Labor Standards – The minimum requirements prescribed by existing laws, rules and
regulations as to the terms and conditions of employment relating to wages, hours of
work, cost-of-living allowance, and other monetary and welfare benefits, including
occupational, safety and health standards
Labor Relations – Defines and regulates the status, rights and duties, and the
institutional mechanisms that govern the individual and collective interactions of Ers,
Ees, or their representatives.
Recruitment and Placement- Any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring workers and includes referring, contract services, promising
or advertising for employment abroad
ELEMENTS OF ILLEGAL RECRUITMENT
1. The offender undertakes any of the activities within the meaning of “recruitment and
placement” under Art. 13(b) of the LC, or any of the prohibited practices enumerated
under Art. 34 of the LC; and
2. The offender has no valid license or authority required by law to enable him to
lawfully engage in recruitment and placement of workers. (People v Chua, G.R. No.
187052, 13 Sept. 2012)
THEORY OF IMPUTED KNOWLEDGE A rule in insurance law that any information
material to the transaction, either possessed by the agent at the time of the transaction
or acquired by him before its completion, is deemed to be the knowledge of the
principal, at least so far as the transaction is concerned, even though in fact, the
knowledge is not communicated to the principal at all.(Leonor v. Filipinas Compania, 48
O.G. 243, 10 Jan. 1950; Rovels Enterprises, Inc. v. Ocampo, G.R. No. 136821, 17 Oct.
2002
Direct Hiring- It occurs when an employer hires a Filipino worker for overseas
employment without going through the POEA or entities authorized by the SOLE.
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.
Control Test The control test assumes primacy in the overall consideration. There is an
Er-Ee relationship when the person for whom the services are performed reserves the
right to control not only the end achieved but also the manner and means used to
achieve that end.
Independent Contractor- Those who undertake “job-contracting.” They exercise
independent employment, contracting to do a piece of work according to their own
methods and without being subject to control of their Er except as to the result of their
work
Project Employees - those employed in connection with a particular construction
project or phase.
PROBATIONARY EMPLOYMENT Probation is the period during which the Er may
determine if the Ee is qualified for possible inclusion in the regular force.
Casual employment It is an employment where the Ee is engaged in an activity which
is not usually necessary or desirable in the usual business or trade of the Er, provided,
such employment is neither Project nor Seasonal. (Art. 295, LC) He performs only an
incidental job in relation to the principal activity of the Er.
Fixed-term employment is a contract in which a company or an enterprise hires an
employee for a specific period of time. In most case it is for a year but can be renewed
after the term expires depending on the requirement. In a fixed-term employment, the
employee is not on the payroll of the company.
REGULAR EMPLOYMENT Those who are hired for activities which are necessary or
desirable in the usual business of the employer.
Seasonal employment Employment where the job, work, or service to be performed is
seasonal in nature and the employment is for the duration of the season.
Managerial Employees- A managerial employee is one who is vested with powers or
prerogatives to lay down or execute management policies and or to hire, transfer,
suspend, lay off, recall, discharge, assign or discipline employees, or to effectively
recommend such managerial actions. All employees not falling within this definition are
considered rank and file employees
Field Personnel- Field personnel refers to non-agricultural employees who: 1.
Regularly perform their duties away from the principal place of business or branch office
of the Er; and 2. Whose actual hours of work in the field cannot be determined with
reasonable certainty. (Sec. 27, Rule II, Book III, IRR.
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.
(Management Prerogative) Management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including hiring, work assignments,
working methods, time, place and manner of work, 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. Further, management
retains the prerogative, whenever exigencies of the service so require, to change the
working hours of its employees. So long as such prerogative is exercised in good faith
for the advancement of the employers interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid
agreements. (Sime Darby vs NLRC)
Job contracting, legitimate job contracting or subcontracting refers to an
arrangement whereby a principal agrees to put out or farm out with the contractor or
subcontractor the performance or completion of a specific job, work, or service 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.
A person is considered engaged in legitimate job contracting or subcontracting if the
following conditions concur:
a. the contractor carries on a distinct and independent business and partakes the
contract work on his account under his own responsibility according to his own
manner and method, free from the control and direction of his employer or
principal in all matters connected with the performance of his work except as to
its result;
b. the contractor has substantial capital or investment; and
c. the agreement between the principal and the contractor or subcontractor assures
the contractual employees’ entitlement to all labor and occupational safety and
health standards, free exercise of the right to self-organization, security of tenure,
and social welfare benefits.
Labor-only contracting, on the other hand, is defined under Article 106 of the Labor
Code. It refers to an arrangement where the contractor, who does not have substantial
capital or investment in the form of tools, equipment, machineries, work premises,
among others, supplies workers to an employer and the workers recruited are
performing activities which are directly related to the principal business of such
employer.
