I.

Labor Standards - Labor standards - refers to that part of labor law which prescribes the
minimum terms and conditions of employment which the employer is required to grant to its
employees.

a. Employer-Employee Relationship

i. Definition
1. Employer - Employer is any person, natural or juridical, domestic or
foreign, who carries on in the Philippines any trade, business, industry,
undertaking or activity of any kind and uses the services of another
person, who is under his orders as regards the employment, except the
Government and any of its political subdivisions, branches or
instrumentalities, including corporations owned or controlled by the
Government.

The employer may be a natural or juridical person. It may be a single

proprietor, a partnership or a corporation.

Employer includes any person acting in the interest of an employer,

directly or indirectly.

Employer is any person can be natural or juridical, such as sole

proprietors, partnerships, or corporations, and include anyone
acting on behalf of an employer that operates a trade, business, or
industry in the Philippines and hires another person to work under
their orders, excluding the government and its instrumentalities.

2. Employee – An employee is any person who performs services for an

employer in which either or both mental and physical efforts are used
and who receives compensation for such services, where there is an
employer-employee relationship. (R.A. No. 8282 Social Security Law

Only a natural person can qualify as an employee. Natural persons may

include Filipino citizens and foreigners.

Employee includes any person in the employ of an employer. The term

shall not be limited to the employees of a particular employer, unless the
Code so explicitly states. It shall include any individual whose work has
ceased as a result of or in connection with any current labor dispute or
because of any unfair labor practice if he has not obtained any other
substantially equivalent and regular employment. (Art. 219(f), LC)

NOTE: A self-employed person shall be both an

employee and employer at the same time.

Employee is any person who provides services, using mental or

physical effort, for an employer and receives compensation. It also
includes the individuals whose work has ceased due to a labor
dispute or unfair labor practice, as long as they haven't secured
equivalent employment elsewhere.

3. Employer-Employee Relationship- Employment relationship is

determined by law and not by contract. The existence of an employer-
employee relationship depends upon the facts of each case.

Test to determine EE-ER Relationship :a) Four-fold test; and b)

Two-tiered test (Economic Dependence Test)

i. Four-fold Test
Factors determining the existence of an employer-employee
relationship:
a. Selection and engagement of the employee;
b. Payment of wages;
c. Power of dismissal; and
d. Power of control, or the Control Test. (Er gives Ee the means,
manner, or method about the job.)

It is the so-called “control test” that is the most

important element.

Absent the power to control the Ee with respect to the means and
methods by which his work was to be accomplished, there is an
Er-Ee relationship between the parties.

The power of control refers to the existence of power and not

necessarily to the actual exercise thereof. It is not essential for
the employer to actually supervise the performance of duties of
the Ee; it is enough that the employer has the right to wield that
power.

Kinds of Control Exercised by an Er

Not every form of control will have the effect of establishing an

Er-Ee relationship. Thus, a line should be drawn between:

Not all forms of control establish an employer-employee (Er-

Ee) relationship. A distinction must be made between rules
that a) rules that merely guide the outcome, where no Er-Ee
relationship exists, and (b) rules that dictate both the result
and the methods used to achieve it, which establish an Er-Ee
relationship.

a. Rules that merely serve as guidelines, which aims

ONLY to promote the result. In such case, no Er-Ee
relationship exists.

b. Rules that fix the methodology and bind or restrict the

party hired to the use of such means or methods. These
address both the result AND the means employed to
achieve it and hence, Er-Ee relationship exists.

However, if the control test alone may be insufficient, and a

two-tiered test is a better approach to fully understand the
relationship.
The main determinant therefore is whether the rules set by the
employer are meant to control not just the results but also the
means and methods.
However, in certain cases the control test is not sufficient to give
a complete picture of the relationship between the parties, owing
to the complexity of such a relationship where several positions
have been held by the worker. The better approach is to adopt
the two-tiered test.
 ii. Two-tiered Test (Economic Dependence) - This two-tiered test
provides us with a framework of analysis, which would take into
consideration the totality of circumstances surrounding the true
nature of the relationship between the parties. This is especially
appropriate in this case where there is no written agreement or terms
of reference to base the relationship on and due to the complexity of
the relationship based on the various positions and responsibilities
given to the worker over the period of the latter’s employment.

Elements 1. The putative Er’s power to control the Ee with respect

to the means and methods by which the work is to be accomplished
(Four-fold Test); and 2. The underlying economic realities of the
activity or relationship.

The two-tiered test offers a comprehensive framework to analyze

the true nature of a work relationship, particularly when no
written agreement exists and the worker's roles have evolved
over time. It consists of two main elements: (1) the employer’s
control over the means and methods of work (Four-fold Test)
and (2) the economic realities of the relationship.

