Labor Relations Finals

Notes on Labor Relations for the Final Examination (2013) by Pauline Mae Araneta

EMPLOYER-EMPLOYEE RELATIONSHIP The existence f employer-employee relationship is determined by the presence of the following elements; namely: a. selection and engagement of the employee b. payment of wages c. power to dismiss d. power to control employee’s conduct CONSTITUTIONAL GUARANTY OF TENURE The policy of the state is to assure the right of workers to “security of tenure.” The guaranty is an act of social justice. The great mass of the population is almost wholly dependent on their employment for their livelihood. When a worker losses his job, his family faces deprivation, if not starvation. Hence, the demand for job security. Both the constitution and the labor code enunciate the right of the worker to security of tenure. SECURITY OF TENURE In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by the Labor Code. An employee who is unjustly dismissed from work shall be entitled to loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from hip up to the time of his actual reinstatement. RIGHTS OF EMPLOYEES IN THE PUBLIC SERVICE Employees of government corporations established under the Corporation Code shall have the right to organize and to bargain collectively with their respective employers. All other employees in the civil service shall have the right to form associations for purposes not contrary to law. LIMITED PURPOSE: The extent of the government employees’ right to self-organization differs significantly from that of employees in the private sector. The latter’s right of self-organization, i.e. “to form, join or assist labor organizations for purposes of collective bargaining,” admittedly includes the right to deal and negotiate with their respective employers in order to fix the terms and conditions of employment and also, to engage in concerted activities for the attainment of their objectives, such as strikes, picketing and boycotts. But the right of government employees to “form, join or assist employees’ organizations of their own choosing” under E.O. No. 180 is not regarded as existing or available for “purposes of collective bargaining,” but simply “for the furtherance and protection of their interests.”

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Notes on Labor Relations for the Final Examination (2013) by Pauline Mae Araneta

While there is no question that the constitution recognizes the right of government employees to organize, they, however, do not have the right to strike, because such mass action will result in temporary stoppage or disruption of public service. SUBSTANTIAL EVIDENCE It is true that administrative quasi-judicial bodies like the NLRC are not bound by the technical rules of procedure in the adjudication of cases. However, the evidence presented before the NLRC must at least have a modicum of admissibility for it be given probative value. Not only must there be some evidence to support a finding or conclusion, but evidence must be substantial. Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. JURISDICTION OF VOLUNTARY ARBITRATIORS OR PANEL OF VOLUNTARY ARBITRATORS The Voluntary Arbitrator or Panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide: 1) all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining agreement; 2) those arising from the interpretation or enforcement of company personnel policies; 3) upon agreement of the parties, all other labor disputes including unfair labor practices and bargaining deadlocks; 4) employment termination disputes arising from CBA or personnel policy implementation. DISEASE AS GROUND FOR TERMINATION An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month or to one-half (1/2) month salary for every year of service, whichever is greater. A fraction of at least six (6) months being considered as one (1) whole year. REGULAR AND CASUAL EMPLOYMENT Notwithstanding the provisions of written agreement and regardless of the oral agreement of the parties, an employment shall be deemed to be: 1) REGULAR - where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, EXCEPT:

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Notes on Labor Relations for the Final Examination (2013) by Pauline Mae Araneta

a. where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee; or b. where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. 2) CASUAL – if it is not covered by the preceding paragraph. Provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. REGULAR EMPLOYMENT BY NATURE OF WORK What determines whether a certain employment is regular or casual is not the will and word of the employer, to which the worker often accedes, much less the procedure of hiring the employee or the manner of paying his salary. It is the nature of the activities performed by the worker in relation to the particular business or trade of the employer. As provided by law, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. RIGHT TO SECURITY OF TENURE CANNOT BE CONTRACTED AWAY • • •

The right to security of tenure cannot be blotted out by an employment contract. In trying to justify the employee’s dismissal, the employer did not cite any of the just or authorized causes. Instead, it merely insisted that the dismissal was authorized in the employment contract that the employee voluntarily signed. C.J. Panganiban: A contract of employment is imbued with public interest. Truly, the contracting parties may establish such stipulation, clauses, terms and conditions as they want, and their agreement would have the force of law between them. However, the employer overlooks the qualification that those terms and conditions agreed upon must not be contrary to law, morals, customs, public policy or public order.

