Exceptions Exceptions to the Coverage of Book III

1. If the apprenticeship training is part of the school 1. Government employees

curriculum, a requirement for graduation, or board 2. Managerial employees
examination, the employer may not pay wage. 3. Field personnel
4. Member of the family of the employer, solely
Difference between learnership from apprenticeship dependent upon him for support.
with respect to the period of training, type of work, 5. Domestic helper/family drivers those in the
salary and qualification. personal service of the employer and who cater to
the comfort and the convenience of his family or
Apprenticeship means practical training on the job household.
supplemented by related theoretical instruction. The 6. Employees paid by result, piece rate workers,
period of apprenticeship shall not exceed 6 months. pakyaw basis, task basis or by commission.
Apprenticeship agreements providing for wage rates 7. Employees of retail and service establishments
below the legal minimum wage, which in no case employing not more 10 employees
shall start below 75% of the applicable minimum
wage. The law however, provides for apprentices Formula
without compensation and there is no commitment on
the part of the employer to hire apprentice. Normal rate
+ Premium rate
On the other hand, the duration of the learnership = New wage
period, which shall not exceed 3 months; there is a
commitment from the employer to employ the New rate
learners if they so desire, as regular employees upon /8
completion of the learnership; if the learner is Overtime rate
dismissed from the service without just and valid
cause and without just and valid cause and without Regular rate 8hours 800
due process after 2 months of service, he will be Rest day 30% 240
deemed as regular employee, and wages or salary New Rate 1,040
rates of the learners which shall begin at not less Divided 8 hours
than 75% of the applicable minimum wage. New Hourly rate 130
Overtime rate 25% 32.50/ hour
Article 71 Deductibility of training cost

An additional deduction from the taxable income of

50% of the value of labor training expenses incurred
for developing the productivity and efficiency of
apprentices provided such deduction shall not
exceed 10% of direct labor wage.

Article 72 Apprentice without compensation

1. Required by the school or training program

curriculum;
2. Requisites for graduation or board examination.

Handicapped workers

Incentives for employers

BOOK III

CONDITIONS OF EMPLOYMENT

Article 82 Coverage

The coverage of Book III of the Labor Code includes

all employees in all establishments, agricultural, or
non-agricultural whether for profit or not.
Employer-Employee relationship.
Four-fold test
1. Power of selection and engagement;
2. Power of dismissal;
3. Power of control not only over the result but also
as to the means and methods by which the work is
accomplished; and
4. Power of wages.

Control Test refers to the employer’s power to

control or right to control the employee not only as to
the result of the work to be done but also as to the
means and methods by which the same is to be
accomplished. This last element is the most
important index of the existence of the relationship.

Wages are defined as “renumeration or earnings,

however designated, capable of being expressed in
terms of money. whether fixed or ascertained on a
time, task, piece or commission basis, or other
method of calculating the same, which is payable by
an employer to an employee under a written or
unwritten contract of employment for work done, or
for service rendered or to be rendered.

Independent Contractor is one who carries on a

distinct and independent business and undertakes to
perform the job, work, or service on its own account
and under its own responsibility according to its on
manner and method, free from the control and
direction of the principal in all matters connected with
the performance of the work except as to the results
thereof.

Article 83 Normal Hours of Work

General Rule: It shall not exceed 8 hours a day.

Exception: Health personnel in cities and
municipalities with population of at least one million
or in hospitals and clinics with a bed capacity of at
least one hundred shall hold regular office hours for 8
hours a day, for 5 days a week. If they permitted or
suffered to work for 6 days or 48 hours they are
entitled to an additional compensation of at least 30%
of their regular wage for work on the sixth day.

Article 84 Hours Worked

Compensable Hours worked:

1. All time during which an employee is required to be

on duty or to be at the employer’s premises or to be
at a prescribed work place; and
2. All time during which an employee is suffered or
permitted to work.

Principles in determining hours worked

 c. The employee does not perform any productive
1. All hours are hours worked which the employee is work during such attendance.
required to give his employer, regardless of whether
ot not such hours are spent in productive labor or Exceptions: If it is sanction by the employer;
involve physical or mental exertion; attendance in CBA negotiation or grievance meeting.
2. An employee need not to leave the premises of the
work place in order that his rest period shall not be Travel time from home to work is not compensable
counted, it being enough that he stops working, may working time except:
rest completely and may leave his work place, to go 1. Called to travel during emergency;
elsewhere, whether within or outside the premises of 2. Travel is done through a conveyance furnished by
his work. the employer;
3. If the work performed was necessary, or it 3. Travel is under supervision and control of the
benefited the employer, or the employee could not employer;
abandon his work at the end of his normal working 4. Travel is done under vexing and dangerous
hours because he had no replacement, all time spent circumstances.
for such work shall be considered as hours worked, if
the work was with the knowledge of his employer or Power interruptions or Brown-outs of short duration
immediate supervisor. not exceeding 20 minutes is compensable hours
4. The time during which an employee is inactive by worked however in case it exceeds 20 minutes, it is
reason of interruption on his work beyond his control considered not compensable working hours provided:
shall be considered working time either if the the employee can leave their workplace or go
imminence of the resumption of work requires the elsewhere whether within or outside the work
employee’s presence at the place of work or if the premises or the employees can use the time
interval is too brief to be utilized effectively and effectively for their own interest.
gainfully in the employee’s own interest.
Semestral break of private school teacher is
Work day refers to any day during which an compensable hours worked for it is a form of
employee is regularly required to work. interruption beyond their control and it is only given to
regular full-time teachers.
The employer has the prerogative to change working
hours and other aspects of employment. Article 85 Meal Periods

