Labor Relations and Negotiations Page 1 of 9

The Statutory Classification of Employees

Topic: The Statutory Classification of Employees

Welcome Notes:
WELCOME BSBA STUDENTS!!!
Get ready to be challenged…
Learn something new every day by adapting the
‘New Normal’

I. INTRODUCTION:
In the previous chapter we have tackled about the existence of employer-employee relationship,
this lesson will help you understand the statutory classification of employees under the mandates of
Labor Code of the Philippines.
II. OBJECTIVES:
At the end of this module, you should be able to:
1. determine the statutory classification of employees, and
2. recognize the classifications in real-life scenarios.
III. PRELIMINARY ACTIVITIES:

Before you proceed to the main lesson, test yourself with this activity.

Instruction: Ponder on the following quotation below.

“He who works with his hands is a laborer.

He who works with his hands and his head is a craftsman.
He who works with his hands and his head and his heart is an artist.”
― Saint Francis of Assisi

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The Statutory Classification of Employees

GREAT!!!
You may now proceed to the main lesson.

IV. LESSON PROPER

Let’s begin!

Based on the preliminary activities, what did you notice about it?
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CONGRATULATIONS!
You may now proceed to the lesson.

Lesson 4: The Statutory Classification of Employees

The Statutory Classification of Employees are hereby referred to by the following notes in
accordance with (Ungos Sr. & Ungos III, 2015) to wit:

The Labor Code classifies employees in this manner:

(1) According to rank; and
(2) According to nature of engagement.

Types of Employees According to Rank

(1) Managerial – those vested with powers or prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign, or discipline employees.
(2) Supervisory – those who, in the interest of the employer, effectively recommend through the use of
independent judgment, the laying down and execution of management policies or the hiring, transfer,
suspension, lay-off, recall, discharge, assignment, or discipline employees.
(3) Rank-and-file – those who are neither managerial nor supervisory.

This classification is significant for purposes of determining eligibility to form, join, or assist in the
formation of a labor organization and the degree of their culpability in disciplinary cases. Managerial
employees are not eligible to form, join or assist in the formation of any labor organization. Supervisory
employees can form, join or assist in the formation of their own labor organization but they are not eligible
for membership in the rank-and-file union. As to degree of culpability in disciplinary cases, managerial
employees and supervisory employees are subject to stricter norm of discipline than rank-and-file
employees. Unlike rank-and-file employees, managerial employees and supervisory may be dismissed by
the mere existence of a basis for believing that such employee has breached the trust of his employer. In
the case of rank-and-file employees, proof of involvement in the questioned acts is required.
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The Statutory Classification of Employees
Mere uncorroborated assertions and accusations by the employer will not suffice.

Types of Employees According to Nature of Engagement

(1) Regular — those who are engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer.

(2) Non-Regular -- those who are engaged to work:

(a) for a specific project or undertaking, i.e., project employees;
(b) for a particular season, i.e., seasonal employees;
(c) for a fixed-term, i.e., fixed-term employees, or
(d) for a trial period, i.e., probationary employees.
(3) Casual — those hired to perform activities which are not usually necessary or desirable in the usual
business or trade of the employer.

The classification is significant for the purpose of determining the tenure of employment.
Employees holding regular employment enjoy security of tenure by express provision of Article 284 of the
Labor Code. On the other hand, employees holding non-regular employment are entitled only to qualified
tenure of employment, in the sense that they cannot be dismissed without just cause or authorized cause
during the term of their employment." Casual employees who have rendered at least one (1) year of service
are entitled to security of tenure, in the sense that their employment cannot be terminated without just
cause or authorized cause, as long as the activity in which they were employed exists.

The Rights of Workers

(1) Right to a Living Wage

The living (minimum) wage shall be as nearly as adequate as is economically feasible to maintain the
minimum standards of living necessary for the health, efficiency and general well-being of the employees
within the framework of the national and social development program.

(2) Right to Humane Conditions of Work - Every workingman is entitled to be protected against the dangers
of sickness or death through safe and healthful working conditions."

(3) Right to Self-Organization - Employees of commercial, industrial, agricultural enterprises or those

employed in religious, charitable, medical, or educational institutions, whether operating for profit or not,
have the right to form, or join organization for purposes of collective bargaining or for their mutual aid and
protections.

(4) Right to Engage in Concerted Activities – Workers have the right to engage in concerted activities for
purposes of collective bargaining or for their mutual aid and protection.
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The Statutory Classification of Employees
(5) Right to Collective Bargaining - This right can be exercised by the workers through their duly selected
labor organization."

(6) Right to Present Grievances to the Employer – Individual employees or group of employees have the
right at any time to present grievances to their employer.

