TITLE I, BOOK III OF THE LABOR CODE DEALING WITH HOURS OF WORK, WEEKLY REST

PERIODS, HOLIDAYS, SERVICE INCENTIVE LEAVES AND SERVICE CHARGES, COVERS ALL
EMPLOYEES IN ALL ESTABLISHMENTS, WHETHER FOR PROFIT OR NOT, EXCEPT THE
FOLLOWING:
1. Government employees
2. Managerial employees
3. Officers and members of the managerial staff
4. Field personnel
5. Members of the family of the employer who are dependent on him for support
6. Domestic helpers
7. Persons in the personal service of another; ad
8. Workers paid by results (Secs. 1 and 2, Rule I, Book III, Rules Implementing the
Labor Code.)
9. The aforementioned employees are not entitled to overtime pay, premium pay for
rest days and holidays, night shift differential pay, holiday pay, service incentive
leave and service charges. (Poquiz, page 171)
GOVERNMENT EMPLOYEES

The terms and conditions of their employment are governed by the Civil Service Law.
In case of government-owned or controlled corporations with original charters, terms
and conditions of employment may be governed by such legislated charters.
Government-owned or controlled corporations without original charters are governed
by the Labor Code. (Poquiz, page 172)
DOMESTIC SERVANTS/ PERSONS IN THE
PERSONAL SERVICE OF ANOTHER
These are those who perform such services in the employer's home which
are usually necessary or desirable for the maintenance and enjoyment
thereof, or minister to the personal comfort, convenience, or safety of
the employer as well as the members of his employer's household. (Sec.
2[d], Rule I, Book III, Rules Implementing the Labor Code.)
A laundrywoman in staff houses of a company or within the premises of the
business of the employer, not actually serving the family of the employer,
is a regular employee. She is not included in the definition of domestic
servants. (Apex Mining Co. Inc. v NLRC, 196 SCRA 251)
NORMAL HOURS OF WORK
GR: The normal hours of work of any Ee shall not exceed 8 hours a day (LC, Art. 83).
XPNs:
Health personnel
Compressed workweek
The eight-hour work requirement does not, however, preclude the employer in the
exercise of its management prerogatives to reduce the number of working hours,
provided that there is no diminution of existing benefits. (Poquiz, page 176)
It is enacted not only to safeguard the health and welfare of the Ee or laborer, but
also in a way to minimize unemployment by forcing Ers, in cases where more than
8-hour operation is necessary, to utilize different shifts of laborers or Ees working
only for 8 hours each. (Manila Terminal Co. Inc vs The Court of Industrial
Relations, 1952)
COMPRESSED WORKWEEK

The normal workweek is reduced to less than 6 days but the total number of work-
hours of 48 hours per week shall remain. The normal workday is increased to
more than 8 hours but not to exceed 12 hours, without corresponding overtime
premium. The concept can be adjusted accordingly depending on the normal
workweek of the company (Department Advisory Order No. 2, Series of 2009).
DURATION OF THE MEAL PERIOD

Every Er shall give his Ees not less than 60 minutes or 1 hour time-off for regular
meals.
As a general rule, employees are entitled to at least one hour time-off for regular
meals which can be taken inside or outside company premises. For a full one-
hour undisturbed lunch break, the employees can freely and effectively use this
hour not only for eating but also for their rest and comfort which are conducive to
more efficiency and better performance in their work. Since the employees are no
longer required to work during this one-hour lunch break, there is no more need
for them to be compensated for this period. (Sime Darby Pilipinas, Inc. v. NLRC,
G.R. No. 119205)
NON- COMPENSABILITY OF THE MEAL PERIOD

It is not compensable during a time-off. Ee must be completely relieved from duty.