Preliminary and Postliminary activities like hours Every employer shall give his employees, regardless
spent by employees to get ready for work or to get of sex, not less than 1 hour time-off for regular meals,
ready to leave work, is not compensable unless the except in the following cases when a meal period of
activities are essential to the employee’s principal not less than 20 minutes may be given by the
work activity. employer provided that such shorter meal period is
credited as compensable hours worked of the
Working while sleeping while in duty is compensable employee: a. non-manual work; b. business hours is
if the nature of the employee’s work allows sleeping not less than 16 hours a day; c. in case of actual or
without interruption or prejudicing work or when there impending emergencies or repairs in machines to
is an agreement between him and his employer. avoid serious damage to the employer: the work is
necessary to prevent serious loss of perishable
Waiting time spent by an employee shall be goods.
considered as working time if waiting is an integral
part of his work or the employee is required or Rest period or coffee breaks running from 5 to 20
engaged by the employer to wait. minutes shall be considered as compensable working
time.
Working while on call is an employee who is required
to remain on call in the employer’s premises or so Meal Period is generally not compensable except if it
close thereto that he cannot use the time effectively is predominantly spent for the employer’s benefit or
and gainfully for his own purpose shall be considered less than 15 minutes shorter than 20 minutes and if
as working while on call. the employee is on continuous shift.

Lectures, Meetings, Training Program and other Eight-hour period does not include the meal break.
similar activities shall not be counted as working time Nowhere in the law may it inferred that employees
if all of the following conditions are met: must take their meals within the company premises.
a. Attendance is outside of the employee’s regular Employees are not allowed form going out of the
working hours; premises as long as they return to their posts on
b. Attendance is in fact voluntary; and time. However, employees who requests to have a
shorter meal time so he can leave earlier than usual employee entitled to premium pay is also entitled to
time out can be granted but the shorten meal time is the benefit of overtime pay.
not compensable.
Premium pay means the additional compensation
Conditions: required by law for work performed within eight hours
1. It is voluntary on the part of the employee and on non-working days, such as rest days and special
overtime pay is waived; days.
2. No diminution of salary and fringe benefits;
3. Work is not physically strenuous and coffee break Rules on overtime work and pay
is provided; 1. It must be with consent of the employer.
4. The value of benefits is equal to the compensation 2. Overtime starts after 8 hours work.
due; 3. For ordinary days, additional 25% of the basic
5. Overtime is demandable if the work exceeds hourly rate.
4:30pm; 4. For rest day/special day/holiday, additional 30% of
6. It is temporary. the basic hourly rate.
5. Not unless a day is a rest day, the given day is
Article 86 Night Shift Differential ordinary day.

Night shift differential is the amount which every Work hours of seaman by the nature of his job, stays
employee is entitled to receive which is equivalent to on board a ship or vessels beyond the regular 8 hour
10% of his regular wage for every hour he has work schedule. The correct criterion in determining
worked between 10pm to 6am. Additional whether or not sailors are entitled to overtime pay is
compensation is justified for hygienic, medical, moral, not, therefore, whether they were on board and
cultural and sociological reasons. cannot leave ship beyond the regular eight working
hours a day, but whether they actually rendered
Exception from the coverage: service in excess of said number of hours.
1. Government employees;
2. Employees in retail and service establishment not Article 88 Undertime not Offset by Overtime
exceeding 5 workers;
3. Domestic helpers and persons in the personal An undertime work on any particular day cannot be
service of another; offset by overtime on any other day. Permission
4. Managerial employees; given to the employee to go on leave on some other
5. Field personnel. day of the week shall not exempt the employer from
paying the additional compensation required in the
When the employee is permitted or suffered to Labor Code. The proper method should be to deduct
work on the period covered after his work the undertime from the accrued leave but pay the
schedule. employee the overtime to which he is entitled.

