LABOR STANDARDS Time spent waiting for work is compensable if it is spent
A. Hours of work “primarily for the benefit of the employer and [its] business.”
1. Coverage/Exclusions
Employees in all establishments, whether operated
for profit or not, are covered by the law on labor standards.
The following are excluded from the coverage of the
law on labor standards:
a. Government employees;
b. Managerial employees;
c. Other officers or members of a managerial staff;
d. Domestic servants and persons in the personal
service of another;
e. Workers paid by results;
f. Non-agricultural field personnel; and
g. Members of the family of the employer.
2. Normal hours of work
“Flexible work arrangements” refer to alternative
arrangements or schedules other than the traditional
or standard work hours, workdays and workweek.
The effectivity and implementation of any of the flexible work
arrangements should be temporary in nature.
a) Compressed work week
“Compressed Workweek” or “CWW” refers to a
situation where the normal workweek is reduced to less than
six (6) days but the total number of work-hours of 48 hours
per week remains. The normal workday is increased to more
than eight (8) hours but not to exceed twelve (12) hours,
without corresponding overtime premium. This concept can
be adjusted accordingly in cases where the normal workweek
of the firm is five (5) days.
The CWW scheme is undertaken as a result of an
express and voluntary agreement of majority of the covered
employees or their duly authorized representatives.
Unless there is a more favorable practice existing in
the firm, work beyond eight (8) hours will not be
compensable by overtime premium provided the total
number of hours worked per day shall not exceed twelve
(12) hours. In any case, any work performed beyond twelve
(12) hours a day or forty-eight (48) hours a week shall be
subject to overtime pay.
3. Meal break
The workers who are required to work in 2
successive shifts should be paid 16hours and not 14, the two
hours for rest or mealtime breaks being included as
compensable working time.
4. Waiting time
If waiting is an integral part of his work or the
employee is required or engaged by the employer to wait.
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The following shall be considered as compensable hours
worked:
a. 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 workplace; and
b. All time during which an employee is suffered or
permitted to work.
5. Overtime work, overtime pay
“Premium pay” refers to the additional
compensation required by law for work performed within
eight (8) hours on non-working days, such as rest days and
regular and special holidays.
“Overtime pay” refers to the additional
compensation for work performed beyond eight (8) hours a
day. Every employee who is entitled to premium pay is
likewise entitled to the benefit of overtime pay.
General rule: The general rule remains that no employee may
be compelled to render overtime work against his will.
Exceptions when employee may be compelled to render
overtime work: W2-PUP-COLLEGE
1. When the country is at war or when any
other national or local emergency has
been declared by Congress or the Chief
Executive;
2. When overtime work is necessary to avail of
favorable weather or environmental
conditions where performance or quality of
work is dependent thereon.
3. When overtime work is necessary to
prevent loss of life or property or in case of
imminent danger to public safety due to
actual or impending emergency in the
locality caused by serious accident, fire,
floods, typhoons, earthquake, epidemic or
other disasters or calamities;
4. When there is urgent work to be performed
on machines, installations or equipment, or
in order to avoid serious loss or damage to
the employer or some other causes of
similar nature;
5. When the work is necessary to prevent loss
or damage to perishable goods;
6. When the completion or continuation of
work started before the 8th hour is
necessary to prevent serous obstruction or
prejudice to the business or operations of
the employer;
 6. Night work, Night shift differential
The law on nightwork applies not only to women
but to all persons, who shall be employed or permitted or
suffered to work at night, except those employed in
agriculture, stock raising, fishing, maritime transport and
inland navigation, during a period of not less than seven (7)
consecutive hours, including the interval from midnight to
five o'clock in the morning, to be determined by the DOLE
Secretary, after consulting the workers’ representatives/labor
organizations and employers.
"Night worker" means any employed person whose
work covers the period from 10 o'clock in the evening to 6
o'clock the following morning provided that the worker
performs no less than seven (7) consecutive hours of work.
7. Part-time work
“Part-time work” is “a single, regular or voluntary
form of employment with hours of work substantially shorter
than those considered as normal in the establishment.” A
“part time worker” is an employed person whose normal
hours of work are less than those of comparable full-time
workers.
The same protection afforded to full-time workers
with respect to security of tenure should also be extended to
part-time workers. Where the employment contract is fixed
or for a definite period only as contemplated by law, part-
time employees are likewise entitled to tenurial rights during
the entire period of their fixed employment. In other words,
they cannot be separated from work without just or
authorized cause.
 Court can order regularization of part-timers;
employer cannot invoke management prerogative to
determine whether to regularize or not.
 Probationary -6 months before maregular
employee
 Private School Teacher – 3 years subject to
determination upon completion of the
period w/n she meets the reasonable
standards, thus not automatic (academic
freedom)
Rule on Part-time teachers
As held in UST vs. NLRC and St. Mary’s University vs.
CA, a part-time member of the faculty cannot acquire
permanent status under the Manual Regulations for Private
schools, in relation to the Labor Code. Only when one has
served as full time teacher can he acquire permanent or
regular status. In UST case, it was ruled that for private school
teacher to acquire permanent status in employment, the
following requisites must concur:
1. The teacher is a full time teacher;
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2. The teacher must have rendered 3 consecutive years
of service; and
3. Such service must have been satisfactory
 Casual Employee – the labor code provides
that any employee who has received at
least one year of service, whether such
service is continuous or broken, shall be
considered as a regular employee with
respect to the activity to which he is
employed, and his employment shall
continue while such activity actually exists
8. Contract for piece of work
B. Wages
1. Wage vs. Salary
The term “wage” is used to characterize the
compensation paid for manual skilled or unskilled labor.
“Salary,” on the other hand, is used to describe the
compensation for higher or superior level of employment.
