September 2024

Understanding Employment
Relationships and Contracts
A Comprehensive Guide to Employer-Employee
Dynamics
Table of Contents

The Foundation of Legal Framework Governing

1 5
Employment Relationships Employment

What is an Employment
2 6 Importance of Compliance
Contract?

The Impact of Employment

Roles Defined: Employer vs.
3 7 Contracts on Workplace
Employee
Harmony

Types of Employment Creating Effective

4 8
Relationships Employment Contracts
 Challenges in Employment
9
Relationships

1 The Role of Communication in

0 Employment Relationships

1 Future Trends in Employment

1 Relationships
The Foundation of Employment Relationships

1. Employment relationships are the bedrock of workforce dynamics, shaped by clear contractual
arrangements between employers and employees.

2. These contracts outline essential rights, responsibilities, and expectations, setting the stage for a
fruitful working environment.

3. By defining roles and obligations, employment contracts serve as navigational tools for both parties,
ensuring smoother interactions.

4. A solid understanding of these relationships fosters trust and cooperation, pivotal for organizational
success.

5. This presentation explores the intricacies of employment relationships and contractual

arrangements.
What is an Employment Contract?

1. An employment contract is a formal agreement that delineates the terms

of the working relationship.

2. It includes job duties, compensation, duration, and performance

expectations, ensuring clarity from the onset.

3. A well-crafted contract acts as a road map, guiding the employee's

responsibilities and the employer's obligations.

4. Moreover, it minimizes the potential for misunderstandings and disputes,

creating a harmonious work environment.

5. Ultimately, effective contracts protect the interests of both parties

involved.
Roles Defined: Employer vs. Employee

1. Understanding the roles of both employer and employee is crucial for a

successful relationship.

2. An employer hires and compensates individuals for their work, often

offering benefits like health insurance and paid time off.

3. On the other hand, an employee carries out tasks under the employer's
guidance, adhering to established policies.

4. Recognizing these distinctions lays the groundwork for mutual respect and
accountability.

5. In essence, both parties play vital roles in fostering a productive working

dynamic.
Types of Employment Relationships

1. Diverse employment relationships exist, each governed by specific legal provisions.

2. Regular Employment offers job security and benefits as outlined in the Labor Code of the
Philippines.

3. Probationary and project-based roles provide flexibility and a chance for evaluation before full
employment.

4. Seasonal jobs cater to varying demands, showcasing the adaptability within the workforce.

5. Understanding these types is essential for navigating employment landscapes.

Types of Employment Relationships

1. Regular Employment:
o Labor Code of the Philippines (Presidential Decree No. 442): Articles 279 to 281 detail the conditions for regular
employment, including job security and benefits.
o Civil Code of the Philippines: General provisions on obligations and contracts might apply, but specific employment-
related matters are covered under the Labor Code.
2. Probationary Employment:
o Labor Code of the Philippines: Article 296 (formerly Article 281) specifies the terms of probationary employment,
including the maximum period (6 months) and conditions for termination.
3. Project-Based Employment:
o Labor Code of the Philippines: Articles 295 (formerly Article 280) and 296 (formerly Article 281) govern the terms of
project-based employment. Workers on project-based contracts have a defined end date linked to the completion of a
specific project.
Types of Employment Relationships
4. Seasonal Employment:
o Labor Code of the Philippines: Article 295 (formerly Article 280) also covers seasonal
employment, which is tied to specific periods or seasons of increased demand.
5. Temporary (or Temp) Employment:
o Labor Code of the Philippines: Temporary or casual employment is outlined in Article
295 (formerly Article 280). These positions are typically short-term and may not come
with the same benefits as regular positions.
6. Part-Time Employment:
o Labor Code of the Philippines: There are no specific provisions for part-time
employment, but general labor laws apply. Employees working fewer hours than full-
time may have limited benefits.
Types of Employment Relationships
7. Freelance/Contract Employment:
o Civil Code of the Philippines: Freelancers or independent contractors are usually governed
by the Civil Code's provisions on contracts (e.g., Articles 1305 and 1318), rather than the
Labor Code, as they are not considered employees.
8. Internship:
o Department of Labor and Employment (DOLE): While not specifically detailed in the
Labor Code, internships are often regulated by DOLE policies and guidelines. Interns may not
always be entitled to the same benefits as regular employees.
Legal Framework Governing Employment

