Labor Reviewer

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SUMMER REVIEWER

—Adviser: Atty. Marlon J. Manuel; Head: Ryan Quan; Understudy: Kate Sabado; QuickTime™ and a

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LABOR STANDARDS

I. GENERAL PRINCIPLES

Labor Code – principal labor law of the country. But

even now, there are Labor Laws that are not found in the Labor Code.

Social Legislation – the promotion of the welfare of

all the people, the adoption by the government of measures calculated to insure economic stability of all the component elements of society thru the maintenance of proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, thru the adoption of measures legally justifiable, or extra-constitutionally, thru the exercise of powers underlying the existence of all governments, on the time honored principle of

salus populi esta suprema lex (Calalang v. Williams, 02 December 1940)

Social Justice – humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objective secular conception may at least be approximated

Labor Standards – sets out the minimum terms,

conditions, and benefits of employment that employers must provide or comply with and to which employees are entitled as a matter of legal right

Labor Relations – defines the status, rights and

duties, as well as the institutional mechanisms that govern the individual and collective interactions between employers, employees and their representatives

Art. 3. Declaration of basic policy Afford protection to labor Promote full employment

Ensure equal work opportunities regardless of sex, race, or creed

Regulate the relations between workers and employers

Assure worker’s rights to self-organization, collective bargaining, security of tenure, and just and humane conditions of work

Seven basic rights of workers guaranteed by the Constitution:

1. right to organize

2. to conduct collective bargaining or negotiation with management

3. to engage in peaceful concerted activities, including strike in accordance with law

4. to enjoy security of tenure 5. to work under humane conditions 6. to receive a living wage

7. to participate in policy and decision-making processes affecting their rights and benefits as may be provided by law.

Art. 4. Construction in favor of labor

When the interest of labor and capital collide, the heavier influence of capital should be counterbalanced with the sympathy and compassion of law for the less privileged workers. But protection to labor does not mean oppression or destruction of capital. The employer’s act will be sustained when it is in the right. [Eastern Shipping Lines v. POEA, 166

SCRA 523 (1998)]

Court decisions adopt a liberal approach that favors the exercise of labor rights. The mandate is simply to resolve doubt in favor of labor. If there is no doubt in implementing and interpreting the law, labor will enjoy no built-in advantage and the law will have to be applied as it is.

When the subject matter is covered by the Labor Code, doubts which involve implementation and interpretation of labor laws should be resolved in favor of labor, even if the question involves Rules of Evidence.

Management Rights / Prerogative – except as

limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of workers

Capitol Medical Center, Inc. v. Meris (16 September 2005)

As long as the company’s exercise of the same is exercised in good faith for the advancement of the employer’s interest, and not for the purpose of defeating or circumventing the rights of the employees under special laws or valid agreements, the courts will uphold them.

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Philippine Blooming Mills Employees Association v. Philippine Blooming Mills, GR No. L-31195, 05 June 1973

The primacy of human rights – freedom of expression, of peaceful assembly and of petition for redress of grievances over property rights has been sustained.

PAL v. NLRC, GR No. 85985 (1993)

The exercise of management prerogatives is not unlimited. A line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of employees. In treating the latter, management should see to it that its employees are at least properly informed of its decisions and modes of action.

Art. 5. Rules and regulations

Department of Labor and Employment (DOLE)

Lead agency in enforcing labor laws and it possesses rule-making power in the enforcement of the Code

But a rule or regulation that exceeds the Department’s rule-making authority is void. Art. 6. Applicability of Labor Code

Applies alike to all workers, except as otherwise provided by law, whether agricultural or non-agricultural.

Applies to a government corporation incorporated under the Corporation Code

II. EMPLOYER –EMPLOYEE RELATIONSHIP (EER)

A. ELEMENTS OF RELATIONSHIP

Jurisprudential Tests to Determine Existence of EER:

A. The employer has the ability (need not be actual) to exercise control over the following: 1. Payment of Wages

 payment of compensation by way of commission does not militate against the conclusion EER exists. Under Art. 97 of the Labor Code, "wage" shall mean "however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, price or commission basis…"

(Insular Life Assurance Co., Ltd. V. NLRC, GR No.119930, 12 March 1998)

 Wages are defined as 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, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered, and included the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. [Ruga v. NLRC,

181 SCRA 266 (1990)]

2. Hiring – employment relation arises from contract of hire, express or implied [Ruga v.

NLRC, 181 SCRA 266 (1990)]

 Selection and engagement of the workers rests with the employers

 Not a conclusive test since it can be avoided by the use of subcontracting agreements or other contracts other than employment contracts

3. Firing – disciplinary power exercised by employer over the worker and the corresponding sanction imposed in case of violation of any of its rules and regulations

4. Control, not only over the end product / RESULT of the work, but more importantly, control over the MEANS through which the work is accomplished. (most essential element; without

it, there is no EER)

B. Economic Relations Test – a subordinate /

alternative test. Existing economic conditions between the parties are used to determine whether EER exists.