Proper Standard for Economic Dependence The proper standard

is whether the worker is dependent on the alleged Er for his
continued employment in that line of business. The determination of
the nature of the relationship between Er and Ee depends upon the
circumstances of the whole economic activity, such as:

Proper Standard for Economic dependence is assessed by the

worker’s reliance on the employer for continued employment in
that business. Factors influencing this assessment include:

a. The extent to which the services performed are an integral

part of the Er’s business;
b. The extent of the worker’s investment in equipment and
facilities;
c. The nature and degree of control exercised by the Er;
d. The worker’s opportunity for profit and loss;
e. The amount of initiative, skill, judgment, or foresight
required for the success of the claimed independent
enterprise;
f. The permanency and duration of the relationship between the
worker and Er; and
g. The degree of dependency of the worker upon the Er for his
continued employment in that line of business.

Evidence of Employment: ID, Voucher, SSS Registration, Memorandum

No particular form of evidence is required to prove the existence of such
relationship. Any competent and relevant evidence to prove the relationship
may
be admitted.

To prove an employment relationship, any relevant evidence—such as an

ID, voucher, SSS registration, or memorandum—may be presented; no
specific form is required.

Absence of Name in the Payroll

In Opulencia Ice Plant v. NLRC (G.R. No. 98368, 15 Dec. 1993), the Supreme
Court disagreed with the employer’s argument that the absence of the
complainant’s name in the payroll disapproved his being an employee. It held
that, “if only documentary evidence would be required to show that
 relationship, no scheming employer would ever be brought before the bar of
justice, as no employer would wish to come out with any trace of illegality he
has authored considering that it should take much weightier proof to invalidate
a written instrument.”

Thus, since the Er-Ee relationship in this case was sufficiently proven by
testimonial evidence, the absence of time sheet, time record or payroll became
inconsequential.

In Opulencia Ice Plant v. NLRC, the Supreme Court ruled that the
absence of a worker’s name on the payroll does not automatically
disapprove their employee status. Relying solely on documentary proof
would allow dishonest employers to evade responsibility, so testimonial
evidence can suffice.

Mode of Compensation: Not Determinative of Er- Ee Relationship

The presence or absence of Er-Ee relationship is not determined by the basis of
the Ee’s compensation. The compensation, whether called wage, salary,
commission or other name, may be computed on the basis of time spent on the
job or it may be based on the quality and/or quantity of the work done. It may
further be dependent on skills possessed, seniority earned, or performance and
initiative shown by the Ee.

It explains how an employee is compensated (wages, salary, commission, or

otherwise) does not define the employment relationship; it may be based
on hours, output, skills, seniority, or performance.

Application of the four-fold test and the two- tiered test

Present Philippine law recognizes a two test. The first tier of the test is the
Four-fold Test. The second tier is the Economics of the Relationship Test (Two-
tiered test). But the latter test is used if and only if there is going to be
harshness in the results because of the strict application of the four-fold test.

Philippine law uses a two-tiered test to determine employment status: the

Four-fold Test (focusing on control, payment, hiring, and firing) and, when
the Four-fold Test is too rigid, the Economics of the Relationship Test,
which considers the broader economic circumstances of the worker's role.

b. Conditions of Employment – terms of employment. These are the rules, policies, and
guidelines that employee and employer agree to abide by during the employee’s service
to the company.

Conditions of Employment are the rules and policies that govern the relationship
between employees and employers, applicable to all employees across
establishments, regardless of profit orientation. Certain groups are excluded from
these conditions:

i. Coverage - It covers all employees in all establishments, whether for profit or

not.

Exceptions (i.e. those NOT covered)

1. Government employees; - The terms and conditions of their employment
are governed by the Civil Service Law.

2. Field personnel; - They are exempted from the coverage due to the
nature of their functions which requires performance of service away
from the principal place of business. Hence, they are free from the
personal supervision of the Er and the latter cannot determine with
 reasonable certainty the actual number of hours of work expended for the
Er's interest.

3. Managerial employees; - They are employed as such by virtue of their

special training or expertise, experience or knowledge and for positions
which require the exercise of independent judgment and discretion. They
are not subject to the rigid observance of regular office hours, as the true
worth of their services do not depend so much on the time they spend in
office, but more on the results of their accomplishments. For these types
of workers, it is not feasible to provide fixed hourly rate of pay or
maximum hours of labor.

a. Their primary duty consists of the management of the

establishment in which they are employed or of a department or
subdivision thereof.
b. They customarily and regularly direct the work of two or more
employees therein.
c. They have the authority to hire or fire employees of lower rank;
or their suggestions and recommendations as to hiring and firing
and as to the promotion or any other change of status of other
employees, are given particular weight.

4. Officers and members of the managerial staff; - Officers and members of

a managerial staff (such as project engineers) are considered managerial
employees for they customarily and regularly exercise discretion and
independent judgment, that is, their powers are not subject to evaluation,
review and final action by the department heads and other higher
executives of the company.