Is there a significance of knowing the difference between Job contracting and Laboronly contracting? THERE IS. Job contracting is valid and recognized by law while
Labor-only contracting is a prohibited act. A finding that a contractor is a labor-only
contractor is equivalent to a declaration that there is an employer-employee relationship
between the principal and the employees of the labor-only contractor. In such a case
the labor-only contractor shall be responsible to the workers in the manner and extent
as if said workers were directly employed by him.
In legitimate contracting, there exists a trilateral relationship under which there is a
contract for a specific job, work or service between the principal and the contractor or
subcontractor, and a contract of employment between the contractor or subcontractor
and its workers. (Azucena, 2016)
There are three parties involved in these arrangements:
1. Principal (Contractee) – It refers to any employer, whether a person or entity,
including government agencies and government-owned and controlled corporations,
who/which puts out or farms out a job, service, or work to a contractor.
2. Contractor or subcontractor – It refers to any person or entity, including a
cooperative, engaged in a legitimate contracting or subcontracting agreement providing
either services, workers or combination of services to a principal under a Service
Agreement;
3. Contractual workers – Includes one employed by a contractor to perform or complete
a job, work or service pursuant to a Service Agreement with a principal
JOB CONTRACTING The Er/principal is merely an indirect employer, by operation of
law, of his contractor’s employees.
The law creates an ErEe relationship for a limited purpose.
The principal becomes solidarily liable. The liability, however, does not extend to the
payment of backwages or separation pay of employees who are illegally dismissed.
Allowed by law
Presence of substantial capital or investment
LABOR-ONLY CONTRACTING - The Er/principal is treated as direct employer of the
contractor’s employees in all instances. (Contractor = agent of the employer.
The statute creates an Er-Ee relationship for a comprehensive purpose
The principal becomes solidarily liable with the contractor not only for unpaid wages but
also for all the rightful claims of the employees under the Labor Code and ancillary laws.
Prohibited by law
Absence of substantial capital or investment
Compressed Work Week It is a scheme where the normal workweek is reduced to less
than six (6) days but the total number of 48 work-hours per week shall remain.
SERVICE CHARGES These are charges collected by hotels, restaurants and similar
establishments distributed completely and equally among the covered workers except
managerial employees.
Wage vs. Salary The term "wages" as distinguished from "salary", applies to the
compensation for manual labor, skilled or unskilled, paid at stated times, and measured
by the day, week, month, or season, while "salary" denotes a higher degree of
employment, or a superior grade of services, and implies a position of office: by
contrast, the term “wages" indicates considerable pay for a lower and less responsible
character of employment, while "salary" is suggestive of a larger and more important
service
Preventive suspension
It means that during the pendency of the investigation, the Er may place the Ee under
preventive suspension leading to termination when there is an imminent threat or a
reasonable possibility of a threat to the lives and properties of the Er, his family and
representatives as well as the offender’s co-workers by the continued service of the Ee.
RETRENCHMENT Involves losses, closures, or cessation of operations
establishment or undertaking due to serious business losses or financial reverse.
of
In preventive retrenchment, retrenchment may be undertaken by the employer before
losses are sustained.
REDUNDANCY. Does not involve losses or the closing or cessation of operations of the
establishment
Just Causes for Termination
1. Serious misconduct or willful disobedience by the Ee of the lawful orders of
his Er or representative in connection with his work;
Serious Misconduct It is an improper or wrong conduct; the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment. To be serious
within the meaning and intendment of the law, the misconduct must be of such grave
and aggravated character and not merely trivial or unimportant. (Villamor Golf Club
v. Pehid, G.R. No. 166152, 04 Oct. 2005)
Elements:
1. It must be serious or of such a grave and aggravated character;
2. Must relate to the performance of the Ees’ duties; and
3. Ee has become unfit to continue working for the Er.(Philippine Aeolus Automotive
United Corp. v. NLRC, G.R. No. 124617, 28 Apr. 2000)
Examples: 1. Sexual harassment; 2. Fighting within the company premises; 3.
Uttering obscene, insulting, or offensive words against a superior; 4. Falsification of
time records; or 5. Gross immorality
2. Gross and habitual neglect by the Ee of his duties;
It implies a want or absence of or failure to exercise diligence that an ordinary prudent
man would use in his own affairs
Degree of Negligence as a Just Cause for Termination
GR: Gross and habitual negligence.
a. Gross neglect has been defined as the want or absence of or failure to exercise slight
care or diligence, or the entire absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them. (NBS v. Court of Appeals. G.R.
No. 146741, 27 Feb. 2002)
b. Habitual neglect implies repeated failure to perform one’s duties over a period of
time, depending upon the circumstance. (JGB and Associates v. NLRC, G.R. No.
