determining requiring special training,
hours of work experience and knowledge
(5) They execute, under general
 Exclusions from hours of work supervision, special assignments
and tasks
GOV-ME-MS-FP-FM-DH-WR (6) They do not devote more than
20% of their hours worked in a
(1) Government employees, work-week to activities which are
including employees of owned or not directly and clearly related to
controlled corporations with

22
1B 09-10
 the performance of their work
hereinbefore described
 Holidays
 Service incentive leave
Yearly leave benefit of five days with
pay, enjoyed by an employee who has
rendered at least one year of service.
 Maternity leave
Female employee who has paid at least
three monthly maternity contributions
in the 12-month period preceding the
semester of her childbirth, abortion or
miscarriage and who is currently
employed shall be paid a daily
maternity benefit equivalent to one
hundred percent of her present basic
salary, allowances and other benefits or
the cash equivalent of such benefits for
sixty days subject to the following
conditions (pp.81-82)
 Paternity leave
Every male employee in the private
sector shall be entitled to paternity
leave benefits of seven days with full
pay for the first four deliveries by his
lawful spouse under such terms and
conditions provided in the rules.
ensure, at all times, the fundamental
equality before the law of women and
men
Sec. 3 of Article XIII – requires the
State to afford full protection to labor
and to promote full employment and
equality of employment opportunities
for all, including assurance of
entitlement to tenurial security of all
workers
Sec. 14 of Art. XIII – mandates that the
State shall protect working women
through provisions for opportunities
that would enable them to reach their
full potential
 Employment of Minors
 Househelpers
 Difference between apprentices
and learners
 Retirement
 Employee-employer
relationship
 Labor standards
 Termination of Employment

 Service charges ~o~

 13th Month Pay

 What are the constitutional

provisions protecting women?