Overtime rate of 25% to his regular wage and Article 89 Emergency Overtime work
additional 10% of such overtime rate for each hour or
work performed between 10pm to 6am. General rule: No one can be compelled to render
overtime work against his will except:
Additional compensation on scheduled rest 1. When the country is at war or under national or
day/special holiday local emergency declared by Congress or the Chief
Executive;
Overtime rate of 30% and an additional amount of not 2. To prevent loss of life or property;
less than 10% of such premium pay rate for each 3. Urgent work to be performed on machines etc. in
hour of worked performed. order to avoid serious loss or damage to the
employer;
Additional compensation on regular holidays 4. Work is necessary to prevent loss or damage to
perishable goods; and
Regular wage during these days plus 200% an 5. Where the completion or continuation of work
additional compensation and not less than 10% of started before eight hour is necessary to prevent
such premium rate for each hours work performed. serious obstruction or prejudice to the business or
operation of the employer.
Article 87 Overtime Work
Article 90 Computation of additional
Overtime pay means the additional compensation compensation
for work performed beyond eight hours. Every
Regular wage of an employee shall include the cash The employer may require an employee to work on
wage only, without deduction on account of facilities any holiday but such employee shall be paid 200% of
provided by the employer. his regular wage rate.

Article 91 Right to weekly rest day Exception:

1. In retail and service establishments regularly
Every employee regardless of the nature of his work employing less than 10 workers.
is entitled to at least one whole day every week as
his rest day. The rest day or day off as others may Regular Holidays
call it shall be determined by the employer subject to New Years Day January 1
the CBA provisions. However, in cases where the Maundy Thursday Movable Date
employee is required by his religious belief to rest on Good Friday Movable Date
certain days, such belief shall be respected by the Eidul Fitr Movable Date
employer. Eidul Adha Movable Date
Araw ng Kagitingan April 9
Article 92 When employer may require work on a Labor Day May 1
rest day. Independence Day June 12
National Heroes Day Last Monday of August
The employer may require his employees to work on Bonifacio Day November 30
any day: Christmas Day December 25
1. In case of actual or impending emergencies Rizal Day December 30
caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity to Special Holidays
prevent loss of life and property, or imminent danger Ninoy Aquino Day Monday nearest August
to public safety; 21
2. Urgent work on the machines in order to prevent All Saints Day November 1
loss or damage to the employer. Last day of the Year December 31
3. In case of abnormal pressure of work due to
special Rules on Payment of Holiday Pay
circumstances, where the employer cannot ordinarily
be expected to resort to other measures. 1. If it is an employee’s regular workday
4. To prevent loss or damage to perishable goods; If unworked 100%
5. The nature of the work requires continuous If worked
operations and the stoppage of work may result in 1st 8 hours 200%
irreparable injury or loss to the employer; and In excess of 8 hours plus 30%
6. Under other circumstances analogous or similar to
the foregoing as determined by the SOLE. 2. If it is an employee’s rest day
If unworked 100%
Article 93 Compensation for rest day, Sunday or 1st 8 hours plus 30% of
Holiday work 200%
in excess of 8 hours plus 30% of
1. The policy of no work no pay applies. hourly rate
2. If the employee reports to work, he is entitled to
100% basic pay and additional pay of 30% of his 3. Special Day and Special Holidays
basic pay or a total payment of 130% of his basic If unworked no pay unless
pay. covered by CBA
3. The premium pay of 30% is given only when work If worked
is suffered during a rest day. 1st 8 hours plus 30%
in excess of 8 hours plus 30%
Premium pay for rest day which is also a special
holiday. If falling on the employee’s rest day
1. Work performed on any special holiday shall be If worked plus 50% of
paid an additional compensation of atleast 30% of the 100%
regular wage of the employee. In excess of 8 hours plus 30% of
2. Where such holiday work falls on the scheduled hourly rate
rest day, he shall be entitled to an additional
compensation of atleast 50% of his regular wage. 4. For those declared as special working holidays
If worked 100%
Article 94 Right to Holiday Pay no premium
since it is
 considered Article 96 Service charge
ordinary day
Amended ( 100% shall go to the employees without
To be entitled to two days successive holidays deductions )
1. One must be present on the day immediately
proceeding the first holiday; or Article 97 Wage
2. One is on leave with pay.
Wage is defined as renumeration or earnings,
Two regular holidays falling on the same day however designated, capable of being expressed in
terms of money, whether fixed or ascertained on a
1. If the employee did not work, he is entitled to time, task, piece or commission basis or other
receive 200% of basic pay; method of calculating the same, which is payable by
2. If the employee worked, he is entitled to 300% of an employer to an employee under a written or
basic pay. unwritten contract of employment for work done or to
be done, or for service rendered or to be rendered.
Monthly paid employees are not entitled to
holiday pay Wage is term applied to payments given to workers
performing manual or physical and work lower
Monthly paid employees are not entitled to the positions including the so called blue collar jobs.
holiday if their total annual income is divided by 365
days resulting in a wage which is beyond the Salary is defined as reward or recompense for
minimum wage per day because they are considered services performed or consideration paid at regular
paid everyday of the year including holidays, rest intervals for the rendering of services or recompense
days and other non-working days. or consideration made to a person for his pains or
industry in another man’s business.
Holiday Pay for monthly paid private school
teacher. Basic Salary includes renumerations or earnings
paid by the employer to employee, but excludes cost
In determining whether or not holiday pay is already living allowances, profit sharing payments, and all
included in the monthly salary, the formula to get the allowances and monetary benefits which have not
daily rate must be considered, If the formula is been considered as part of the basic salary of the
monthly rate times 12 mos. divided by 251 days, the employee.
employees monthly salary does not include
Saturdays, Sundays, and holidays, thus the Bonus may form part of the wage provided the
employee is still entitled to holiday pay despite the employer promised and agreed to give without any
fact that he is paid monthly basis. On the other hand, conditions imposed for its payment, such as success
if the divisor used in determining the daily rate is 365 of business or greater production or output, then it is
days, the employee is no longer entitled to receive part of wage.
holiday pay because such is deemed included in his
monthly pay. Bonus is a gratuity or act of liberality of the giver
which the recipient has no right to demand as a
1. No work no pay applies on hour paid faculty matter of right.
members for regular holidays except on days
decalred as special holidays or for some reason Commission is a recompense, compensation,
classes are called off or shortened for the hours they reward of an employee, agent, salesman, executor,
are supposed to have taught. trustee, receiver, factor, broker or bailee, when the
same is calculated as a percentage on the amount of
Article 95 Right to service incentive leave his transaction or on the profit of the principal.

