Labor Law 101

Kenneth L. Chua, Partner | 31 January 2024

Agenda
1 Overview and Introduction 6 Terms and Conditionsof Employment

2 Natureof Relationship 7 Terminationof Employment

3 Types of Employment (For Tenure) 8 Occupational Safety and Health

4 Contracting 9 Special Concerns

5 Classification of Employees (For Benefits) 10 Questions andAnswers

1
Labor Code of the
Philippines, Overview
and Introduction
Constitutional Protection to Workers
Translate to law

The State shall afford full protection The State shall afford
to labor. protection to labor.
- Article XIII, Section 3 of the 1987 - Article 3 (Declaration
Constitution of Basic Policy) of the Labor Code
Basic Right of Workers Guaranteed by
the Constitution
n To organize
n To conduct collective bargaining or negotiation with management
n To engage in peaceful concerted activities, including strike in
accordance with law
n To work under humane conditions
n To receive a living wage
n To participate in policy and decision-making processes affecting their
rights and benefits
n To enjoy security of tenure
Management Prerogative

"[A]n employer is free to manage and regulate, according to his own discretion and judgment, all
phases of employment, which includes hiring, work assignments, working methods, time, place
and manner of work, supervision of workers, working regulations, transfer of employees, lay-off of
workers, and the discipline, dismissal and recall of work." (Philippine-Singapore Transport
Services, Inc. v. NLRC [G.R. No. 95449, 18 August 1997]

Limitations:
n Not abused, not used as a tool for oppression
n Subject to legal limits, CBA and general principles of fair play and justice
2
Nature of Relationship
Employee

Four-Fold Test

Elements:
i. selection and engagement of the individual;
ii. payment of wages or benefits to him;
iii. power to dismiss him or impose other disciplinary penalties;
iv. power to control him with respect to the means and methods by which he accomplishes
his work.
Contractor

Service Provider (who

Direct engages own personnel
to perform the work)
Independent Contractor Test

Elements:
i. The vendor carries a distinct and independent business;
ii. He performs the contracted services on his own account and under his
own responsibility, according to his own manner and method, and free
from his client's control and direction in all matters connected with the
performance of the contracted services except as to the results thereof;
iii. He has substantial capital or investment to enable himself to
accomplish the contracted services.
Economic Dependence Test

Badges:
a. The extent to which the contracted services are an integral part of the
client's business;
b. The extent of the vendor's investment in equipment and facilities;
c. The nature and degree of control exercised by the client;
d. The vendor's opportunity for profit and loss;
e. The amount of initiative, skill, judgment or foresight required for the
success of the claimed independent enterprise;
f. The permanency and duration of the relationship between the vendor
and the client; and
g. The degree of dependency of the vendor upon the client for the
continuity of its business.
3
Types of Employment
(For Tenure)
Types of Employment

Regular (i.e., Indefinite) Employment

Probationary Employment

Project Employment

Seasonal Employment

Casual Employment

Fixed-Period Employment
Regular (i.e., Indefinite) Employment

If an individual is engaged to perform activities that are usually necessary or

desirable in the usual business or trade of the employer
Probationary Employment

Period of employment to determine whether employee is qualified to be a

regular employee

Maximum length of the probationary employment is 6 months or 180 calendar

days, counted from the date the new employee started working
Probationary Employment

Instances when probationary employment is deemed regular employment:

n New employee is allowed to work after the lapse of the
probationary employment
n Employer does not inform the probationary employee that he
failed to qualify for regular employment before the lapse of his
probationary employment
n Employer does not notify the employee of the standards that he must
satisfy at the beginning of the probationary employment
Project Employment

Period of employment has been fixed for a specific undertaking, the completion of which has
been determined at the time of the hiring of the employee
Project Employment

A project employee may acquire the status of a regular employee:

n when he is continuously rehired after the cessation of a project, and
n the tasks he performs are vital, necessary and indispensable to the
usual business or trade of his employer.
Seasonal Employment

Work is to be performed only at certain time of the year; and, the employment is for the duration
of that time of the year
Casual Employment

