2019 LABOR LAW
I. GENERAL PROVISIONS
A. Basic Policy on labor
Presidential Decree No. 442 otherwise known as the Labor Code of the Philippines is a
decree instituting a labor Code, thereby revising and consolidating labor and social
laws to afford protection to labor, promote employment and human resources
development and ensure industrial peace based on social justice. It is a charter of
human rights and a bill of obligations for every working man.
Effectivity date: November 1, 1974 Presidential Decree No. 442 was signed into law
on May 1, 1974. Article 2 says, the Code was to take effect six months after its
promulgation. Therefore, the law took effect on November 1, 1974.
Father of Labor Code: The writing of the labor code began under the leadership of
then Minister of Labor, Mr. Blas Ople, who deserves to be regarded as the “Father of
the Labor Code”.
Declaration of Basic Policy on Labor – The State shall afford protection to labor, promote
full employment, ensure equal work opportunities regardless of sex, race or creed and
regulate the relations between workers and employers. The State shall assure the rights of
workers to self-organization, collective bargaining, security of tenure, and just and humane
conditions of work.
Protection to labor - In affording full protection to labor, this Court must ensure
equal work opportunities regardless of sex, race, or creed. Even as we, in every case,
attempt to carefully balance the fragile relationship between employee and employer,
we are mindful of the fact that the policy of the law is to apply the Labor Code to a
greater number of employees. This would enable employees to avail of the benefits
accorded to them by law, in line with the constitutional mandate giving maximum aid
and protection to labor, promoting their welfare and reaffirming it as a primary social
economic force in furtherance of social justice and national development. (Angelina
Francisco v. NLRC. G.R. No. 170087, August 31, 2006)
The constitutional policy to provide full protection to labor is not meant to be a
sword to oppress employers. The commitment under the fundamental law is that the
cause of labor does not prevent us from sustaining the employer when the law is
clearly on its side. (Estrellita G. Salazar v. Philippine Duplicators, Inc, G.R. No. 154628,
December 6, 2006
Classification of labor laws:
1. Labor Standards law – part of the law which prescribes the minimum terms and
conditions of employment which the employer is required to grant to its employees.
Prescribes the terms and conditions of employment as affecting wages or monetary
benefits, hours of work, cost of living allowances, and occupational health, safety and
welfare of the workers. It provides economic benefits to the workers who are actually
working. e.g. 13th month pay
2. Labor Relations law – that part of the labor law which deals with unionism, collective
bargaining, grievance machinery, voluntary arbitration, strike, picketing and lockout
(Book V of the Labor Code).
Defines and regulates the status, rights and duties, and the institutional mechanisms,
that govern the individual and collective interactions of employers, employees or
their representatives. It is concerned with the stabilization of relations of
employers and employees and seeks to forestall and adjust the differences
between them by the encouragement of Collective Bargaining (CB) and the
settlement of labor disputes through conciliation, mediation, and arbitration. e.g.
Collective Bargaining Negotiations
3. Social Legislation – All laws passed by the State to promote public welfare. It
includes statutes intended to enhance the welfare of the people even where there
is no employer-employee relationship. It provides economic benefits to workers
who are at work because of the hazards of employment. e.g. GSIS Law, SSS Law,
Philhealth benefits, Agrarian Laws
Labor relations and labor standards laws are not mutually exclusive. They are
complementary to, and closely interlinked with, each other. For instance, the laws on
collective bargaining, strikes and lockouts which are covered by labor relations law
necessarily relate to the laws on working conditions found in Book III.
An “exclusive bargaining representative” or “exclusive bargaining agent” or Sole and
Exclusive Bargaining Agent (SEBA), refers to a legitimate labor organization duly
certified as the sole and exclusive bargaining representative or agent of all the
employees in a bargaining unit. Note must be made of the latest innovative
amendment of the Labor Code’s Implementing Rules introduced by Department Order
No. 40-I-15, Series of 2015, which has expressly repealed the entire provision on
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“Voluntary Recognition” of the Implementing Rules on Book V and replaced it with
the freshly-minted mode of securing the status of a sole and exclusive bargaining
agent through a “Request for SEBA Certification” or “Request.” Voluntary recognition is
therefore no longer allowed and is effectively replaced by the Request mode.
Nonetheless, the designation of a SEBA does not deprive an individual employee or group of
employees to exercise their right at nay time to present grievances to their employer, with
or without the intervention of the SEBA.
However, in the 2009 case of Tabigue v. International Copra Export Corporation, the
Supreme Court clarified that an individual employee or group of employees cannot be
allowed to submit or refer unsettled grievances for voluntary arbitration without the
participation of the SEBA. The reason is that it is the SEBA which is a party to the
CBA which contains the provision on voluntary arbitration. Being a party thereto, the
SEBA cannot be disregarded when a grievable issue will be submitted for voluntary
arbitration.
Recognition of management prerogative: The law also recognizes that management has
rights which are also entitled to respect and enforcement in the interest of fair play.
(St. Luke’s Medical Center Ees Ass’n v. NLRC, G.R. No. 162053, March 7, 2007)
The principle of co-determination refers to the right given to the employees to co-
determine or share the responsibility of formulating certain policies that affect their
rights, benefits and welfare.
In PAL v. NLRC, it was held that the formulation of a Code of Discipline among
employees is a shared responsibility of the employer and the employees. It affirmed
the decision of the NLRC which ordered that the New Code of Discipline should be
reviewed and discussed with the union, particularly the disputed provisions and that
copies thereof be furnished each employee.
However, the grant of the right of participation does not mean co-management of
business or intrusion into management prerogatives. This principle does not mean that
workers should approve management policies or decisions.
The establishment of Labor-Management Council (LMC) is mandated under the said
constitutional principle of co-determination
B. Construction in favor of labor
All doubts in the implementation and interpretation of the provisions of this Code, including
its implementing rules and regulations, shall be resolved in favor of labor. (Sec 4, LC)
C. Constitutional and Civil Code provisions relating to Labor Law
Important labor-related Constitutional Principles:
 Under Article II (Declaration of Principles and State Policies)
Section 18. The State affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare.
 Under Article III (Bill of Rights):
a) Due process and equal protection of the law. This cannot be invoked by
employees against their employers in cases of termination of their employment.
b) Freedom of speech, of expression, or of the press, or the right of the people
peaceably to assemble and petition the government for redress of grievances. This
freedom is relevant only in picketing and not in strike.
c) Right of public and private sector employees to form unions, associations, or
societies for purposes not contrary to law shall not be abridged. This is known as
“Freedom of association.” This provision is the basis for the employee’s right to
self-organization.
d) Non-impairment of obligation of contracts. The concept of this right in political
law is similar in labor law.
e) Right to speedy disposition of cases in judicial, quasi-judicial or administrative
bodies this can be invoked in labor cases at all levels.
f) Prohibition against involuntary servitude. This principle is relevant only in 2
situations, namely:
1) Resignation which mean that an employee has the right to resign since
he cannot be forced to work against his will;
2) Return-to-work order which means that a striker can be ordered to
return to work even against his will in national interest cases.
