LABSOLE MODULE 1: INTRODUCTION TO LABOR LAW
Topic I. Introduction to Labor Law 2. Collective Bargaining
General Classification of Labor 3. Security of tenure
Three Classifications of Labor Laws 4. Just and humane conditions of work
Construction in favor of labor
[Link] Standards
•The New Civil Code of the Philippines provides:
Labor standards is that branch of labor law that
prescribes the minimum requirements for hours of Art. 1702. In case of doubt, all labor legislation and
work, wages, monetary benefits, welfare benefits, all labor contracts shall be construed in favor of safety
and occupational health and safety. and decent living of the laborer.
[Link] Relations •The Labor Code of the Philippines provides:
Labor relations is that branch of labor law tha Art. 4 Construction in favor of Labor. All doubts in the
regulates the activities of labor organizations and implementation and interpretation of the provisions
prescribes the modes and machinery for the of this Code, including its implementing rules and
settlement of labor disputes, including collective regulations shall be resolved in favor of labor.
bargaining, and the modes and procedure for
terminating an employment. Difference between the two provisions of law
[Link] Laws Article 1702 speaks of doubts in labor law and labor
contracts in general while Article 4 of the Labor Code
These are statutes intended to provide protection to is specifically confined to doubts involving the Labor
the employee and his beneficiaries in case of Code and its implementing rules .
disability, sickness, old age, death, and other
contingencies that result in loss of income or financial The New Civil Code provision is more comprehensive
burden. and covers all labor legislations which necessarily also
includes the Labor Code and other special laws as well
Social legislation is so broad that it covers labor laws, as labor Contracts.
agrarian laws and welfare laws. The emphasis is more
on the aspect of general public good and social Construction in favor of labor
welfare.
The rule on construction of labor is applicable to all
Basic Policy of the Labor Code workers whether in the government/public sector or
in the private sector.
Art. 3. Declaration of basic policy. The State shall
afford protection to labor, promote full employment, When conflicting interests of labor and capital are to
ensure equal work opportunities regardless of sex, be weighed on the scales of justice, the heavier
race or creed and regulate the relations between influence of labor should be counterbalanced by
workers and employers. The State shall assure the sympathy and compassion the law must accord the
rights of workers to self-organization, collective underprivileged worker.
bargaining, security of tenure, and just and humane
conditions of work. However, the general rule is that where the law
speaks in clear and categorical language there is no
This provision states 4 rights of workers under the room for interpretation there is only room for
Labor Code: application.
1. Self-organization
LABSOLE MODULE 1: INTRODUCTION TO LABOR LAW
Doubt or Ambiguity in Labor Contracts (1) If created by special charter - not covered by the
Labor Code
Contracts which are not ambiguous are to be
interpreted according to their literal meaning and not (2) If organized under the Corporation Law - covered
beyond their obvious intendment. It is only when the by the Labor Code.
law is ambiguous or of doubtful meaning may the
court interpret or construe its true intent. Exclusionary Clause
Doubt or ambiguity in evidence “Except as otherwise may be provided” - This means
that some rights and benefits under the Labor Code
The rules in Article 4 and Article 1702 are also are not accorded to certain types of employees in the
applicable in appreciation of evidence in labor private sector. These rights and benefits are the
cases/proceedings. Consequently, when there is following:
doubt between the evidence presented by the
employer and the employee, such doubt should be 1. The right to organize, join, or assist in
resolved in favor of the latter. organizing a labor union is not available to
managerial employees
“If doubt exists between the evidence presented by
the employer and the employee, the scales of justice 2. The normal hours of work, meal periods, night
must be tilted in favor of the latter.” shift differential, overtime pay, weekly rest day,
and special holiday premium, regular holiday
The rule does not deprive employees fair treatment pay, service incentive leave and service charges
are not available to:
The rule does not mean thet capital or the employer,
at all times, are at the losing end of a controversy. A. Managerial employees
Management also has its own rights which as such are
entitled to respect and enforcement in the interest of B. Officers and members of the managerial staff
simple fair play.