2. Minimum wage defined, Minimum wage
setting
The minimum wage rates prescribed by law shall be
the basic cash wages without deduction therefrom of
whatever benefits, supplements or allowances which the
employees enjoy free of charge aside from the basic pay.
Minimum wage setting - Whenever conditions in the region
so warrant, the Regional Board shall investigate and study all
pertinent facts and based on the prescribed standards and
criteria, shall proceed to determine whether a Wage Order
should be issued.
 In the performance of its wage-determining
functions, the Regional Board shall conduct public
hearings/consultations, giving notices to employees’
and employer’s groups, provincial, city and municipal
officials and other interested parties
 Hearings may be conducted by the Regional Board
en banc or by a duly-authorized committee thereof
wherein each sector shall be represented. No
preliminary or permanent injunction or TRO may be
issued by any court, tribunal or any other entity
against any proceeding before the commission or
regional board. Failure to conduct public
hearings/consultations and to publish a wage order
renders it invalid.
 The commission shall review the wage order issued
by the Regional Board prior to its publication.
 A wage order shall be published only after its review
by the commission and shall take effect 15 days after
its publication in at least 1 general circulation in the
region
 Any party aggrieved by the wage order issued by the
Regional Board may appeal such order to the
National Wages and Productivity Commission
 (NWPC) within 10 calendar days from publication of
such order. It shall be mandatory for the commission
to decide such appeal within 60 calendar days from
the filing thereof.
 Any wage order issued by the Regional Board may
not be disturbed for a period of 12 months from its
effectivity, and no petition for wage increase shall be
entertained within the said period except when
there are supervening conditions.
What are the methods of fixing the minimum wage rates?
There are two (2) methods, to wit:
1. “Floor-Wage” method which involves the
fixing of a determinate amount to be added
to the prevailing statutory minimum wage
rates; and
2. “Salary-Cap” or “Salary-Ceiling” method
where the wage adjustment is to be applied
to employees receiving a certain
denominated salary ceiling.
The distinction between the two (2) methods is best
shown by way of an illustration. Under the “Floor Wage
Method,” it would be sufficient if the Wage Order simply set
P15.00 as the amount to be added to the prevailing statutory
minimum wage rates; while in the “Salary-Ceiling Method,” it
would be sufficient if the Wage Order states a specific salary,
such as P250.00, and only those earning below it shall be
entitled to the wage increase.
3. Minimum wage of workers paid by results
a) Workers paid by results – They are
workers who are engaged on
pakyao, piecework, task and other
non-time work. They are so called
because they are paid not on the
basis of the time spent on their
work but according to the quantity,
quality or kind of job and the
consequent results thereof.
(Supervised or Unsupervised
workers)
Because of the unique manner by which the work is
compensated as distinguished from the compensation
calculated in the basis of time, it is subject to more
regulations in order to ensure payment of fair and reasonable
wage rates basically through 2 modes:
1) Time and motion study; or
2) As may be fixed through consultation with workers’
and employers’ organizations.
b) Apprentices – 75% of the SMW
c) Learners – 75% of the SMW
d) Persons with disability – 100% of
the SMW
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4. Commissions
“Commission” is the recompense, compensation or
reward of an employee, agent, salesman, executor, trustee,
receiver, factor, broker or bailee, when the same is calculated
as a percentage on the amount of his transactions or on the
profit of the principal.
5. Deductions from wages
General rule is that an employer, by himself or
through his representative, is prohibited from making any
deductions from the wages of his employees. The employer
is not allowed to make unnecessary deductions without the
knowledge or authorization of the employees.
Are there exceptions to this rule? Ui-L2AMI-DCDW.
a) For union dues, in cases where the right of the
worker or his union to check-off has been
recognized by the employer or authorized in writing
by the individual worker concerned
b) In cases where the worker is insured with his
consent by the employer, and the deduction is to
recompense the employer for the amount paid by
him as premium on the insurance;
c) In cases where the employer is authorized by law
or regulations issued by the DOLE Secretary.
d) Deductions for loss or damage;
e) Deductions made for agency fees from non-union
members who accept the benefits under the CBA
negotiated by the bargaining union. This form of
deduction does not require the written
authorization of the non-bargaining union member
concerned;
f) Deductions for value of meal and other facilities;
g) Deductions for premiums for SSS, PhilHealth,
employees’ compensation and Pag-IBIG;
h) Withholding of wages because of the employee’s
debt to the employer which is already due;
i) Deductions made pursuant to a court judgment
against the worker under circumstances where the
wages may be the subject of attachment or
execution but only for debts incurred for food,
clothing, shelter and medical attendance;
j) Withholding tax mandated under the National
Internal Revenue Code (NIRC);
k) When deductions from wages are ordered by the
court;
6. Non-diminution of benefits
The 2014 case of Wesleyan University-Philippines v.
Wesleyan University-Philippines Faculty and Staff
Association, succinctly pointed out that the Non-Diminution
Rule found in Article 100 of the Labor Code explicitly
prohibits employers from eliminating or reducing the benefits
received by their employees. This rule, however, applies only
if the benefit is based on any of the following:
1) An express policy;
 2) A written contract; or upon the realization of profits, the bonus is not
3) A company practice. demandable and enforceable.