1. Employment relationships are anchored in various laws ensuring compliance and fairness.

2. The Labor Code of the Philippines outlines the rights and responsibilities of workers and employers
alike.

3. This legal structure upholds labor standards and promotes equitable treatment for all employees.

4. Awareness of these laws is paramount for both parties to maintain a lawful employment
environment.

5. Navigating this framework can prevent legal disputes and foster a culture of compliance.
Legal Framework Governing Employment
 Presidential Decree No. 442 (Labor Code of the Philippines): The primary legislation covering various
forms of employment.
 Presidential Decree No. 1986 (Amending Certain Provisions of the Labor Code): Includes
amendments affecting employment types and worker rights.
 DOLE Department Orders: Provide specific guidelines on various employment types, including
internships and temporary work.
For detailed and specific guidance, consulting the official Labor Code, Civil Code, and DOLE guidelines, or
seeking legal advice might be necessary.
Importance of Compliance

1. Adhering to labor laws protects both employers and employees, fostering a

transparent working relationship.

2. Compliance ensures that all rights are upheld, contributing to a more

engaged and motivated workforce.

3. Employers who prioritize compliance benefit from reduced risk of disputes

and enhanced company reputation.

4. For employees, knowing their rights fosters confidence and security within
their roles.

5. In essence, compliance is key to a thriving workplace culture.

The Impact of Employment Contracts on Workplace
Harmony
1. Clear contracts lead to reduced misunderstandings, creating a
more peaceful work atmosphere.
2. When roles and expectations are well-defined, employees feel
empowered and valued.
3. This clarity contributes to higher job satisfaction and lower
turnover rates.
4. Employers benefit from a cooperative workforce, leading to
increased productivity and success.
5. In conclusion, effective contracts are vital for workplace harmony.
Creating Effective Employment Contracts

1. Crafting a robust employment contract requires attention to detail and

clarity.

2. It's essential to cover all critical aspects, including compensation, duties,

and termination clauses.

3. Employers should regularly review and update contracts to adapt to

changing laws and workforce dynamics.

4. Collaboration with legal experts can enhance the contract's effectiveness

and legality.

5. Ultimately, a well-structured contract serves as a foundation for strong

employment relationships.
Creating Effective Employment Contract align with
relevant laws
1. Offer and Acceptance
 Labor Code of the Philippines (Presidential Decree No. 442): The Labor Code does not explicitly mention offer and
acceptance, but it implies the necessity of a mutual agreement in the employment relationship through its provisions on
employment contracts and terms.

2. Consideration
 Labor Code of the Philippines: Article 294 (formerly Article 279) stipulates that employment contracts must specify the
terms of employment, including compensation. Consideration in employment is the mutual exchange of labor for wages.

3. Mutual Assent
 Civil Code of the Philippines (Republic Act No. 386): Article 1318 of the Civil Code states that there must be a meeting of
the minds between the parties for a contract to be valid. This principle applies to employment contracts as well.
Creating Effective Employment Contract align with
relevant laws
4. Competency and Capacity
 Civil Code of the Philippines: Articles 1329 and 1330 state that parties must have the capacity to enter into contracts. In
the context of employment, this means that both the employer and employee must be of legal age and possess the mental
capacity to understand the contract.

5. Legality
 Labor Code of the Philippines: Article 3 highlights that employment contracts must comply with laws and regulations.
Terms that violate labor laws or public policy are not enforceable.

6. Clear Terms
 Labor Code of the Philippines: Articles 82 to 94 cover provisions regarding the contents of employment contracts,
including job responsibilities, compensation, and working hours. These articles ensure that contracts are clear and specify
terms of employment.
Creating Effective Employment Contract align with
relevant laws
7. Consideration (Reiterated)
 Civil Code of the Philippines: This principle is reiterated in Article 1350, which mentions that
consideration must be lawful and possible. For employment contracts, this includes the employee's labor
and the employer's compensation.

8. Signatures
 General Contract Principles: Although not explicitly stated in the Labor Code, the requirement for
signatures follows general principles of contract law, as outlined in the Civil Code, which mandates that
contracts be executed in writing and signed by both parties to be enforceable.
Prohibited Contractual Arrangements
Prohibited contractual arrangements refer to types of agreements that are not allowed under the law due to their
nature or content. The relevant laws and regulations from the Philippines that address prohibited contractual
arrangements: These can include:
1. Contracts for Illegal Activities: Agreements to engage in activities that are illegal or against public policy,
such as drug trafficking or fraud.
 Civil Code of the Philippines: Articles 1409 and 1410 address contracts that are void and unenforceable if
they are for illegal activities or contrary to public policy.
 Article 1409: "The following contracts are void and inexistent from the beginning: (1) Those whose cause,
object or purpose is contrary to law, morals, good customs, public order or public policy."
Prohibited Contractual Arrangements