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Whether the employee is probationary, contractual, regular or even casual, the employment contract, more often than not, is prepared by the employer. This fact works against the employer, in a sense, because obscurity in the contract is deemed his fault. The civil law rule on interpretation of contracts applies. It provides that “the interpretation of obscure words or stipulation in a contract shall not favour the party who caused the obscurity.” This rule of interpretation is applicable to contracts of adhesion where there is already a prepared form containing the provisions of the employment of contract. The employee “takes it or leaves it.” The presumption is that there was an imposition by one party against the other and that the employee signed the contract out of necessity. 3

Notes on Labor Relations for the Final Examination (2013) by Pauline Mae Araneta

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The five-month period specified in private respondents’ employment contracts having been imposed precisely to circumvent the constitutional guarantee on security of tenure should, therefore, be struck down or disregarded as contrary to public policy or morals. REGULAR JOBS CONTRACTED OUT

Contracting out of a job, work or service that results in termination of regular employees and reduction of work hours or reduction of splitting of the bargaining unit is allowed when: a. done in good faith; and b. justified by exigencies of the business. PROJECT EMPLOYEE Project employee is one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. PROJECT EMPLOYEES NOT ENTITLED TO SEPARATION PAY Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular company. What is required is for the company to report it to the nearest Public Employment Office for statistical purposes. REGULAR SEASONAL EMPLOYEES Regular seasonal employees are those called to work from time to time, the nature of their relationship with the employer is such that during off-season, they are temporarily laid off but during summer season, they are reemployed or when their services may be needed. They are not, strictly speaking, separated from the service by are merely considered as on leave of absence without pay until they are reemployed. Their employment status is never severed but only suspended. FIXED PERIOD OR EMPLOYMENT FOR A TERM – WHEN VALID The Labor Code does not proscribe or prohibit an employment contract with a fixed period, provided the same is entered into by the parties without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstance vitiating consent, or where it satisfactorily appears that the employer and employee dealt with each other on a more or less equal terms with no moral dominance whatever being exercised by the former over the latter.

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Notes on Labor Relations for the Final Examination (2013) by Pauline Mae Araneta

INVALID FIXED-TERM EMPLOYMENT Purefoods Precedent – “5-month contractuals” It could not be supposed that private respondent and all other so-called “casual” workers of the petitioner knowingly and voluntarily agreed to the 5-month employment contract. Cannery workers are never on equal terms with their employers. Almost always, they agree to any terms of an employment contract just to get employed considering that it is difficult to find work given their ordinary qualifications. Indeed, to the unemployed, security of tenure has no value. It could not then be said that employer and employees “dealt with each other on a more or less equal terms with no moral dominance whatever being exercised by the former over the latter.” By hiring employees only for a period of 5 months, the employer prevents the employees from attaining the status of a regular employee. It was a clear circumvention of the employees’ right to security of tenure, and to other benefits like minimum wage, cost-ofliving allowance, sick leave, holiday pay and 13 th month pay. PRETERMINATION OF FIXED-PERIOD EMPLOYMENT: ILLEGAL DISMISSAL A fixed-period employee is not regular because his job, as anticipated and agreed, will exist only for a specified period of time. In other words, it is not permanent. But he is deemed regular in two senses: (1) the nature of his work is necessary or desirable in the principal business of the employer; and (2) he enjoys security of tenure during the limited time of his employment. Before the end of the agreed period he cannot be removed without a valid cause. PROBATION EMPLOYMENT Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. A probationary employee is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. A probationary appointment is made to afford the employer an opportunity to observe the fitness of a probationary employee while at work, and to ascertain whether he will become a proper and efficient employee. RIGHTS OF PROBATIONARY EMPLOYEE: TERMINATED ONLY FOR CAUSE In all cases involving employees engaged on probationary basis, the employer shall make known to the employee at the time he is hired, the standards by which he will qualify as a regular employee. 5

Notes on Labor Relations for the Final Examination (2013) by Pauline Mae Araneta

If an employee hired allegedly on probationary basis was not informed of the standards that should qualify her as a regular employee, the employee is deemed to have been hired from day one as a regular employee. PROBATION OF TEACHERS According to the Manual Regulations for Private Schools established by the Department of Education, “Full time teachers who have rendered three consecutive years of satisfactory services shall be considered permanent.” The legal requisites, therefore, for acquisition by a teacher of permanent employment, or security of tenure, are as follows: (a) The teacher is a full-time teacher; (b) The teacher must have rendered three (3) consecutive years of service; and (c) Such service must have been satisfactory.

WHEN PROBATIONARY EMPLOYEE BECOMES REGULAR An employee who is allowed to work after a probationary period shall be considered a regular employee. It is an elementary rule in the law on labor relations that a probationary employee engaged to work beyond the probationary period of six months, or for any length of time set forth by the employer, shall be considered a regular employee.