1. payment of PAG-IBIG Fund contributions

2. payment / remittance of contributions to the State Insurance Fund

3. deduction of withholding tax

4. deduction / remittance of SSS contributions Insular Life Assurance Co., Ltd. v. NLRC, GR No. 119930, 12 March 1998

The employment status of a person is defined and prescribed by law and not by what the parties say it should be.

Algon Engineering Construction Corp. v. NLRC, GR No. 83402, 06 October 1997

No particular evidence is required to prove the existence of an EER. All that is necessary is to show that the employer is capable of exercising control over the employee. In labor disputes, it suffices that

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there be a causal connection between the claim asserted and the EER. Control of the employee's conduct is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Aurora Land Projects Corp. v. NLRC, GR No. 114733, 02 January 1997

Whenever the existence of EER is in dispute, four elements constitute the reliable yardstick (four-fold test); (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee's conduct. It is the so-called "control test," and that is whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished, which constitute the most important index of the existence of the employer-employee relationship Stated otherwise, an EER exists where the person for whom the services are performed reserves the right to control no only the end to be achieved but also the means to be used in reaching such end.

Filipinas Broadcasting Network, Inc. v. NLRC, GR No. 118892, 11 March 1998

There could be no EER where "the element of control is absent; where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work; and in turn is compensated according to the result of his efforts and not the amount thereof, we should not find that the relationship of employer-employee exists."

Dy Keh Beng v. International Labor, GR No. L-32245, 25 May 1979

It should be borne in mind that the control test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right.

AFP Mutual Benefit Association v. NLRC, GR No. 102199, 28 January 1997

However, not all that glitters is control. The fact that private respondent was required to solicit business exclusively for petitioner could hardly be considered as control in labor jurisprudence. Under Memo Circulars No. 2-81 and 2-85 issued by the Insurance Commissioner, insurance agents are barred from serving more than one insurance company, in order to protect the public and to enable insurance companies to exercise exclusive supervision over their agents in their solicitation work.

Thus, the exclusivity restriction clearly springs from a regulation issued by the Insurance Commission, and not from an intention by petitioner to establish control over the method and manner by which private respondent shall accomplish his work. This feature is not meant to change the nature of the relationship between the parties, nor does it necessarily imbue such relationship with the quality of control envisioned by the law.

So too, the fact that private respondent was bound by company policies, memo/circulars, rules and regulations issued from time to time is also not indicative of control. With regard to the territorial assignments given to sales agents, this too cannot be held as indicative of the exercise of control over an employee. Further, not every form of control that a party reserves to himself over the conduct of the other party in relation to the services being rendered may be accorded the effect of establishing an employer-employee relationship.

Ruga v. NLRC, 181 SCRA 266 (1990)

The employer-employee relationship between the crew members and the owners of the fishing vessels engaged in deep-sea fishing is merely suspended during the time the vessels are drydocked or undergoing repairs or being loaded with the necessary provisions for the next fishing trip. The said ruling is premised on the principle that all these activities i.e., drydock, repairs, loading of necessary provisions, form part of the regular operation of the company fishing business.

B. INDEPENDENT CONTRACTORS AND LABOR-ONLY CONTRACTORS

Independent Contractors

Labor – Only Contractors

has sufficient substantial capital OR investment in machinery, tools or equipment directly or intended to be related to the job contracted

has NO substantial capital OR investment in the form of machinery, tools or equipment

carries an independent business different from the employer’s

has no independent business

undertakes to perform the job under its own account and

responsibility, FREE from the principal’s control

performs activities directly related to the main business of the principal

NO EER except when the contractor or

subcontractor fails to pay the employees’ wages.

Principal treated as direct employer of the person recruited in all instances (contractor is deemed

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agent of the principal) LIMITED liability

(principal solidarily liable with contractor or subcontractor only when latter fails to comply with requirements as to unpaid wages and other labor standards

violations.