Instance when the meal period is considered compensable
It is compensable where the lunch period or meal time:
1. Is predominantly spent for the Er’s benefit; or 2. Where it is less than 20 min. It
will be
considered only as a coffee break.
WORK DAY

Work day is the 24-hour period which commences from the time the Ee regularly
starts to work
Illustration:
If the worker starts to work 8 am today, the
workday is from 8 am today up to 8 am tomorrow. (Azucena, page 221)
Minimum normal working hours fixed by law need not be continuous to constitute the
legal working day.
OVERTIME WORK

Service rendered in excess of and in addition to eight hours on ordinary working days,
which are the prescribed daily work period, is overtime work. (Caltex Regular
Employees at Mla. Office v Caltex Phils., Inc., 247 SCRA 398)
NOTE: Express instruction from the Er to the Ee to render OT work is not required for
the Ee to be entitled to OT pay; it is sufficient that the Ee is permitted or suffered
to work. (Azucena, page 222) However, written authority after office hours during
rest days and holidays are required for entitlement to compensation.
OVERTIME PAY

Any employee who is permitted or required to work beyond eight hours on ordinary
working days shall be paid an additional compensation for the
overtime work in an amount equivalent to his regular wage plus at least 25% thereof.
It is the amount obtained by multiplying the overtime hourly rate by the number of
hours worked in excess of eight hours. (Poquiz, page 186)
UNDERTIME CANNOT OFFSET OVERTIME (ART.
88, LC)
Where a worker incurs undertime hours during his regular daily work, said undertime
hours should not be offset against the overtime hours on the same day or on any
other day (Azucena, page 233)
The rationale behind the law is reflected in the doctrine laid down by the Supreme
Court that "offsetting the overtime with undertime and at the same time charging
said undertime to the accrued leave is unfair and cannot be done" (NAWASA v
NWSA Consolidated Union, 11 SCRA 766, 778)
NIGHT WORK

Any and all work rendered between 6 pm and 6 am

(National Rice & Corn Corp. v. NARIC, 105 Phil 891).
NIGHT SHIFT DIFFERENTIAL (NSD)
An employee shall be paid night shift differential of no less than ten percent (10%) of
his regular wage for each hour of work performed between ten o'clock in the
evening and six o'clock in the morning (Sec. 2, Rule II, Book III, Rules
Implementing the Labor Code).
Where the night-time work of an employee overlaps with overtime work, the receipt of
overtime pay does not preclude the receipt of night differential pay. The latter is
night pay; the former is payment beyond eight-hour work. (Poquiz, page 185)
WAGES
It is the remuneration or earnings, however designated, capable of being expressed in
terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, payable by an Er to
an Ee under a written or unwritten contract of employment:
1. For work done or to be done, or for services rendered or to be rendered; and
includes
2. Fair and reasonable value of board, lodging, or other facilities customarily
furnished by the Er to the Ee as determined by SLE.
“NO WORK, NO PAY” PRINCIPLE (FAIR DAY’S
WAGE FOR A FAIR DAY’S LABOR)
GR: If there is no work performed by the Ee, without the fault of the Er, there can be
no wage or pay.
XPNs: The laborer was able, willing and ready to work but was:
1. Prevented by management;
2. Illegally locked out;
3. Illegally suspended;
4. Illegally dismissed
5. Illegally prevented from working (Aklan
6. Electric Coop. v. NLRC, G.R. No. 129246, January 10, 2000).
WAGES
Compensation for manual labor
(skilled or unskilled) also known as
“blue collared workers,” paid at
stated times and measured by the
day, week, month or season.
Considerable pay for a lower and
less responsible character of
employment.
GR: Not subject to execution
XPN: Debts incurred for food, shelter,
clothing and medical attendance.
SALARY
Paid to “white collared workers” and
denotes a higher degree of
employment or a superior grade of
services and implies a position in the
office.
Suggestive of a larger and more
permanent or fixed compensation for
more important service.
Subject to execution.
BONUS

Refers to the payment in excess of regular or guaranteed wages. It is granted to an

employee for his tangible contribution to the success of the employer’s business,
without which the employer may not realize bigger profits. The contribution may
be in the form of an employee’s commitment to the job, his industry and loyalty.
(Metro Transit Org., Inc. v. NLRC, G.R. No. 116008, July 11, 1995)
GR: The payment of bonus is a management function, not a demandable and
enforceable obligation, which cannot be enforced upon the employer who may not
be obliged to assume the onerous burden of granting bonuses or other benefits
aside from the employee’s basic salaries or wages. (Philippine National
Construction Corporation v. NLRC, G.R. No. 128345, May 18, 1999)
BONUS
XPN: Bonuses can be demanded as a matter of right if:
given without any condition; hence, part of the wage or salary (Atok Big Wedge Mining
Co., Inc. v. Atok Big Wedge Mutual Benefit Assn., 92 Phil. 754) grant thereof is a
result of an agreement such as the CBA (Gery v. Insular Lumber, 93 Phil. 807)
given on account of company policy or practice (Claparols v. CIR, 65 SCRA 613)
grant is mandated by law
MINIMUM WAGE