Accordingly, it is not in violation of the involuntary servitude principle.
 Under Article XIII (Social Justice and Human Rights):
a) Second of two protection-to-labor clauses:
“Section 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of employment
opportunities for all.
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It shall guarantee the rights of all workers to self-organization, collective bargaining
and negotiations, and peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of tenure, humane conditions
of work, and a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual compliance therewith to foster industrial
peace.
The State shall regulate the relations between workers and employers, recognizing
the right of labor to its just share in the fruits of production and the right of
enterprises to reasonable returns to investments, and to expansion and growth.”
Note: The labor-related provisions of the Constitution are merely statements of
principles and are all NOT self executing provisions. They are used only as guides for
judicial decisions or legislative enactments. Being mere statement of principles and
policies, no case can be filed for their violation. Only violation of the laws passed to
implement these principles and policies can be proper subject of court litigation.
Kinds of procedural due process that may be asserted:
1) Procedural due process that may be invoked against the employer during the
investigation of the employee’s administrative case at the company-level that may
lead to his dismissal:
a. Statutory due process per Agabon doctrine which refers to the due process
provision in the Labor Code (Article 277[b]); and
b. Contractual due process per Abbott Laboratories doctrine which refers to the
due process prescribed in the Company Rules and Regulations or Code of
Conduct or Code of Discipline.
2) Procedural due process that may be invoked once a case has already been filed
in the labor court, such as the Labor Arbiter or the NLRC, and/or brought to higher
courts:
a. Constitutional due process under Section 1, Article III of the Constitution
since this right cannot be invoked against the private employer but only
against the State or government as represented by Labor Arbiters, NLRC, CA
and SC.
A dismissed employee can invoke constitutional due process, in addition to
statutory and contractual due process, only when he files an illegal dismissal case
in the labor court and he is deprived due process by a government functionary lke
the Labor Artiber or the NLRC, or Court of Appeals on Rule 65 Certiorari Petition.
The reason is that, at this stage, the government is now involved through said
labor tribunals.
The rule since Agabon is that compliance with the statutorily-prescribed procedural
due process under Article 292(b) [277(b)] of the Labor Code would suffice. It is not
important in determining the validity of the termination whether there is an existing
company policy which also enunciates the procedural due process in termination
cases. However, under the latest doctrinal en banc ruling in the 2013 case of Abbott
Laboratories, Philippines v. Pearlie Ann F. Alcaraz, it is now required that in addition
to compliance with the statutory due process, the employer should still comply with
the due process procedure prescribed in its own company rules now called
CONTRACTUAL DUE PROCESS. The employer’s failure to observe its own company-
prescribed due process, IN ADDITION TO STATUTORY DUE PROCESS, will make it
liable to pay an indemnity in the form of nominal damages, the amount of which is
similar to the P30,000.00 awarded under the Agabon doctrine.
Per the prevailing Lopez doctrine (Lopez vs. Alturas Group of Companies), the right to
counsel is neither indispeansable nor mandatory. It becomes mandatory only in 2
situations:
1. When the employee himself request for counsel; or
2. When he manifests that he wants a formal hearing on the charges against him, in
which case, he should assisted by counsel.
Civil Code provisions on Labor:
“Article 1700. The relations between capital and labor are not merely contractual.
They are so impressed with public interest that labor contracts must yield to the
common good. Therefore, such contracts are subject to the special laws on labor
unions, collective bargaining, strikes and lockouts, closed shop, wages, working
conditions, hours of labor and similar subjects.”
“Article 1702. In case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the laborer.”
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Article 1702 applies to doubts and ambiguities in (1) Labor legislations; (2) Labor
contracts such as an employment contract or a CBA; (3) evidence presented in labor
cases.
II. PRE-EMPLOYMENT
A. Recruitment and placement of local and migrant workers (Labor Code and
RA 8042, as amended by RA 10022)
Illegal recruitment may be committed by:
1) By non-licensee or non-holder of authority – with respect to
a) acts of recruitment allowed only to be done by licensee or holders of authority;
and
b) Prohibited activities;
2) By any person, regardless of whether a non-licensee, non-holder, licensee or holder of
authority – with respect to prohibited activities under Article 34 of the Labor Code as
amended.
Recruitment and placement - Act of canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring workers and includes referring, contract services, promising
or advertising for employment abroad, whether for profit or not.
Prohibited activities:
1. To charge or accept, directly or indirectly, any amount greater than that specified in
the schedule of allowable fees prescribed by the DOLE Secretary, or to make a worker
pay or acknowledge any amount greater than that actually received by him as a loan or
advance;
2. To furnish or publish any false notice or information or document in relation to
recruitment or employment;
3. To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under the Labor
Code, or for the purpose of documenting hired workers with the POEA, which include
the act of reprocessing workers through a job order that pertains to non-existent work,
work different from the actual overseas work, or work with a different employer
whether registered or not with the POEA;
4. To induce or attempt to induce a worker already employed to quit his employment in
order to offer him another unless the transfer is designed to liberate a worker from
oppressive terms and conditions of employment;
5. To influence or attempt to influence any person or entity not to employ any worker
who has not applied for employment through his agency or who has formed, joined or
supported, or has contacted or is supported by any union or workers' organization;
6. To engage in the recruitment or placement of workers in jobs harmful to public health
or morality or to the dignity of the Republic of the Philippines;
7. To fail to submit reports on the status of employment, placement vacancies, remittance
of foreign exchange earnings, separation from jobs, departures and such other matters
or information as may be required by the Secretary of Labor and Employment;
8. To substitute or alter to the prejudice of the worker, employment contracts approved
and verified by the DOLE from the time of actual signing thereof by the parties up to
and including the period of the expiration of the same without the approval of the
DOLE;
9. For an officer or agent of a recruitment or placement agency to become an officer or
member of the Board of any corporation engaged in travel agency or to be engaged
directly or indirectly in the management of travel agency;
10. To withhold or deny travel documents from applicant workers before departure for
monetary or financial considerations, or for any other reasons, other than those
authorized under the Labor Code and its implementing rules and regulations;
11. Failure to actually deploy a contracted worker without valid reason as determined by
the Department of Labor and Employment;
12. Failure to reimburse expenses incurred by the worker in connection with his
documentation and processing for purposes of deployment, in cases where the
deployment does not actually take place without the worker's fault. Illegal
recruitment when committed by a syndicate or in large scale shall be considered
an offense involving economic sabotage; and
13. To allow a non-Filipino citizen to head or manage a licensed recruitment/manning
agency.