To ripen into a company practice that is demandable 7. Facilities vs. Supplements

as a matter of right, the giving of the benefit should not be by Distinction Facilities Supplements
reason of a strict legal or contractual obligation but by As to its definition: The term The term
reason of an act of liberality on the part of the employer. “facilities” “supplements”
 The test or rationale of this rule on long practice includes articles or means extra
requires an indubitable showing that the employer services for the remuneration or
agreed to continue giving the benefits knowing fully benefit of the special privileges
well that said employees are not covered by the law employee or his or benefits given
requiring payment thereof. family but does to or received
 Since there is no hard and fast rule which may be not include tools by the laborers
used and applied in determining whether a certain of the trade or over and above
act of the employer may be considered as having articles or services their ordinary
ripened into a practice, the following criteria may be primarily for the earnings or
used to determine whether an act has ripened into a benefit of the wages.
company practice: employer or
1) The act of the employer has been done for a necessary to the
considerable period of time; conduct of the
2) The act should be done consistently and employer’s
intentionally; and business.
3) The act should not be a product of erroneous As to when said benefit The benefit or
interpretation or construction of a doubtful or compensability: or privilege is privilege given to
difficult question of law or provision in the CBA. made part of the the employee
BONUS laborer’s basic which constitutes
General Rule: is an amount granted and paid ex-gratia to the wage an extra
employee. It cannot be forced upon the employer. If there is remuneration
no profit, there should be no bonus. If profit is reduced, over and above his
bonus should likewise be reduced. basic or ordinary
earning or wage
Exception: Bonus may become demandable and enforceable As to its Deductible Not deductible
in the following instances: deductibility:
The criterion is not so much with the kind of the
1) If it has ripened into a company practice; benefit or item (food, lodging, bonus or sick leave) given but
To be enforceable and considered as a company its purpose. Thus, free meals supplied by the ship operator to
practice: crew members, out of necessity, cannot be considered as
a. The employer must have promised and the parties facilities but supplements which could not be reduced having
expressly agreed upon it, or been given not as part of wages but as a necessary matter in
b. It must have had fixed amount and had been a long the maintenance of the health and efficiency of the crew
and regular practice on the part of the employer during the voyage.

 The test or rationale of this rule on long practice
requires an indubitable showing that the employer
agreed to continue giving the benefits knowing fully
well that said employees are not covered by the law
requiring payment thereof.
2) If it is granted as an additional compensation which
the employer agreed to give without any condition
such as success of business or more efficient or more
productive operation, hence, it is deemed part of
wage or salary.
3) When considered as part of the compensation and
therefore demandable and enforceable, the amount
is usually fixed. If the amount thereof is dependent
Legal Requirements that must be complied with before
facilities may be deducted from wages:
1) Proof that such facilities are customarily furnished
by the trade;
2) The provision of deductible facilities is voluntary
accepted in writing by the employee; and
3) The facilities are charged at fair and reasonable
value
8. Wage Distortion/Rectification
“Wage distortion” contemplates a situation where
an increase in prescribed wage rates results in either of the
following:

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 1) Elimination of the quantitative differences in the
rates of wages or salaries; or
2) Severe contraction of intentional quantitative
differences in wage or salary rates between and
among employee groups in an establishment as to
effectively obliterate the distinctions embodied in
such wage structure based on the following criteria:
a. Skills;
b. Length of service; or
c. Other logical bases of differentiation.
Elements of Wage Distortion: HS-Elims-Existence
1) An existing hierarchy of positions with corresponding
salary rates;
2) A significant change in the salary rate of a lower pay
class without a concomitant increase in the salary
rate of a higher one;
3) The elimination of the distinction between the two
levels; and
4) The existence of the distortion in the same region of
the country.
9. Divisor to determine daily rate
C. Rest Periods
1. Weekly rest day – a rest day period of not
less than twenty-four (24) consecutive
hours after every six (6) consecutive
normal work days. {determined by the
employer, exception: religious grounds}
2. Emergency rest day work – W - PUP
D. Holiday pay/Premium pay
1. Coverage, exclusions – GMOD-RF-RFC
2. Teachers, piece workers, takay, seasonal
workers, seafarers –if supervised, the
employee is entitled to holiday pay, if
Unsupervised, he is not.
E. Leaves
1. Service incentive Leave – at least one (1)
year of service is entitled to incentive leave
of five (5) days with pay. Exclusions: GMOD-
RF-RFC {SIL is convertible to cash}
2. Maternity Leave – married or unmarried to
undergo or recuperate from childbirth,
miscarriage or complete abortion. Daily
maternity benefit of 100% of her average
daily salary credit for:
60 days – normal delivery
78 days – Ceasarian delivery
(only for the first four(4) deliveries or
miscarriages)
3. Paternity Leave – entitled to seven (7)
calendar days of leave benefits with pay on
the condition that his spouse(legal) has
delivered a child or suffered miscarriage for
purposes of enabling him to effectively lend
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support to his wife in her period of recovery
and/or nursing of the newly-born child.
Available only for the first 4 deliveries and
may be availed of before or during the
delivery, provided that the total number of
days should not exceed 7 calendar days for
each delivery. {not convertible to cash}
4. Parental Leave - seven (7) working days
every year to a solo parent who has
rendered service of at least one (1) year, to
enable him/her to perform parental duties
and responsibilities where his/her physical
presence is required. This leave shall be
non-cumulative. It bears noting that this
leave privilege is an additional leave benefit
which is separate and distinct from any
other leave benefits provided under existing
laws or agreements. {Not convertible to
cash}
5. Leave for Victims of Violence against
Women and Children - It is for a total of ten
(10) days of paid leave of absence, in
addition to other paid leaves under the law.
It is extendible when the necessity arises as
specified in the protection order. Its
purpose is to enable the woman employee
to attend to the medical and legal concerns
relative to said law. This leave is not
convertible to cash.
6. Special leave benefit for women - any
female employee in the public and private
sector regardless of age and civil status shall
be entitled to a special leave of two (2)
months with full pay based on her gross
monthly compensation subject to existing
laws, rules and regulations due to surgery
caused by gynecological disorders provided
that she has rendered at least 6 months
continuous aggregate employment service
for the last 12 months prior to surgery. This
special leave shall be non-cumulative and
non-convertible to cash.