Sec. 14, Article II – expressly

recognized the role of women in nation-
building and commands the State to

23
1B 09-10
Art. 278 – Coverage
Establishments or Undertakings,
whether for Profit or Not
Art. 279 – Security of Tenure
Regular Employment – employer
shall not terminate the services of an
employee except for a just cause or
authorized cause
Unjust dismissal – employee is
entitled to
1. Reinstatement without loss of
seniority rights and other
privileges
2. Full back wages inclusive of
allowances computed from the
time his compensation was
withheld from him up to the time
of his actual reinstatement
Art. 280 – Regular and Casual
Employment
Regular Employment – employee
has been engaged to perform activities
which are usually necessary or
desirable in the usual business or trade
of the employer except where the
employment has been fixed for a
specific project or undertaking the
completion or termination of which has
been determined at the time of the
engagement of the employee or where
the work or service to be performed is
seasonal in nature and the employment
is for the duration of the season.
Casual Employment – if not
covered by regular employment
provided that any employee has
rendered at least one year of service,
whether such service is continuous or
broken shall be considered a regular
employee with respect to the activity in
which he is employed and his
24
1B 09-10
employment shall continue while such
activity exists.
Art. 281 – Probationary Employment
Not exceed 6 months from the
date the employee started working
unless it is covered by an
apprenticeship agreement
stipulating a longer period.
The services of a probationary
employee may be terminated for:
a. Just cause; or
b. When he fails to qualify as a
regular employee in accordance
with reasonable standards made
known by the employer to the
employee at the time of his
engagement.
An employee who is allowed to work
after a probationary period shall be
considered a regular employee.
Art. 282 – Termination by Employer
An employer may terminate an
employment for any of the following
causes:
a. Serious misconduct or willful
disobedience by the employee of
the lawful ordered of his
employer or representative in
connection with his work;
b. Gross and habitual neglect by
the employee of his duties;
c. Fraud or willful breach by the
employee of the trust reposed in
him by his employer or duly
authorized representative;
d. Commission of a crime or
offense by the employee against
the person of his employer or any
immediate member of his family
 or his duly authorized
representatives; and
e. Other causes analogous to the
foregoing.
Art. 283 – Closure of Establishment
and Reduction of Personnel
The employer may also terminate the
employment of any employee due to:
a. Installation of labor-saving
devices
b. Redundancy
c. Retrenchment to prevent losses
or the closing or cessation of
operation of the establishment or
undertaking unless the closing is
for the purpose of circumventing
the provisions of this Title
Employer must serve a written notice
on the workers and the Ministry of
Labor and Employment at least one
month before the intended date.
In case of termination due to the
installation of labor-saving devices or
redundancy, the worker affected shall
be entitled to a separation pay
equivalent to at least his one month
pay or to at least one month pay for
every year of service, whichever is
higher.
In case of retrenchment (under C), the
separation pay shall be equivalent to
one month pay or at least one half
(1/2) month pay for every year of
service, whichever is higher.
A fraction of at least six months shall
be considered as one whole year.
Art. 284 – Disease as a ground for
termination
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An employer may terminate the
services of an employee who has been
found to be suffering from any disease
and whose continued employment is
prohibited by law or is prejudicial to his
health as well as to the health of his
co-employees provided:
a. He is paid separation pay
equivalent to at least one month
salary or to one-half (1/2) month
salary for every year of service,
whichever is greater;
b. A fraction of at least six months
being considered as one whole
year
Art. 285 – Termination by Employee
a. An employee may terminate
without just cause the employee-
employer relationship by serving
a written notice on the employer
at least one (1) month in
advance. The employer upon
whom no such notice was served
may hold the employee liable for
damages.
b. An employee may put an end to
the relationship without serving
any notice on the employer for
any of the following just causes
(S-I-C-O):
 Serious insult by the employer
or his representative on the
honor and person of the
employee;
 Inhuman and unbearable
treatment accorded the
employee by the employer or his
representative;
 Commission of a crime or
offense by the employer or his
representative against the person
of the employee or any of the
 immediate members of his
family; and
 Other causes analogous to any
of the foregoing.
ART. 286 - When Employment not
Deemed Terminated
The bona-fide suspension of the
operation of a business or undertaking
for a period not exceeding six (6)
months, or the fulfillment by the
employee of a military or civic duty
shall not terminate employment.
In all such cases, the employer shall
reinstate the employee to his former
position without loss of seniority rights
if he indicates his desire to resume his
work not later than one month from
the resumption of operations of his
employer or from his relief from the
military or civic duty.
Title II – Retirement from the Service
Art. 287 – Retirement
An employee may be retired upon
reaching the retirement age based in
the CBA or other applicable
employment contract
In case of retirement, the employee
shall be entitled to receive such
retirement benefits as he may have
earned under existing laws and any
CBA and other agreements: Provided:
a. That an employee’s retirement
benefits under any collective
bargaining and other agreements
shall not be less than those
provided therein.
In the absence of a retirement plan or
agreement providing for retirement
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benefits of employees in the
establishment, an employee upon
reaching the age of sixty (60) years or
more, but not beyond sixty-five (65)
years which is hereby declared the
compulsory retirement age, who has
served at least five (5) years in the
said establishment, may retire and
shall be entitled to retirement pay
equivalent to at least one-half (1/2)
month salary for every year of service, a
fraction of at least six (6) months being
considered as one whole year.
Unless the parties provide for broader
inclusions, the term „one-half (1/2)
month salary‟ shall mean fifteen (15)
days plus one-twelfth (1/12) of the
13th month pay and the cash
equivalent of not more than five (5)
days of service incentive leaves.
Retail, service and agricultural
establishments or operations employing
not more than ten (10) employees or
workers are exempted from the
coverage of this provision.
Violation of this provision is hereby
declared unlawful and subject to the
penal provisions under Article 288 of
this Code.
Implementing Rules
Sec. 1 – Coverage
Applies to all establishments whether
operated for profit or not with the
exception of the Government and its
political subdivision including
government-owned or controlled
corporations
Sec. 2 – Security of Tenure
If regular employment – employer shall
not terminate except for a just or
authorized causes as provided by law
and subject to the requirements of due
process
If employment covered by contracting
or subcontracting arrangement – no
employee shall be dismissed prior to
the expiration of the contract between
the principal and the contractor or
subcontractor unless dismissal is for
just or authorized cause or is brought
about by the completion of the phase of
the contract for which the employee
was engages subject to the
requirements of due process or prior
notice
In all cases of termination, the
following standards of due process