TERMINATION OF EMPLOYMENT ART. 282. TERMINATION BY EMPLOYER: JUST CAUSES An employer may terminate an employment for any of the following causes: (a) Serious misconduct or wilful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b)Gross and habitual neglect by the employee of his duties; (c) Fraud or wilful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d)Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) Other causes analogous to the foregoing. EFFECT IF NO JUST CAUSE OF TERMINATION When there is no just cause of termination, there is illegal dismissal. Backwages and reinstatement are two reliefs given to an illegally dismissed employee. 6

Notes on Labor Relations for the Final Examination (2013) by Pauline Mae Araneta

ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL The employer may also terminate the employment of any employee due to: (1)the installation of labor-saving devices, (2)redundancy, (3)retrenchment to prevent losses; or (4)the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of the Labor Law, by serving a written notice on the worker and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to: (1)the installation of labor saving devices or (2)redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month or to at least one (1) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year. In case of: (1)retrenchment to prevent losses or (2)closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year. CLOSURE OF BUSINESS BY EMPLOYER Closure of the business by the owner is allowed no only in case the business is losing because closure is a business prerogative of such owner. If the business is not losing but its owner, for reasons of his own, wants to get out of the business, he, in good faith can lawfully do so anytime. Just as no law forces anyone to go into business, no law compels anybody to stay in business. But the employees should be paid their separation pay, in the case where the closure of business is not due to business losses or financial reverses, to at least one (1) month or to at least one (1) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year.

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Notes on Labor Relations for the Final Examination (2013) by Pauline Mae Araneta

CLOSURE OF BUSINESS DUE TO SERIOUS BUSINESS LOSSES Where, however, the closure was due to business losses, the Labor Code does not impose any obligation upon the employer to pay separation benefits. The grant of separation pay is a statutory obligation on the part of the employer and a demandable right on the part of the employee, except only where the closure or cessation of operations was due to serious business losses or financial reverses and there is sufficient proof of this fact or condition. PROCEDURE OF CLOSURE OF BUSINESS Under the Labor Code, cessation of business operations not due to business reverses must meet three (3) requirements namely: (a) service of a written notice to the employees and the MOLE at least one (1) month before the intended date thereof; (b)the cessation of or withdrawal from business operations must be bona fide in character; and (c) payment to the employees of termination pay amounting to at least one (1) month pay or one-half (1/2) month pay for each year of service, whichever is higher. A fraction of at least six (6) months is considered as one (1) whole year. PROCEDURE TO TERMINATE EMPLOYMENT Substantive due process mandates that an employee can only be dismissed based on just or authorized causes. Procedural due process requires further that he can only be dismissed after he has been given an opportunity to be heard. STANDARDS OF PROCEDURAL DUE PROCESS I.

For termination of employment based on JUST CAUSES, the following requisites must concur: (a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; (b)A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to 8

Notes on Labor Relations for the Final Examination (2013) by Pauline Mae Araneta

respond to the charge, present his evidence or rebut the evidence presented against him; and (c) A written notice of termination served on the employee indicating that upon due consideration of all circumstances, grounds have been established to justify his termination. In cases of termination, the foregoing notices shall be served on the employee’s last known address. II.

For termination of employment based on AUTHORIZED CAUSES, the requirements of due process shall be deemed complied with upon service of a written notice to: (a) the employee; and (b)the appropriate Regional Office of the Department of Labor and Employment at least thirty (30) days before the effectivity of the termination, specifying the ground or grounds for termination.

III.

If termination is brought by the completion of the contract or phase thereof, no prior notice is required. If the termination is brought about by the failure of an employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written notice is served to the employee within a reasonable time from the effective date of termination.

IV.

WHEN HEARING NOT REQUIRED No hearing is needed if the employee has admitted his guilt. There must be admission of guilt. If the employee merely narrated and explained what he did, without admitting his guilt, then conducting a hearing is required; otherwise, there is failure of due process. PREVENTIVE SUSPENSION The employer may place the worker concerned under preventive suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or of his co-workers. PERIOD OF SUSPENSION Preventive suspension, being only an intermediate protective measure, cannot last for an indefinite period. The Code’s implementing rules provide that no preventive suspension shall last longer than thirty (30) days. After that period, the employer shall reinstate the worker in his former position or in a substantially equivalent position, or the employer may extend the period of suspension, provided that during the period of extended suspension, he pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the extension if the employer decides, after completion of the hearing, to dismiss the worker. 9