F. Service charge - Percentage of sharing- All service
charges collected by covered employers are required
to be distributed at the following rates:
1. 85% to be distributed equally
among the covered employees; and
2. 15% to management to answer
for losses and breakages and distribution to
employees receiving more than P2, 000.00
a month, at the discretion of the
management
G. Thirteenth month pay - not be less than one-twelfth
(1/12) of the total basic salary earned by an
employee within a calendar year. To be entitled to
 the 13th month pay benefit, it is imposed as a
minimum service requirement that the employee
should have worked for at least one (1) month
during a calendar year.
Covered employees: Only rank-and-file employees,
regardless of their designation or employment status and
irrespective of the method by which their wages are paid, are
entitled to the 13th month pay benefit. Managerial
employees are not entitled to 13th month pay.
Excluded:
The following employers are not covered by the 13th month
pay law:
1) 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
2) Employers already paying their employees 13th month
pay or more in a calendar year or its equivalent at the
time of the issuance of the Revised Guidelines.
3) Employers of those who are paid on purely
commission, boundary, or task basis, and those who
are paid a fixed amount for performing a specific work,
irrespective of the time consumed in the performance
thereof, except where the workers are paid on piece-
rate basis, in which case, the employer shall be
covered by the Revised Guidelines insofar as such
workers are concerned. Workers paid on piece-rate
basis shall refer to those who are paid a standard
amount for every piece or unit of work produced that
is more or less regularly replicated without regard to
the time spent in producing the same.
H. Separation pay
The Labor Code prescribes the payment of
separation pay only in the following four (4) situations:
When termination is due to authorized causes:
(1) installation of labor-saving devices;
(2) redundancy;
(3) retrenchment; or
(4) closing or cessation of business operations; and
(5) disease
In accordance with jurisprudence, the following separation
pay may be cited:
(1) Separation pay in lieu of reinstatement; and
(2) Separation pay as financial assistance in cases where the
dismissal was held valid and legal but the employee is given
financial assistance by reason of long years of service,
unblemished record, substantial justice, etc.
The Toyota doctrine.
Under this doctrine, all grounds in Article 282 of the Labor
Code, except analogous causes, would not merit payment of
financial assistance.
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Exception to Toyota doctrine: When termination is based on
analogous causes.
Toyota, however, makes a distinction when the grounds cited
are the analogous causes for termination under Article
282(e), like inefficiency, incompetence, ineptitude, poor
performance and others. It declared that in these cases, the
NLRC or the courts may opt to grant separation pay
anchored:
a. on social justice
b. in consideration of the length of service of the
employee,
c. the amount involved
d. whether the act is the first offense
e. the performance of the employee
f. And the like, using the guideposts enunciated in
PLDT on the propriety of the award of separation
pay.
I. Retirement pay
a. Eligibility – P-PUDGE
1) All employees in the private
sector, regardless of their position,
designation or status and
irrespective of the method by
which their wages are paid;
2) Part-time employees;
3) Underground mine workers;
4) Domestic helpers or persons in
the personal service of another;
5) Employees of government-owned
and/or controlled corporations
organized under the Corporation
Code(without original charters).
6) Employees of service and other job
contractors.
Excluded:
1) Employees of the national government and its
political subdivisions, including government-owned
and/or controlled corporations, if they are covered
by the Civil Service Law and its regulations.
2) Employees of retail, service and agricultural
establishments or operations regularly employing
not more than ten (10) employees.
A. Under Article 287.
This article provides for two (2) types of retirement:
(1) Optional retirement upon reaching the age of sixty (60)
years.
(2) Compulsory retirement upon reaching the age of sixty-five
(65) years.
It is the employee who exercises the option under
No. 1 above. Five (5) years is the minimum years of service
that must be rendered by the employee before he can avail
of the retirement benefits upon reaching optional or
compulsory retirement age under Article 287.
B. Under retirement plan.
The optional and compulsory retirement schemes
provided under Article 287 come into play only in the
absence of a retirement plan or agreement setting forth
other forms of optional or compulsory retirement schemes.
Thus, if there is a retirement plan or agreement in an
establishment providing for an earlier or older age of
retirement (but not beyond 65 which has been declared the
compulsory retirement age), the same shall be controlling.
C. Retirement at an earlier age or after rendering certain
period of service.
Based on Article 287 the employers and employees
are free to agree and stipulate on the retirement age, either
in a CBA or employment contract (voluntary agreed upon,
mutual agreement). It is only in the absence of such
agreement that the retirement age shall be fixed by law, that
is, in accordance with the optional and compulsory
retirement age prescribed under Article 287.
What is the retirement age of underground mine workers?
The optional retirement age of underground mine workers is
50 years of age; while the compulsory retirement age is 60
years old.
What is the minimum number of years of service required of
underground mine workers?
Minimum years of service is also 5 years.
b. Amount – In the absence of a retirement
plan or agreement providing for retirement
benefits of employees in the establishment,
an employee, upon reaching the optional or
compulsory retirement age specified in
Article 287, shall be entitled to retirement
pay equivalent to at least one-half (½)
month salary for every year of service, a
fraction of at least six (6) months being
considered as one (1) whole year.
“One-half month salary” shall include all of the following:
(1) Fifteen (15) days salary of the employee based
on his latest salary rate.
(2) The cash equivalent of five (5) days of service
incentive leave;
(3) One-twelfth (1/12) of the 13th month pay due the
employee; and
(4) All other benefits that the employer and
employee may agree upon that should be included
in the computation of the employee’s retirement pay.