Requisites for the enjoyment of service incentive Supplements and Facilities

leave
1. A total of five days leave in one year with pay. Supplements constitute extra renumeration or
2. The employee must have been in the service for special privileges or benefits given to or received by
atleast one year whether broken or continuous. the laborers over and above their ordinary earnings
3. If unused the five days are paid their cash or wages.
equivalent at the end of the year.
4. It covers all employees except the general Facilities are items of expense necessary for the
exceptions and establishment already giving sick laborer’s and his family’s existence and subsistence
leaves/vacation leaves with pay for at least five days. so that by express provision of law, they form part of
the wage and when furnished by the employer are
deductible therefrom, since if they are not so
furnished, the laborer would spend and for them just Article 101 Payment by result
the same.
Compensation of piece rate workers
Legal requirements for deducting facilities from
wages In the absence of wage rates based on time and
motion studies determined by the labor secretary or
1. Proof must be shown that such facilities are submitted by the employer to the SOLE for his
customarily furnished by the trade. approval, wage rates of piece-rate workers must be
2. The provision of deductible facilities must be based on the applicable daily minimum wage
voluntary accepted in writing by the employee. determined by the RTWPC. xxx shall receive not less
3. Facilities must be charged at fair and reasonable than the applicable minimum wage rates prescribed
value. under the Order for the normal working hours which
shall not exceed eight hours work day or a proportion
Article 98 Application of Title thereof for work of less than the normal working
hours.
This Title shall not apply to farm tenancy or
leasehold, domestic service and persons working in Formula:
their respective homes in neddle work or in any 1. Amount increase in AMW x 100% = % increase
cottage. previous AMW
2. Existing rate / piece x % increase = increase in
MINIMUM WAGE RATES rate / piece;
3. Existing rate / piece + increase in rate / piece =
Article 99 Regional Minimum wage adjusted rate /
piece
RA No. 6727
Article 102 Forms of payment
This is know as Wage Rationalization Act issued on
July 1, 1989 which provides that minimum wage The payment of wages must be paid in legal tender
fixing is done on regional basis by the Regional except:
Boards, located in each of the 17 regions of the 1. Customary of the date of effectivity of the Labor
country instead through Congress or by Chief Code;
Executive. 2. Necessary because of special circumstances as
determined by the Secretary of Labor; and
Article 100 Prohibition against elimination or 3. Stipulated in the CBA.
diminution of benefits
The labor code
A Company practice favoring employees cannot
be withheld unilaterally by the employer

A company practice favorable to the employees had

indeed been established and the payments made
pursuant thereto, ripened into benefits enjoyed by
them. Any benefit and supplement being enjoyed by
the employees cannot be reduced, diminished,
discontinued or eliminated by the employer.

Wage order increases not a company practice

Moreover, to ripen into a company practice that is

demandable as a matter of right, the giving of the
increase should not be by reason of a strict legal or
contractual obligation, but by reason of an act of
liberality on the part of the employer.

Overtime does not fall under Article 100

The overtime pay was not given to each employee

consistently, deliberately and unconditionally, but as
a compensation for additional services rendered.