BASIC LAWS AFFECTING EMPLOYMENT

Labor Laws/Legislation consists of statutes, regulations and

jurisprudence governing the relation between the capital
(employers) and the labor (employees), by providing for certain
employment standards and a legal framework for negotiating,
adjusting and administering those standards and other incidents
of employment.

Social Legislation – includes laws that provide particular kinds of

protection or benefits to society or segments thereof in
furtherance of social justice. In that sense, labor laws are
necessarily social legislation. Agrarian laws are social legislation,
so is the law providing for social legislation.

2 general classifications

1. Labor Standards law - laws that which set out the

minimum terms, conditions and benefits of employment that
employers must provide or comply with and to which
employees are entitled as a matter of legal rights. It
prescribe the terms and conditions of employment such as
wages or monetary benefits, hours of work, cost of living
allowances, occupational health, safety and welfare of
workers.

2. Labor Relations Law – laws which define the status, rights

and duties and institutional mechanisms that govern the
individual and collective interactions of employers,
employees and their representatives.
Kinds of Labor Laws
1. Protective legislation – designed to protect the weaker party
to the employment contract (Anti-sexual Harassment Act;
Child Labor Laws, Laws against discrimination on
employment of women)
2. Welfare or social legislation (SSS Law, GSIS law, Philhealth,
Worker’s Compensation Act)
3. Diplomatic Legislation – designed to settle labor disputes
through pacific modes (conciliation, mediation, grievance
machinery or arbitration)
4. Administrative Legislation – creates labor bodies like POEA,
OWWA, DOLE, NLRC or TESDA

SEVEN (7) BASIC RIGHTS OF WORKERS AS GUARANTEED

BY THE CONSTITUTION:

1. Right to Organize
2. Right to Conduct Collective Bargaining or Negotiation with
Management
3. Right to Engage in Peaceful Concerted Activities including
strike in accordance with law
4. Right to Enjoy Security of Tenure
5. Right to Work Under Humane Conditions
6. Right to Receive a Living Wage

The rationale labor laws is the POLICE POWER of the State.

The power of the State to regulate the exercise of right or conduct

of business to promote the greater good.

ART 3. DECLARATION OF BASIC POLICY. The State

shall afford protection to labor, promote full employment,
ensure equal work opportunities regardless of sex, age or
creed, and regulate the relations between workers and
employers. The State shall assure the right of workers to
self-organization, collective bargaining, security of tenure,
and just and humane conditions of work.

EMPLOYER - one who employs the services of others;

one for whom employees work and who pays their wages or
salaries.

EMPLOYEE - one who works for an employer; a person

working for salary or wages

MANAGEMENT PREROGATIVE

Except as limited by special laws, an employer is free

to regulate, according to his own discretion and
judgment, all aspects 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
EMPLOYEES, WORK SUPERVISION, LAY-OFF OF
WORKERS, AND DISCIPLINE, DISMISSAL AND RECALL
OF WORKERS.

Thus, so long as management prerogatives are exercised in

good faith for the advancement of the employer’s interest
and not for the purpose of defeating or circumventing the
rights of employees under special law or under valid agreements,
it shall be upheld.

Management Rights

1. Right to conduct business

2. Right to prescribe rules
 3. Right to select employees
4. Right to terminate employment

ELEMENTS OF EMPLOYER-EMPLOYEE RELATIONSHIP:

1. selection and engagement of the employee

2. the payment of wages
3. the power of dismissal
4. the employer’s power to control the employee (with respect to
the means and methods by which the work is to be
accomplished)

The last element as mentioned above is what is known

as the CONTROL TEST - whether the employer controls
or has reserved the 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.

Employees Exempt from the Benefits of Employer-Employee

Relationship (E-Er R)

1. Government Employees
2. Managerial Employees
3. Field Personnel
4. Family Members dependent on the employer for support
5. Domestic Helpers
6. Persons on the Personal Service of another
7. Workers Paid by Result
Types of Employees

1. Regular or permanent employees – those who perform

activities, which are usually necessary and desirable in the
usual business or trade of the employer. Those who has
rendered at least one (1) year of service, whether such
service is continuous or broken will be considered a regular
employee with respect to the activity in which he is employed
and his employment will continue while such activity exists.

