Labor Law 101Atty. Melody Sampaga-Favis

February 2012

Labor Law Concepts

Labor Law are laws enacted by the State to:

1. promote the welfare of the employees

(Ex. Labor standards and labor policies)

2. Regulate the relations with their employers. (Ex. Labor relations)

Labor Standards

those which set the minimum standards prescribed by law relating to the terms and conditions of employment

Labor Relations Those which governs the relations between

employers and employeesProvides for procedural framework or

mechanism through which LS may be obtained either through collective bargaining agreements (CBA), mediation, arbitration awards.

Focal interest is centered on the interaction or relationship between employers and employees.

Labor Policies

General principles that do not exclusively pertain to LS nor govern the relations per se between workers and employers.

Example: Art. II Section 18 1987 Constitution

Social Legislation

Body of laws and rules aimed at promoting the general welfare of the public or a particular segment of society.

Social Justice

Salus populi est suprema lex Humanization of laws and equalization of

social and economic forcesThe promotion of the welfare of all the

people.

Mandatory Legal Benefits

Pay Rates

Overtime Pay Plus 25%hourly rate

Holiday Pay Plus 100% of the basic daily wage

Premium Pay Plus 30% of the basic daily wage

Night shift differential Plus 10% basic daily wage

Service Incentive Leave 5 days

Service Charge 85% (rank and file) 15% (mgt.)

Retirement Pay ½ month pay for every year of service

Separation Pay 1 month pay (labor saving, redundancy) or ½ month pay (retrenchment, closure, disease) for every years of services

Labor Standards

Labor StandardsMandatory Legal Benefits Pay rates

13th month pay 1/12 of basic annual salary

Maternity Leave 60 days (normal) and 78 (caesarian)

Paternity Leave 7 work days/delivery

Solo Parents Leave 7 work days/year

Leave for Victims of Violence 10 work days

Special leave benefits for Women 2 months 9gyne surgery)

Social Security Benefits As provided under SSS, EC, Philhealth, Pag Ibig

Minimum Wage As per regional wage order

Employer Employee Relationship Four Fold Test (South

West Disaster Control)

1. Selection and engagement of employee

(Who exercises the power to hire or engage the services of the worker?)

2. Payment of wages (Who pays the wages ?)

Four Fold Test 3. Power of dismissal (Who has the power to

discipline or discretion to terminate the employment of the worker?)

4. Power of Control (Who has the power to

control not only the end to be achieved but also the means and the manner to be used in reaching that end?)

Kinds of Employment Kinds of Employment

Necessary and Desirable to the Business of Employer

Incidental to the business of the employer

Period of Employment

1. Regular Beyond probationary period

2. Probationary For a maximum period of 6 months

3. Casual Fixed period exceeding one (1) year

Kinds of Employment1. Regular – those who were engaged to

perform activities which are usually necessary or desirable in the usual business or trade of the employer;

2. Project – employment is for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee. Ex. Construction workers assigned in a building project.

Kinds of Employment4. Casual employment – those which are

merely incidental to the business of the employer and such work is for a definite period of time.

5. Probationary employee – where the employee is made to undergo a trial period during which the employer determines his/her fitness to qualify for regular employment based on reasonable standards made known to the employee at that time of the engagement.

Kinds of Employment

6. Fixed-period – refers to contracts which specify the priod of its duration or the date of its completion/termination. Ex. Trainers or lecturers employed for the duration of the training program.

Labor Only Contractingprohibited activityAn arrangement whereby the contractor or

subcontractor merely recruits, supplies, or places workers to perform a job, work or service for a principal.

Principal is hereby considered the direct employer of the contractual employee and the contractor or subcontractor shall become a mere agent acting for and in behalf of the principal.

Key Points

If the contractor merely supplies or recruits workers for the principal but the principal controls the work performane of the agency workers and provides the equipments, tools ad capitalization for the business, the recruitment practice is labor only contracting.

Job Contracting/Independent Contracting Legitimate labor contracting arrangementIf contractor has :

a. tools, equipment, implements, machineries, work premises and

b. capital investment c. Operates as an independent business

apart from the principal, offering its service to perform the job, work, or service on its own account, the transaction is independent contracting or job-contracting. (Ex. Law firm contracts catering services of X catering)

Kinds of Employment Kinds of Employment

Necessary and Desirable to the Business of Employer

Incidental to the business of the employer

Period of Employment

4. Project Fixed for a specific duration of the project

5. Seasonal Fixed for a specific duration of the seasonal work

6. Fixed Period Fixed for a specified period as agreed by the parties