Labor Code of the Philippines

Presidential Decree No. 442, AS AMENDED

May 1, 1974

A DECREE INSTITUTING A LABOR CODE THEREBY REVISING AND CONSOLIDATING LABOR AND SOCIAL
LAWS TO AFFORD PROTECTION TO LABOR, PROMOTE EMPLOYMENT AND HUMAN RESOURCES
DEVELOPMENT AND INSURE INDUSTRIAL PEACE BASED ON SOCIAL JUSTICE

The Labor Code of the Philippines stands as the law governing employment practices and labor relations
in the Philippines. It was enacted on Labor day of 1974 by President Ferdinand Marcos, in the exercise of
his then extant legislative powers. It prescribes the rules for hiring and termination of private employees;
the conditions of work including maximum work hours and overtime; employee benefits such as holiday
pay, thirteenth month pay and retirement pay; and the guidelines in the organization and membership in
labor unions as well as in collective bargaining.

The Labor Code contains several provisions which are beneficial to labor. It prohibits termination from
employment of Private employees except for just or authorized causes as prescribed in Article 282 to 284
of the Code. The right to trade union is expressly recognized, as is the right of a union to insist on a
closed shop.

Strikes are also authorized for as long as they comply with the strict requirements under the Code, and
workers who organize or participate in illegal strikes may be subject to dismissal. Moreover, Philippine
jurisprudence has long applied a rule that any doubts in the interpretation of law, especially the Labor
Code, will be resolved in favor of labor and against management.

The Bureau of Employment Services shall be primarily responsible for developing and monitoring a
comprehensive employment program.

The Minister of Labor shall have the power to impose and collect fees based on rates recommended by
the Bureau of Employment Services.

The Overseas Employment Development Board (OEDB) is hereby created to undertake, in cooperation
with relevant entities and agencies, a systematic program for overseas employment of Filipino workers in
excess of domestic needs and to protect their rights to fair and equitable employment practices. The
OEDB shall be composed of the Secretary of Labor and Employment as Chairman, the Undersecretary of
Labor as Vice-Chairman, and a representative each of the Department of Foreign Affairs, the Department
of National Defense, the Central Bank, the Department of Education, Culture and Sports, the National
Manpower and Youth Council, the Bureau of Employment Services, a workers’ organization and an
employers’ organization and the Executive Director of the OEDB as members.

Ban on direct-hiring. No employer may hire a Filipino worker for overseas employment except through
the Boards and entities authorized by the Secretary of Labor. Direct-hiring by members of the diplomatic
corps, international organizations and such other employers as may be allowed by the Secretary of Labor
is exempted from this provision.
Pursuant to the national policy to maintain close ties with Filipino migrant communities and promote
their welfare as well as establish a data bank in aid of national manpower policy formulation, an Office of
Emigrant Affairs is hereby created in the Department of Labor.

A National Seamen Board is hereby created which shall develop and maintain a comprehensive program
for Filipino seamen employed overseas. The National Seamen Board shall be composed of the Secretary
of Labor and Employment as Chairman, the Undersecretary of Labor as Vice-Chairman, the Commandant
of the Philippine Coast Guard, and a representative each of the Department of Foreign Affairs, the
Department of Education, Culture and Sports, the Central Bank, the Maritime Industry Authority, the
Labor Code of the Philippines page -2-

Bureau of Employment Services, a national shipping association and the Executive Director of the NSB as
members.

It shall be mandatory for all Filipino workers abroad to remit a portion of their foreign exchange
earnings to their families, dependents, and/or beneficiaries in the country in accordance with rules and
regulations prescribed by the Secretary of Labor.

Pursuant to national development objectives and in order to harness and maximize the use of private
sector resources and initiative in the development and implementation of a comprehensive employment
program, the private employment sector shall participate in the recruitment and placement of workers,
locally and overseas, under such guidelines, rules and regulations as may be issued by the Secretary of
Labor.