2. Term or fixed term employees – the service is for a definite

period of time which in effect must be terminated upon the
expiration or end of the said period.

3. Project employee – one hired for a specific undertaking in

which employment duration is specified by the scope of work
and/or length of the project.

ART 83. NORMAL HOURS OF WORK- Shall not exceed 8 hours

in a regular working day.

PURPOSE - to safeguard the health and welfare of the laborer

and in a way to minimize unemployment by utilizing
different shifts.

REGULAR WORKING DAYS: The regular working days of

covered employees shall not be more than five days in a
workweek. The workweek may begin at any hour and on
any day, including Saturday or Sunday, designated by the
employer.
ART 85. MEAL PERIODS. Should not be less than sixty (60)
minutes, and is time-off/non-compensable. Under specified
cases, may be less than sixty (60) minutes, but should
not be less than twenty (20) minutes and must be with full pay.
If less than twenty (20) minutes, it becomes only a rest period and
is thus considered as work time

ART 86. NIGHT SHIFT DIFFERENTIAL - Additional

compensation of not less than ten percent (10%) of an
employee’s regular wage for every hour of work done between
10:00 PM and 6:00 AM, whether or not this period is part
of the worker’s regular shift.

If work done between 10 PM and 6 AM is overtime work, then

the 10% night shift differential should be based on his
overtime rate.

Basic + overtime + nighshift

ART 87. OVERTIME WORK; OVERTIME PAY - Additional

compensation for work performed beyond eight (8) hours within
the worker’s 24-hour workday. (30%)

- 30% of 130% if on a special holiday/rest day

- 25% of regular wage if done on a regular workday
- 30% of 150% if on special holiday AND rest day
- 30% of 200% if on a regular holiday

RATIONALE- employee is given OT pay because he is made to

work longer than what is commensurate with his agreed
compensation for the statutorily fixed or voluntarily agreed
hours of labor he is supposed to do.- As a rule, cannot
be waived, as it is intended to benefit laborers and
employees. But when the waiver is made in consideration
of benefits and privileges which may even exceed the
overtime pay, the waiver may be permitted.

COMPRESSED WORKWEEK - allowable under the following

conditions:

1. It is voluntary on the part of the worker

2. There will be no diminution of the weekly or monthly take-
home pay and fringe benefits of the employees;
3. The value of the benefits that will accrue to the employees
under the proposed schedule is more than or at least
commensurate with the one-hour OT pay that is due them during
weekdays based on the employee’s quantification
4. The one-hour OT pay will become due and payable if they
are made or permitted to work on a day not scheduled for
work on the compressed work week
5. The work does not involve strenuous physical exertion and
employees must have adequate rest periods
5. The arrangement is of temporary duration.

ART 88. UNDERTIME NOT OFFSET BY OVERTIME

Undertime work on any particular day shall not be offset by

overtime work on any other day. Permission given to the
employee to go on leave on some other day of the week
shall not exempt the employer from paying the additional
compensation.

RATIONALE- An employee’s regular pay rate is lower than the

overtime rate. Offsetting the undertime hours against the
overtime hours would result in undue deprivation of the
employee’s extra pay for overtime work.
ART 91. RIGHT TO A WEEKLY REST DAY- Employees should
be provided a rest period of not less than twenty four (24)
consecutive hours after every six (6) consecutive normal
work days.- Employer shall schedule the weekly rest day of his
employees subject to collective bargaining agreement.
However, the employer shall respect the preference of
employees as to their weekly rest day when such
preference is based on religious grounds. But when
such preference will prejudice the operations of the
undertaking and the employer cannot normally result to other
remedial measures, the employer may so schedule the weekly
rest day that meets the employee’s choice for at least two (2)
days a month.