“One-half (½) month salary” means 22.5 days arrived at after
adding 15 days plus 2.5 days representing one-twelfth [1/12]
of the 13th month pay plus 5 days of service incentive leave.
c. Retirement benefits of workers paid by
results – For covered workers who are paid
by results and do not have a fixed monthly
rate, the basis for the determination of the
salary for fifteen (15) days shall be their
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average daily salary (ADS). The ADS is the
average salary for the last twelve (12)
months reckoned from the date of their
retirement, divided by the number of actual
working days in that particular period.
d. Retirement benefits of part-time workers -
Applying the principles under Article 287, as
amended, the components of retirement
benefits of part-time workers may also be
computed at least in proportion to the
salary and related benefits due them.
a. Taxability – in order to be exempt, the
following are the requirements:
1) a reasonable private benefit plan maintained by the
employer;
2) The retiring official or employee has been in the
service of the same employer for at least ten (10)
years;
3) He/she is not less than fifty (50) years of age at the
time of his/her retirement; and
4) The benefits shall be availed of by an official or
employee only once.
J. Women workers
a. Provisions against discrimination
a) Payment of a lesser compensation, including wage,
salary or other form of remuneration and fringe
benefits, to a female employee as against a male
employee, for work of equal value; and
b) Favoring a male employee over a female employee
with respect to promotion, training opportunities,
study and scholarship grants solely on account of
their sexes.
b. Stipulation against marriage
c. Prohibited acts
d. Anti-sexual harassment Act
K. Employment of minors
L. Househelpers
M. Employment of Homeworkers
N. Apprentices and Learners
O. Persons with disability
a. Definition
b. Rights of persons with disability
c. Prohibition on discrimination against
persons with disability
d. Incentives for employers
 TERMINATION OF EMPLOYMENT
A. Employer-Employee relationship
1. Four-fold test – S-P-D-C
1. Selection and engagement of the employee;
2. Payment of wages or salaries;
3. Exercise of the power of dismissal; or
4. Exercise of the power to control the employee’s
conduct.
The test of control is the controlling test which means that
the employer controls or has reserved the right to control the
employee not only as the result of the work to be done but
also as to the means and methods by which the same is to be
accomplished.
2. Kinds of employment
Probationary employment – is one who, for a given period of
time, is on observation, evaluation and trial by an employer
during which the employer determines whether or not he is
qualified for employment.
General Rule: it should not exceed 6 months from the date
the employee started working. One becomes a regular
employee upon the completion of his
Exceptions:
1. When the employer and the employee agree on a
shorter or longer period;
2. When the nature of the work to be performed by the
employee requires a longer period;
3. When a longer period is required and established by
company policy
 Within the 6 month period, the employees are
entitled to security of tenure nothwithstanding their
limited tenure and non permanent status, they
cannot be dismissed except for just or authorized
cause or when he fails to qualify as a regular
employee
 Agabon doctrine applies if dismissal of probationary
employee for a just cause is without due process.
Thus, termination is considered legal but the
employee will be awarded an indemnity in the form
of nominal damages of 30k.
 Jaka doctrine applies if dismissal of probationary
employee for an authorized cause is without due
process. The amount of indemnity is higher 50k
(a) Regular employees referring to those who have been
“engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer”;
How does one become a regular employee?
1. By nature of work. - The employment is deemed regular
when the employee has been engaged to perform activities
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which are usually necessary or desirable in the usual business
or trade of the employer.
2. By period of service. - The employment is reckoned as
regular when the employee has rendered at least one (1) year
of service, whether such service is continuous or broken, with
respect to the activity in which he is employed and his
employment shall continue while such activity exists.
3. By probationary employment. - The employment is
considered regular when the employee is allowed to work
after a probationary period.
(b) Project employees referring to those “whose employment
has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at
the time of the engagement of the employee”;
Litmus test of Project Employment – whether or not the
project employees were assigned to carry out a specific
project or undertaking, the duration and scope of which were
specified at the time the employees were engaged for that
project.
Indicators of project employment:
1. The duration of the specific undertaking is
reasonably determinable
2. The duration and work and service is defined in the
employment agreement and explained to the
employee at the time of hiring
3. It must be in connection with the particular project
or undertaking for which he is engaged
4. While awaiting engagement, he is free to offer his
services to any other employer
5. A report is made by the employer upon termination
of the employee concerned to the DOLE Regional
Office within 30 days from separation from work
6. The employer by practice gives completion bonus
(c) Seasonal employees referring to those who work or
perform services which are seasonal in nature, and the
employment is for the duration of the season;
Requisites for one to become seasonal employee:
1. The seasonal employee should perform work or
services that are seasonal in nature; and
2. They must have also been employed for more than
one (1) season.
(d) Casual employees referring to those who are not regular,
project, or seasonal employees;
Requisites to be considered as a casual employee:
1. merely incidental to the principal business of the
employer and
2. such work or job is for a definite period made
known to the employee at the time of engagement.
(e) Fixed-term employees whose term is freely and
voluntarily determined by the employer and the employee.
The two (2) requisites or criteria for the validity of a fixed-
term contract of employment are as follows:
1. The fixed period of employment was knowingly and
voluntarily agreed upon by the parties, without any
vices of consent;
2. It satisfactorily appears that the employer and
employee dealt with each other on more or less
equal terms with no moral dominance whatever
being exercised by the former on the latter.
Fixed-term employment is the only exception to the rule
that one becomes regular if he is made to perform activities
directly related to the principal business of the employer
(Regularity by virtue of nature of work)
3. Job Contracting
a. Trilateral relationship in job contracting
In legitimate job contracting, there are three (3) parties
involved, to wit:
1. The principal who decides to farm out a job, work or
service to a contractor;
2. The contractor who has the capacity to
independently undertake the performance of the
job, work or service; and
3. The contractual workers engaged by the contractor
to accomplish the job, work or service.