Employee is hired to perform work that is merely incidental to the business of the employer; and,
such work is for a definite period made known to the employee at the time of his hiring
Casual Employment

If a casual employee renders at least one year of service (whether

continuous or not):
n he shall be considered a regular employee with respect to the activity for
which he is employed, and
n his employment shall continue while such activity exists
Fixed-Period Employment

Criteria:
n the fixed period of employment was knowingly and voluntarily agreed
upon by the parties without any force, duress, or improper pressure
being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or
n it satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no dominance exercised by
the former over the latter.
4
Contracting
(Department Order No.
174, Series of 2017)
Definition of Contracting

An arrangement whereby a principal agrees to farm out to a contractor the performance

or completion of a specific job or work within a definite or predetermined period, regardless
of whether such job or work is to be performed or completed within or outside the premises of
the principal
Parties

Principal Contractor

Contractor's Employees
Conditions for Permissible Contracting

a. The contractor is engaged in a distinct and independent business and

undertakes to perform the job or work on its own responsibility,
according to its own manner and method;
b. The contractor has substantial capital to carry out the job farmed out by
the principal on his account, manner and method, investment in the
form of tools, equipment, machinery and supervision;
c. In performing the work farmed out, the contractor is free from the
control and/or direction of the principal in all matters connected with
the performance of the work except as to the result thereto; and
d. The Service Agreement ensures compliance with all the rights and
benefits for all the employees of the contractor under the labor laws.
e. [The contractor is registered in such capacity with the relevant DOLE
regional office.]
Prohibited Forms of Contracting

i. Labor-only contracting
ii. When the principal farms out work to a "Cabo".
iii. Contracting out of job or work through an in-house agency.
iv. Contracting out of job or work through an in-house cooperative which
merely supplies workers to the principal.
v. Contracting out of a job or work by reason of a strike or lockout
whether actual or imminent.
vi. Contracting out of a job or work being performed by union members
and such will interfere with, restrain or coerce employees in the
exercise of their rights to self-organization.
Prohibited Forms of Contracting

vii. Requiring the contractor's employees to perform functions which are

currently being performed by the regular employees of the principal.
viii. Requiring the contractor's employees to sign, as a precondition to
employment or continued employment, an antedated resignation letter;
a blank payroll; a waiver of labor standards including minimum wages
and social or welfare benefits; or a quitclaim releasing the principal or
contractor from liability as to payment of future claims; or require the
employee to become member of a cooperative.
ix. Repeated hiring by the contractor of employees under an employment
contract of short duration.
Prohibited Forms of Contracting

x. Requiring employees under a contracting arrangement to sign a

contract fixing the period of employment to a term shorter than the term
of the Service Agreement, unless the contract is divisible into phases
for which substantially different skills are required and this is made
known to the employee at the time of engagement.
xi. Such other practices, schemes or employment arrangements designed
to circumvent the right of workers to security of tenure.
Labor-Only Contracting

Definition:

An arrangement where the contractor merely recruits, supplies or places workers to perform
a job or work for a principal and one of the two below is present:
a) i. The contractor does not have substantial capital, or
ii. The contractor does not have investments in the form of tools, equipment,
machineries, supervision, work premises, among others, and
iii. The contractor's employees recruited and placed are performing activities which are
directly related to the main business operation of the principal;
OR
b) The contractor does not exercise the right to control over the performance of the work of
its employee.
Required Contracts

a b

Employment contract Service agreement

between the contractor between the principal
and its employee and the contractor
Required Provisions in Employment Contract

i. ii.
The specific description of The place of work and
the job or work to be terms and conditions of
performed by the employment, including
employee; and applicable wage rate.
Required Provisions in Service Agreement

i. ii. iii.
The place or work and
terms and conditions
The specific governing the contracting
description of the job arrangement, to include
or work being the agreed amount of the A provision on bond,
subcontracted, contracted job or work as renewable every year.
including its term or well as the standard
duration; administrative fee of not
less than 10% of the total
contract cost; and
Liabilities of Principal

Legitimate contracting

Solidary liability to employees of the contractor for failure of contractor to comply with labor laws