shall be observed:
For termination based on just cause:
a. Written notice specifying the
ground/s for termination
b. Hearing
c. Written notice of termination
served
For termination of employment as
defined in Art. 283:
a. Requirement of due process
deemed complied with upon
service of a written notice to the
employee and the appropriate
Regional Office of the DOLE at
least 30 days before the
effectivity of the termination
specifying the ground/s for
termination
If termination is brought about by the
completion of a contract or phase or by
failure of an employee to meet the
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standards of the employer in case of
probationary employment, a written
notice is sufficient served within a
reasonable time.
Sec. 3 – Reinstatement
An employee who is unjustly dismissed
from work shall be entitled to
reinstatement without loss of seniority
rights and backwages
Sec. 4 – Reinstatement to Former
Position
Employee – separated without just
cause – reinstated to his former
position unless:
a. Such position no longer exists at
the time of reinstatement in
which case he shall be given a
substantially equivalent position
in the same establishment
without loss of seniority rights
b. In case the establishment ceased
operations or former position no
longer exists at the time of
reinstatement for reasons not
attributable to the fault of the
employer, the employee shall be
entitled to separation pay
equivalent at least to one month
for every year of service,
whichever is higher, a fraction of
at least six months being
considered as one whole year.
Sec. 5 – Regular and casual
employment
(a) Employment shall be considered to
be regular employment where the
employee has been engaged to perform
activities which are usually necessary
or desirable in the usual business or
trade of the employer except where the
employment has been fixed for a
specific project or undertaking the
completion or termination of which has
been determined at the time of the
engagement of the employee or where
the work or service to be performed is
seasonal in nature and the employment
is for the duration of the season.
(b) Employment shall be deemed as
casual in nature if it is not covered by
the preceding paragraph; Provided,
That any employee who has rendered
at least one year of service, whether
such service is continuous or not, shall
be considered a regular employee with
respect to the activity in which he is
employed and his employment shall
continue while such activity exists.
(c) An employee who is allowed to work
after a probationary period shall be
considered a regular employee.
Sec. 6 – Probationary employment
(a) Where the work for which an
employee has been engaged is
learnable or apprenticeable, the
probationary employment period of the
employee shall be limited to the
authorized learnership or
apprenticeship period, whichever is
applicable.
(b) Where the work is neither
learnable nor apprenticeable, the
probationary employment period shall
not exceed six (6) months reckoned
from the date the employee actually
started working.
(c) The services of an employee who has
been engaged on probationary basis
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may be terminated only for a just cause
or when authorized by existing laws, or
when he fails to qualify as a regular
employee in accordance with
reasonable standards prescribed by the
employer.
(d) In all cases involving employees
engaged on probationary basis, the
employer shall make known to the
employee the standards under which
he will qualify as a regular employee at
the time of his engagement.
Sec. 7 – Termination of Employment by
Employer
The just causes: provided in Article 283
of the Code
The separation from work for a just
cause does not entitle him to the
termination pay provided in the Code,
without prejudice, however, to
whatever rights, benefits, and privileges
he may have under the applicable
individual or collective agreement with
the employer or voluntary employer
policy or practice.
Sec. 8 – Disease as a ground for
dismissal
Where the 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 not
terminate his employment unless there
is a certification by competent public
health authority that the disease is of
such nature of at such a stage that it
cannot be cured within a period of six
(6) months even with proper medical
treatment. If the disease or ailment can
be cured within the period, the
employee shall not terminate the
employee but shall ask the employee to
take a leave of absence. The employer
shall reinstate such employee to his
former position immediately upon the
restoration of his normal health.
Sec. 9 – Termination pay
(a) An employee shall be entitled to
termination pay equivalent to at least
one month's salary for every year of
service a fraction of at least six (6)
months being considered as one whole
year, in case of termination of his
employment due to the installation of
labor-saving devices or redundancy.
(b) Where the termination
employment is due to retrenchment to
prevent losses and in case of closure or
cessation of operations
establishment or undertaking not due
to serious business losses or financial
reverses, or where the employment is
prohibited by law or is prejudicial to his
health or to the health of his co-
employees, the employee shall be
entitled to termination pay equivalent
to at least one-half month's pay for
every year of service, a fraction of at
least six months being considered as
one whole year.
(c) The termination pay provided in the
Section shall in no case be less than
the employee's one month pay.
Sec. 10 – Basis of termination pay
The computation of the termination pay
- latest salary rate unless the same was
reduced by the employer to defeat the
intention of the Code, in which case the
basis of computation shall be the rate
before its deduction.
Sec. 11 – Termination of employment
by employee
The just causes for putting an end to
the employer-employee relationship by
the employee shall be those provided in
Article 286 of the Labor Code.
Sec. 12 – Suspension of relationship
In case of suspension of operation of
the business or undertaking of the
employer for a period not exceeding six
(6) months unless the suspension is for
the purpose of defeating the rights of
the employees under the Code, and in
of case of mandatory fulfillment by the
employee of a military or civic duty.
of The payment of wages of the employee
as well as the grant of other benefits
and privileges while he is on a military
or civic duty shall be subject to special
laws and decrees and to the applicable
individual or collective bargaining
agreement and voluntary employer
practice or policy.
Sec. 13 – Retirement
In the absence of any collective
bargaining agreement or other
applicable agreement concerning terms
and conditions of employment which
provides for retirement at an older age,
an employee may be retired upon
reaching the age of sixty (60) years.
Sec. 14 – Retirement benefits
(a) An employee who is retired
pursuant to a bona-fide retirement
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plan or in accordance with the
applicable individual or collective
agreement or established employer
policy shall be entitled to all the
retirement benefits provided therein or
to termination pay equivalent to at
least one-half month salary for every
year of service, whichever is higher, a
fraction of at least six (6) months being
considered as one whole year.

(b) Where both the employer and the

employee contribute to the retirement
plan, agreement or policy, the
employer's total contribution thereto
shall not be less than the total
termination pay to which the employee
would have been entitled had there
been no such retirement fund. In case
the employer's contribution is less than
the termination pay the employee is
entitled to receive, the employer shall
pay the deficiency upon the retirement
of the employee.

(c) This Section shall apply where the

employee retires at the age of sixty (60)
years or older.

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