Notes on Labor Relations for the Final Examination (2013) by Pauline Mae Araneta

Thirty-day preventive suspension applies to employment in general. For project and nonproject employees in the construction industry, the preventive suspension cannot be longer than 15 days. Beyond that, the employee is entitled to wages and other benefits. PREVENTIVE SUSPENSION EXCEEDING 30 DAYS – CONSTRUCTIVE DISMISSAL After the 30-day period of suspension, the employee must be reinstated to his former position because suspension beyond this maximum period amounts to constructive dismissal. WHERE DISMISSAL IS VALID BUT DUE PROCESS WAS NOT OBSERVED The dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for noncompliance with the procedural requirements of due process. In other words, the employer should be sanctioned in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer. CONSEQUENCES OF ILLEGAL DISMISSAL An employee who is unjustly dismissed from work shall be entitled to loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from hip up to the time of his actual reinstatement. The causes are any one or more of the following: separation pay, backwages, reinstatement, damages, indemnity, and attorney’s fees. BACKWAGES AND REINSTATEMENT are two reliefs given to an illegally dismissed employee. They are separate and distinct from each other. However, in the event that reinstatement is no longer possible, separation pay is awarded to the employee. Thus, the award of separation pay is in lieu of reinstatement and not of backwages. In other words, an illegally dismissed employee is entitled to: (1) either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and (2) backwages. BACKWAGES Backwages, in general, are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal. Backwages presupposes illegal termination. It is restitution of earnings unduly withheld from the employee because of illegal termination. REINSTATEMENT

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Notes on Labor Relations for the Final Examination (2013) by Pauline Mae Araneta

Reinstatement, on the other hand, means restoration to a state of condition from which one had been removed or separated. When situations arise where reinstatement is neither possible nor advisable such as when the employee’s position no longer exists, or the company has closed down, or severely strained relations has set in between employer and employees of a confidential capacity, payment of separation pay may be ordered. SEPARATION PAY Separation pay is the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with “the wherewithal during the period that is looking for another employment.” Separation pay is granted where reinstatement is no longer advisable because of certain situations such as when the employee’s position no longer exists, or the company has closed down, or severely strained relations have set in between the parties. BACKWAGES vs. SEPARATION PAY Payment of backwages is a form of relief that restores the income that was lost by reason of unlawful dismissal; separation pay, in contrast, is oriented towards the immediate future, the transitional period the dismissed employee must undergo before locating a replacement job. DAMAGES Any award of moral damages may be awarded by the Labor Arbiter grounded on the Civil Code. Moral damages may be awarded to compensate one for diverse injuries such as mental anguish, besmirched reputation, wounded feelings and social humiliation. As a rule, moral damages are recoverable only where the dismissal or suspension of the employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or were done in a manner contrary to morals, good customs or public policy. Exemplary damages may be awarded only if the dismissal was shown to have been effected in a wanton, oppressive or malevolent manner. The award for attorney’s fees is justified if the claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act of the party against whom it is sought. TERMINATION BY EMPLOYEE ART. 285. (a) An employee may terminate without just cause the employee-employer relationship by serving a written notice on the employer at least one (1) month in advance. The 11

Notes on Labor Relations for the Final Examination (2013) by Pauline Mae Araneta

employer upon whom no such notice was served may hold the employee liable for damages. (b) An employee may put an end to the relationship without serving any notice on the employer for any of the following just causes: 1. Serious insult by the employer or his representative on the honor and person of the employee; 2. Inhuman and unbearable treatment accorded the employee by the employer or his representative; 3. Commission of a crime or offense by the employer or his representative against the person of the employee or any of the immediate members of his family; and 4. Other causes analogous to any of the foregoing.

SEPARATION PAY IN VOLUNTARY RESIGNATION The general rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, unless there is a stipulation for payment of such in the employment contract or Collective Bargaining Agreement (CBA), or payment of the amount is sanctioned by established employer practice or policy. RETIREMENT FROM THE SERVICE ART. 287. RETIREMENT Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, that an employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (6) years or more, nut not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term “one-half (1/2) month salary” shall mean fifteen (15) days plus one-twelfth (1/12) of the 13 th-month pay and the cash equivalent of not more than five (5) days of service incentives leaves. An underground mining employee upon reaching the age of fifty (50) years or more, but not beyond sixty (60) years which is hereby declared the compulsory retirement age for underground mine workers, who has served at least five (5) years as underground mine worker, may retire and shall be entitled to all the retirement benefits provided for in this Article. Retail, service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. 12

Notes on Labor Relations for the Final Examination (2013) by Pauline Mae Araneta

Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code. PRESCRIPTION OF OFFENSES AND CLAIMS ART. 290. OFFENSES Offenses penalized under the Labor Code shall prescribe in three (3) years. All unfair labor practices shall be filed with the appropriate agency within one (1) year from accrual of such unfair labor practice; otherwise, they shall be forever barred. ART. 291. MONEY CLAIMS All money claims arising from employer-employee relations shall be filed within three (3) years from the time the cause of action accrued. ACTION FOR REINSTATEMENT PRESCRIBES IN FOUR YEARS The period of prescription mentioned in the Labor Coder refers to and is limited to money claims, all other cases of injury to rights of a working man being governed by the Civil Code. Hence, an action for reinstatement prescribes is in four (4) years, for the injury to the employee’s rights as provided in the Civil Code.

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