5. Members of the family of the Er who are dependent on him for support; -
Workers who are family members of the employer, and who are
dependent on him for their support, are outside the coverage of this Title
on working conditions and rest periods

6. Workers paid by results; (Secs. 1 and 2, Rule I, Book III, IRR) - Payment
of this type of worker is determined by the results of the work performed
or the number of units produced, not the number of hours used in the
completion of the job or the time spent in production.

7. Persons in the personal service of another; - Persons in the personal

service of another are not covered by Title I: Working Conditions and
Rest Periods if they:

a) Perform such services in the employer’s home which are usually

necessary or desirable for the maintenance and enjoyment
thereof; or
b) Minister to the personal comfort, convenience or safety of the
employer as well as the members of his employer’s household
8. Domestic helpers - They are not covered by this Title because terms and
conditions of employment are governed by the provisions of R.A. No.
10361, otherwise known as the Batas Kasambahay Law.

 Government Employees - Governed by Civil Service Law.

 Field Personnel - Due to work away from the main office and lack of
supervision on hours worked.

 Managerial Employees - Given independent discretion, their work is

judged on results, not hours.
  Managerial Staff Officers - Like project engineers, they exercise
discretion without department oversight.

 Employer’s Family Members - Dependents of the employer are

excluded.

 Workers Paid by Results - Payment is based on output, not hours.

 Personal Service Workers - Those providing services in the
employer's home or for personal comfort.

 Domestic Helpers - Governed by the Batas Kasambahay Law (R.A.

No. 10361).

ii. Hours of Work - Hours worked shall include:

a) All time during which an employee is required to be on duty or
to be at a prescribed workplace; AND
b) All time during which an employee is suffered or permitted to
work
All hours are hours worked which the employee is required to give
their employer, regardless of whether or not such hours are spent in
productive labor or involve physical or mental exertion.
2. Normal Hours of Work - The normal hours of work of any employee
shall not exceed eight (8) hours a day. There is no hard limit on the
maximum hours of work that may be rendered by an employee.
However, work rendered beyond the eight-hour limit would not be
considered normal. It would be overtime, and thus subject to additional
pay to entitled employees.

Exception to 8-Hour Law:

a) Health personnel
b) Compressed workweek
The eight-hour work requirement does not however, preclude the Er in
the exercise of its management prerogatives to reduce the number of
working hours, provided that there is no diminution of existing benefits.
It is not prohibited to have normal hours of work of less than eight hours
a day. What the law regulates is work hours exceeding eight – it
prescribes the maximum but not the minimum.

Hours Worked
Working time is one during which an employee is actually working. It
may include an instance when an employee is not actually working but
he is required to be present in the Er’s premises. Thus, the fact that he is
required to be present although not actually doing any work, is still
deemed working time.

When Hours Worked are Compensable

a. Ee is required to be on duty or to be at a prescribed workplace;
b. Ee is suffered or permitted to work;
c. Rest periods of short duration during working hours which shall
not be more than 20 minutes; and
d. Meal periods of less than 20 minutes. (Sec. 7, Rule I, Book III,
IRR).
NOTE: Travel time, when beneficial to the Er, is compensable.
 Principles in Determining Hours Worked
a. All hours which the Ee is required to give to his Er regardless of
whether or not such hours are spent in productive labor or
involve physical or mental exertion.

b. Rest period is excluded from hours worked, even if Ee does not

leave his workplace, it being enough that:
1) He stops working;
2) May rest completely; or
3) May leave his workplace, to go elsewhere, whether
within or outside the premises of the workplace.

c. All time spent for work is considered hour worked if:

1) The work performed was necessary;
2) If it benefited the Er; or
3) The Ee could not abandon his work at the end of his
normal working hours because he had no replacement;
4) Provided, the work was with the knowledge of his Er or
immediate supervisor.

d. The time during which an Ee is inactive by reason of

interruptions in his work beyond his control shall be considered
working time:
1) If the imminence of the resumption of the work requires
the Ees presence at the place of work; or
2) If the interval is too brief to be utilized effectively and
gainfully in the Ees own interest.

RULES ON HOURS WORKED

A. WAITING TIME- It shall be considered as working time if:

1) Waiting is an integral part of this work;
2) The Ee is required or engaged by the Er to wait; or
3) When Ee is required to remain on call in the Er’s premises or so close
thereto that he cannot use the time effectively and gainfully for his own
purpose. (Sec. 5, Rule I, Book III, IRR)

NOTE: An employee who is not required to leave word at his home or with
company officials where he may be reached is not working while on call. (Sec.
5(b), Rule I, Book III, IRR)

The controlling factor is whether waiting time spent in idleness is so spent

predominantly for the Er’s benefit or for the Ee’s.