Principal’s liability extends to all rights, duties and liabilities under labor standard laws including the right to self-organization

PERMISSIBLE PROHIBITED

Contracting or subcontracting – an arrangement

whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal

Contractor or subcontractor – any person or entity

engaged in a legitimate contracting or subcontracting arrangement

Contractual employee – one employed by a

contractor or subcontractor to perform or complete a job, work or service pursuant to an arrangement between the latter and a principal

Principal – any employer who puts out or farms out a

job, service or work to a contractor or subcontractor

Permissible Job Contracting; Conditions

a. The contractor carries on an independent business;

b. Undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and

c. The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business.

Labor-only Contracting – an arrangement where

the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present:

1. The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed

2. The employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or

3. The contractor does not exercise the right to control over the performance of the work of the contractual employee.

Substantial capital or investment – capital stocks

and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out.

Right to Control – right reserved to the person for

whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end.

The test to determine whether one is a job or labor-only contractor is to look into the elements of a job contractor. If ALL elements of a job contractor are present, then he is a job contractor. Otherwise, he is a labor-only contractor. Absent one of the elements for being a job contractor, the person is a labor-only contractor.

On the other hand, not all requisites of a labor-only contractor need to be present. As long as any one of the elements is present, then the person is a labor-only contractor.

Posting of Bond – an employer or indirect employer

may require the contractor or subcontractor to furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due the employees should the contractor or subcontractor, as the case may be, fail to pay the same

Civil liability of employer and contractors – Every

employer or indirect employer shall be jointly and severally liable with his contractor or sub-contractor for the unpaid wages of the employees of the latter. Such employer or indirect employer may require the contractor or sub-contractor to furnish a bond equal to the cost of labor under contract on condition that the bond will answer for the wages due the employees should the contractor or subcontractor, as the case may be, fail to pay the same

Liability of the principal to the employee in cases of illegal dismissal

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1. Joint and several with the employer, but with the right to reimbursement from the employer-contractor

2. Wage differentials only to the extent where the employee performed the work under the principal.

3. Separation pay and backwages, only when the principal has some relation to the termination (such as when he conspired to terminate)

(Rosewood Processing Inc. v. NLRC, GR Nos. 116476-84, 21 May 1998)

NOTE: this ruling is an obiter and made an

unjustified interpretation of Art. 109 of the Labor Code. Art. 109 makes the principal liable in illegal dismissal WON there was fault on his part.

Prohibited Acts (DO 18-02):

a. Contracting out of a job, work or service when not done in good faith and not justified by the exigencies of the business and the same results in the termination of regular employees and reduction of work hours or reduction or splitting of the bargaining unit

b. Contracting out of work with a "cabo" as defined in Section 1 (ii), Rule I, Book V of these Rules.

"Cabo" refers to a person or group of persons or

to a labor group which, in the guise of a labor organization, supplies workers to an employer, with or without any monetary or other consideration whether in the capacity of an agent of the employer or as an ostensible independent contractor

c. Taking undue advantage of the economic situation or lack of bargaining strength of the contractual employee, or undermining his security of tenure or basic rights, or circumventing the provisions of regular employment, in any of the following instances:

i. In addition to his assigned functions, requiring the contractual employee to perform functions which are currently being performed by the regular employees of the principal or of the contractor or subcontractor;

ii. Requiring him to sign, as a precondition to employment or continued employment, an antedated resignation letter; a blank payroll; a waiver of labor standards including minimum wages and social or welfare benefits; or a quitclaim releasing the principal, contractor or subcontractor from any liability as to payment of future claims; and

iii. Requiring him to sign a contract fixing the period of employment to a term shorter than the term of the contract between the principal and the contractor or subcontractor, unless the latter contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement

d. Contracting out of a job, work or service through an in-house agency which refers to a contractor or subcontractor engaged in the supply of labor which is owned, managed or controlled by the principal and which operates solely for the principal

e. Contracting out of a job, work or service directly related to the business or operation of the principal by reason of a strike or lockout whether actual or imminent

f. Contracting out of a job, work or service being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self organization as provided in Art. 248 (c) of the Labor Code, as amended

Existence of EER – The contractor or subcontractor

shall be considered the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation.

The principal, however, shall be solidarily liable with the contractor in the event of any violation of any provision of the Labor Code, including the failure to pay wages.

The principal shall be deemed the employer of the contractual employee in any of the following cases as declared by a competent authority: a. where there is labor-only contracting; or b. where the contracting arrangement falls

within the prohibited acts

Registration of Contractors and Subcontractors

The registration of contractors and subcontractors shall be necessary for purposes of establishing an effective labor market information and monitoring.