The National Manpower and Youth Council, which is attached to the Department of Labor for policy and
program coordination and hereinafter referred to as the Council, shall be composed of the Secretary of
Labor as ex-officio chairman, the Secretary of Education and Culture as ex-officio vice-chairman, and as
ex-officio members, the Secretary of Economic Planning, the Secretary of Natural Resources, the
Chairman of the Civil Service Commission, the Secretary of Social Welfare, the Secretary of Local
Government, the Secretary of Science and Technology, the Secretary of Trade and Industry and the
Director-General of the Council. The Director General shall have no vote. The Council shall establish a
National Manpower Skills Center and regional and local training centers for the purpose of promoting
the development of skills. The centers shall be administered and operated under such rules and
regulations as may be established by the Council.

“Managerial employees” refer to those whose primary duty consists of the management of the
establishment in which they are employed or of a department or subdivision thereof, and to other
officers or members of the managerial staff.

“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 normal hours of work of any employee shall not exceed eight (8) hours a day. Rest periods of short
duration during working hours shall be counted as hours worked, e.g., coffee breaks in the morning and
afternoon. However, lunch break of not less than sixty (60) minutes time-off for regular meals is not.
It shall be the duty of every employer, whether operating for profit or not, to provide each of his
employees a rest period of not less than twenty-four (24) consecutive hours after every six (6)
consecutive normal work days.

Every employee shall be paid a night shift differential of not less than ten percent (10%) of his regular
wage for each hour of work performed between ten o’clock in the evening and six o’clock in the
morning.

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Work may be performed beyond eight (8) hours a day provided that the employee is paid for the
overtime work, an additional compensation equivalent to his regular wage plus at least twenty-five
percent (25%) thereof.

Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation
equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent (30%)
thereof.

An additional compensation of at least thirty percent (30%) of his regular wage for work performed on
Sundays and holidays.

Work performed on any special holiday shall be paid an additional compensation of at least thirty
percent (30%) of the regular wage of the employee.

Where such holiday work falls on the employee’s scheduled rest day, he shall be entitled to an
additional compensation of at least fifty per cent (50%) of his regular wage.

Every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay. This provision shall not apply to those who are already enjoying
the benefit herein provided, those enjoying vacation leave with pay of at least five days and those
employed in establishments regularly employing less than ten employees.

Every employer shall grant to any pregnant woman employee who has rendered an aggregate service of
at least six (6) months for the last twelve (12) months, maternity leave of at least two (2) weeks prior to
the expected date of delivery and another four (4) weeks after normal delivery or abortion with full
pay based on her regular or average weekly wages.

No child below fifteen (15) years of age shall be employed, except when he works directly under the sole
responsibility of his parents or guardian, and his employment does not in any way interfere with his
schooling.

Any person between fifteen (15) and eighteen (18) years of age may be employed for such number of
hours and such periods of the day as determined by the Secretary of Labor and Employment in
appropriate regulations.

Househelpers shall be paid the following minimum wage rates:

Eight hundred pesos (P800.00) a month for househelpers in Manila, Quezon, Pasay, and Caloocan cities
and municipalities of Makati, San Juan, Mandaluyong, Muntinlupa, Navotas, Malabon, Parañaque, Las
Piñas, Pasig, Marikina, Valenzuela, Taguig and Pateros in Metro Manila and in highly urbanized cities;

Six hundred fifty pesos (P650.00) a month for those in other chartered cities and first-class
municipalities; and

Five hundred fifty pesos (P550.00) a month for those in other municipalities.

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There shall be a National Labor Relations Commission which shall be attached to the Department of
Labor and Employment for program and policy coordination only, composed of a Chairman and fourteen
(14) Members. Five (5) members each shall be chosen from among the nominees of the workers and
employers organizations, respectively. The Chairman and the four (4) remaining members shall come
from the public sector, with the latter to be chosen from among the recommendees of the Secretary of
Labor and Employment.

In cases of regular employment, the employer shall not terminate the services of an employee except for
a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual reinstatement. (As amended by
Section 34, Republic Act No. 6715, March 21, 1989)

Any employee who 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 employment shall continue while such activity exists.

Probationary employment shall not exceed six (6) months from the date the employee started
working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of
an employee who has been engaged on a probationary basis may be terminated for a just cause or 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.

An employer may terminate an employment for any just cause. 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.