WHEN EMPLOYEE MAY BE REQUIRED TO RENDER

WORK ON A REST DAY:

1. In case of actual or impending emergencies caused by

serious accident, fire, flood, typhoon, earthquake epidemic
or other disaster or calamity, to prevent loss of life or property
or in cases of force majeure or imminent danger to public
safety

2. urgent work to be performed on the machinery,

equipment or installation to avoid serious loss which the
employer would otherwise suffer

3. abnormal pressure of work due to special circumstances,

where the employer cannot ordinarily be expected to resort
to other measures

4. prevent serious loss of perishable goods

5. nature of work requires continuous operation for seven days a
week

6. work is necessary to avail of favorable weather or

environmental conditions where performance or quality of
work depends upon them

ART 93. COMPENSATION FOR REST DAY, SUNDAY OR

HOLIDAY WORK

- this article does not prohibit a stipulation in

the CBA for higher benefits

SPECIAL HOLIDAYS
1. All Saint’s Day -November 1
2. Last Day of the Year-December 31
3. And all other days declared by law or
ordinances to be a special holiday or non-
working day

NOTE: worked = regular wage plus 30%

premium pay
not worked = none

ADDITIONAL COMPENSATION FOR WORK ON A REST

DAY, SUNDAY OR HOLIDAY WORK:
1. Work on a scheduled rest day - 30% of regular wage
2. No regular workdays and rest days -30% of
regular wage for work on Sundays & Holidays
3. Work on Special Holidays -30% of regular wage
4. Holiday Work falls on Scheduled Rest Day - 50% of regular
wage
ART 94. RIGHT TO HOLIDAY PAY

HOLIDAY PAY - A day’s pay given by law to an employee even if

he does not work on a regular holiday. It is limited to the ten (10)
regular holidays listed by law.

- employee should not have been absent without pay on

the working day preceding the regular holiday

REGULAR HOLIDAYS:
1. New Year’s Day -January 1
2. Maundy Thursday -Movable date
3. Good Friday- Movable date
4. Araw ng Kagitingan -April 9
5. Labor Day -May 1
6. Independence Day -June 12
7. National Heroes Day`-Last Sunday of
August
8. Bonifacio Day-November 30
9. Christmas Day-December 25
10. Rizal Day-December 30

HOLIDAY PAY - A day’s pay given by law to an employee even if

he does not work on a regular holiday. It is limited to the ten (10)
regular holidays listed by law.
- employee should not have been absent without pay on
the working day preceding the regular holiday
Art. 94(b) refers to regular holidays, special holidays are taken
care of under Art. 93.
☛ PREMIUM PAY - Additional compensation for work performed
on a scheduled rest day or holiday.
☛ REGULAR HOLIDAYS:
1. New Year’s Day -January 1
2. Maundy Thursday -Movable date
3. Good Friday- Movable date
4. Araw ng Kagitingan -April 9
5. Labor Day -May 1
6. Independence Day -June 12
7. National Heroes Day`-Last Sunday of
August
8. Bonifacio Day-November 30
9. Christmas Day-December 25
10. Rizal Day-December 30

Note: Compensable whether worked or

unworked.

DOUBLE HOLIDAY PAY

1. 200% of the basic wage provided, he works on that day and

was present or on leave with pay on the preceding
workday. If on leave without pay, rate still applies if
leave is authorized.

2. 400% if he worked – as per DOLE Memo if there are 2 regular

holidays in one day, example April 9 and Good Friday.
Provided the employee worked on the day prior to the
regular holiday or on leave with pay or on authorized absence.
3. If there are two succeeding holidays eg., Maundy
Thursday and Good Friday, the employee must be present
the day before the scheduled regular holiday to be entitled to
compensation to both otherwise, he must work on the first
holiday to be entitled to holiday pay on the second regular
holiday
SERVICE CHARGE

All service charge collected by the hotels, restaurants, and similar

establishments shall be distributed at the rate of 85% for all
covered employees and 15% for the management. The share of
employees shall be equally distributed among them. In case the
service charge is abolished, the share of the covered employees
shall be considered integrated in their wages.

What is “13th month pay”?

It is a mandatory benefit provided to employees pursuant to

Presidential Decree No. 851 which requires employers to grant
13th month pay to all its rank and file employees.

What is “bonus”?

Bonus is an amount granted to an employee in excess of what the

law requires as a reward or incentive for achieving a goal and/or
contributing to the success of the employer’s business. Unlike
13th month pay, a bonus is given out of the employer’s generosity
and is not a demandable and enforceable obligation, unless when
it has been made part of the wage or made the subject of an
express agreement.

Who are covered or entitled to the 13th month pay?

All rank-and-file employees who have worked for at least one (1)
month during the calendar year, are entitled to receive 13th month
pay regardless of the nature of their employment and irrespective
of the methods by which their wages are paid.