Prohibited contracting

Direct employment relationship with employees of the contractor

Rights of Contractor's Employees

a) Safe and healthful working conditions;

b) Labor standards such as but not limited to service incentive leave, rest
days, overtime pay, holiday pay, 13th month pay, and separation pay;
c) Retirement benefits under the SSS or retirement plans
of the contractor;
d) Social security and welfare benefits; and
e) Self-organization, collective bargaining and peaceful concerted
activities including the right to strike.
Termination of Employment of
Contractor's Employees
n Prior to the expiration of Service Agreement – usual rule
n Pre-termination of Service Agreement – party at fault to bear unpaid
wages and other unpaid benefits
n Expiration of Service Agreement – contractor's employees may wait for
redeployment for three months and after three months, receive
separation benefits
Exemption from DOLE DO 174-17

n Construction companies with license from PCAB

n Business process companies (business process outsourcing,
knowledge process outsourcing, legal process outsourcing, IT
infrastructure outsourcing, application development, hardware/software
support, medical transcription, animation services, back office
operations/support)
n Private security companies (except for registration)
n Other contractual relationship (contract of sale/purchase, contract of
lease, contract of carriage, contract growing, toll manufacturing, and
contract of management, operation and maintenance)
n Professionals and individuals with unique skills
5
Classification of
Employees (For Benefits)
 "Exempt" employees / "Non-exempt" employees
Not eligible to overtime / eligible to overtime

i. government employees Generally, all others

ii. managerial employees and officers
or members of the managerial staff
iii. field personnel
iv. members of the family of the
employer
v. domestic helpers and persons in the
personal service of another
vi. employees who are paid by results,
as determined by DOLE
Managerial Employees

Elements:
i. Their primary duty consists of the management of the company where
they are employed or of a department or subdivision of the company;
ii. They customarily and regularly direct the work of two or more
employees therein; and
iii. They have the authority to hire or fire other employees of lower rank; or
their suggestions and recommendations as to the hiring and firing and
as to the promotion or any other change of status of other employees
are given particular weight.
Officers or Members of the Managerial Staff

Elements:
i. Their primary duty consists of the performance of work directly related
to management policies of their company;
ii. They customarily and regularly exercise discretion and independent
judgement;
iii. They (x) regularly and directly assist a proprietor or a managerial
employee whose primary duty consist of the management of the
company where the managerial employee is employed or a subdivision
of the company; (y) execute under general supervision work along
specialized or technical lines requiring special training, experience, or
knowledge; or (z) execute under general supervision special
assignments and tasks, and
iv. They do not devote more than 20% of their working hours to activities
that are not directly and closely related to the performance of the work
described in the immediately preceding three paragraphs.
Field Personnel

Definition:

Non-agricultural employees who regularly perform their duties away from the principal place of
business or branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty.
6
Employment Terms
and Conditions
Mandatory Terms
and Conditions
Mandatory Terms and Conditions

n Minimum wage n Maternity leave

n Overtime pay* n Paternity leave
n Night shift differential* n Parental leave (solo parent leave)
n Meal period* n Leave due to domestic violence
n Rest day and premium pay for rest day work* n Leave due to surgery for gynecological
n Holiday pay* and premium pay for disorder
holiday work* n Contributions to the SSS, PhilHealth and
n Service incentive leave (vacation leave)* Pag-IBIG Fund

n Lactation period n 13th month pay (for rank-and-file employees)

n Retirement pay

* means the benefit is mandatory for non-exempt or overtime eligible employees

Minimum Wage

It varies based on region,

industry and size of
establishment

PhP 610 per day for NCR,

in general
Work Hours and Overtime*

n Normal hours of work ≤ 8 hours / day

n Work rendered > 8 hours / day = overtime pay (unless there is
compressed workweek arrangement)
n Overtime pay = applicable wage rate + at least 25%

[rate may vary when work is during holiday, rest day or night shift]
Work Hours and Overtime*

Employers may not require employees to perform overtime

work, except: Note

n in certain cases when emergency overtime work may be

rendered; or * Provided appropriate
compensation is paid
n the employee has agreed to perform overtime work
Work Hours and Overtime*

