Republic of the Philippines

CAVITE STATE UNIVERSITY

Bacoor City Campus

DEPARTMENT OF MANAGEMENT STUDIES

BS BUSINESS MANAGEMENT

HRMT 80: Labor Relations and Negotiations

1st Semester, AY 2022-2023

MODULE 1: 1987 Philippine Constitution in relation to Labor

Preface

This module is designed to help Business Management Students taking up Labor relations
and negotiations subject thru online. The material is designed to be read interactively or after
downloading; while the embedded interactive exercises require internet connectivity, each can
also be downloaded for offline work. These exercises are presented to help you test and apply
what you are reading, challenge yourself, prepare quizzes, and have a little fun along the way.1

About the Author

Atty. Renney Kirsty P. Mostajo-Rivera is one of the pioneer

students of Cavite State University, Bacoor Campus. She
graduated cum laude under Business Management Major in
Marketing Management. In 2013, she took up Bachelor of
Laws at Philippine Christian University under an honor
graduate scholarship program. She manages to be a
consistent dean lister while being a working student at the
same time. By the grace of God, she graduated on the year
2017 and passed the bar on the same year. Since 2018,
she handles business law subjects in Cavite State
University, Bacoor Campus such as Obligations and
Contracts and International Trade and Agreements.
Presently, she is working as Court Attorney at the Supreme
Court of the Philippines.

Objectives:
After successfully completing this module, you should be able to have an overview of the law in
relation to labor relations and negotiations. This module aims to provide insight into the nature
and function of labor law, familiarize the students with legal concepts, terminology and
principle related to labor relations and negotiations.

1 O s tate .p re s s book .p ub
Labor relations - refers to that part of labor law which regulates the relations between
employers and workers. Example: Book V of the Labor Code which deals with labor
organizations, collective bargaining, grievance machinery, voluntary arbitration, conciliation
and mediation, unfair labor practices, strikes, picketing and lockout.

Labor standards - refers to that part of labor law which prescribes the minimum terms and
conditions of employment which the employer is required to grant to its employees. Examples:
Books One to Four of the Labor Code as well as Book VI thereof which deal with working
conditions, wages, hours of work, holiday pay and other benefits, conditions of employment of
women, minors, househelpers and homeworkers, medical and dental services, occupational health
and safety, termination of employment and retirement.

Kinds of Employees

Under Article 294 of the Labor Code, there are four kinds of employment arrangement. These

are:

1. Regular employment. There are two kinds of regular employees

Regular employees by nature of work, that is, those who are engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer.

Regular employees by years of service, that is, those who have rendered at least one year of
service, whether continuous or broken, with respect to the activity in which they are employed.

The primary standard to determine regular employment is the reasonable connection between
the particular activity performed by the employee in relation to the usual business or trade of
the employer. The test is whether the activity of the employee is usually necessary or desirable
in the usual business or trade of the employer.

2. Project employment. A project employee is one whose employment has been fixed for a
specific project or undertaking, the completion or termination of which has been determined at
the time the employee is engaged It is not sufficient that an
employee is hired for a specific project or phase of work. There must also be a determination
of, or a clear agreement on, the completion or termination of the project at the time the
employee is engaged.

The services of project employees are coterminous with the project. They can be terminated
upon the end or completion of that project, or a phase of the project, for which they were hired.
The employer has no obligation to pay them separation pay.

The predetermination of the duration of the period of a project employment is important in

resolving if an employee is a project employee or not. For example, in a previous case, the Court
ruled that while the employee was clearly hired for a specific project, the absence of a definite
period of the project led the Court to the conclusion the employee was regular.

3. Seasonal employment. Seasonal workers perform work that is seasonal in nature and are
employed only for the duration of one season

Seasonal workers who are rehired every working season are considered to be regular
employees. The nature of their relationship with the employer is such that during off season
they are temporarily laid off, but when their services are needed, they are re-employed. They
are not, strictly speaking, separated from the service but are merely considered as on a leave
of absence without pay until they are re-employed. Their employment relationship is never
severed but only suspended. As a result, these employees are considered to be in the regular
employment of the employer.

However, it is not sufficient that the work performed is seasonal in nature. There must also be
evidence that the employee worked only for the duration of the season. For example, in a
previous
case, the fact that the employees repeatedly worked as sugarcane workers for the employer for
several years established the regular employment.

4. Casual employment. There is casual employment where an employee is engaged to perform a

job, work or service which is merely incidental to the business of the employer, and that job,
work or service is for a definite period made known to the employee at the time of engagement
(Implementing Rules of the Labor Code, Book VI, Rule I, section 5(b)). A casual employee is one
whose work is neither regular, project or seasonal.

However, if a casual employee has worked for at least one year (whether continuously or not)
he becomes a regular employee but only with respect to the activity in which he is employed,
and his employment will continue while that activity exists. Even though a casual employee, he
is entitled to all the rights and privileges, and is subject to the same duties and obligations, as
is granted by law to regular employees during the period of his actual employment.

5. Fixed-period employment. While not specifically mentioned in Article 294, fixed-period

employment is recognized under the Civil Code, pursuant to the freedom of parties to fix the
duration of the contract, whatever its object. These fixed-term employment contracts are not
limited to seasonal work or specific projects with predetermined completion dates; also
contemplated are employment arrangements whereby the parties have assigned a specific date
of termination.