2. Unconscionable Contracts: Contracts that are excessively unfair to one party, often because of
a significant imbalance in power or knowledge.
 Civil Code of the Philippines: Article 1308 provides that contracts must be "entered into
freely by the parties with the proper legal capacity and for a lawful cause." An unconscionable
contract may be deemed to lack the requisite elements of fairness and legality.
 Article 1308: "Contracts are perfected by mere consent, which is manifested by the agreement
of the parties, and by their agreement on the subject matter and the cause of the obligation."
Prohibited Contractual Arrangements

2. Unconscionable Contracts: Contracts that are excessively unfair to one party, often because of
a significant imbalance in power or knowledge.
Signs that a contract might be unconscionable
a. Pressure to sign a contract without adequate time to review its
terms.
b. A printed contract that uses abnormally fine print sizes.
c. Terms that appear unfair or terms that are incomprehensible.
Prohibited Contractual Arrangements
3. Contracts with Minors: Generally, contracts involving individuals who are
under the age of majority are not enforceable unless they are for necessities.
 Civil Code of the Philippines: Article 1327 stipulates that contracts entered
into by minors (persons below 18 years of age) are generally voidable, except
for those that are for necessary goods and services.
 Article 1327: "Contracts entered into by a minor who is less than 18 years old
or who is otherwise incapable of giving consent are voidable. Contracts for the
necessities of life, such as food, clothing, and shelter, are valid."
Prohibited Contractual Arrangements
4. Contracts that Restrain Trade: Agreements that unreasonably restrict competition or
trade, such as non-compete clauses that are too broad in scope or duration.
 Civil Code of the Philippines: Article 1306 recognizes that contracts that restrain trade
or competition can be subject to limitations.
 Article 1306: "Contracts which restrain trade or competition may be regulated under the
provisions of this Code."
Prohibited Contractual Arrangements
5. Contracts with Exclusion Clauses: Clauses that attempt to exclude liability for personal injury or
death are often considered unenforceable in many jurisdictions.
 Civil Code of the Philippines: Article 1170 provides that those who are liable for damages cannot
exclude liability for personal injury or death.
 Article 1170: "Those who are liable for damages cannot exclude liability for any injury caused to
persons or properties, except in cases where the law allows."
Prohibited Contractual Arrangements
6. Contracts Against Public Policy: Agreements that go against societal norms or public
interest, such as those that involve bribery or corruption.
 Civil Code of the Philippines: Article 1412 addresses agreements that are contrary to
public policy or good morals and are therefore void.
 Article 1412: "Contracts which are contrary to law, morals, good customs, public order,
or public policy shall be void."
Challenges in Employment Relationships

1. Despite clear contracts, challenges may arise within employment

relationships.
2. Common issues include disputes over performance expectations,
compensation, and contract interpretation.
3. Proactive communication can mitigate many of these challenges,
fostering understanding.
4. Employers should create an open environment where employees
feel safe discussing concerns.
5. Recognizing and addressing challenges is essential for maintaining
a productive workplace.
The Role of Communication in Employment
Relationships
1. Open communication is the linchpin of successful employment relationships.

2. Regular feedback and constructive dialogue help align expectations and performance standards.

3. Employers should encourage an atmosphere where employees feel valued and heard.

4. Effective communication strengthens trust and collaboration, essential for team success.

5. In essence, fostering communication leads to empowered employees and improved organizational

outcomes.
Future Trends in Employment Relationships

1. The landscape of employment relationships is evolving, influenced

by technology and cultural shifts.
2. Remote work and flexible arrangements are becoming increasingly
common, reshaping traditional roles.
3. Employers must adapt their contracts and policies to
accommodate these changes.
4. Staying informed about industry trends is crucial for fostering a
competitive advantage.
5. Preparing for future shifts can ensure resilience in employment
relationships.
Thank You for Your Attention!

1. Thank you for exploring the intricacies of employment relationships and contractual arrangements.

2. I hope this presentation has provided valuable insights into the nature of employment contracts.

3. Remember, understanding these dynamics is crucial for success in any organization.

4. Feel free to reach out with questions or for further discussions.

Examine the implications of prohibited contractual arrangements in employment agreements, including illegal activities,
unconscionable terms, and restrictive trade clauses. How do such clauses affect enforceability of a contract and the over-all
employment relationship?