Prohibited activities in relation to illegal recruitment for overseas employment:
1. Grant a LOAN to an overseas Filipino worker with interest exceeding eight
percent (8%) per annum, which will be used for payment of legal and allowable
placement fees and make the migrant worker issue, either personally or through a
guarantor or accommodation party, post-dated checks in relation to the said loan;
2. Impose a compulsory and exclusive arrangement whereby an overseas Filipino
worker is required to avail of a LOAN only from specifically designated institutions,
entities or persons;
3. Refuse to condone or renegotiate a LOAN incurred by an overseas Filipino
worker after the latter's employment contract has been prematurely terminated
through no fault of his or her own;
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4. Impose a compulsory and exclusive arrangement whereby an overseas Filipino
worker is required to undergo HEALTH EXAMINATIONS only from specifically
designated medical clinics, institutions, entities or persons, except in the case of a
seafarer whose medical examination cost is shouldered by the principal/
shipowner;
5. Impose a compulsory and exclusive arrangement whereby an overseas Filipino
worker is required to undergo TRAINING, SEMINAR, INSTRUCTION OR
SCHOOLING of any kind only from specifically designated institutions, entities or
persons, except for recommendatory trainings mandated by principals/shipowners
where the latter shoulder the cost of such trainings;
6. For a SUSPENDED RECRUITMENT/MANNING AGENCY to engage in any kind of
recruitment activity including the processing of pending workers' applications; and
7. For a recruitment/manning agency or a foreign principal/employer to pass on
the overseas Filipino worker or deduct from his or her salary the payment of the
cost of INSURANCE fees, premium or other insurance related charges, as provided
under the compulsory worker's INSURANCE coverage.
“License” refers to the document issued by the DOLE Secretary authorizing a person,
partnership or corporation to operate a private recruitment or manning agency.
“Authority” refers to the document issued by the DOLE Secretary authorizing the
officers, personnel, agents or representatives of a licensed recruitment or manning
agency to conduct recruitment and placement activities in a place stated in the license
or in a specified place.
Note: A recruiter can be a natural or juridical person.
Elements of Illegal recruitment vary in accordance with the classification of illegal
recruitment, namely:
1. Simple illegal recruitment;
2. Illegal recruitment as a form of economic sabotage:
a) Committed by a syndicate
b) Committed in large scale
2 elements of simple illegal recruitment:
1. The offender has no valid license or authority required by law to enable one to
lawfully engage in recruitment and placement of workers; and
2. He undertakes either any activity within the meaning of “recruitment and
placement” defined under Article 13(b), or any prohibited practices under Article
34 of the Labor Code
Relevant principles on illegal recruitment:
1. Mere impression that a person could deploy workers overseas is sufficient to
constitute illegal recruitment. But if no such impression is given, the accused should
not be convicted for illegal recruitment.
2. Mere promise or offer of employment abroad amounts to recruitment.
3. There is no need to show that accused represented himself as a licensed recruiter.
4. Referrals may constitute illegal recruitment.
5. It is illegal recruitment to induce applicants to part with their money upon false
misrepresentations and promises in assuring them that after they paid the
placement fee, jobs abroad were waiting for them and that they would be
deployed soon.
6. Recruitment whether done for profit or not is immaterial.
7. The act of receiving money far exceeding the amount as required by law is not
considered as “recruitment and placement” as this phrase is contemplated under
the law.
8. Actual receipt of fee is not an element of the crime of illegal recruitment.
9. Conduct of interviews amounts to illegal recruitment.
10. Absence of receipt is not essential to hold a person guilty of illegal recruitment.
11. Conviction for illegal recruitment may be made on the strength of the testimonies
of the complainants.
12. Absence of documents evidencing the recruitment activities strengthens, not
weakens, the case for illegal recruitment.
13. Only one person recruited is sufficient to convict one for illegal recruitment.
14. Non-prosecution of another suspect is immaterial.
15. Execution of affidavit of desistance affects only the civil liability but has no effect
on the criminal liability for illegal recruitment.
16. Defense of denial cannot prevail over positive identification. Positive
identification where categorical and consistent and not attended by any showing
of ill motive on the part of the eyewitnesses on the matter prevails over alibi
and denial. Between the categorical statements of the prosecution witnesses, on
the one hand, and bare denials of the accused, on the other hand, the former must
prevail.

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Elements of illegal recruitment by a syndicate:
1. There are at least three (3) persons who, conspiring and/or confederating with
one another, carried out any unlawful or illegal recruitment and placement
activities as defined under Article 13(b) or committed any prohibited activities
under Article 34 of the Labor Code; and
2. Said persons are not licensed or authorized to do so, either locally or overseas.
Elements of illegal recruitment in large scale:
1. The accused engages in the recruitment and placement of workers as defined
under Article 13(b) or committed any prohibited activities under Article 34 of the
Labor Code; and
2. The accused commits the same against three (3) or more persons, individually or as
a group.
Relevant principles on Illegal recruitment involving economic sabotage:
1. The number of persons victimized is determinative of the crime. A conviction for
large scale illegal recruitment must be based on a finding in each case of illegal
recruitment of three (3) or more persons having been recruited, whether
individually or as a group.
2. Failure to prove at least 3 persons recruited makes the crime a case of simple
illegal recruitment.
3. There is no illegal recruitment in large scale based on several information filed by
only one complainant.
4. The number of offenders is not material in illegal recruitment in large scale.
5. Recruitment in large scale or by a syndicate is malum prohibitum and not malum
in se.
Illegal recruitment vs. Estafa: A person can be charged and convicted separately for illegal
recruitment and estafa involving one and the same act of recruitment. Moreover, same
evidence to prove illegal recruitment may be used to prove estafa and conviction for both
illegal recruitment and estafa is not double jeopardy.
There are 3 means of committed the estafa, namely:
1. Estafa with unfaithfulness or abuse of confidence;
2. Estafa by means of false pretenses or fraudulent acts;
3. Estafa through fraudulent means.
Liability of Local recruitment agency and foreign employer
The nature of the liability between local recruiter and its foreign principal is
“solidary” or “joint and several” for any and all claims arising out of the employment
contract of OFWs.
Solidary liability of corporate officers with the recruitment agency is not automatic in
character. In order to hold the officers of the agency solidarily liable, it is required
that there must be proof of their culpability therefor. Thus, it was held in the 2013
case of Gagui v. Dejero, that while it is true that R.A. 8042 and the Corporation Code
provide for solidary liability, this liability must be so stated in the decision sought to
be implemented. Absent this express statement, a corporate officer may not be
impleaded and made to personally answer for the liability of the corporation.
Relevant principles on the person liable for illegal recruitment:
1. Employees of a licensed recruitment agency may be held liable for illegal
recruitment as principal by direct participation, together with his employer, if it
is shown that he actively and consciously participated in illegal recruitment.
2. Good faith and merely following orders of superiors are not valid defenses of an
employee.
3. A manager of a recruitment/manning agency is not a mere employee. As such,
he receives job applications, interviews applicants and informs them of the
agency’s requirement of payment of performance or cash bond prior to the
applicant’s deployment. As the crewing manager, he was at the forefront of the
company’s recruitment activities.
Theory of Imputed Knowledge – this means that the knowledge of agent is deemed
knowledge of the principal but not the other way around.
The theory of imputed knowledge is a rule that any information material to the
transactions, either possessed by the agent at the time of the transaction or acquired
by him before its completion, is deemed to be the knowledge of the principal, at least
insofar as the transaction is concerned, even though the knowledge, in fact, is not
communicated to the principal at all.