10939, 07 Mar. 1996)
3. Fraud or willful breach by the Ee of the trust reposed in him by his Er or duly
organized representative;
Fraud, in its general sense, is deemed to comprise anything calculated to deceive,
including all acts, omissions, and concealment involving a breach of legal or equitable
duty, trust, or confidences justly reposed, resulting in damage to another, or by which an
undue and unconscientious advantage is taken of another. Deceit is a species of fraud.
(Galvez v. CA, G.R. No. 187919, 25 Apr. 2012)
Requisites of Fraud or Willful Breach of Trust
1. There must be an act, omission, or concealment;
2. The act, omission, or concealment involves a breach of legal duty, trust, or
confidence justly reposed;
3. It must be committed against the employer or his/her representative; and
4. It must be in connection with the employee’s work
4. Commission of a crime or offense by the Ee against the person of his Er or any
immediate member of his family or his duly authorized representative;
This refers to an offense committed by the Ee against the person of his Er or any
immediate member of his family or his duly authorized representative and thus,
conviction of a crime involving moral turpitude is not analogous thereto as the element
of relation to his work or to his Er is lacking.
Requisites
1. There must be an act or omission punishable/prohibited by law; and
2. The act or omission was committed by the employee against the person of the
employer, any immediate member of his/her family, or his/her duly authorized
representative. (Sec. 5.2 [f], D.O. No. 147-15)
5. Other causes analogous to the foregoing
For an act to be included in analogous cases of just causes of termination, it must be
due to the voluntary and/or willful act or omission of the Ee. (Nadura v. Benguet
Consolidated, G.R. No. L-17780, 24 Aug. 1962)
Requisites
1. There must be an act or omission like those specified just causes; and
2. The act or omission was voluntary and/or willful on the part of the employees. (Sec.
5.2 [g], D.O. No. 147-15)
Authorized causes are initiated by the employer’s exercise of management prerogative,
who shall be liable to pay separation pay as mandated by law. It does not usually
require delinquency or culpability on the part of the employee.
Authorized causes of termination by the Er:
1. Installation of labor-saving devices
Automation is a management prerogative of replacing manpower with machine power in
order to effect more economy and greater efficiency in method of production.
Requisites for a Valid Automation
1. Written notice to the employee and to the DOLE at least one (1) month before the
intended date of termination;
2. Payment of separation pay of at least one (1) month for every year of service;
3. Good faith in the discharge of employees; and,
4. Reasonable criteria to be used in implementing automation
2. Redundancy
It is the superfluity in the performance of a particular work. It exists where the services
of an Ee are in excess of what is reasonably demanded by the actual requirements of
the enterprise.
Requisites of Redundancy
1. There must be superfluous positions or services of employees;
2. The positions or services are in excess of what is reasonably demanded by the actual
requirements of the enterprise to operate in an economical and efficient manner;
3. There must be good faith in abolishing redundant positions;
4. There must be fair and reasonable criteria in selecting the employees to be
terminated; and
5. There must be an adequate proof of redundancy such as but not limited to the new
staffing patter, feasibility studies/ proposal, on the viability of the newly created
positions, job description and the approval by the management of the restructuring
3. Retrenchment
It is the reduction of personnel usually due to poor financial returns as to cut down on
costs of operations in terms of salaries and wages to prevent bankruptcy of the
company
Standards of Preventive Retrenchment
1. The losses expected should be substantial and not merely de minimis in extent; The
substantial loss apprehended must be reasonably imminent;
2. It must be reasonably necessary and likely to effectively prevent the expected losses;
and,
3. Alleged losses if already realized, and the expected imminent losses sought to be
forestalled, must be proven by sufficient and convincing evidence. (Lopez Sugar
Corporation v. Federation of Free Workers, et al., G.R. Nos. 75700-01 Aug. 1990)
4. Closing or cessation of operation of the establishment or undertaking
It must be done in good faith and not for the purpose of circumventing pertinent labor
laws. A change of business ownership does not create an obligation on the part of the
new owner to absorb the employees of the previous owner, unless expressly assumed.
Labor contracts being in personam, are generally not enforceable against a transferee.
5. Disease Disease as a Ground for Dismissal When the Ee suffers from a disease,
and: 1. His continued employment is prohibited by law or prejudicial to his health or to
the health of his co-Ees; and (Sec. 8, Book VI, Rule I, IRR) 2. With a certification by
competent public health authority that the disease is incurable within six (6) months
despite due medication and treatment. (Solis v. NLRC, G.R. No. 116175, 28 Oct. 1996)
Payment of separation pay in case of closure Payment of separation pay is required
only where closure is neither due to serious business losses nor due to an act of
Government. (North Davao Mining
There is no obligation to pay separation pay 1. When the closure of the business is due
to serious business loss; and 2. Where closure of business is by compulsion of law
because closure of business is not attributed to Er’s will. (e.g., the land where the
building is situated was declared covered by the Comprehensive Agrarian Reform Law)