Requisites of legitimate job contracting:
1) It must be registered with the DOLE
2) it must have a distinct and independent business
and free from control and direction of the principal
in all matters connected with the performance of
the work except as to the results thereof;
3) The contractor has substantial capital and/or
investment in the form of tools, equipment,
machineries, work premises, and other materials
which are necessary in the conduct of the
business;and
4) The Service Agreement between principal and
contractor should ensure compliance with all the
rights and benefits of workers.
Absence of any of the foregoing requisites makes it a labor-
only contracting arrangement.
b. Effects of labor only contracting
When is there labor-only contracting?
(a) The contractor does not have substantial capital or
investments in the form of tools, equipment, machineries,
work premises, among others, and the employees recruited
and placed are performing activities which are usually
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necessary or desirable to the operation of the company, or
directly related to the main business of the principal 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; OR
(b) The contractor does not exercise the right of control over
the performance of the work of the employee.
NOTE: Even if only one of the two (2) elements above is
present, there is labor-only contracting.
Effects:
1. The labor-only contractor will be treated as the
agent or intermediary of the principal.
2. The principal will become the employer as if it
directly employed the workers. It will be responsible
to them for all their entitlements and benefits under
labor laws.
3. The principal and the labor-only contractor will be
solidarily treated as the direct employer.
4. The employees will become employees of the
principal.
c. Distinctions between legitimate job
contracting and labor only contracting
1. In legitimate job contracting, no ER-EE relationship
exists between the contractual employees of the
contractor and the principal; while in labor-only
contracting, ER-EE relationship is created by law;
2. In the former, the principal is considered as an
indirect employer; while in the latter, the principal is
considered as the direct employer;
3. In the former, the joint and several obligation of the
principal and the legitimate job contractor is only for
a limited purpose, that is, to ensure that the
employees are paid their wages. while in the latter,
the principal becomes jointly and severally or
solidarily liable with the labor-only contractor to the
latter’s employees.
B. Dismissal from Employment
What is meant by two-fold due process requirement?
Dismissal of employees requires the observance of the two-
fold due process requisites, namely:
1. Substantive aspect which means that the dismissal must be
for any of the (1) just or (2) authorized causes
2. Procedural aspect which means that the employee must be
accorded due process, the elements of which are notice and
the opportunity to be heard and to defend himself.
What is the distinction between JUST CAUSES and
AUTHORIZED CAUSES?
 A dismissal based on a just cause means that the
employee has committed a wrongful act or omission; while a
dismissal based on an authorized cause means that there
exists a ground which the law itself allows or authorizes to be
invoked to justify the termination of an employee even if he
has not committed any wrongful act or omission such as:
 Installation of labor-saving devices;
 Redundancy;
 Retrenchment;
 Closure or cessation of business operations or
 Disease
1. Just Causes
a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or
representative;
 For misconduct or improper behavior to be a just
cause for dismissal, the following requisites must
concur:
1) It must be serious; and
2) It must relate to the performance of the
employee’s duties; and
3) It must show that he has become unfit to
continue working for the employer.
All the above three (3) requisites must concur.
 One of the fundamental duties of an employee is to
obey all reasonable rules, orders and instructions of
the employer. In order to validly invoke this ground,
the following requisites must be complied with, to
wit:
1) The employee’s assailed conduct must have
been willful or intentional, the willfulness
being characterized by a wrongful and
perverse attitude; and
2) The order violated must be based on a
reasonable and lawful company rule,
regulation or policy and made known to the
employee and must pertain to the duties
for which he has been engaged to discharge
b) Gross and habitual neglect by the employee of his
duties;
 The following are the requisites:
1) There must be negligence which is gross
and/or habitual in character; and
2) It must be work-related as would make him
unfit to work for his employer.
 Abandonment is a form of neglect of duty; hence, a
just cause for termination of employment.
To constitute abandonment, two (2) elements must concur,
namely:
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1. The employee must have failed to report for work or
must have been absent without valid or justifiable
reason; and
2. There must have been a clear intention on the part
of the employee to sever the employer-employee
relationship manifested by some overt act.
c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
 Fraud - The following are the requisites of this
ground:
1. The employee has committed an intentional
deception and used dishonest methods for
personal gain or to damage the employer;
and
2. The fraud is work-related and rendered him
unfit to work for his employer.
 For the doctrine of loss of trust and confidence to
apply, the following requisites must be satisfied:
1. The employee holds a position of trust and
confidence;
2. There exists an act justifying the loss of
trust and confidence, which means that the
act that betrays the employer’s trust must
be real, i.e., founded on clearly established
facts;
3. The employee’s breach of the trust must be
willful, i.e., it was done intentionally,
knowingly and purposely, without
justifiable excuse; and
4. The act must be in relation to his work
which would render him unfit to perform it.
d) Commission of a crime or offense by the employee
against the person of his employer or any
immediate member of his family or his duly
authorized representatives; and
 The following are the requisites for the valid
invocation of this ground:
1. A crime or offense was committed by the
employee;
2. It was committed against any of the
following persons:
(a) His employer;
(b) Any immediate member of his
employer’s family; or
(c) His employer’s duly authorized
representative.
e) Union officers who knowingly participate in an
illegal strike
f) Any employee, union officer or ordinary member
who knowingly participates in the commission of
illegal acts during a strike
 g) where strikers who violate orders, prohibitions
and/or injunctions as are issued by the DOLE
Secretary or the NLRC
h) where violation of the union security agreement in
the CBA
 What are the requisites in order to validly
terminate employees based on this clause?