Failure to register shall give rise to the presumption that the contractor is engaged in labor-only contracting.

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The law does not require both substantial capital and investment in the form of tools, equipment and machineries. This is clear from the use of the conjunction “or.” If the intention was to require the contractor to prove that he has both capital and the requisite investment, then the conjunction “and” should have been used.

While these services (janitorial, security and even technical or other specific services) may be considered directly related to the principal business of the employer, nevertheless, they are not necessary in the conduct of the principal business of the employer.

Lapanday Agricultural Dev’t Corp. v. CA, GR No. 112139, 31 January 2000

It will be seen from the above provisions that the principal (petitioner) and the contractor (respondent) are jointly and severally liable to the employees for their wages. The joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance with the provisions therein including the minimum wage. The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer of the contractor's employees to secure payment of their wages should the contractor be unable to pay them. Even in the absence of an EER, the law itself establishes one between the principal and the employees of the agency for a limited purpose i.e. in order to ensure that the employees are paid the wages due them.

Several factors to consider to Determine Whether Contractor is carrying on an independent business:

1. nature and extent of work 2. skill required

3. term and duration of the relationship

4. right to assign the performance of specified pieces of work

5. control and supervision of worker

6. power of employer with hiring, firing, and payment of wages

7. control of the premises

8. duty to supply premises, tools, appliances, materials and labor

9. mode, manner, terms of payment (Vinoya v.

NLRC, GR No. 126286, 02 February 2000) C. SPECIAL CASES

1. Working scholars – no EER between students on one hand, and schools, colleges or universities on the other, where:

a. there is written agreement between them under which the former agree to work for the latter in exchange for the privilege to study free of charge

b. provided, the students are given real opportunities, including such facilities as may be reasonable and necessary to finish their chosen courses under such agreement 2. Resident physicians in training – There is EER

between resident physicians and the training hospital unless:

a. There is a training agreement between them b. The training program is duly accredited or

approved by the appropriate government agency.

III. PRE-EMPLOYMENT A. PRINCIPLES AND DEFINITIONS

JMM Promotion & Management Inc. v. CA, GR No. 120095, 05 August 1996

The POEA Rules are clear. A reading thereof readily shows that in addition to the cash and surety bonds and the escrow money, an appeal bond in an amount equivalent to the monetary award is required to perfect an appeal from a decision of the POEA. Obviously, the appeal bond is intended to further insure the payment of the monetary award in favor of the employee if it is eventually affirmed on appeal to the NLRC. Overseas recruiters are subject to more stringent requirements because of the special risks to which our workers abroad are subjected by their foreign employers, against whom there is usually no direct or effective recourse. The overseas recruiter is solidarily liable with the foreign employer. The bonds and the escrow money are intended to insure more care on the part of the local agent in its choice of the foreign principal to whom our overseas workers are to be sent. Every intendment of the law must be interpreted in favor of the working class, conformably to the mandate of the Constitution. By sustaining rather than annulling the appeal bond as a further protection to the claimant employee, this Court affirms once again its commitment to the interests of labor.

PNB v. Cabansag, GR No. 157010, 21 June 2005 Noteworthy is the fact that respondent likewise applied for and secured an Overseas Employment Certificate from the POEA through the Philippine Embassy in Singapore. The Certificate, issued on March 8, 1999, declared her a bona fide contract worker for Singapore. Under Philippine law, this

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document authorized her working status in a foreign country and entitled her to all benefits and processes under our statutes. Thus, even assuming that she was considered at the start of her employment as a “direct hire” governed by and subject to the laws, common practices and customs prevailing in Singapore she subsequently became a contract worker or an OFW who was covered by Philippine labor laws and policies upon certification by the POEA. At the time her employment was illegally terminated, she already possessed the POEA employment Certificate. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to 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.

B. RECRUITMENT AND PLACEMENT 1. Definition: Illegal Recruitment; Prohibited Acts Recruitment and Placement – any act of (CETCHUP) canvassing, enlisting, transporting,

contracting, hiring, utilizing or procuring workers and includes (CRAP) includes contract services, referrals, advertising for employment, promising for employment locally or abroad, whether for profit or not: Provided, That any person or entity which, in any manner, offers or promises for a fee, employment to two or more persons shall be deemed engaged in recruitment and placement

Prohibited Practices

1. To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay 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 this Code

4. To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is designed to

liberate the worker from oppressive terms and conditions of employment

5. To influence or to attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency 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 obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized representatives

8. To fail to file 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 9. To substitute or alter employment contracts

approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor

10. 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 a travel agency

11. To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under this Code and its implementing rules and regulations

12. Failure to actually deploy without valid reason as determined by DOLE

13. 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

Art. 38. Illegal recruitment

Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by licensees or non-holders of authority, shall be deemed illegal and punishable under Article 39 of this Code. The Department of Labor and Employment or any law enforcement officer may initiate complaints. People v. Panis, 142 SCRA 664 (1986)

The number of persons dealt with is not the basis in determining WON an act constitutes recruitment and placement. Any of the acts mentioned in Article 13 (b) will constitute recruitment and placement even if only one prospective worker is involved. In that case, a license or authority from POEA is needed.