Instances when emergency overtime work may be rendered:

1 2 3

Philippines is at war Necessary to prevent loss of Urgent work to be performed

or when any other national life or property or in case of on machines, installations or
or local emergency has imminent danger to public equipment, in order to avoid
been declared by Congress safety due to an actual or serious loss or damage to the
or the President; impending emergency in the employer or some other
locality caused by serious cause of similar nature;
accidents, fire, flood, typhoon,
earthquake, epidemic, or
other disaster or calamity;
Work Hours and Overtime*

Instances when emergency overtime work may be rendered (continuation):

4 5 6

Necessary to prevent loss or Completion or continuation of Necessary to avail of

damage to perishable goods; the work started before the favorable weather or
8th hour is necessary to environmental conditions
prevent serious obstruction or where performance or quality
prejudice to the business or of work is dependent thereon.
operations of the employer;
Night Shift Differential*

Work between 10 p.m. and 6 a.m.

of the following day

Additional compensation of at least

10% of an employee's applicable
wage rate
Meal Period*

At least 1 hour non-compensable time-off for regular meals

May give employees a meal break of less than 1 hour in certain cases; but
considered as compensable hours worked and must not be less than
20 minutes
Meal Period*

Instances when a meal break of less than 1 hour is allowed:

1 2 3 4
Actual or impending
emergencies or there is
Work is non-manual urgent work to be
The establishment
work in nature performed on Necessary to prevent
regularly operates
or does not involve machineries, equipment serious loss of
not less than
strenuous physical or installations to avoid perishable goods.
16 hours a day;
exertion; serious loss which the
employer would
otherwise suffer; and
Rest Day*

n An employer may require its employees to work 6 days / week

n Rest period without pay of not less than 24 consecutive hours for every
6 consecutive normal working days
n Work on rest days = applicable wage rate + at least 30%
Rest Day*

Employers may not require employees to work on rest days, except:

Note
n in certain cases when emergency work may be rendered; or
n the employee has agreed to work
* Provided appropriate
compensation is paid
Rest Day*

Emergency and exceptional situations when rest day work may be required:

Actual or impending
emergencies caused by
serious accident, fire, flood, Urgent work to be performed Abnormal pressure of work
typhoon, earthquake, on machineries, equipment or due to special circumstances,
epidemic or other disaster or installations to avoid serious where the employer cannot
calamity, to prevent loss of loss which the employer ordinarily be expected to
life or property, or in cases of would otherwise suffer; resort to other measures;
force majeure or imminent
danger to public safety;
Rest Day*

Emergency and exceptional situations when rest day work may be required (continuation):

Necessary to avail
Nature of the work is such
of favorable weather or
To prevent serious loss of that the employees have to
environmental conditions
perishable goods; work continuously for 7 days
where performance or quality
in a week or more; and
of work is dependent thereon.
Regular Holidays*

Regular Holidays Date Regular Holidays Date

1 New Year's Day January 1 7 National Heroes Day last Monday of

August
2 Araw ng Kagitingan April 9
8 Bonifacio Day November 30
3 Maundy Thursday movable date
9 Christmas Day December 25
4 Good Friday movable date
10 Rizal Day December 30
5 Labor Day May 1
11 Eidul Fitr movable date
6 Independence Day June 12
12 Eidul Adha movable date
Regular Holidays*

Unworked Worked

100% of regular daily wage for any at least 200% of the applicable wage
unworked regular holiday rate on the said regular holiday
Special Non-Working Holidays*

The special non-working holidays are as follows:

Immaculate
Benigno S.
All Saints Day Conception of
Aquino Jr. Day
(November 1) Mary
(August 21)
(December 8)

Last day of Others that the

the year President may
(December 31) declare
Special Non-Working Holidays*

Unworked Worked

no work, no pay at least 130% of the applicable wage

rate on the said special non-working
holiday
Regular Work Day*

Work for the first 8 hours that is performed between 6:00 a.m.
100.0%
and 10:00 p.m.