1) The union security clause is applicable;
2) The bargaining union is requesting for the
termination of employment due to
enforcement of the union security provision
in the CBA; and
3) There is sufficient evidence to support the
union’s decision to expel the employee
from the union.
 Is there an exception to this rule?
Yes. An employee cannot be compelled to join a union based
on religious ground. For example: members of the Iglesia ni
Kristo (INK) cannot be compelled to join a union; hence, they
are not bound by the union security doctrine.
i) Violation of company rules and regulations.
j) Theft of property owned by a co-employee as
distinguished from company-owned property which
is considered serious misconduct.
k) Incompetence, inefficiency or ineptitude.
l) Failure to attain work quota.
m) Failure to comply with weight standards of
employer.
n) Attitude problem.
2. Authorized Causes
(1) Business-related causes. – Referring to the grounds
specifically mentioned in Article 283, to wit:
a. Installation of labor-saving device;
b. Redundancy;
c. Retrenchment;
d. Closure or cessation of business operations NOT
due to serious business losses or financial reverses;and
e. Closure or cessation of business operations due to
serious business losses and financial reverses.
(2) Health-related causes. – Referring to disease covered by
Article 284 of the Labor Code.
The following are the five (5) common requisites applicable to
the grounds under Article 283:
1. There is good faith in effecting the termination;
2. The termination is a matter of last resort, there
being no other option available to the employer
after resorting to cost-cutting measures;
3. Two (2) separate written notices are served on
both the affected employees and the DOLE at least
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one (1) month prior to the intended date of
termination;
4. Separation pay is paid to the affected employees
5. Fair and reasonable criteria in ascertaining what
positions are to be affected by the termination
3. Due Process
a) Twin-notice requirement
b) Hearing; meaning of opportunity
to be heard
 Due process means compliance with both
STATUTORY due process and CONTRACTUAL
dueprocess. CONSTITUTIONAL due process is not
applicable (Per Agabon doctrine).
 Statutory due process refers two-notice rule with
ample opportunity to be heard; while contractual
due process refers to the one prescribed in the
Company Rules and Regulations (Per Abbott
Laboratories doctrine).
 Contractual due process was enunciated in the 2013
en banc ruling in Abbott Laboratories, Philippines v.
Pearlie Ann F. Alcaraz. Thus, it is now required that
in addition to compliance with the statutory due
process, the employer should still comply with the
due process procedure prescribed in its own
company rules. The employer’s failure to observe its
own company-prescribed due process will make it
liable to pay an indemnity in the form of nominal
damages, the amount of which is equivalent to the
P30,000.00 awarded under the Agabon doctrine.
 Are the twin-notice requirement and hearing
required in all cases of termination?
No. The two-notice requirement and hearing are required
only in case of just cause termination in the following order:
1. Service of first written notice;
2. Conduct of hearing; and
3. Service of second written notice.
Ample Opportunity To Be Heard
The Perez doctrine enunciates the new guiding
principle on the hearing requirement. It has interpreted the
term “ample opportunity to be heard” as follows:
(a) “Ample opportunity to be heard” means any meaningful
opportunity (verbal or written) given to the employee to
answer the charges against him and submit evidence in
support of his defense, whether in a hearing, conference or
some other fair, just and reasonable way.
(b) A formal hearing or conference is no longer mandatory. It
becomes mandatory only under any of the following
circumstances:
(1) When requested by the employee in writing; or
 (2) When substantial evidentiary disputes exist; or
(3) When a company rule or practice requires it; or
(4) When similar circumstances justify it.
 Are the twin-notice requirement and hearing
applicable to authorized cause termination?
No. Due process in authorized cause termination is deemed
complied with upon the separate and simultaneous service of
a written notice of the intended termination to both:
(1) the employee to be terminated; and
(2) the appropriate DOLE Regional Office, at least
one (1) month before the intended date of the termination
specifying the ground/s therefor and the undertaking to pay
the separation pay required under Article 283 of the Labor
Code. For obvious reason, hearing is not required.
 Are the twin-notice requirement and hearing
applicable to an abandonment case which is a just
cause to terminate employment?
No. Although considered as a just cause to terminate
employment, the due process requirement is different.
No hearing is required (since the employee has already
abandoned his job) but the following notices should be
complied with:
1) First notice asking the employee to explain why
he should not be declared as having abandoned his job; and
2) Second notice informing him of the employer’s
decision to dismiss him on the ground of abandonment.
What are the instances where hearing is not required?
Hearing is not required in the following cases:
1. Termination of project, seasonal, casual or fixed-term
employment.
2. Termination of probationary employment on the ground
of failure of the probationary employee to qualify as a
regular employee in accordance with reasonable standards
made known to him at the start of the employment.
3. Termination due to abandonment of work.
4. Termination due to authorized causes
5. Termination due to disease under Article 284.
6. Termination by the employee (resignation)
7. Termination after 6 months of bona-fide suspension of
operation under Article 286. For purposes of satisfying due
process, what is required is simply that the notices provided
under Article 283 be served to both the affected employees
and the DOLE at least one (1) month before the termination
becomes effective.
8. Termination due to retirement under Article 287.
9. Termination due to closure or stoppage of work by
government authorities when non-compliance with the law
or implementing rules and regulations poses grave and
imminent danger to the health and safety of workers in the
workplace.
10. Termination of employee who has admitted his guilt for
the offense charged.
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C. Reliefs for illegal dismissal
Under this article, an illegally dismissed employee is entitled
to the following reliefs:
(1) Reinstatement without loss of seniority rights
and other privileges;
Reinstatement is self-executory or immediately
executory only if it is ordered by the Labor Arbiter. This
means that the employee ordered reinstated need not file
any motion for the issuance of writ of execution to enforce
reinstatement. The employer, in fact, is required to manifest
within 10 days from his receipt of the order of reinstatement
which of the two (2) options he is taking:
(1) To reinstate the employee to his former position
or to a substantially equivalent position; or
(2) To reinstate him in the payroll, which means the
employee need not report for work but only for the
purpose of getting his wage.