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The proviso about “two or more persons” merely lays down a rule of evidence: where fee is collected because of a promise or offer of employment to two or more prospective workers, the individual or entity dealing with them shall be deemed to be engaged in the act of recruitment and placement. The words “shall be deemed” create that presumption.

Labor Code

RA 8042 – Overseas Filipinos and Overseas

Migrant Workers Act

local recruitment and employment

applies to recruitment for overseas employment Illegal Recruitment (Art. 38): Any recruitment activity including Prohibited Acts under Art. 34 committed by licensees or non-holders of authority. Elements:

1. That 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. That the offender

undertakes either any activity within the meaning of recruitment and placement defined under Article 13(b), or any prohibited practices enumerated under Article 34.

Illegal Recruitment (Sec. 6):

Any recruitment activity committed by non-licensees / non-holders of authority; OR Prohibited Acts (same

as Art. 34 of LC) committed by any person, whether a non-licensee, non-holder, licensee or holder of authority.

Added the following in the list of Prohibited Acts:

1. fail to actually deploy without valid reason; 2. fail to

reimburse expenses incurred by the worker in connection with his/her documentation and processing for purposes of

deployment, in cases where the deployment does not actually take place without the workers fault.

To prove illegal recruitment, it must be shown that the accused gave the distinct impression that he had the power or ability to send complainants abroad for work such that the latter were convinced to part with their money in order to be deployed.

A person is guilty of illegal recruitment when he gives the impression that he has the power to send workers abroad.

Illegal recruitment involving economic sabotage

1. By a syndicate – carried out by a group of 3 or

more persons confederating with one another 2. In large scale – committed against 3 or more

persons individually or as a group

People v. Fernandez, et. al., 07 March 2002

These categories are separate or independent categories. If there is only one complainant in several complaints, there is no illegal recruitment in large. But where there are three conspiring recruiters, there is illegal recruitment by a syndicate.

Non-licensee / Non-Holder of authority – any

person, corporation or entity which has not been issued a valid license or authority to engage in recruitment and placement by the Secretary of Labor, or whose license or authority has been suspended, revoked or cancelled by the POEA or the Secretary

Who are liable:

Principals, accomplices, and accessories

For juridical persons, the officers having control, management or direction of their business shall be liable.

Where illegal recruitment is proved but the elements of “large scale” or “syndicate” are absent, the accused can be convicted only of “simple illegal recruitment”. (People v. Sagun, GR

No. 110554, 19 February 1999)

Illegal recruitment (IR) involving Economic Sabotage (Art. 38 (b) Labor Code & Sec. 10 RA 8042):

1. IR committed by syndicate – carried out by a group of 3 or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme falling under illegal recruitment

2. IR committed in large scale - committed against 3 or more persons individually or as a group

Estafa – a person convicted for illegal recruitment

under Labor Code can be convicted for violation of the Revised Penal Code provisions on estafa provided the elements of the crime are present.

Art. 39 (c) of Labor Code unconstitutional

Only a Judge may issue warrants of search and arrest. The labor authorities must go through the judicial process.

Venue – filed with the RTC of the province or city,

Where offense committed; OR

Where offended party actually resides at the time of the commission of the offense

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are needed to see this picture. Prescriptive Periods:

Simple IR – within 5 years from time IR happened

Economic Sabotage – within 20 years from time IR happened

People v. Diaz, 259 SCRA 441 (1996)

The acts of the appellant, which were clearly described in the lucid testimonies of the three victims, such as collecting from each of the complainants payment for passport, medical tests, placement fee, plane tickets and other sundry expenses, promising them employment abroad, contracting and advertising for employment, unquestionably constitute acts of large scale illegal recruitment.