Work for the first 8 hours that isperformed between 10:00 p.m.
110.0%
and 6:00 a.m. of the next day

Work in excess of 8 hours that isperformed between 6:00 a.m.

125.0%
and 10:00 p.m.

Work in excess of 8 hours that isperformed between 10:00 p.m.

137.5%
and 6:00 a.m. of the next day
Rest Day*

Work for the first 8 hours that is performed between 6:00 a.m.
130.0%
and 10:00 p.m.

Work for the first 8 hours that isperformed between 10:00 p.m.
143.0%
and 6:00 a.m. of the next day

Work in excess of 8 hours that isperformed between 6:00 a.m.

169.0%
and 10:00 p.m.

Work in excess of 8 hours that isperformed between 10:00 p.m.

185.9%
and 6:00 a.m. of the next day
Special Non-Working Holiday*

Work for the first 8 hours that is performed between 6:00 a.m.
130.0%
and 10:00 p.m.

Work for the first 8 hours that isperformed within 12 midnight

143.0%
and 6:00 a.m. and within 10:00 p.m. and 12 midnight

Work in excess of 8 hours that isperformed between 6:00 a.m.

169.0%
and 10:00 p.m.

Work in excess of 8 hours that isperformed within 12 midnight

185.9%
and 6:00 a.m. and within 10:00 p.m. and 12 midnight
Special Non-Working Holiday that Falls on the
Rest Day*
Work for the first 8 hours that is performed between 6:00 a.m.
150.0%
and 10:00 p.m.

Work for the first 8 hours that isperformed within 12 midnight

165.0%
and 6:00 a.m. and within 10:00 p.m. and 12 midnight

Work in excess of 8 hours that isperformed between 6:00 a.m.

195.0%
and 10:00 p.m.

Work in excess of 8 hours that isperformed within 12 midnight

214.5%
and 6:00 a.m. and within 10:00 p.m. and 12 midnight
Regular Holiday*

Work for the first 8 hours that is performed between 6:00 a.m.
200.0%
and 10:00 p.m.

Work for the first 8 hours that isperformed within 12 midnight

220.0%
and 6:00 a.m. and within 10:00 p.m. and 12 midnight

Work in excess of 8 hours that isperformed between 6:00 a.m.

260.0%
and 10:00 p.m.

Work in excess of 8 hours that isperformed within 12 midnight

286.0%
and 6:00 a.m. and within 10:00 p.m. and 12 midnight
Regular Holiday that Falls on the Rest Day*

Work for the first 8 hours that is performed between 6:00 a.m.
260.0%
and 10:00 p.m.

Work for the first 8 hours that isperformed within 12 midnight

286.0%
and 6:00 a.m. and within 10:00 p.m. and 12 midnight

Work in excess of 8 hours that isperformed between 6:00 a.m.

338.0%
and 10:00 p.m.

Work in excess of 8 hours that isperformed within 12 midnight

371.8%
and 6:00 a.m. and within 10:00 p.m. and 12 midnight
Service Incentive Leave*

n At least 1 year of service

n Yearly service incentive leave = 5 days with pay
n Converted to its money equivalent if not used or exhausted at the end
of the year
n Commonly replaced by vacation leave or annual leave
Lactation Period

Total: 40 minutes / 8-hour work day

This can be broken down into such number and such length for each period as
may be agreed upon between manager and employee
Maternity Leave Benefit (Social Security Act of
2018, as amended)
n 105 days in case of childbirth or 60 days in case miscarriage of
emergency termination of pregnancy
n Additional 15 days in case of solo parent employee who has childbirth
n Additional 30 days but unpaid in case of childbirth
n 7 days are assignable to the father
n Employer should advance to the pregnant female employee the
full maternity benefit within 30 days from the filing of the maternity
leave application
n SSS shall reimburse the maternity benefit to the employer to a
limited extent
Paternity Leave (Paternity Leave Act of 1996)

n Married male employees, regardless of employment status (e.g.,

probationary, regular, project)
n Applies to the first 4 deliveries or miscarriages of the employee's lawful
wife with whom he is cohabiting.
n 7 days, with full pay, consisting of his basic salary
n Unused leave is not convertible to cash
Solo Parent Leave (Expanded Solo Parents
Welfare Act)