For this employment arrangement to be considered compliant with the employees’ right to
security of tenure, it must:

Be voluntarily and knowingly agreed upon by the parties, without any force, duress, or improper
pressure being brought to bear upon the employee, absent any vices of consent.

Appear 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 over the latter.

6. Probationary Employment. Article 295 makes express reference to Probationary

Employment, which provides a trial period, during which the employer observes the fitness,
propriety and efficiency of a probationer to decide whether he is qualified for permanent
employment, while the probationer seeks to prove to the employer that he has the qualifications
to meet the reasonable standards for permanent employment. If the employee was allegedly
hired on a probationary basis, but was not informed of the standards that would qualify him as
a regular employee, he is deemed a regular employee from the very start. Additionally, an
employee who is allowed to work beyond the probationary period shall be deemed regular. This
probationary period is usually fixed at six months or less. However, the parties to an
employment contract can agree to a longer period of probation (for example, when the same is
established by company policy or when the same is required by the nature of work to be
performed by the employee).

Entitlement to statutory employment rights

Philippine Supreme Court rulings recognize job security even in cases involving non-regular
employees. A project employee is entitled to security of tenure for either of the following:

The duration of the project for which he was hired.

The phases of the project for which he was hired, or to which he was assigned, or in connection
with which he rendered services.

Similarly, an employee hired for a fixed term enjoys security of tenure during the agreed
period. Security of tenure also applies to a probationary employee. However, a probationary
employee can be dismissed for failure to qualify as a regular employee in accordance with the
reasonable standards made known to him at the time of his engagement.

Title I of Book 3 of the Labor Code provides for minimum conditions of employment in respect
of:

● Hours of work.
● Meal periods.
● Night shift provisions.
● Overtime work.
● Weekly rest periods.
● Holidays.
● Service incentive leaves.
● Service charges.

However, these minimum conditions of employment do not apply to the following employees
(excluded employees):

● Government employees.
● Managerial employees.
● Officers and members of the managerial staff.
● Field personnel.
● Members of the family of the employer who are dependent on him for
support. Domestic helpers.
● Persons in the personal service of another.
● Workers who are paid by result as determined by the Secretary of the Department of
 Labor and Employment (DOLE).

● Employers of those who are paid on a purely commission, boundary or task basis.
● Employers of those who are paid a fixed amount for performing a specific task,
irrespective of the time spent performing that specific task (with the exception of
workers paid on a piece-rate basis).1

Employer- Employee relationship

The jurisdiction of the National Labor Relations Commission (NLRC) is limited to cases or
disputes where there is an employer-employee relationship between the parties. If no such
employer-employee relationship exists, then the regular courts would have jurisdiction over the
case or dispute.

Philippine jurisprudence applies the “ four-fold test” to determine the issue of whether an
employer-employee relationship exists: 1) the selection and engagement of the employee; 2) the
payment of wages; 3) the power of dismissal; and 4) the employer’ s power to control the
employee’ s conduct (the ‘ control test’ ).

If substantial evidence is presented to show that a person selects and engages another for
employment, pays his/her wages, has the power to dismiss him/her and/or controls his/her
conduct, then the courts will consider such person as his/her employer.

It is the so-called “ control test” which constitutes the most important index of the existence
of the employer-employee relationship that is, whether the employer controls or has reserved
the right to control the employee not only as to the result of the work to be done but also as to
the means and methods by which the same is to be accomplished. Stated otherwise, an
employer-employee relationship exists where the person for whom the services are performed
reserves the right to control not only the end to be achieved but also the means to be used in
reaching such end. (Pacific Consultants International Asia, Inc. v. Klaus K. Schonfeld, 516
SCRA 209).2

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:

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; the contractor has substantial capital or

2 https://www.manilatimes.net/2019/10/03/business/columnists-business/employer-employee-relationship
test/625380
investment; and 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.1

Under the Labor Code, in labor only contracting, the person or intermediary acting as the
contractor is considered merely an agent of the principal. The principal remains responsible to
the workers in the same manner and extent as if the latter were directly employed by him.
Consequently, the principal pays all the wages, benefits and other claims that are a result of
the employer-employee relationship. However, in legitimate job contracting, the solidary
liability of the contractor and the principal is only for the limited purpose of paying the wages
of the contractor’ s employees assigned to the principal under a service agreement. Even
though recourse to the principal is available to the contractor’ s employees in case of
non-payment, there is no employer-employee relationship between the workers and the principal.
There is limited liability because the contractor remains the employer, and the principal is not
responsible for any other claims made by the contractor’ s employees.3

Activity 2: Case Digest

1. Philippine Geothermal, Inc. vs NLRC (G.R. Nos. 82643-67 August 30, 1990

2. Dacles vs Millenium Erectors Corp. (G.R. No. 209822, July 8, 2015)

3. Hanjin Heavy Industries and Construction Co. vs Ibañez (G.R. No. 170181, June 26, 2008)

4. Universal Robina Sugar Milling Corp. vs Acibo et. al. (G.R. No. 186439 January 15, 2014)

5. Brent School Inc. vs Zamora (G.R. No. L-48494 February 5, 1990)

6. Mariwasa Manufacturing, Inc. vs Dazo (G.R. No. 74246 January 26, 1989)

7. Petron Corporation vs Caberte et. al. (G.R. No. 182255, June 15, 2015)

3 https://www.divinalaw.com/dose-of-law/job-contracting/