Sunace International Management Services, Inc. v. NLRC - The High Court here has the
opportunity to discuss the application of the theory of imputed knowledge. The OFW
(Divina), a domestic helper in Taiwan, has extended her 12-month contract, after its
expiration, for two (2) more years after which she returned to the Philippines. It was
established by evidence that the extension was without the knowledge of the local
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recruitment agency, petitioner Sunace. The Court of Appeals, however, affirmed the
Labor Arbiter’s and NLRC’s finding that Sunace knew of and impliedly consented to
the extension of Divina’s 2-year contract. It went on to state that “It is undisputed
that [Sunace] was continually communicating with [Divina’s] foreign employer.” It
thus concluded that “[a]s agent of the foreign principal, ‘petitioner cannot profess
ignorance of such extension as obviously, the act of the principal extending
complainant (sic) employment contract necessarily bound it.’”
In finding that the application by the CA of this theory of imputed knowledge was
misplaced, the High Court ruled that this theory ascribes the knowledge of the agent,
Sunace, to the principal, employer Xiong, not the other way around. The knowledge of
the principal-foreign employer cannot, therefore, be imputed to its agent, Sunace.
There being no substantial proof that Sunace knew of and consented to be bound
under the 2-year employment contract extension, it cannot be said to be privy
thereto. As such, Sunace and its owner cannot be held solidarily liable for any of
Divina’s claims arising from the 2-year employment extension. As the New Civil Code
provides: “Contracts take effect only between the parties, their assigns, and heirs,
except in case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law.”
Termination of Contract of Migrant Worker without Just or Valid Cause
An OFW cannot acquire regularity of employment. The prevailing rule is that OFWs are
contractual (fixed-term only), not regular employees in fact they can never attain regularity
of employment. There is is always fixed-term in nature.
Relevant principles:
1. Indefinite period of employment of OFWs is not valid as it contravenes the
explicit provision of the POEA Rules and Regulations on fixed-period employment.
2. OFWs do not become regular employees by reason of nature of work, that is,
that they are made to perform work that is usually necessary and desirable in
the usual business or trade of the employer. The exigencies of their work
necessitate that they be employed on a contractual basis. This notwithstanding
the fact that they have rendered more than twenty (20) years of service.
3. Regular employment does not result from the series of re-hiring of OFWs.
4. The fixed-period employment of OFWs is not discriminatory against them nor
does it favor foreign employers. It is for the mutual interest of both the seafarer
and the employer why the employment status must be contractual only or for a
certain period of time. Seafarers spend most of their time at sea and
understandably, they cannot stay for a long and an indefinite period of time at
sea. Limited access to shore society during the employment will have an adverse
impact on the seafarer. The national, cultural and lingual diversity among the
crew during the contract of employment is a reality that necessitates the
limitation of its period.
5. The expiration of the employment contracts of OFWs marks its ending.
Effect of hiring a seafarer for overseas employment but assigning him to local
vessel: As held in OSM Shipping Philippines, Inc. v. NLRC, the non-deployment of the
ship overseas did not affect the validity of the perfected employment contract. After
all, the decision to use the vessel for coastwise shipping was made by petitioner only
and did not bear the written conformity of private respondent. A contract cannot be
novated by the will of only one party. The claim of petitioner that it processed the
contract of private respondent with the POEA only after he had started working is
also without merit. Petitioner cannot use its own misfeasance to defeat his claim.
Effect of non-deployment of OFW to overseas employment: Petitioner-seafarer, in
Santiago v. CF Sharp Crew Management, Inc. was not deployed overseas despite the
signing of a POEA-approved employment contract. One of his contentions is that such
failure to deploy was an act designed to prevent him from attaining the status of a
regular employee. The Supreme Court, however, disagreed and ruled that “seafarers
are considered contractual employees and cannot be considered as regular employees
under the Labor Code. Their employment is governed by the contracts they sign
every time they are rehired and their employment is terminated when the contract
expires. The exigencies of their work necessitate that they be employed on a
contractual basis.”
“Presumed-identity approach” or “processual presumption” is an International Law
doctrine which dictates that where a foreign law is not pleaded or, even if pleaded, is
not proved, the presumption is that foreign law is the same as Philippine law. Thus,
under this situation, Philippine labor laws should apply in determining the issues
presented in a case.
Due process under Philippine law applicable to termination of employment of OFWs. In
the absence of proof of applicable foreign law, OFWs are entitled to due process in
accordance with Philippine laws.
The Agabon doctrine applicable to OFWs who are dismissed for cause but without due
process. The Agabon doctrine of awarding indemnity in the form of nominal damages
in cases of valid termination for just or authorized cause but without procedural due
process also applies to termination of OFWs.
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The burden of proof to show that the dismissal of the OFW is legal devolves on both
recruitment agency and its foreign principal.
OFWs are not entitled to the reliefs under Article 279 of the Labor Code as reinstatement
or separation in lieu of restatement or full backwages.
Reliefs to which OFWs are entitled: They are entitled to the reliefs provided under
Section 10 of R.A. No. 8042, as amended, to wit:
1. All salaries for the unexpired portion of the contract;
2. Full reimbursement of placement fees and deductions made with interest at 12%
per annum.
All the reliefs available to an illegally dismissed OFW are always monetary in nature. It
must be noted that under the 2009 Serrano doctrine, (Serrano v. Gallant Maritime
Services, Inc.,), an illegally dismissed OFW is now entitled to all the salaries for the
entire unexpired portion of their employment contracts, irrespective of the stipulated
term or duration thereof. The underlined phrase in Section 10 below has been
declared unconstitutional in this case:
“In case of termination of overseas employment without just, valid or authorized cause
as defined by law or contract, or any unauthorized deductions from the migrant
worker's salary, the worker shall be entitled to the full reimbursement of his placement
fee and the deductions made with interest at twelve percent (12%) per annum, plus his
salaries for the unexpired portion of his employment contract or for three (3) months
for every year of the unexpired term, whichever is less.”
However, R.A. No. 10022 (March 8, 2010), which amended R.A. No. 8042 (Migrant
Workers and Overseas Filipinos Act of 1995), has replicated and re-enacted the same
unconstitutional provision exactly as above quoted. The question is: was the
unconstitutionality of the above-underlined part of the provision cured by such
replication or re-enactment in the amendatory law.
The 2014 en banc case of Sameer Overseas Placement Agency, Inc. v. Joy C. Cabiles,
answered this in the negative. The said provision was thus declared still
unconstitutional and null and void despite its replication in R.A. No. 10022.
Some principles in regard to monetary awards to OFWs:
1. Monetary award to OFW is not in the nature of separation pay or backwages but a
form of indemnity.
2. Only salaries are to be included in the computation of the amount due for the
unexpired portion of the contract. Overtime, holiday and leave pay and
allowances are not included. However, this rule on exclusion of allowance does
not apply in case it is encapsulated in the basic salary clause.
