1. Labor Laws and Legislations
TOPIC: Labor Law
LESSON 2
DR. MARIO S. NILLO
Faculty
GS MBA/CBM
HRDM Research Coordinator
2. Introduction
In this highly complex and increasingly
competitive world that we live in, people
have to exert extra ounce of effort inorder
to get what they need and achieve what
they want. Food is hardly served on our
tables in golden platters – we have to work
hard for it, and much them regardless of
how they are packaged. And so the youth
are sent to school not simply so that they will
break the shackles of illiteracy, but also to
craft decent pathway towards the arena of
the society’s working force – and ultimately,
to have a good life.
2
3. Labor and Capital . . .
In carrying out and interpreting the LC’s
provisions and its IRR, the workingman’s
welfare should be the primordial and
paramount consideration. This kind of
interpretation gives meaning and substance
to the liberal compassionate spirit of the law
provided for in Article 4 of the LC. However,
if the provision of law is clear and
unambiguous, it must be applied in
accordance with its express terms and no
interpretations is needed
3
4. Case Illustration
St Luke’s Medical Centre Employees
Association vs NLRC (2007)
FACTS: Maribel Santos worked as an X-Ray Technician
at St Luke’s Medical Centre. However, she does not
possess a certificate of registration as required under
the newly passed Radiologic Act or RA 7431.
Specifically, Section 15 of this law provides that unless
exempt from the examinations, no person shall practice
or offer to practice as a radiologic and/or X-ray
technologist in the Philippines without having obtained
the proper certificate of registration from the Board. Due
to her non-compliance and her failure to pass the exams
pursuant to the afore-mentioned law, she was dismissed.
She filed a car against St. Luke’s for illegal dismissal.
ISSUE: Whether or not the employee was validly
dismissed.
4
5. Case Illustration
St Luke’s Medical Centre Employees Association vs
NLRC (2007) . . .
RULING: YES. While the right of workers to security of tenure is
guaranteed by the Constitution , its exercise may be
reasonably regulated pursuant to the police power of the
State to safeguard health, morals, peace, education, order,
safety, and the general welfare of the people. Consequently,
persons who desire to engage in the learned professions
requiring scientific or technical knowledge may be required
to take an examination as a prerequisite to engaging in their
chosen careers. The most concrete example of this would be
in the field of medicine, the practice of which in all its
branches has been closely regulated by the State. It has long
been recognized that the regulation of this field is a
reasonable method of protecting the health and safety of
the public to protect the public from the potentially deadly
effects of incompetence and ignorance among those who
would practice medicine.
5
6. Comments on St Lukes Medical Centre
Employees’ Association vs NLRC (2007)
While our laws endeavor to give life to
the constitutional policy on social justice
and the protection of labor, it does not
mean that every labor dispute will be
decided in favor of the workers. The law
also recognizes that management rights
which are also entitled to respect and
enforcement in the interest of fair play.
Labor laws, to be sure, do not authorized
interference with the employer’s
judgment in the conduct of the latter
business.
6
7. c. Constitutional Basis
The state shall 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 to investments, and to
expansion and growth. (Article Xlll,
Section 3)
7
8. Sources of labor laws
Labor Code (LC) and other related
special legislation
Contract
Collective Bargaining Agreement
(CBA)
Past practices
Company policies
8
9. Management Prerogative
It is the right of an employer to regulate,
unless otherwise limited by special laws,
according to his own discretion and
judgment, all aspect of employment,
including hiring, work assignments, working
methods, time. Place and manner of work,
tools to be used, processes to be followed,
supervision of workers, working regulations,
transfer of Ee’s, workers, working regulations,
transfer of Ee’s, work supervision, lay-off of
workers and the discipline, dismissal and
recall of workers.
9
11. 11
Article XIII, Section 1. The Congress shall
give highest priority to the enactment of
measures that protect and enhance the
right of all the people to human dignity,
reduce social, economic, and political
inequalities, and remove cultural
inequalities by equitably diffusing wealth
and political power for the common
good.
Enactment this end, the State shall
regulate the acquisition, ownership, use,
and disposition of property and its
increments.
Article XIII, Section 3. 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. . .
Article XIII, Section 2. The
promotion of social justice
shall include the
commitment to create
economic opportunities
based on freedom of
initiative and self-reliance.