There is no way the employer can disregard the
reinstatement order. Posting of a bond does not stay the
execution of immediate reinstatement.
Are there instances where writ of execution of Labor
Arbiter’s reinstatement order is still required?
Yes, under the 2011 NLRC Rules of Procedure, there
are two (2) instances when a writ of execution should still be
issued immediately by the Labor Arbiter to implement his
order of reinstatement, even pending appeal, viz.:
(1) When the employer disobeys the Rules-
prescribed directive to submit a report of
compliance within ten (10) calendar days from
receipt of the decision; or
(2) When the employer refuses to reinstate the
dismissed employee.
The Labor Arbiter shall motu proprio issue a corresponding
writ to satisfy the reinstatement wages as they accrue until
actual reinstatement or reversal of the order of
reinstatement. The employee need not file a motion for the
issuance of the writ of execution since the Labor Arbiter shall
thereafter motu proprio issue the writ. Employer may be
cited for contempt for his refusal to comply with the order of
reinstatement. Employer is liable to pay the salaries for the
period that the employee was ordered reinstated pending
appeal even if his dismissal is later finally found to be legal on
appeal.
(2) Full backwages, inclusive of allowances; and
In 1996, the Supreme Court changed the rule on the
reckoning of backwages. It announced a new doctrine in the
case of Bustamante v. NLRC, which is now known as the
Bustamante doctrine. Under this rule, the term “full
backwages” should mean exactly that, i.e., without deducting
from backwages the earnings derived elsewhere by the
concerned employee during the period of his illegal dismissal.
When is the award of backwages limited?
(1) When the dismissal is deemed too harsh a
penalty;
 (2) When the employer acted in good faith; or
(3) Where there is no evidence that the employer
dismissed the employee.
Thus, the backwages will not be granted in full but limited to
1 year, 2 years or 5 years.
(3) Other benefits or their monetary equivalent.
 The following reliefs that are awarded in illegal
dismissal cases are missing in Article 279:
(1) Award of separation pay in lieu of reinstatement - The
amount equivalent to at least one (1) month salary or to one
(1) month salary for every year of service, whichever is
higher, a fraction of at least six (6) months being considered
as one whole year and the allowances that the employee has
been receiving on a regular basis.
Separation pay, as a substitute remedy, is only
proper for reinstatement but not for backwages. This remedy
is not found in the Labor Code but is granted in case
reinstatement is no longer possible or feasible, such as when
any of the following circumstances exists:
(1) Where the continued relationship between the
employer and the employee is no longer viable due
to the strained relations and antagonism between
them (Doctrine of Strained Relations).
(2) When reinstatement proves impossible,
impracticable, not feasible or unwarranted for varied
reasons and thus hardly in the best interest of the
parties
(3) Where the employee decides not to be reinstated
as when he does not pray for reinstatement in his
complaint or position paper but asked for separation
pay instead.
(4) When reinstatement is rendered moot and
academic due to supervening events
(5) To prevent further delay in the execution of the
decision to the prejudice of private respondent.
(2) Award of penalty in the form of nominal damages in case
of termination due to just or authorized cause but
without observance of procedural due process.
(3) Reliefs to illegally dismissed employee whose employment
is for a fixed period. The proper relief is only the payment of
the employee’s salaries corresponding to the unexpired
portion of the employment contract.
(4) Award of damages and attorney’s fees.
(5) Award of financial assistance in cases where the
employee’s dismissal is declared legal but because of long
years of service, and other considerations, financial
assistance is awarded.
(6) Imposition of legal interest on separation pay, backwages
and other monetary awards.
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D. Preventive Suspension - It is justified only in cases
where the employee’s continued presence in the
company premises during the investigation poses a
serious and imminent threat to the life or property
of the employer or of the employee’s co-workers.
Without this threat, preventive suspension is not
proper.
 During the 30-day preventive suspension, the worker
is not entitled to his wages and other benefits.
However, if the employer decides, for a justifiable
reason, to extend the period of preventive
suspension beyond said 30-day period, he is
obligated to pay the wages and other benefits due
the worker during said period of extension. In such a
case, the worker is not bound to reimburse the
amount paid to him during the extension if the
employer decides to dismiss him after the
completion of the investigation.
 Extension of period must be justified. During the 30-
day period of preventive suspension, the employer is
expected to conduct and finish the investigation of
the employee’s administrative case. The period of
thirty (30) days may only be extended if the
employer failed to complete the hearing or
investigation within said period due to justifiable
grounds. No extension thereof can be made based
on whimsical, capricious or unreasonable grounds.
 Preventive suspension lasting longer than 30 days,
without the benefit of valid extension, amounts to
constructive dismissal.
 Indefinite preventive suspension amounts to
constructive dismissal.
E. Constructive dismissal
Constructive dismissal contemplates any of the following
situations:
1) An involuntary resignation resorted to when
continued employment is rendered impossible, unreasonable
or unlikely;
2) A demotion in rank and/or a diminution in pay; or
3) A clear discrimination, insensibility or disdain
by an employer which becomes unbearable to the
employee that it could foreclose any choice by him
except to forego his continued employment.
What is the test of constructive dismissal?
The test of constructive dismissal is whether a reasonable
person in the employee’s position would have felt compelled
to give up his position under the circumstances. It is an act
amounting to dismissal but made to appear as if it were not.
In fact, the employee who is constructively dismissed may be
allowed to keep on coming to work. Constructive dismissal is,
therefore, a dismissal in disguise.