Statutory minimum wage is the lowest wage rate fixed by law that an Er can pay his
workers.
Purpose of the minimum wage law
The compulsory payment of a fair statutory wage is a preventive action, not remedial,
for it settles the wage rates before industrial disputes arise thereby foreclosing
the eruption of social and economic disquietude.
EMPLOYER-EMPLOYEE RELATIONSHIP

Employment relationship is determined by law and not by contract (Insular Life

Assurance Co. Ltd. v. NLRC, G.R. No. 119930, March 12, 1998).
NOTE: Taxi or jeepney drivers under the “boundary” system are Ee’s of the taxi or
jeepney owners/operators; so also the passenger bus drivers and conductors
(Jardin v. NLRC and Goodman Taxi, G.R. No. 119268, February 23, 2000).
Er-Ee relation is a question of law
An employment contract which stipulates that there is no Er-Ee relationship between
the parties is invalid. The existence of an Er-Ee relation is a question of law and
being such, it cannot be made the subject of agreement (Tabas v. California
Manufacturing Co., G.R. No. L-80680, January 26, 1989).
FACTORS DETERMINING THE EXISTENCE OF AN
EMPLOYER-EMPLOYEE RELATIONSHIP
The four–fold test (indicia of determination):

1. Selection and engagement of the employee;

2. Payment of wages;
3. Power of dismissal; and
4. Power of control (Azucena, Vol. I).
CONTROL TEST
The control test assumes primacy in the overall consideration. There is an Er-Ee
relationship when the person for whom the services are performed reserves the
right to control not only the end achieved but also the manner and means used to
achieve that end (Television and Production Exponents Inc. v. Servana, 542 SCRA
578).
Not every form of control establishes employer- employee relationship. A demarcation
line should be drawn between:
(a) rules that merely serve as guidelines which only promote the result, and
(b) rules that fix the methodology and bind or restrict the party hired to the use of
such means or methods. Under the first category, there exists no employer-
employee relationship. In the second category, it has the effect of establishing
employer-employee relationship (Insular life v. NLRC, 179 SCRA 439; Consulta v.
CA, G.R. No. 145443, March 18, 2005).
KINDS OF EMPLOYMENT
1. Probationary
2. Regular
3. Project Employees
4. Seasonal
5. Casual
6. Fixed-term
PROBATIONARY
Employment where the Ee, upon his engagement:
1. Is made to undergo a trial period
2. During which the Er determines his fitness to qualify for regular employment,
3. Based on reasonable standards made known to the Ee at the time of
engagement (IRR, Book VI, Rule I, Sec 6).
RULES ON PROBATIONARY EMPLOYMENT

1. Er shall make known to the Ee at the time he is hired,

the standards by which he will qualify as a regular Ee;
2. An Ee allowed to continue work after the probationary
period shall be considered a regular Ee;
3. During the probationary period, the Ee enjoys security
of tenure; his services can only be terminated for just
or authorized causes.
GR: It shall not exceed 6 months.
After the lapse of the probationary period (6 months), Ee
becomes regular.
TYPES OF REGULAR EMPLOYMENT