Who are rank-and-file employees?

 All employees not considered managerial employees are
considered rank-and-file employees. A managerial employee is
one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees, or to
effectively recommend such managerial actions.

Are there employers who are exempted from paying 13th

month?

Yes. The following employers are exempted from paying 13th

month pay under PD 851:

a) The government and any of its political subdivisions, including

government-owned and controlled corporations, except those
corporations operating essentially as private subsidiaries of the
Government;

b) Employers who are already paying their employees 13th

month pay or more in a calendar year or its equivalent at the time
of the issuance of PD 851;

c) Employers of persons in the personal service of another in

relation to such workers; and

d) Employers of those who are paid on purely commission,

boundary, or task basis, and those who are paid a fixed amount
for performing specific work, irrespective of the time consumed in
the performance thereof, except those workers who are paid on
piece-rate basis, in which case the employer shall grant such
workers the required 13th month pay.
How is 13th month pay computed?

The 13th month pay shall not be less than 1/12 of the total basic
salary earned by an employee within a calendar year. To
illustrate:

Total basic salary earned for the year = proportionate 13th

month pay

12 months

Are maternity leave benefits included in the computation of

13th month pay?

No. Maternity leave benefits are not included in the computation

of 13th month pay.

To illustrate, assuming that a female employee is receiving a

monthly salary of P10,000.00 and was on maternity leave from
June 1 to July 31, 2013:

January - P10,000.00 P100,000.00 =

P8,333.33

February - P10,000.00 12 months

March - P10,000.00

April - P10,000.00

May - P10,000.00
June - on maternity leave

July - on maternity leave

August - P10,000.00

September - P10,000.00

October - P10,000.00

November - P10,000.00

December - P10,000.00

P100,000.00

P8,333.33 is the proportionate 13th month pay of a female

employee who was on maternity leave from June 1 to July 31,
2013.

What does “basic salary” comprise of?

“Basic salary” shall include all remunerations or earnings paid by

an employer to an employee for services rendered but does not
include allowances and monetary benefits which are not
considered or integrated as part of the regular or basic salary,
such as the cash equivalent of unused vacation and sick leave
credits, overtime, premium, night differential and holiday pay, and
include cost-of-living allowances. However, these salary-related
benefits should be included as part of the basic salary in the
computation of the 13th month pay if by individual or collective
agreement, company practice or policy, the same are treated as
part of the basic salary of the employees.
When should the 13th month pay be paid?

It should be paid not later than December 24 of each year. An

employer, however, may give to his employees one-half of the
13th month pay before the opening of the regular school year and
the other half on or before the 24th day of December of every
year.

Are resigned or separated/terminated employees entitled to

13th month pay?

Yes. An employee who has resigned or whose services were

terminated at any time before the time for payment of 13th month
is still entitled to the benefit.

How much is the 13th month pay of a resigned or separated/

terminated employee?

The 13th month pay of a resigned or separated/terminated

employee is in proportion to the length of time he or she has
worked during the year, reckoned (a) from the time she has
starting working during the calendar year or (b) the time the last
13th month pay was given, up to the time of his/her resignation or
separation/termination from the service.

Thus, if he/she worked only from January to September, his/her

13th month pay shall be equal to 1/12 of his total basic salary
earned during that period.

TERMINATION OF EMPLOYMENT

1. Just causes – those which are attributable to the employees

own acts or omissions
- Serious misconduct
- Willful disobedience
 - Gross habitual neglect of duties
- Fraud or willful breach of trust
- Commission of a crime against the person of his employer or
his immediate family member or his representative
- Other causes analogous

2. Authorized causes – attributable to employer

- Redundancy
- Retrenchment
- Installation of Labor Saving Device
- Closure or Cessation of business

Republic Act 7877: Anti-Sexual Harassment Act of 1995

SECTION 2. Declaration of Policy. – The State shall value the

dignity of every individual, enhance the development of its human
resources, guarantee full respect for human rights, and uphold the
dignity of workers, employees, applicants for employment,
students or those undergoing training, instruction or education.
Towards this end, all forms of sexual harassment in the
employment, education or training environment are hereby
declared unlawful.