Not more than 7 working days every year

Any solo parent employee who has rendered service of at least 6 months
Leave Due to Domestic Violence
(Anti-Violence Against Women and Their
Children Act of 2004)

Paid leaves of up to
A female victim of 10 days, extendible Leave shall cover the
violence against when the necessity days that the Unused leaves are not
women and their arises as specified in employee has to cumulative and not
children who is a protection order attend to medical and convertible to cash
employed issued by an legal concerns.
appropriate authority
Special Leave Benefit for Women
(Magna Carta of Women)
n A woman employee who has rendered continuous aggregate service of
at least 6 months for the last 12 months
n Surgery caused by gynecological disorders
n Up to 2 months leave with full pay
n Unused leaves are not cumulative and not convertible to cash
Social Insurance

Social Security National Health Home

A Act of 2018, as B Insurance Act of C Development
amended 1995, as Mutual Fund Law
amended / of 2009
Universal Health
Care Act
13th Month Pay (Revised Guidelines on the
Implementation of the 13th-Month Pay)
n All "rank-and-file" employees regardless of the amount of their monthly
basic salary, their designation or employment status, and the method
by which their salary is paid,
n Have worked for at least 1 month during a calendar year.
n 13th-month pay = at least 1/12 of the total basic salary that the
employee earned within a calendar year
n Should be paid not later than December 24 of each year.
13th Month Pay (Revised Guidelines on the
Implementation of the 13th-Month Pay)
n Who are rank-and-file employees? All employees who are not
classified as managerial employees
n For purposes of 13th month pay law, "managerial" employees are those
who are vested with the power or prerogative 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 actions.
Private Retirement Benefit

n Private retirement plan or agreement will govern but should not be less
than those provided by the Labor Code
n If none, retirement pay = at least his ½-month salary x years of service
Private Retirement Benefit

"½-month salary" generally includes:

n 15 days salary of the employee based on his latest salary date
n cash equivalent of 5 days of service incentive leave
n 1/12 of the 13th-month pay due the employee
n all other benefits that the employer and employee may agree upon to
be included in computing the retirement pay
Voluntary Benefits
Non-Diminution of Benefits Rule

Definition
An employer may not unilaterally
withdraw or reduce a benefit that it
has no obligation to give but
voluntarily chose to give to its
employees.

Conditions
i. The grant of the benefit is founded
on a policy or has ripened into a
practice over a long period;
ii. It is consistent and deliberate; and;
iii. It is not due to error in the
construction or application of a
difficult or doubtful question of law.
7
Termination of
Employment
Employee Management
aka Just Cause
Constitutional Guaranty of Tenure
Translate to law

It is state policy to assure all workers No worker shall be dismissed

to security of tenure. except for just or authorized
- Art XIII, Sec. 8 of the 1987 cause provided by law and after
Constitution procedural due process.
- Labor Code
Two Facets of Legal Dismissal

Legality of Act Substantive

Just causes – act or omission attributable to the employee

Authorized causes – economic necessity or health condition

Legality in the Manner Procedural

Substantive Due Process

A Serious Misconduct E Loss of Confidence

B Willful Disobedience F Commission of Crime

Just Causes
Gross and Habitual
C Negligence G Analogous Cases

D Fraud
A. Serious Misconduct

01 There must be misconduct;

03 It must relate to the performance of the
employee's duties; and

02 The misconduct must be of such grave

and aggravated character; 04 There must be showing that the
employee becomes unfit to continue
working for the employer.
B. Willful Disobedience

01 There must be disobedience or

insubordination; 03 The order violated must be reasonable,
lawful, and made known to the
employee; and

02 The disobedience or insubordination must

be willful or intentional characterized by a
wrongful and perverse attitude;
04 The order must pertain to the
duties which he has been engaged
to discharge.
C. Gross and Habitual Neglect of Duties

01 There must be neglect of duty; and

02 The negligence must be both gross and habitual in character.

D. Fraud or Willful Breach of Trust

01 There must be an act, omission,

or concealment; 03 It must be committed against the
employer of his/her representative; and