1. An employment shall be deemed to be regular where the Ee has been engaged to

perform activities which are usually necessary or desirable in the usual business
or trade of the Er, the provisions of written agreements to the contrary
notwithstanding and regardless of the oral agreements of the parties [IRR, Book
VI, Rule I, Sec. 5 (a)]. (Nature of work)
2. 2. Any Ee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular Ee with respect to the activity
in which he is employed and his employment shall continue while such activity
exists [IRR, Book VI, Rule I, Sec. 5 (b)]. (Years of service)
Regularization is not a management prerogative; rather, it is the nature of
employment that determines it. It is a mandate of the law (PAL v. Pascua, G.R. No.
143258, August 15, 2003).
Regular employment does not mean permanent employment. A probationary Ee
becomes a regular Ee after 6 months. The service of a regular Ee may only be
terminated for just/authorized causes.
PROJECT EMPLOYMENT
Project
A "project" has reference to a particular job or undertaking that may or may not be
within the regular or usual business of the Er. In either case, the project must be
distinct, separate and identifiable from the main business of the Er, and its
duration must be determined or determinable (PAL v. NLRC, G.R. No. 125792,
November 9, 1998).
Project employment
Project employment is employment that has been fixed for a specific project or
undertaking the completion for which has been determined at the time of
engagement of the Ee [IRR, Book VI, Rule I, Sec. 5(a)]. The period is not the
determining factor, so that even if the period is more than 1 year, the Ee does not
necessarily become regular.
SEASONAL EMPLOYMENT

Employment where the job, work or service to be performed is seasonal in nature and
the employment is for the duration of the season [IRR, Book VI, Rule I, Sec.5 (a)].
An employment arrangement where an Ee is engaged to work during a particular
season on an activity that is usually necessary or desirable in the usual business
or trade of the Er.

During off-season, the relationship of Er-Ee is not severed; the Seasonal Ee is merely
considered on LOA without pay. Seasonal workers who are repeatedly engaged
from season to season performing the same tasks are deemed to have acquired
regular employment (Hacienda Fatima v. National Federation of Sugarcane
Workers-Food and General Trade, G.R. No. 149440, January 28, 2003).
CASUAL EMPLOYMENT

1. It is an employment where the Ee is engaged in an activity which is not usually

necessary or desirable in the usual business or trade of the Er, Provided: such
employment is neither Project nor Seasonal (LC, Art. 281). He performs only an
incidental job in relation to the principal activity of the Er.
NOTE: But despite the distinction between regular and casual employment, every Ee
shall be entitled to the same rights and privileges, and shall be subject to the
same duties as may be granted by law to regular Ees during the period of their
actual employment.
2. An Ee is engaged to perform a job, work or service which is merely incidental to the
business of the Er, and such job, work or service is for a definite period made
known to the Ee at the time of engagement [IRR, Book Vi, Rule I, Sec. 5 (b)].
DISMISSAL FROM EMPLOYMENT

No worker shall be dismissed except for a just or authorized cause provided by law
and after due process (Both substantive and procedural due process must be
afforded to the employee).
In case of regular employment, the requirement of substantive due process (Security
of Tenure) is satisfied when the Er does not terminate the services of an Ee
unless it is for a just cause or when authorized by the LC on Termination of
Employment (LC, Art. 279).
JUST CAUSE
Those initiated by the employee
The law do not require that
Separation pay be paid.
Non-complaince of due process;
indemnity: PHP 30,000
AUTHORIZED CAUSE
Those initiated by the employer in
the exercise of Management
prerogative.
The law requires that the Separation
pay be paid.
Non-compliance of due process;
indemnity: PHP 50,000
JUST CAUSE

Termination intitated by the employee. Exercise of management prerogative, however

must not be exercised wwith abuse of discretion.
Procedural requirements:
1. Notice (two-notice rule)
2. Hearing
3. Judgment
Where the employer had a valid reason to dismiss the employee but has failed to
comply with the due process requirement, the dismissal may be upheld but the
employer will be penalized to pay an indemnity to the employee (Wenphil Corp. v.
NLRC, G.R. No. 80587, February 8, 1989).
JUST CAUSES FOR TERMINATION

1. Serious misconduct or willful disobedience by the Ee of the lawful orders of his Er

or representative in connection with his work;
2. Gross and habitual neglect by the Ee of his duties;
3. Fraud or willful breach by the Ee of the trust reposed in him by his Er or duly
organized representative;
4. Commission of a crime or offense by the Ee against the person of his Er or any
immediate member of his family or his duly authorized representative;
5. Other causes analogous to the foregoing (LC, Art. 282).
AUTHORIZED CAUSES

Authorized causes – initiated by the employer’s exercise of management prerogative,

who shall be liable to pay separation pay as mandated by law. Does not usually
require delinquency or culpability on the part of the employee.
1. Installation of labor-saving devices
2. Redundancy
3. Reorganization
4. Retrenchment
5. Closing or cessation of operation of the establishment or undertaking
6. Disease