3. Entitlement to overtime pay of OFWs. - As far as entitlement to overtime pay is
concerned, the correct criterion in determining whether or not sailors are entitled
to overtime pay is not whether they were on board and cannot leave ship
beyond the regular eight (8) working hours a day, but whether they actually
rendered service in excess of said number of hours. An OFW is not entitled to
overtime pay, even if guaranteed, if he failed to present any evidence to prove
that he rendered service in excess of the regular eight (8) working hours a day.
4. In case of unauthorized deductions from OFW’s salary, he shall be entitled to the
full reimbursement of the deductions made with interest at 12% per annum. This
is in addition to the full reimbursement of his placement fee with the same
interest of 12% per annum plus his salaries for the unexpired portion of his
employment contract if he is terminated without just, valid or authorized cause as
defined by law or contract.
Labor Arbiters, NOT the SSS, have the jurisdiction over an OFW’s claims for disability
and death benefits. The Labor Arbiters have jurisdiction even if the case is filed by the
heirs of the deceased OFW.
The Labor Code’s concept of permanent total disability is similar to that of OFWs. The
concept of this kind of disability under Article 192 of the Labor Code is applicable to
them as reiterated lately in the 2013 case of Kestrel Shipping Co., Inc. v. Munar.
The requisites for compensability of injury or illness of seafarers:
1. It should be work-related; and
2. The injury or illness existed during the term of the seafarer’s employment contract.
Ban on Direct Hiring
“Direct Hiring” refers to the process of directly hiring workers by employers for
overseas employment without ng through the POEA or entities authorized by the Secretary
of Labor and Employment (SLE).
Ban on direct hiring: An employer may only hire Filipino worker for overseas employment
as authorized by the DOLE Secretary and processed by the POEA. However, by exceptions
direct hiring of the following is allowed:
8
 1. Those hired by international organizations;
2. Those hired by members of the diplomatic corps;
3. Name hires or workers who are able to secure overseas employment
opportunity with an employer without the assistance or participation of any
agency; or
4. Other employers as may be allowed by DOLE.
Purpose of the prohibition on direct hiring:
1. To ensure the best possible terms and conditions of employment for the worker;
2. To assure the foreign employer that he hires only qualified Filipino workers;
3. To ensure full regulation of employment in order to avoid exploitation.
The POEA Administrator or the DOLE Secretary or DOLE Regional Director have the
power to issue closure order if upon preliminary examination or surveillance, said
officials is satisfied that such danger or exploitation exists. A written order may be
issued for the closure of the establishment being used for illegal recruitment activity.
The DOLE Secretary have the power to issue warrant of arrest and search and seizure
orders. In Salazar v. Achacoso, the SC declared that the exercise by the DOLE Secretary
of his twin powers to issue arrest warrant and search and seizure orders provided
under Article 38[c] of the Labor Code is unconstitutional. Only regular courts can issue
such orders.
REMITTANCE OF FOREIGN EXCHANGE EARNINGS by OFWs is mandatory. It shall be
mandatory for all Filipino workers abroad to remit a portion of their foreign
exchange earnings to their families, dependents, and/or beneficiaries in the country in
accordance with rules and regulations prescribed by the DOLE Secretary. It should be
made through the Philippine banking system.
EMPLOYMENT OF NON-RESIDENT ALIENS
ALIEN EMPLOYMENT PERMIT (AEP) - a document issued by the DOLE Secretary
through the DOLE-Regional Director who has jurisdiction over the intended place of
work of the foreign national, authorizing the foreign national to work in the
Philippines.
All foreign nationals who intend to engage in gainful employment in the Philippines
are required to apply for AEP.
“Gainful employment” refers to a state or condition that creates an employer-
employee relationship between the Philippine-based company and the foreign national
where the former has the power to hire or dismiss the foreign national from
employment, pays the salaries or wages thereof and has authority to control the
performance or conduct of the tasks and duties.
Categories of foreign nationals EXEMPTED from securing AEP:
1. All members of the diplomatic service and foreign government officials accredited
by and with reciprocity arrangement with the Philippine government;
2. Officers and staff of international organizations of which the Philippine
government is a member, and their legitimate spouses desiring to work in the
Philippines;
3. All foreign nationals granted exemption by law;
4. Owners and representatives of foreign principals whose companies are accredited
by the POEA, who come to the Philippines for a limited period and solely for the
purpose of interviewing Filipino applicants for employment abroad;
5. Foreign nationals who come to the Philippines to teach, present and/or conduct
research studies in universities and colleges as visiting, exchange or adjunct
professors under formal agreements between the universities or colleges in the
Philippines and foreign universities or colleges; or between the Philippine
government and foreign government: provided that the exemption is on a
reciprocal basis; and
6. Permanent resident foreign nationals and probationary or temporary resident
visa holders under Section 13 of the Philippine Immigration Act of 1940.
The categories of foreign nationals EXCLUDED from securing AEP:
1. Members of the governing board with voting rights only and do not intervene in
the management of the corporation or in the day-to-day operation of the enterprise.
2. Corporate officers as provided under the Corporation Code of the Philippines,
Articles of Incorporation, and By-laws of the Corporation such as President,
Secretary and Treasurer.
3. Those providing consultancy services who do not have employers in the
Philippines.
4. Intra-corporate transferee who is a manager, executive or specialist as defined
below in accordance with Trade Agreements and an employee of the foreign
service supplier for at least one (1) year prior to deployment to a branch,
subsidiary, affiliate or representative office in the Philippines:
i. an EXECUTIVE: a natural person within the organization who primarily
directs the management of the organization and exercises wide latitude
in decision making and receives only general supervision or direction
from higher level executives, the board of directors or stockholders of
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 the business; an executive would not directly perform tasks related to
the actual provision of the service or services of the organization;
ii. a MANAGER: a natural person within the organization who primarily
directs the organization/ department/ subdivision and exercises
supervisory and control functions over other supervisory, managerial or
professional staff; does not include first-line supervisors unless
employees supervised are professionals; does not include employees who
primarily perform tasks necessary for the provision of the service; or
iii. a SPECIALIST: a natural person within the organization who possesses
knowledge at an advanced level of expertise essential to the
establishment/provision of the service and/or possesses proprietary
knowledge of the organization's service, research equipment, techniques
or management; may include, but is not limited to, members of a licensed
profession.
5. Contractual service supplier who is a manager, executive or specialist and an
employee of a foreign service supplier which has no commercial presence in the
Philippines:
a. who enters the Philippines temporarily to supply a service pursuant to a
contract between his/her employer and a service consumer in the Philippines;
b. must possess the appropriate educational and professional qualifications; and
c. must be employed by the foreign service supplier for at least one (1) year
prior to the supply of service in the Philippines.
The validity of an AEP is one (1) year.
Exception: When employment contract provides otherwise but not to exceed
three (3) years.
The AEP may be renewed subject to the conditions imposed by law.