(7) Right to Participate in Policy and Decision-Making Processes - This right extends only to matters that
directly affect the employees' rights, benefits and welfare, but not on matters pertaining to business
operations, management of the business or those falling within the traditional areas of collective bargaining.

(8) Right to Security of Tenure-Workers cannot be dismissed without just cause.

The Prerogatives of Management

While workers have their rights, employers have also their prerogatives. It is the prerogative of an
employer to determine, according to his own discretion and judgment, all aspects of employment, including
hiring, work assignment, working methods, time, place and manner of work, tools to be used, processes to
be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of
workers, discipline, dismissal and recall of work. These prerogatives are recognized because it is deemed
important to society as a whole that the business should succeed. (Ungos Sr. & Ungos III, 2015)

The exercise of these prerogatives is inherent and exclusive to every owner of a business.
Managerial prerogatives may be availed of without liability as long as they are exercised in good faith for
the advancement of the employer's interest. Employees or labor unions cannot object to the exercise by
management of its prerogatives, in much the same way that they may be expected to resist to the utmost
what they consider to be an intrusion into their exclusive domain. Not even the National Labor Relations.
Commission or the Labor Arbiters can interfere with or substitute their judgment for that of the employer in
the conduct of his business because there is nothing in the Labor Code that authorizes them to exercise
managerial authority, although it is within their power to inquire on whether or not the exercise of
managerial prerogatives was tainted with bad faith or grave abuse of discretion. (Ungos Sr. & Ungos III,
2015)

We had just finished the discussion on The Statutory Classification of

Employees. Let’s move on to the next higher level of activity/ies or exercise/s that
demonstrates your potential skills/knowledge of what you have learned.
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The Statutory Classification of Employees

V. ANALYSIS, APPLICATION AND EXPLORATION

ACTIVITY 1
Name: ______________________________ Course & Section: __________________
Instruction: Identify what is being stated in the following phrases. (10 items x 1 point each)
______________1. A type of employee who, in the interest of the employer, effectively recommend
through the use of independent judgment, the laying down and execution of management policies
or the hiring, transfer, suspension, lay-off, recall, discharge, assignment, or discipline employees.
______________2. A type of employee that is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign, or
discipline employees.
______________3. A type of employee who are neither managerial nor supervisory.
______________4. Employees that are engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer.
______________5. Employees that are engaged to work for a specific project or undertaking, i.e.,
project employees.
______________6. Employees that are hired to perform activities which are not usually necessary or
desirable in the usual business or trade of the employer.
______________7. It is a right to be economically feasible to maintain the minimum standards of living
necessary for the health, efficiency and general well-being of the employees within the framework
of the national and social development program.
______________8. This right can be exercised by the workers through their duly selected labor
organization."
______________9. It is a right that manifests the following: Workers cannot be dismissed without just
cause.
_____________10. It is a right wherein have the right to form, or join organization for purposes of
collective bargaining or for their mutual aid and protections. Right to Self-Organization

Finally, let us summarize the lesson of what we had discussed today.

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The Statutory Classification of Employees

VI. GENERALIZATION
Name: ______________________________ Course & Section: __________________
Instruction: Read the following case at bench. Then, answer the corresponding questions that follow.

CAOILE V LNRC 115491 Nov 24, 1998

Coca-Cola Bottlers hired Alejandro Caoile as an Electrician Data Processing (EDP) Supervisor in its
Zamboanga plant, but was later dismissed on the ground of loss of trust and confidence for his involvement
in the anomalous encashment of check payments to a contractor.The allegation goes: Mr. Redempto de
Guzman was hired as a contractor for the installation of a private automatic branch exchange house wiring
in the plant premises for the sum of P 65, 000.00. Since Caoile was the supervisor, all transactions for the
payment of Mr. Redempto de Guzman was coursed through him. The facts revealed that Caoile cashed
more than what was asked in different instances and reasoned the payment of the services of Mr. de
Guzman. In the payment for the initial cash advance, Mr. de Guzman requested for 10,000 and the
petitioner prepared a payment request memo in the amount of 15,000 retaining the5,000 for himself. When
queried by Mr. De Guzman about theP5,000.00, complainant replied that it was for the higher ups as
arranged by Mr. Arthur Soldevilla, an alleged partner of Mr. de Guzman. The same scenario also happened
in the succeeding second and third cash advances, also a few other instances. On September 4, 1992, Mr.
de Guzman executed an affidavit exposing the fraudulent acts of the petitioner, which was investigated by
the company. Although the petitioner denied the allegations, different witnesses confirmed that petitioner
indeed cashed the checks and handled the payment for the contractor. As a result, the petitioner was
dismissed. Subsequently, Caoile filed a complaint for illegal dismissal and money claims against Coca-Cola
and its officers. The labor arbiter found that petitioner was illegally dismissed and ruled that he be
reinstated with back wages. Upon appeal of the respondent, the NLRC reversed the Labor arbiter’s
decision. (Data retrieved from: https://www.scribd.com/document/249614438/Labor-Case-Digests)
1. What is the issue of this case at bench?
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2. If you will decide on the issue that you have mentioned above, what resolutions will you make?
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The Statutory Classification of Employees