02 The act, omission or concealment

involves a breach of legal duty, trust,
or confidence justly reposed;
04 It must be in connection with the
employees' work.
E. Loss of Confidence

01 There must be an act, omission

or concealment; 04 The loss of trust and confidence should
not be simulated;

02 The act, omission or concealment justifies

the loss of trust and confidence of the
employer to the employee;
05 It should not be used as a subterfuge
for causes which are improper, illegal,
or unjustified; and

03 The employee concerned must be

holding a position of trust and confidence; 06 It must be genuine and not a mere
afterthought to justify an earlier action
taken in bad faith.
F. Commission of Crime or Offense

01 There must be an act or omission punishable or prohibited by law; and

02 The act or omission was committed by the employee against the person of employer, or any
immediate member of the family or duly authorized representative of the employer.
G. Analogous Cases

01 There must be act or omission similar to those specified just causes; and

02 The act or omission must be voluntary and/or willful on the part of the employees.
Procedural Due Process

"Ample
Show Cause Notice of
Opportunity to
Notice Decision
be heard"
First Written Notice: Show Cause Notice

01 The specific causes or grounds for termination as provided for under Article 297 of the Labor
Code, as amended, and company policies, if any;

02 Detailed narration of the facts and circumstances that will serve as a basis for the charge
against the employee. A general description of the charge will not suffice; and

03 A directive that the employee is given the opportunity to submit a written explanation within a
reasonable period.
First Written Notice: Show Cause Notice

"Reasonable opportunity" to be heard "should be construed as a period of at least 5 calendar

days from receipt of the notice to give the employees an opportunity to study the accusation
against them, consult a union official or lawyer, gather data and evidence, and decide on the
defenses they will raise against the complaint".
Administrative Hearing

n When: (i) requested by the employee; (ii) substantial evidentiary

disputes exist; (iii) company rule or practice requires it; or, (iv) when
similar circumstances justify it
n With assistance of counsel, at the option of the employee
n Informal or fact-finding
Second Written Notice: Notice of Decision

1. 2.

All circumstances involving The grounds have been

the charge against the established to justify the
employee have been severance of their
considered; and employment.

Served personally or to employee's last knownaddress

Business Management
aka Authorized Cause
Constitutional Guaranty of Tenure
Translate to law

It is state policy to assure all workers No worker shall be dismissed

to security of tenure. except for just or authorized
- Art XIII, Sec. 8 of the 1987 cause provided by law and after
Constitution procedural due process.
- Labor Code
Two Facets of Legal Dismissal

Legality of Act Substantive

Just causes – act or omission attributable to the employee

Authorized causes – economic necessity or health condition

Legality in the Manner Procedural

Substantive Due Process

Installation of Labor
A Saving Devices D Closure

B Redundancy E Disease

Authorized Causes
Retrenchment to
C Prevent Losses
Installation of Labor Saving Devices

01 04
There must be introduction No other option available to the
of machinery, equipment or employer than the introduction of
other devices; machinery, equipment or device and the
consequent termination of employment

02
of those affected thereby; and
Done in good faith;

03 Valid purpose, such as to save on cost,

enhance efficiency and other
justifiable economic reasons;
05 Fair and reasonable criteria in selecting
employees to be terminated.
Redundancy

01 There must be superfluous positions or

services of employees; 04 Fair and reasonable criteria in selecting
the employees to be terminated; and

02 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;
05 Adequate proof of redundancy, such
as but not limited to the new staffing
pattern, feasibility studies/proposal
on the viability of the newly created

03 Good faith in abolishing

redundant positions;
positions, job description and
the approval by the management
of the restructuring.
Retrenchment to Prevent Losses

01 04
Reasonably necessary and likely to In good faith for the advancement of its
prevent business losses; interest and not to defeat or circumvent
the employee's right to security of
tenure; and

02
The losses, if already incurred, are not
merely de minimis, but substantial,

05
serious, actual and real, or if only Fair and reasonable criteria in
expected, are reasonably imminent; ascertaining who would be dismissed
and who would be retained among the