III. LABOR STANDARDS
A. Conditions of employment
Coverage – Employees in all establishment, whether operated for profit or not, are covered
by the law standards EXCEPT for the following:
a. Government employees;
b. Managerial employees;
c. Other officers or members of a managerial staff;
d. Domestic workers or kasambahay and persons in the personal service of
another;
e. Workers paid by results;
f. Non-agricultural field personnel; and
g. Members of the family of the employer.
Hours of work
The following shall be considered as compensable hours worked:
a) All time during which an employee is required to be on duty or to be at the
employer’s premises or to be at a prescribed workplace; and
b) All time during which an employee is suffered or permitted to work.
“Fair day’s wage for a fair day’s labor,” remains the basic factor in determining the
employees’ wages and backwages.
Normal hours of work; hours worked
The total normal hours of work per day is 8 hours daily. Any work in excess of said 8
normal hours is considered overtime work.
Normal working hours may be reduced provided that no corresponding reduction is made
on the employee’s wage or salary equivalent to 8-hour work day. In instances where the
number of hours required by the nature of work is less than 8 hours, such number of hours
should be regarded as the employee’s full working day.
“Flexible work arrangements” refer to alternative arrangements or schedules other than
the traditional or standard work hours, workdays and workweek. The effectivity and
implementation of any of the flexible work arrangements should be temporary in nature.
Under R.A. No. 8972, otherwise known as “The Solo Parents’ Welfare Act of 2000,” solo
parents are allowed to work on a flexible schedule. The phrase “flexible work schedule” is
defined in the same law as the right granted to a solo parent employee to vary his/her
arrival and departure time without affecting the core work hours as defined by the
employer.
“Compressed Workweek” or “CWW” refers to a situation where the normal workweek is
reduced to less than six (6) days but the total number of work-hours of 48 hours per week
remains. The normal workday is increased to more than eight (8) hours but not to exceed
twelve (12) hours, without corresponding overtime premium. This concept can be adjusted
accordingly in cases where the normal workweek of the firm is five (5) days.
The CWW scheme is undertaken as a result of an express and voluntary agreement of
majority of the covered employees or their duly authorized representatives.
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Unless there is a more favorable practice existing in the firm, work beyond 8 hours will not
be compensable by overtime premium provided that total number of hours worked per day
shall not exceed 12 hours. In any case, any work performed beyond 12 hours a day or 48
hours a week shall be subject to overtime pay.
Power interruptions/Brownouts: The following are the effects of power
interruptions/brownouts:
a. Brown-outs of short duration but not exceeding twenty (20) minutes shall be treated
as worked or compensable hours whether used productively by the employees or not.
b. Brown-outs running for more than twenty (20) minutes may not be treated as hours
worked provided any of the following conditions are present:
1. The employees can leave their workplace or go elsewhere whether within or
without the work premises; or
2. The employees can use the time effectively for their own interest.
c. In each case, the employer may extend the working hours of his employees outside
the regular schedules to compensate for the loss of productive man-hours without
being liable for overtime pay.
Meals period: Every employer is required to give his employees, regardless of sex, not less
than 1 hour or 60 minutes for regular meals. Being time-off, it is not compensable hours
worked. In this case,t he employee is free to do anything he wants, except to work. If he is
required, however, to work while eating, he should be compensated therefor.
Waiting time spent by an employee shall be considered as working time if waiting
is an integral part of his work or the employee is required or engaged by the
employer to wait. Time spent waiting for work is compensable if it is spent
“primarily for the benefit of the employer and [its] business.”
Overtime work:
Basic principles on overtime work:
1) Work rendered after normal eight (8) hours of work is called “overtime work.”
2) In computing overtime work, "regular wage" or "basic salary" means "cash" wage
only without deduction for facilities provided by the employer.
3) "Premium pay" means the additional compensation required by law for work
performed within eight (8) hours on non-working days, such as regular holidays,
special holidays and rest days.
4) "Overtime pay" means the additional compensation for work performed beyond
eight (8) hours.
5) Illustrations on how overtime is computed:
 For overtime work performed on an ORDINARY DAY, the overtime pay is
plus 25% of the basic hourly rate.
 For overtime work performed on a REST DAY OR ON A SPECIAL DAY, the
overtime pay is plus 30% of the basic hourly rate which includes 30%
additional compensation as provided in Article 93 [a] of the Labor Code.
 For overtime work performed on a REST DAY WHICH FALLS ON A SPECIAL
DAY, the overtime pay is plus 30% of the basic hourly rate which includes
50% additional compensation as provided in Article 93 [c] of the Labor Code.
 For overtime work performed on a REGULAR HOLIDAY, the overtime pay is
plus 30% of the basic hourly rate which includes 100% additional
compensation as provided in Article 94 [b] of the Labor Code.
 For overtime work performed on a REST DAY WHICH FALLS ON A
REGULAR HOLIDAY, the overtime pay is plus 30% of the basic hourly rate
which includes 160% additional compensation.
“Premium pay” refers to the additional compensation required by law for work
performed within the eight (8) normal hours of work on non-working days, such as rest
days and regular and special holidays. “Overtime pay” refers to the additional
compensation for work performed beyond the eight (8) normal hours of work on a
given day. An employee is entitled to both premium pay and overtime pay if he
works on a nonworking day and renders overtime work on the same day.
In case the employment contract stipulates that the compensation includes built-in
overtime pay and the same is duly approved by the DOLE, the non-payment by the
employer of any overtime pay for overtime work is justified and valid.
Emergency Overtime work: As a general rule, no employee may be compelled to
render overtime work against his will. The reason is that his will constitute involuntary
servitude. However, in the following circumstances, an employee may be compelled to
render overtime work:
1) When the country is at war or when any other national or local emergency
has been declared by the National Assembly or the Chief Executive;
2) When overtime work is necessary to prevent loss of life or property or
in case of imminent danger to public safety due to actual or impending
emergency in the locality caused by serious accident, fire, floods, typhoons,
earthquake, epidemic or other disasters or calamities;
3) When there is urgent work to be performed on machines, installations or
equipment, or in order to avoid serious loss or damage to the employer or
some other causes of similar nature; When the work is necessary to prevent
loss or damage to perishable goods;
4) When the completion or continuation of work started before the 8th hour is
necessary to prevent serious obstruction or prejudice to the business or
operations of the employer; and
5) When overtime work is necessary to avail of favorable weather or
environmental conditions where performance or quality of work is dependent
thereon.
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In the above-mentioned circumstances, the employee may not validly refuse to render Computation of additional compensation (rates only); facilities vs.
emergency overtime work that he may be dismissed on the ground of insubordination or supplements
willful disobedience of the lawful order of the employer. Nonetheless, the employer is
entitle for the payment of overtime pay which cannot be waived. The right to overtime pay Weekly rest periods
is not subject to a waiver. Such right is governed by law and not merely by the agreement of
the parties. Holidays

Night-shift differential – is equivalent to 10% of employees regular wage for each hour of Service incentive leaves
work performed between 10pm and 6am of the following day.