Article XIII, Section 14. The
State shall protect working
women by providing safe and
healthful working conditions,
taking into account their
maternal conditions, and such
facilities and opportunities
that enhance their welfare
and enable them to realize
their full potential in the
service of the nation.
Constitutional Provisions of the 1987 Constitution. . .
12. Participative management
Participative management is strongly linked with
the notion of industrial democracy. PM means
including employees in the process of decision-
making. It is initiated on the idea that an
employee should be given an opportunity to
participate in the decision making process of the
management when the employee invests his
time and secures his destiny to the workplace.
Further, the employee must be afforded a
chance to articulate his views ad appropriate
value ought to be given to them by the
management while framing policies.
12
13. Importance of participative
management in an organization
13
Ees see themselves with the work, which directs to better
performance
Ees experience e motivation because they are involved in
management
This leads to self-worth, job satisfaction and collaboration of
Ees with management
It reduces conflict and stress, resulting in more commitment to
goals and better acceptance to change
It results in improved communication as people jointly talks
about work problems.
14. Fundamentals for successful
participation by Employees
14
1. Strong trade unions
3. Comprehensive
understanding of
objectives
2. Positive attitude of
management
Voluntary
participation
advantageous
4. Education and
training of workers
15. Compassionate justice
In consonance with the overarching
purpose of fostering social justice as the
underlying principle in labor laws, courts
and labor tribunals have utilized what is
known as compassionate justice in
decisions and rulings -
It is disregarding rigid rules and giving
due weight to all equities of the case
.e.g. validly dismissed may still be given
severance pay.
15
16. Compassionate justice . . .
This has been in certain
dismissal cases to bar
termination of workers who
have been found guilty of
certain offenses, but have
nevertheless rendered long
years of service and
without and derogatory
record prior to offense
committed.
16
17. Compassionate justice . . .
This has been in certain dismissal
cases to bar termination of
workers who have been found
guilty of certain offenses, but
have nevertheless rendered long
years of service and without and
derogatory record prior to offense
committed.
17
18. Compassionate justice . . .
As an example, in the case of Caltex
Refinery Employees’ Association vs NLRC
(1995), the court held that the dismissal of
an employee for theft of lighter fluid
valued at P 8.00 is too severed a penalty,
in view of the length of service he has
rendered in the company (8 years) and
the lack of previous derogatory record,
that there was no showing that the
employee’s retention in the service would
work under prejudice to the viability of the
employer’s operations. Besides, the
employee has already been preventive
suspended and most likely suffered mental
torture in the process.
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19. Compassionate justice . . .
Also, in the case of Manila Electric
Company vs Beltran (2012), the
Court ruled that the termination of a
senior branch clerk due to
negligence consisting of her failure
to immediately remit collections
amounting to P 15, 000 is too harsh in
lieu of her nine (9) years of
unblemished service in the
company, and the absence of
intent, ill motive or bad faith in his
remiss.
19
20. Compassionate justice . . .
However, it must be remembered that this
court of protection given to laborers should
not mean injustice and destruction of the
right of employers, as even the idea of social
justice is not intended to countenance
wrongdoing simply because it is committed
by the underprivileged.
“At best it may mitigate the penalty but it
certainly will not condone the offense.
Compassion for the underprivileged is an
imperative of every humane society but only
when the recipient is not a rascal claiming an
undeserved privilege. Social Justice cannot
be permitted to be refuse of scoundrels any
more than can equity be an impediment to
the punishment of the guilty.”
20
21. Employee-Employer
Relation ship . . .
The Code uses Er-
Ee more often
than capital and
labor relationship.
Nevertheless, for
purposes of
discussion
employer shall
equally refer to
capital, and
employee to
labor.
21
22. Employment: Contractual in
Nature
Contractual in nature but impressed
with public interest. – It arises from the
agreement of the parties. However,
since a labor contract is impressed so
much with public interest, it must
conform to the common good.
Therefore, even if employment is
primarily determined by the
agreement between the parties, such
contract is regulated by State laws.
In this regard, the Civil Code of the
Philippines provide that the parties
are enjoined not to act oppressively
against each other, or impair the
interest or convenience of the public.
22
23. Actual case on Employment:
Contractual Efren Paguio vs NLRC
(2003)
Facts: Metromedia Times Corporation entered into an
employment contract with the petitioner.. In this contract,
this stipulation was provided: “You are not an employee of
Metromedia Times Group, nor does the company have
any obligations towards anyone you may employ, nor
any responsibility for your operating expenses or for any
liability you may incur”. Petitioner was later on dismissed
from work, prompting him to file a case for illegal dismissal.