KUDOS!
You have come to an end of Module 4.
OOPS! Don’t forget that you have still an assignment to do.
Here it is….

VII. ASSIGNMENT
Name: ______________________________ Course & Section: __________________
Instruction: Identify whether the statement is TRUE or FALSE.
________1. Rank-and-file are those who, in the interest of the employer, effectively recommend
through the use of independent judgment, the laying down and execution of management policies.
________2. The classification of employees is significant for the purpose of determining their tenure of
employment.
________3. The exercise of the prerogatives of management is not inherent and exclusive to every
owner of a business.
________4. Managerial prerogatives may be availed of without liability as long as they are exercised in
good faith for the advancement of the employer's interest.
________5. . Managerial employees are not eligible to form, join or assist in the formation of any labor
organization.
________6. Supervisory employees can form, join or assist in the formation of their own labor
organization but they are not eligible for membership in the rank-and-file union.
________7. As to degree of culpability in disciplinary cases, managerial employees and supervisory
employees are subject to stricter norm of discipline than rank-and-file employees.
________8. Regular employees are those engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer.
________9. Employees holding non-regular employment are entitled only to qualified tenure of
employment, in the sense that they cannot be dismissed without just cause.
________10. Casual employees who have rendered at least one (1) year of service are entitled to
security of tenure, in the sense that their employment cannot be terminated without just cause or
authorized cause, as long as the activity in which they were employed exists.

After your long journey of reading and accomplishing the module, let us now
challenge your mind by answering the evaluation part of this module.
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The Statutory Classification of Employees

VIII. EVALUATION
Name:______________________________ Course & Section: __________________

Direction/Instruction: Choose the letter that contains the best answer.

(This evaluation will be submitted on ________________.)

1. “He works with his hands is a laborer. He who works with his hands and his head is a craftsman. He
who works with his hands and his head and his heart is an artist,” Who quoted that statement?
A. Edgar Allan Poe
B. Saint Francis of Assisi
C. Lewis Carrol
D. H.G. Wells
2. What do we call the employees that are vested with power to lay down and execute managerial policies
and/or to hire, transfer, suspend, lay-off, assign, and discipline employees?
A. Supervisory
B. Rank-and-File
C. Managerial
D. Security
3. Which among these type of employees recommends using independent judgment for the best interest of
the employer?
A. Managerial
B. Security
C. Rank-and-File
D. Supervisory
4. All of the following are engagements for non-regular employees except:
A. For a specific project or undertaking
B. For a fixed term
C. For a trial period
D. For vital decision-making
5. The law protects the rights of all employees to enjoy security of tenure. What provision is it?
A. Article 262
B. Article 413
C. Article 284
D. Article 365
6. How long should a casual employee render in order for him/her to be entitled to security of tenure?
A. One (1) year
B. Two (2) years
C. Three (3) years
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The Statutory Classification of Employees
D. Four (4) years

7. The minimum earnings shall be as nearly as adequate as is economically feasible to maintain basic
standards of living. What right of a worker is it?
A. Right to Humane Conditions of Work
B. Right to Self-Organization
C. Right to Engage in Concerned Activities
D. Right to a Living Wage
8. Employees have the privilege at any time to present grievances to their superiors. What right of a worker
is it?
A. Right to Security of Tenure
B. Right to Collective Bargain
C. Right to Engage in Concerted Activities
D. Right to Present Grievances
9. Which of the following explains the “Right to Humane Conditions”?
A. Every workingman is entitled to be protected against dangers of sickness or death through safe
and healthful working environments.
B. Workers have the right to engage in concerted activities for purposes of collective bargaining.
C. All employees should be compensated with the prescribed minimum wage.
D. No employees should be prohibited to express their grievances.
10. Which among the factors below is used to classify employees?
A. Benefits
B. Nature of Engagement
C. Gender
D. Schedule

CONGRATULATIONS on reaching the end of this module!

You may now proceed to the next module.
Don’t forget to submit all the exercises, activities and portfolio
on ___________________.
KEEP UP THE GOOD WORK.
Well Done!!!