Service charges
When the work of an employee falls at night time, the receipt of overtime pay shall
not preclude the right to receive night differential pay. The reason is the payment of 13th month pay
the night differential pay is for the work done during the night; while the payment of
the overtime pay is for work in excess of the regular eight (8) working hours. B. Wages

How is Night Shift Differential Pay computed: Payment of wages

1) Where night shift (10 p.m. to 6 a.m.) work is regular work. Prohibition regarding wages
a. On an ordinary day: Plus 10% of the basic hourly rate or a total of 110%
of the basic hourly rate. Wage distortions; concept
b. On a rest day, special day or regular holiday: Plus 10% of the regular
hourly rate on a rest day, special day or regular holiday or a total of 110% of Non-dimunition of benefits
the regular hourly rate.
2) Where night shift (10 p.m. to 6 a.m.) work is overtime work. C. Leaves
a. On an ordinary day: Plus 10% of the overtime hourly rate on an ordinary
day or a total of 110% of the overtime hourly rate on an ordinary day. Service incentive leave
b. On a rest day or special day or regular holiday: Plus 10% of the overtime
hourly rate on a rest day or special day or regular holiday. Maternity leave
3) For overtime work in the night shift. Since overtime work is not usually eight
(8) hours, the compensation for overtime night shift work is also computed on the Paternity leave
basis of the hourly rate.
a. On an ordinary day. Plus 10% of 125% of basic hourly rate or a total of
Solo parent leave
110% of 125% of basic hourly rate.
b. On a rest day or special day or regular holiday. Plus 10% of 130% of
regular hourly rate on said days or a total of 110% of 130% of the applicable Leave benefits for women workers under RA 9710 and RA 9262
regular hourly rate.
D. Special groups of employees

Women

Discrimination

Stipulation against marriage

Prohibited acts

Sexual harassment
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Minors (RA 7610, as amended by RA 9231)
Kasambahay (RA 10361)
Homeworkers
Nightworkers
Apprentices and learners
TRAINING AND EMPLOYMENT OF SPECIAL WORKERS 1. APPRENTICES AND LEARNERS •
What are the distinctions between learnership and apprenticeship? The following are
the distinctions: 1. Practical training. Both learnership and apprenticeship involve
practical training on-the-job. 2. Training agreement. Learnership is governed by a
learnership agreement; while apprenticeship is governed by an apprenticeship
agreement. 2. Occupation. Learnership involves learnable occupations consisting of
semi-skilled and other industrial occupations which are non-apprenticeable; while
apprenticeship concerns apprenticeable occupations or any trade, form of employment
or occupation approved for apprenticeship by the DOLE Secretary. 3. Theoretical
instructions. Learnership may or may not be supplemented by related theoretical
instructions; while apprenticeship should always be supplemented by related theoretical
instructions. 4. Ratio of theoretical instructions and on-the-job training. For both
learnership and apprenticeship, the normal ratio is one hundred (100) hours of
theoretical instructions for every two thousand (2,000) hours of practical or on-the-
job training. Theoretical instruction time for occupations requiring less than two
thousand (2,000) hours for proficiency should be computed on the basis of such ratio.
Competency-based system. Unlike in apprenticeship, it is required in learnership that
it be implemented based on the TESDA-approved competency-based system. 6. Duration
of training. Learnership involves practical training on the job for a period not
exceeding three (3) months; while apprenticeship requires for proficiency, more than
three (3) months but not over six (6) months of practical training on the job. 7. 8.
Qualifications. The law does not expressly mention any qualifications for learners;
while the following qualifications are required to be met by apprentices under Article
59 of the Labor Code: (a) Be at least fourteen (14) years of age; (b) Possess vocational
aptitude and capacity for appropriate tests; and (c) Possess the ability to comprehend
and follow oral and written instructions. CONFLICT IN THE AGE REQUIREMENT FOR
APPRENTICES: Under the Labor Code as stated above – 14 years of age Under the
Labor Code’s Implementing Rules – “Be at least 15 years of age, provided those who
are at least 15 years of age but less than 18 may be eligible for apprenticeship only
in non-hazardous occupations.” CONFLICT, HOW RESOLVED: It should be 15 years of
age but the more appropriate basis is not the Labor Code’s Implementing Rules
(which cannot amend the Labor Code) but another law, R.A. No. 9231, (“AN ACT
PROVIDING FOR THE ELIMINATION OF THE WORST FORMS OF CHILD LABOR AND
AFFORDING STRONGER PROTECTION FOR THE WORKING CHILD“) where it is provided
that: (1) All persons under eighteen (18) years of age shall be considered as a “child”;
and (2) Children below fifteen (15) years of age shall not be employed EXCEPT if
he/she falls under any of the exceptions mentioned and enumerated in the law.
Circumstances justifying hiring of trainees. Unlike in apprenticeship, in learnership,
the law, Article 74 of the Labor Code, expressly prescribes the pre-requisites before
learners may be validly employed, to wit: (a) When no experienced workers are
available; (b) The employment of learners is necessary to prevent curtailment of
employment opportunities; and (c) The employment does not create unfair
competition in terms of labor costs or impair or lower working standards. 9.
Limitation on the number of trainees. In learnership, a participating enterprise is
allowed to take in learners only up to a maximum of twenty percent (20%) of its
total regular workforce. No similar cap is imposed in the case of apprenticeship. 10.
Option to employ. In learnership, the enterprise is obliged to hire the learner after
the lapse of the learnership period; while in apprenticeship, the enterprise is given
only an “option” to hire the apprentice as an employee. 11. Wage rate. The wage rate
of a learner or an apprentice is set at seventy-five percent (75%) of the statutory
minimum wage. 2. DISABLED WORKERS (PERSONS WITH DISABILITY) (R.A. No. 7277, as
Amended by R.A. No. 9442) • Who are persons with disability (PWDs)? “Persons with
Disability” are those suffering from restriction or different abilities, as a result of a
mental, physical or sensory impairment, to perform an activity in the manner or
within the range considered normal for a human being. • What is impairment?
“Impairment” refers to any loss, diminution or aberration of psychological,
physiological, or anatomical structure or function. • What is disability? “Disability”
means (1) a physical or mental impairment that substantially limits one or more
psychological, physiological or anatomical functions of an individual or activities of
such individual; (2) a record of such an impairment; or (3) being regarded as having
such an impairment. • What is handicap? “Handicap” refers to a disadvantage for a
given individual, resulting from an impairment or a disability that limits or prevents
the function or activity that is considered normal given the age and sex of the individual.
a. EQUAL OPPORTUNITY What are the rights of PWDs? Under the law, PWDs are
entitled to equal opportunity for employment. Consequently, no PWD shall be denied
access to opportunities for suitable employment. A qualified employee with disability
shall be subject to the same terms and conditions of employment and the same
13
compensation, privileges, benefits, fringe benefits, incentives or allowances as a Incentive for employers
qualified able-bodied person. • What is the wage rate of PWDs? The wage rate of
PWDs is 100% of the applicable minimum wage. • What is the wage rate of PWD if
hired as apprentice or learner? A PWD hired as an apprentice or learner shall be paid
not less than seventy-five percent (75%) of the applicable minimum wage. b.