The respondent company asserted that petitioner is not a
regular employee, but one subject to a fixed-term, which
justifies his dismissal at the end of the contract.
Issue: Whether or not petitioner is a regular employee.
23
24. Actual case on Employment: Contractual
Efren Paguio vs NLRC (2003). . .
RULING: The Court ruled that respondent company
cannot seek refuge under the terms of the agreement it
has entered with petitioner. The basis of the existence of
this relationship is the NATURE of the work of the petitioner,
regardless of the nomenclature used by the employer to
characterize his status in the company. The law affords
protection to an employee, and it will not countenance
any attempt protection to an employee, and it will not
countenance any attempt to subvert its spirit and intent.
A stipulation in an agreement can be ignored as and
when it is utilized to deprive the employee of his security
of tenure . The sheer inequality that characterizes Er-Ee
relations, where the scales generally tip against the
employee, often scarcely provides him real and better
options.
24
25. Actual case on Employment:
Contractual Efren Paguio vs NLRC
(2003) . . .
25
Thus defined, a regular employee is one who is
engaged to perform activities which are
necessary and desirable in the usual business or
trade of the employer as against those which are
undertaken for a specific project or are seasonal.
Even in these latter cases, where such person has rendered at
least one year of service, regardless of the nature of the activity
performed or of whether it is continuous or intermittent, their
employment is considered regular as long as the activity exists,
it not be formally declared as such before acquiring a regular
status (Underscoring supplied)
That petitioner performed activities which were
necessary and desirable to the business of the Er, and
that the same went on for more than a year, could
hardly be denied.
26. Test of Employment
This test is the yardstick to
determine employer-employee
relationship:
a. selection and engagement of
the employee;
b. payment of wages;
c. power of dismissal;
d. and employer’s power to control
the employee’s conduct (Azucena,
2007).
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27. Test of Employment . . .
The power of control of the powers mentioned above,
the power of control over the employee’s conduct is
generally regarded as determinative of the existence of
the employer-employee relationship [See: G.R. No.
95845].
Under the control test, such a relationship exists where
the person for whom the services are performed
reserves the right to control not only the end achieved,
but also the manner and means used to achieve that
end [See: D.O. No. 147-15].
Thus, if the power of control can be exercised only on
the end result of the job, and not on the means as to
how the job will be done, then the relationship is not
that of an employer and employee. The relationship
between them is merely contractual
27
28. What exactly does one mean by
Employer Employee Relationship?
Every new employee, no matter whichever position he is
hired for, is more than just a new employee for the
organization that hires him.
In other words, whenever an employer hires a new
employee, he is not just bringing in another new face
on board, but he is also starting a new relationship.
Since employers and employees often work in close
quarters, they necessarily develop relationships.
However it’s not just starting these new relationships
that matter. It’s all about managing them and taking it
forward as it is vital to the success of the organization
and in turn, the growth of the employee within the
organization. To reap these benefits, keep the dynamics
of your employer-employee relationship in mind
28
29. Why is a strong Employer
Employee Relationship Essential?
A good work relationship does not build overnight. It
takes time and a lot of mutual faith and trust, between
both the employer and the employee, to take each
other into confidence. Having said this, a strong
employer-employee relationship could benefit both the
employee and employer in a good way. Take the
instance of an employee looking for better prospects. It
is sometimes observed that though the present
employer may not be too keen on losing a good and
dependable hand, but only with the employee’s future
in mind, he may give a very good account of his
employee to the new employer, as these days previous
employer references, form a critical part of the hiring
process . . .
29
30. Why is a strong Employer
Employee Relationship Essential
1. Increased productivity for the organization: A Strong
employer employee relationship creates a pleasant work
environment for the employee. Subsequently, he works
with increased confidence and morale. This leads to
better performance and increased productivity.
2. Improved Employee Loyalty: A good employer-employee
relationship helps in increased employee loyalty and
improves the prospects of employee retention. For most
businesses, the increased cost of employee turnover
outweighs the cost of the employee relations program
that they have in place. Additionally, it ensures that the
employer has a trained and skilled set of employees.
3. A healthy and conflict free work environment: A smooth
employer-employee relationship reduces the possibility of
conflicts within the work place. This helps in developing a
cordial relationship within the workforce too and leads to
greater productivity
30
31. How to establish a strong Employer-Employee
Relationship?