C. Field personnel
Applicability of the Labor Code
D. members of the family of the employer who
Art. 6. Applicability - All rights and benefits granted to are dependent on him for support
workers under this Code shall, except as may
E. Domestic helpers
otherwise be provided herein, apply alike to all
workers, whether agricultural or non-agricultural. F. Person in the personal services of another;
Coverage clause G. Workers paid by results
The phrase shall apply alike to all workers, refers to 3. Employees in retail and service establishments
those employed in the private sector only . The Labor regularly employing less than 10 workers are not
Code does not apply, to employees of the entitled to:
Government except the provisions on employee’s
compensation. a. Holiday pay
With regard to government-owned or controlled b. Service incentive leave
corporations, the applicability of the Labor Code will
4. Employees in retail, service, and agricultural
depend upon the manner of their creation. Thus:
establishments employing not more than 10
LABSOLE MODULE 1: INTRODUCTION TO LABOR LAW
employees or workers are not entitled to Under this element the relationship of employer-
retirement benefits. employee is created by the act of hiring a person
as an employee.
Hiring may either be expressed or implied. A
Topic II. Employer Employee Relationship written contract is not necessary. The essential
thing is that there should be an understanding
Importance of Employer-Employee Relationship
between the parties that one is to render
Labor Law is about employer-employee
personal service to or for the benefit of the other
relationship. Therefore, the applicability of labor
and a recognition by them of the right of one to
laws is dependent upon the existence of
order and control the performance of the work.
employer-employee relationship. (Labor Law
Review, Paulino D. Ungos Jr. & Paulindo D. Ungos Payment of Wages
III, 4, (2018))
Under this criterion, the relationship of
If there is no employer-employee relationship employer-employee is deemed to exist if the
then the rules of Civil Law will apply. person hired is compensated in the form of
wages.
Employer
The term wage is defined under Art. 97 of the
Includes any person acting for the interest of an
Labor Code: “Wage” paid to an employee shall
employer, directly or indirectly. The term shall
mean the remuneration or earnings, however
not include any labor organization or any of its
designated, capable of being expressed in terms
officers or agents except when acting as
of money, whether fixed or ascertain on a time,
employer.
task, piece or commission basis or other method
Employee of calculating the same, which is payable by an
employer to an employee under a written
Includes any person in the employ of an contract or unwritten contract of employment
employer. The term shall not be limited to the for work done or to be done, or for services
employees of a particular employer, unless this rendered or to be rendered.
Code so explicitly states. It shall include any
individual whose work has ceased a result or in The main consideration for an employer to give a
connection with any current labor dispute or wage to an employee is the labor being
because of any unfair labor practice if he has not performed NOT the results or the finished work.
obtained any other substantial equivalent and If something is paid primarily in consideration of
regular employment. results or finished work, the compensation is not
wage.
Elements of an Employer-Employee Relationship
Power of Dismissal
1. Selection and engagement of employee;
The relationship of employer-employee is
2. Payment of wages deemed to exist if the person hired is subjected
to the rules of discipline of the employer.
3. Power of dismissal
Prohibiting a person hired from competing with
4. Power to control the employee’s conduct the firm under pain of dismissal, and subjecting
the person hired to disciplinary action for
Selection and Engagement absences without leave are indications that the
employer wields the power of dismissal.
LABSOLE MODULE 1: INTRODUCTION TO LABOR LAW
Power of Control no amount to the labor law concept of control
that is indicative of employer-employee
This refers to the authority of the employer to relationship.
manage the employee on both the result of the
work to be done and the means by which the Tests to determine the existence of Employer-
work is to be accomplished. Employee Relationship
BOTH the means and the end must be controlled The Economic Reality Test - When a worker
by the employer. possesses some attributes of an employee and
others of an independent contractor which make
Tests to determine the existence of Employer- him fall within an intermediate area he may be
Employee Relationship classified under the category of an employee
when the economic facts of the relation make it
The Control Test is commonly regarded as the
more nearly one of employment than one of
most crucial and most determinative indicator of
independent business enterprise. (Sunripe
the presence or absence of an employer
Coconut Products vs. CIR, 83 Phil. 518, April 30,
employee relationship. Under the control test, an
1949)
employer-employee relationship exists where
the person for whom the services are performed Cases to be read
reserves the right to control not only the end
achieved, but also the manner and means to be Sonza vs ABS-CBN, G.R. No. 138051, 431 SCRA
used in reaching the end. ( Abante, Jr. vs. 583, June 10 2004
Lamadrid Bearing & Parts Corp., G.R. No. 159980,
430 SCRA 368, May 28 2004). Mario Felicilda vs Manchesteve Uy, G.R. No.
221241, 803 SCRA 296, September 14, 2016
Not every form of control is considered
Compania Maritima vs Cabagnot vda. de Hio, G.R.