DISCRIMINATION ON EMPLOYMENT • What is the rule on discrimination against
employment of PWDs? No entity, whether public or private, shall discriminate against
a qualified PWD by reason of disability in regard to job application procedures, the IV. SOCIAL WELFARE LEGISLATION
hiring, promotion, or discharge of employees, employee compensation, job training, and V. LABOR RELATIONS
other terms, conditions and privileges of employment. The following constitute acts of VI. POST-EMPLOYMENT
discrimination: (a) Limiting, segregating or classifying a job applicant with disability A. Employer-Employee Relationship
in such a manner that adversely affects his work opportunities; (b) Using qualification
standards, employment tests or other selection criteria that screen out or tend to Tests in determining the existence of employee-employer relationship:
screen out a PWD unless such standards, tests or other selection criteria are shown
1. Four-fold test
to be job-related for the position in question and are consistent with business necessity;
2. Control Test
(c) Utilizing standards, criteria, or methods of administration that: (1) have the effect of
3. Two-tiered test
discrimination on the basis of disability; or (2) perpetuate the discrimination of others
who are subject to common administrative control. (d) Providing less compensation, Four-Fold Test provides the 4 elements of employment relationships as follows:
such as salary, wage or other forms of remuneration and fringe benefits, to a
qualified employee with disability, by reason of his disability, than the amount to 1. Selection and engagement of the employee;
which a nondisabled person performing the same work is entitled; (e) (f) Favoring a 2. Payment of wages or salaries;
non-disabled employee over a qualified employee with disability with respect to 3. Exercise of the power of dismissal; and
promotion, training opportunities, study and scholarship grants, solely on account of the 4. Exercise of the power to control the employee’s conduct.
latter’s disability; Re-assigning or transferring an employee with a disability to a job
These tests, however, are not fool-proof as they admit of exceptions.
or position he cannot perform by reason of his disability; (g) Dismissing or
terminating the services of an employee with disability by reason of his disability Control test – refers to the fourth element in the Four-fold test which means that the
unless the employer can prove that he impairs the satisfactory performance of the employer controls or has reserved the right to control the employee not only as to the
work involved to the prejudice of the business entity; provided, however, that the result of the work done but also as to the means and methods by which the same is to be
employer first sought to provide reasonable accommodations for persons with accomplished.
disability; (h) Failing to select or administer in the most effective manner
employment tests which accurately reflect the skills, aptitude or other factor of the If the so-called employer does not control such means and methods but is only interested in
applicant or employee with disability that such tests purports to measure, rather than the results thereof, then the arrangement is called “independent job contracting” or
the impaired sensory, manual or speaking skills of such applicant or employee, if any; “contractualization”, the party controlling the means and methods is called the independent
and (i) Excluding PWD from membership in labor unions or similar organizations. contractor and the party interested only in the results is called the principal/client/indirect
employer/statutory employer.

Two-Tiered Test: Enunciated in Francisco v. NLRC, the two-tiered test is composed of:
Persons with disabilities
(1) The putative employer’s power to control the employee with respect to the means
Discrimination and methods by which the work is to be accomplished [control test]; and

14
 (2) The underlying economic realities of the activity or relationship [broader economic
reality test].
Under the economic reality test, the proper standard of economic dependence is whether
the worker is dependent on the alleged employer for his continued employment in that line
of business.
These 2-tiered test applies to cases where there are several parties alleged to be employers
of one individual. The determinant factor is economic dependency of such individual. In
other words, under the economic reality test, the question to ask is - among the parties
alleged to be the employer, to whom is the individual economically dependent?
It is not necessary to have a written contract of employment in order to establish employer-
employee. It may be an oral or written contract. A written contract is not necessary for the
creation and validity of the relationship. The only exception is in the case of
Kasambahay where, under the Kasambahay Law, it is required that the contract of
employment should be in writing.
Present Philippine law recognizes a two-tiered test. The first tier of the test is the four-fold
test. The second tier is the economics of the relationship test. But the latter test is used if
and only if there is going to be harshness in the results because of the strict application of
the four-fold test (Francisco v. NLRC, G.R. No. 170087, August 31, 2006).

Proper standard for economic dependence is whether the worker is dependent on the Kinds of employment
alleged employer for his continued employment in that line of business. The determination
of the relationship between employer and employee depends upon the circumstances of the Legitimate subcontracting vs. labor-only contracting
whole economic activity, such as:
VII. MANAGEMENT PREROGATIVE
1. The extent to which the services performed are an integral part of the employer’s VIII. JURISDICTION AND RELIEFS
business
2. The extent of the worker’s investment in equipment and facilities; NLRC
3. The nature and degree of control exercised by the employer;
4. The worker’s opportunity for profit and loss; (1) EXCLUSIVE AND ORIGINAL JURISDICTION:
5. The amount of initiative, skill, judgment, or foresight required for the success of the
claimed independent enterprise; a) Petition for injunction in ordinary labor disputes to enjoin or restrain any
6. The permanency and duration of the relationship between the worker and actual or threatened commission of any or all prohibited or unlawful acts or to
employer; and require the performance of a particular act in any labor dispute which, if not
7. The degree of dependency of the worker upon the employer for his continued restrained or performed forthwith, may cause grave or irreparable damage to any
employment in that line of business (Francisco v. NLRC, G.R. No. 170087, August 31, party.
2006).
b) Petition for injunction in strikes or lockouts under Article 264 of the Labor
Code.
Following the broader economic reality test, the Supreme Court found petitioner in Orozco
v. The Fifth Division of the Hon. CA, who is a columnist in the Philippine Daily Inquirer (PDI), c) Certified cases which refer to labor disputes causing or likely to cause a strike
not an employee of PDI but an independent contractor. Thus: “Petitioner’s main occupation or lockout in an industry indispensable to the national interest, certified to it by
is not as a columnist for respondent but as a women’s rights advocate working in various the Secretary of Labor and Employment for compulsory arbitration by virtue of
women’s organizations. Likewise, she herself admits that she also contributes articles to Article 263(g) of the Labor Code.
other publications. Thus, it cannot be said that petitioner was dependent on respondent PDI d) Petition to annul or modify the order or resolution (including those issued
for her continued employment in respondent’s line of business. “The inevitable conclusion during execution proceedings) of the Labor Arbiter.
is that petitioner was not respondent PDI’s employee but an independent contractor,
engaged to do independent work.” (2) EXCLUSIVE APPELLATE JURISDICTION:

The contractual stipulation that there is no Er-Ee relationship between the parties is not a) All cases decided by the Labor Arbiter
binding on labor officials because what determines the existence or non-existence of
b) Cases decided by the DOLE Regional Directors of hearing officers involving small
employer-employee relationship is the actual factual situation between the parties and not
what is stipulated in the contract. money claims under Article 129 of the Labor Code.
c) Contempt cases decided by the Labor Arbiters.

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