There are numerous ways this can be done.
Some of the prominently practiced ways are
given below;
1. Applauding good performance: Appreciating
a good performance of an employee, either
personally or before a collective audience, not
only boosts the employee’s morale, but can
also motivate the other employees as well to
do better. This can lead to a strong bonding
between the organization and the workforce,
leading to better productivity and employee
performance.
31
32. How to establish a strong Employer-
Employee Relationship?
2. Set Goals: From an organization’s perspective, it is
important to set performance goals for the employee, and
support him in achieving it. In other words, achieving
strong employee relations is also providing your employees
with the image of ambition and success. A strongly motivated
employee will contribute his mind and heart for the
organization and by and large will be able to achieve the
objectives laid down by the organization.
3. Follow equality and communicate effectively: Most of the
employee’s do not follow the path of equal opportunities for
all, with respect to analyzing independent employees goes.
There is always a slight possibility of favoritism in every
organization. This act, if done away with, can really open the
doors to unearth true talent within the organization. Also, an
employee must be made to feel that the doors of his
reporting authority are always open to him to discuss
thoughts and steps to improve productivity in the
organization. This freedom and felicity to communicate your
thoughts freely can go a long way in building a strong
employee-employer relationship, leading to an overall growth
of the organization and employees.
32
33. Independent Contractor
Independent contractor is a
person who accomplishes the
desired work as specified by the
principal in accordance with his
own means and methods. As long
as the desired result is achieved,
the means and methods used are
immaterial to the principal.
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34. Independent Contractor . . . 34
However, if a person works for another for a fee,
but control is inexistent on the part of the person
who hires, the former is generally considered as
an I.C.- and the person for whom the services
are rendered is known as the principal.
“Where a person who works for another does so more or
less at his own pleasure and is not subject to definite hours
or conditions of work, and in turn is compensated
according to the result of his efforts and not the amount
thereof, we should not find that the relationship of employer
and employee exists”. (Encyclopedia Britannica Inc. vs
NLRC, 1996).
35. Important to distinguish whether the
relationship is that of an Er and Ee or that
of a principal and independent contractor
1. Laws governing them are different Labor Laws govern
the rights and liabilities of the parties in an Er-Ee relatio
35
1. Laws governing them are different Labor Laws govern the
rights and liabilities of the parties in an Er-Ee relationship, while
ordinary rules on contract will apply to an independent
contractor and principal.
2. Courts which have jurisdiction are likewise different-Labor
tribunals will have jurisdiction over Er-Ee disputes while regular
courts will have jurisdiction to an independent contractor and
principal.
36. Contracting and
subcontracting
Defined as an arrangement whereby
a principal agrees to put our or farm
out with a contractor or subcontractor
the performance or completion of a
specific job, work or service within a
definite or predetermined period,
regardless of whether such job, work
or service is to be performed or
completed within or outside the
premises of the principal.
36
37. Contracting Agreement
The contractor is considered as the
employer of the workers. But in the
event that the contractor or
subcontractor fails to pay the wages
of his employees, the principal shall
be JOINTLY and SEVERALLY liable with
his contract tor or subcontractor to
such employees to the extent of the
work performed under the contract, in
the same manner and extent that he
is liable to employees directly
employed by him.
37
38. Labor-only Contracting
Where the person supplying workers to an
employer does not have substantial capital
or investment in the form of tools,
equipment, machineries, work premises,
among others, and the workers recruited
and placed by such persons are performing
activities which are directly related to the
principal business of such employer.
In such cases, the person or alleged
contractor shall be considered merely as an
agent of the employer, who in turn shall be
responsible to the worker in the same
manner and extent as if the latter were
directly employer by him.
38
39. D.O. No 182-02 elucidated the
definition of labor-only
contracting,to wit:
Labor-only contracting shall refer to an
arrangement where the contractor or
subcontractor merely recruits, supplies or places
workers to perform a job, work or service, and any
of the following elements are present:
A. The contractor or subcontractor does not have
substantial capital which relates to the job, work
or service to be performed and the Ees recruited
supplies or placed by such contractor or
subcontractor are performing activities which are
directly related to the main business of the
principal; or
39
40. D.O. No 182-02 elucidated the
definition of labor-only
contracting,to wit: continuation
B. The contractor does no have the
right to control over the
performance of the work of the
contractual employee.