Rules which serve merely as guidelines towards No. L-10675, April 29, 1960
the achievement of mutually desired results, are
not indicative of the power of control.
The power of control cannot be inferred from the Topic III. Legitimate Job Contracting
mere fact that the relationship may be
Job Contracting
terminated for certain specified causes, such as
failure to meet the annual sales quota, inability Job contracting is an arrangement where a
to make sales production or conduct detrimental principal outsources a job, work or service to a
to the company. contractor who performs the job, work or service
through its deployed personnel.
This is because these have no connection on the
means and methods of work. Example: A large business or institution
(principal) has outsourced its security (job, work
Drawing the line
or service) to a security agency (Contractor). The
The line should be drawn between rules that security agency will perform this job, work or
merely serve as guidelines towards the service through its deployed personnel.
achievement of the mutually desired result
Job Contracting
without dictating the means or methods of
accomplishing the assigned tasks, the rules Job contracting may either be legitimate
imposed by the hiring party on the hired party do (permissible) or the prohibited labor only
LABSOLE MODULE 1: INTRODUCTION TO LABOR LAW
contracting. Job contracting is commonly perform the job or work on its own responsibility,
referred to as outsourcing. according to its own manner and method;
Read:[Link] 2. The contractor has substantial capital to carry
ads/2017/07/Department-Circular-No_-01-17 out the job farmed out by the principal on his
Clarifying-the-applicability-of-Department- account, manner and method. Investment in the
Order-No_-[Link] form of tools, equipment, machinery and
supervision
Trilateral Relationship
3. In performing the work farmed out, the
In job contracting there are three parties contractor is free from the control and/or
involved. direction of the principal in all manners
connected with the performance of work except
1. The “principal” which refers to any natural or
as to the result thereto; and
juridical entity whether an employer not, who
puts out or farms out a job or work to a 4. The service agreement ensures compliance
contractor; with all the rights and benefits for all the
employees of the contractor under labor laws.
2. The contractor
The absence of ANY of the foregoing elements
3. The contractor’s employees which refers to
makes the arrangement a labor only contracting
the employee of the contractor hired to perform
agreement.
or complete a job or worked out by the principal.
Labor only contracting
Legitimate Job Contracting
This is a prohibited arrangement where the
Legitimate or permissible job contracting or
contractor or subcontractor merely recruits,
subcontracting refers to an arrangement
supplies or places workers to perform a job, work
whereby a principal agrees to put out or farm out
or service for a principal.
to contractor or subcontractor the performance
or completion of a specific job, work or service The elements are:
within a definite or predetermined period,
regardless of whether such job, work or service is 1. The contractor or subcontractor does not have
to be performed within or outside the premises substantial capital or investment to actually
of the principal ( Sasan vs NLRC, G.R. No. 176240, perform the job, work service under its own
October 17, 2008) account and responsibility; and
In this arrangement the principal is not the 2. The employees recruited, supplied or placed
employer of the workers provided by the by such contractor or subcontractor are
contractor. Going back to the previous example, performing activities are directly related to the
the security guards are not the employees of the main business of the principal.
business. They are however, employees of the
security agency. Effects of labor only contracting
Elements of Legitimate Job Contracting 1. The labor only contractor will be treated as the
agent or intermediary of the principal. Since the
1. The contractor is engaged in a distinct and act of an agent is the act of the principal,
independent business and undertakes to representations made by the labor-only
LABSOLE MODULE 1: INTRODUCTION TO LABOR LAW
contractor to the employees will bind the
principal.
2. The principal becomes the direct employer as
if the principal directly employed the workers
supplied by the labor only contractor.
3. The principal and the labor only contractor will
be solidarily treated as the employer.
4. The employees supplied by the labor only
contractor will become the regularemployees of
the principal.
Cases to read
Sasan vs NLRC, G.R. No. 176240, October 17,
2008
Vinoya vs NLRC, G.R. No. 126586, February 2,
2000