Engaged to Wait vs. Waiting to be Engaged

In engaged to wait, waiting is an integral part of the job; the time spent waiting
is compensable, while in waiting to be engaged, idle time is not working time;
it is not compensable.

B. PRELIMINARY AND POSTPRELIMINARY ACTIVITIES

Preliminary (before work) and preliminary (after actual work) activities deemed
performed during working hours and compensable:
1) Where such activities are controlled by the Er or required by the Er; and
2) Pursued necessarily and primarily for the Er's benefit. (31 Am. Jur. 882-
883)
C. TRAVEL TIME
1. Travel from home to work
General Rule: Normal travel from home to work is not working time.
Exceptions:
a. Emergency call outside his regular working hours where he is required to
travel to his regular place of business or some other work site;
b. Done through a conveyance provided by the Er;
c. Done under the supervision and control of the Er; and
d. Done under vexing and dangerous circumstance.

2. Travel that is all in a day’s work – time spent in travel as part of the Ees
principal activity.

e.g., Travel from job site to job site during the work day, must be counted as
working hours. Travel from main workplace (5pm) to jobsite A (6pm) to
jobsite B (7pm) to jobsite C (8pm) to main workplace (9pm) is compensable.

But, if instead of travelling back to the main workplace, employee decides to

go home from jobsite C, travel time from 8pm is no longer compensable,
because it would already fall under the category of work to home travel.

3. Travel away from home

a. Travel that requires an overnight stay on the part of the Ee when it cuts
across the Ees workday is clearly working time.

b. The time is not only hours worked on regular workdays but also during
corresponding working hours on non- working days. Outside of these
regular working hours, travel away from home is not considered working
time.

4. Sleeping Time- A worker sleeping may be working. Whether sleeping time

allowed an employee will be considered as part of his working time will
depend upon the express or implied agreement of them
parties. In the absence of an agreement, it will depend upon the nature of the
service and its relation to the working time.

The rule is that sleeping time may be considered:

a) Working time if:
1. it is subject to serious interruption; or
2. takes place under conditions substantially less desirable than would be
likely to exist at the employee’s home.
b) Not working time if there is an opportunity for comparatively
uninterrupted sleep under fairly desirable conditions.

5. POWER INTERRUPTIONS
a. Brownouts of short duration but not exceeding 20 minutes shall be treated as
worked or compensable hours whether used productively by the employees
or not; (DOLE P.I. 36, 22 May 1978)
b. Brownouts running for more than 20 minutes may not be treated as hour
worked provided that any of the following conditions are present:
1. The employees can leave their workplace or go elsewhere whether
within or without the work premises; or
2. The employees can use the time effectively for their own interest.

Time spent during which an employee is inactive by reason of interruptions

beyond his control is working time, such as twenty-minute electric power failure
or machine breakdowns. The pay for this non-productive time is known as idle-
time pay. Where the work is broken or is not continuous, the idle time that an
employee may spend for rest is not counted as working time.
 6. LECTURES, MEETINGS, TRAINING PROGRAMS-

Attendance at lectures, meetings, training programs and similar activities need not
be counted as working time if the following criteria are met:

a. Attendance is outside of the employee's regular working hours;

b. Attendance is in fact voluntary;
c. The employee does not perform any productive work during such attendance.

iii. Meal Periods –

General Rule: Not compensable and not included in the hours worked.

Every Er shall give his Ees not less than 60 minutes or one (1) hour time-off
for regular meals. As a general rule, employees are entitled to at least one hour
time-off for regular meals which can be taken inside or outside company
premises.

For a full one-hour undisturbed lunch break, the employees can freely and
effectively use this hour not only for eating, but also for their rest and comfort
which are conducive to more efficiency and better performance in their work.
Since the employees are no longer required to work during this one-hour lunch
break, there is no more need for them to be compensated for this period.

It is compensable where the lunch period or meal time:

1. Is predominantly spent for the Er’s benefit; or
2. When it is less than 60 minutes.

NOTE: Where during a meal period, the laborers are required to stand
by for emergency work, or where the meal hour is not one of complete
rest, such is considered overtime. (Pan American World Airways System
v. Pan American Employees Association, G.R. No. L-16275, 23 Feb.
1961) Rest periods or coffee breaks running from five (5) to 20 minutes
shall be considered as compensable working time.

Compensability of Meal Periods during overtime work

Meal periods provided during overtime work are compensable; since the one
(1)-hour meal period (non-compensable) is not given during OT work because
the latter is usually for a short period and to deduct from the same would
reduce to nothing the Ees’ OT work. Thus, the one-hour break for meals during
OT should be treated as compensable.

Where Meal Periods are Shortened: Compensable or Not Compensable

1. Compensable – Upon employer’s request.

2. Not Compensable - Shortened meal breaks upon the employees’
request – The employees themselves may request that the meal
period be shortened so that they can leave work earlier than the
previously established schedule