40
41. Legitimate Job Contractingversus
Labor-Only Contracting
No Er-Ee relationship between the
contractual employees of the job
contractor and the principal
An Er-Ee relationship is created by law
between the principal and trhe
contractual employees of the labor-
only contractor
The principal is considered only an
“indirect employer”.
The principal is considered the “direct
employer” of the contractual
employees.
The joint and several obligation of the
principal and the legitimate job
contractor is only for limited purpose
that is, to ensure that the employees
are paid their wages./ Other than this.
The principal becomes solidarily
liable” with the labor-only contractor
for all rightful claims of the contractual
employees.
The principal is not responsible for any
claim made by the contractual
employee.
Legitimate job contractor undertakes
to perform a specific job for the
principal.
The labor-only contractor merely
provides the personnel work for the
principal.
41
42. Arrangement Violative of
Public Policy
Contracting out of a job, work or service when
not done in good faith and not justified by the
exigencies of the business such as the following:
1. Contracting out of jobs, works or services
when the same results in the termination or
reduction of regular employees and reduction of
work hours or reduction or splitting of the
bargaining unit;
2. Contracting out of work with a “cabo”;
3. Taking undue advantage of the economic
situation or lack of bargaining strength of the
contractor’s employee . . .
42
43. Arrangement Violative of
Public Policy . . .
i. Requiring them to sign, as a precondition to
employment or continued employment, an
antedated resignation letter; a blank payroll; a
waiver of labor standards including minimum
wages and social olr welfare benefits; or a
quitclaim releasing the principal contractor or
subcontractor from any liability as to payment of
future claims.
ii. Requiring them to perform functions which are
currently being performed by the regular
employees of the principal; and
4. Contracting out of a job or service through an
inhouse agency.
43
44. Arrangement Violative of
Public Policy . . .
5. Contracting out of a job, work or service that is
necessary or desirable or directly related to the business or
operation of the principal by reason of a strike or lockout
whether actual or imminent.
6. Contracting out of a job, work or service being
performed by union members when such will interfere with,
restrain or coerce employees in the exercise of their rights
to self-organization as provided in Article 215 of the LC.
7. Repeated hiring of employees under an employment
contract of short duration or under a Service Agreement of
short duration with the same or different contractors which
circumvents the LC provisions on security of tenure.
44
45. What are other related
laws?
45
1. Civil Code:
a. Article 1700 – The relations between capital and labor are not
merely contractual. They are so impressed with public interest
that labor contracts must yield to the common good. Therefore,
such contracts are subject to the special laws on labor unions,
CB, strikes and lockouts, closed shop, wages, working conditions,
hours of labor and similar subjects.
b. Article 1701, c. Article 1702, Article 1703,
2. Revised Penal Code: Article 289 – Formation,
maintenance and prohibition of combination of
capital or labor through violence or threats.
47. TEXTBOOKS AND REFERENCES
Azucena, Cesario A, The Labor Code with Comments and Cases, Volume I & II, 7th Edition
2010, Published and Distributed by Rex Book Store, 856 Nicanor
Reyes, Sr, St. 1977 C.M. Recto Avenue, Manila, Philippines.
Beik, M (2005), Labor Relations, Post Road, West, West, CT: Greenwood Publishing.
Carriel M. R. & Hearvin, C (2010) Labor Relations and Collective Bargaining: US (3rd Edition
ed..) Wiley-Blackwell.
Camilar-Serrano, Angelita O, Labor Relations Management and Negotiations, copy rights
2015, Published by Unlimited Books, Library Services & Publishing Inc., Room 215 ICP Building,
Cabildo St., Intremuros, Manila email: unlimitedbooks2014@yahoo.com
Fossum, J (2011). Labor Relations: Development, Styructure and Process, 10th edition,
McGraw-Hill Comnpanies Inc.
Luna, Alden Reuben B. (Atty) (2016)., Labor Laws and Legislation, copyrights 2016 published
by Unlimited Books Library Services & Publishing Inc. Room 215 ICP Building, Cabildo St.,
Intramuros, Manila. Email: unlimitedbooks2014@yahoo.com
Foz, Vicente B, The Labor Code of the Philippines and its Implementing Rules and
Regulations,1996. No. 27, K-J St., corner K-7 St., Kamias Road, Quezon City.
Good luck
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