SECTION 3. Work, Education or Training -Related, Sexual

Harassment Defined. – Work, education or training-related
sexual harassment is committed by an employer, employee,
manager, supervisor, agent of the employer, teacher, instructor,
professor, coach, trainor, or any other person who, having
authority, influence or moral ascendancy over another in a work
or training or education environment, demands, requests or
otherwise requires any sexual favor from the other, regardless of
whether the demand, request or requirement for submission is
accepted by the object of said Act.
(a) In a work-related or employment environment, sexual
harassment is committed when:

(1) The sexual favor is made as a condition in the hiring or

in the employment, re-employment or continued employment
of said individual, or in granting said individual favorable
compensation, terms of conditions, promotions, or privileges;
or the refusal to grant the sexual favor results in limiting,
segregating or classifying the employee which in any way
would discriminate, deprive ordiminish employment
opportunities or otherwise adversely affect said employee;

(2) The above acts would impair the employee’s rights or

privileges under existing labor laws; or

(3) The above acts would result in an intimidating, hostile, or

offensive environment for the employee.

(b) In an education or training environment, sexual harassment is

committed:

(1) Against one who is under the care, custody or

supervision of the offender;

(2) Against one whose education, training, apprenticeship or

tutorship is entrusted to the offender;

(3) When the sexual favor is made a condition to the giving

of a passing grade, or the granting of honors and
scholarships, or the payment of a stipend, allowance or
other benefits, privileges, or consideration; or

(4) When the sexual advances result in an intimidating,

hostile or offensive environment for the student, trainee or
apprentice.
Any person who directs or induces another to commit any act of
sexual harassment as herein defined, or who cooperates in the
commission thereof by another without which it would not have
been committed, shall also be held liable under this Act.

SECTION 4. Duty of the Employer or Head of Office in a Work-

related, Education or Training Environment. – It shall be the duty
of the employer or the head of the work-related, educational or
training environment or institution, to prevent or deter the
commission of acts of sexual harassment and to provide the
procedures for the resolution, settlement or prosecution of acts of
sexual harassment. Towards this end, the employer or head of
office shall:

(a) Promulgate appropriate rules and regulations in

consultation with and jointly approved by the employees or
students or trainees, through their duly designated
representatives, prescribing the procedure for the investigation of
sexual harassment cases and the administrative sanctions
therefor.

Administrative sanctions shall not be a bar to prosecution in

the proper courts for unlawful acts of sexual harassment.

The said rules and regulations issued pursuant to this

subsection (a) shall include, among others, guidelines on proper
decorum in the workplace and educational or training institutions.

(b) Create a committee on decorum and investigation of

cases on sexual harassment. The committee shall conduct
meetings, as the case may be, with officers and employees,
teachers, instructors, professors, coaches, trainors, and students
or trainees to increase understanding and prevent incidents of
sexual harassment. It shall also conduct the investigation of
alleged cases constituting sexual harassment.

In the case of a work-related environment, the committee

shall be composed of at least one (1) representative each from
the management, the union, if any, the employees from the
supervisory rank, and from the rank and file employees.

In the case of the educational or training institution, the

committee shall be composed of at least one (1) representative
from the administration, the trainors, instructors, professors or
coaches and students or trainees, as the case may be.

The employer or head of office, educational or training

institution shall disseminate or post a copy of this Act for the
information of all concerned.

SECTION 5. Liability of the Employer, Head of Office,

Educational or Training Institution. – The employer or head of
office, educational or training institution shall be solidarily liable
for damages arising from the acts of sexual harassment
committed in the employment, education or training environment if
the employer or head of office, educational or training institution
is informed of such acts by the offended party and no immediate
action is taken.

SECTION 6. Independent Action for Damages. – Nothing in this

Act shall preclude the victim of work, education or training-related
sexual harassment from instituting a separate and independent
action for damages and other affirmative relief.
SECTION 7. Penalties. – Any person who violates the provisions
of this Act shall, upon conviction, be penalized by imprisonment
of not less than one (1) month nor more than six (6) months, or a
fine of not less than Ten thousand pesos (P10,000) nor more
than Twenty thousand pesos (P20,000), or both such fine and
imprisonment at the discretion of the court.

Any action arising from the violation of the provisions of this Act
shall prescribe in three (3) years.