03 Expected or actual losses must be proved

by sufficient and convincing evidence;
employees, such as status, efficiency,
seniority, physical fitness, age, and
financial hardship for certain workers.
Closure or Cessation of Operation

1. There must be a decision to close or cease operation of the enterprise by the management;

2. The decision was made in good faith; and

3. There is no other option available to the employer except to close or cease operations.
Disease

01 The employee must be suffering from any disease;

02 Continued employment of the employee is prohibited by law or prejudicial to his/her health as

well as to the health of his/her co-employees; and

03 Certification by a competent public health authority that the disease is incurable within a period
of six months even with proper medical treatment.
Procedural Due Process

30 days prior
written notice 30 days prior
to each written notice Separation pay
impacted to DOLE
employee
Notice to Employees

1. 2.

Effective date Cause of termination

n Deliver in person
n Acknowledge receipt
Notice to DOLE

n Establishment Report
n DOLE regional or field office having jurisdiction over the employer's
registered place of business & employees' workplace
30 Day Notice

n Counted from the day the notice is received by the employee AND the
appropriate DOLE regional or field office
n If not given on the same day to both: count form the date the last notice
was received
n Cannot be waived; cannot be substituted by money equivalent
Separation Pay

Depends on the authorized cause for termination

One month's salary per year of ½ month's salary per year of

service service

n installation of labor-saving n retrenchment to prevent losses

devices n closure or cessation of
n redundancy operations of the establishment
or undertaking not due to
serious business losses or
financial reverses
n disease
Separation Pay

n Total separation pay cannot be less than the employee's one-

month's salary
n A fraction of at least 6 months of service shall be considered one
whole year
n If the closure is due to serious business losses, the employer has no
obligation to pay the affected employees separation pay
8
Occupational Safety
and Health
Obligations of Employer

n Equip a place of employment free from hazardous conditions

n Provide complete job safety instructions and proper orientation
n Ensure that chemical, physical and biological substances and agents,
and ergonomic and psychosocial stresses are without risk to workers
n Use only approved devices and equipment
n Comply with OSH standards
n Make arrangement for workers to participate in improvement of
OSH system
n Provide measures to deal with emergencies, fires and accidents
n Comply with reportorial requirements
n Register with the DOLE
Obligations of Employee

n Participate in capacity building activities

n Use safeguards and safety devices
n Comply with instructions to prevent accidents and imminent
danger situations
n Observe prescribed steps to be taken in cases of emergency and
participate in disaster drills
n Report work hazard
9
Special Concerns
Sexual Harassment

n Anti-Sexual Harassment Act of 1995

n Safe Spaces Act
Discrimination

Discrimination based on the following is prohibited:

n Age
n Gender -- Women
n Solo parent status
n Persons with disabilities
n Battered women and those who assist them
n HIV/AIDS, Hepatitis B, Tuberculosis, Mental Health
n Indigenous peoples
Questions Where When

and Answers Why How

Who What

Kenneth L. Chua
Partner
kenneth.chua@quisumbingtorres.com
 Kenneth L. Chua
Partner

n Head, Employment Practice Group

n Member, Baker McKenzie's Asia Pacific Employment & Compensation Steering
Committee
(T): +63 (2) 88194940
(M): +63 (2) 72172547 n Leading Lawyer in Employment, Chambers Asia Pacific, 2012 to 2020
(M): +63 (917) 8194940 n Leading Individual in Employment, The Legal 500 Asia Pacific, 2012 to 2020
kenneth.chua@quisumbingtorres.com
n Distinguished practitioner for Labour and Employment by Asialaw Leading Lawyers 2020
n Legal Counsel representing Quisumbing Torres for the Global In-House Center Council
Philippines (GICC)
n Representative for Employer Sector, National Tripartite Industrial Peace Council and
Tripartite Executive Committee, Department of Labor and Employment
n Participant, Technical Working Group on Labor and Social Policy Issues, Employers
Confederation of the Philippines
n Admitted to the bar in 1999 (Ranked 6th)
Quisumbing Torres is a member firm of Baker & McKenzie International, a Swiss Verein.
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