Aquino v. CA, 204 SCRA 240 (1991)

Receipt of payments, after the expiration of the license, for services rendered before said expiration does not constitute illegal recruitment. Recruitment refers to the offering of inducements to qualified personnel to enter a particular job or employment. The advertising, the promise of future employment and other come-ons took place while Ms. Aquino was still licensed. True, the payments for services rendered are necessary consequences of the applications for overseas employment. However, it is asking too much to expect a licensed agency to absolutely at the stroke of midnight stop all transactions on the day its license expires and refuse to accept carry-over payments after the agency is closed. In any business, there has to be a winding-up after it ceases operations. The collection of unpaid accounts should not be the basis of a criminal prosecution.

The prosecution is based on the date of the prohibited activity, not on the payments being illegal exactions even if effected during the correct period. The payments are necessary in order to defray the expenses entailed in any overseas contract of employment. They are intended for administrative and business expenses and for the travelling expenses of the applicants once cleared for overseas travel.

People v. Senoron, 267 SCRA 278 (1997)

According to the Labor Code, it is not the issuance or signing of receipts for the placement fees that makes a case for illegal recruitment, but rather the undertaking of recruitment activities without the necessary license or authority. Absent any other participation in the IR activities, mere receiving of placement fees or signing of receipt do not constitute IR.

Darvin v. CA, 292 SCRA 534 (1998)

By themselves, procuring a passport, airline tickets and foreign visa for another individual, without more, can hardly qualify as recruitment activities. IR must be proved beyond reasonable doubt.

2. Regulation of Recruitment and Placement Activities

Entities authorized to engage in recruitment and placement

a. public employment offices

b. Philippine Overseas Employment Administration (POEA)

c. private recruitment entities d. private employment agencies

e. shipping or manning agents or representatives f. such other persons or entities as may be

authorized by the DOLE Secretary g. construction contractors

Is direct-hiring of OFWs allowed? Why?

No. Employers cannot directly hire workers for overseas employment except through authorized entities see (enumeration above).

The reason for the ban is to ensure full regulation of employment in order to avoid exploitation.

Fees to be Paid by Workers:

No worker shall be charged with any fee until employee: (1) obtained work through recruiter’s efforts; and (2) worker has actually commenced working.

Placement fee in an amount equivalent to one month’s salary of the worker and documentation costs are the ONLY AUTHORIZED PAYMENTS that may be collected from a hired worker.

Eastern Assurance and Surety Corp. v. Secretary of Labor, 181 SCRA 110 (1990)

POEA has the power to order refund of illegally collected fees. Implicit in its power to regulate the recruitment and placement activities of all agencies is the award of appropriate relief to the victims of the offenses committed by the respondent agency or contractor. Such relief includes the refund or reimbursement of such fees as may have been fraudulently or otherwise illegally collected, or such money, goods or services imposed and accepted in excess of what is licitly prescribed.

Nature of the liability of local recruitment agency and foreign principal

1. Local Agency is solidarily liable with foreign principal.

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2. Severance of relations between local agent and foreign principal does not affect liability of local recruiter.

Joint and solidary liability of recruiter with Foreign Principal

A recruitment agency is solidarily liable for the unpaid salaries of a worker it recruited for employment overseas.

Even if the recruiter and the principal had already severed their agency agreement at the time employee was injured, the recruiter may still be sued for a violation of the employment contract because no notice of the agency agreement's termination was given to the employee.

Catan v. NLRC, 160 SCRA 691 (1988)

This must be so, because the obligations covenanted in the recruitment agreement entered into by and between the local agent and its foreign principal are not coterminous with the term of such agreement so that if either or both of the parties decide to end the agreement, the responsibilities of such parties towards the contracted employees under the agreement do not at all end, but the same extends up to and until the expiration of the employment contracts of the employees recruited and employed pursuant to the said recruitment agreement. Otherwise, this will render nugatory the very purpose for which the law governing the employment of workers for foreign jobs abroad was enacted.

Posting of cash bond by recruiter

Capricorn Travel & Tours v. CA, 184 SCRA 123 (1990)

The requirement for the posting of a cash bond is also an indispensable adjunct to the requirement that the agency undertakes to assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the contract of overseas employment and to guarantee compliance with existing labor and social legislation of the Philippines and the country of employment. The undertaking to assume joint and solidary liability and to guarantee compliance with labor laws, and the consequent posting of cash and surety bonds, may be traced all the way back to the constitutional mandate for the State to "afford full protection to labor, local and overseas." The peculiar nature of overseas employment makes it very difficult for the Filipino overseas worker to effectively go after his foreign employer for employment-related claims and, hence, public policy dictates that, to afford overseas workers

protection from unscrupulous employers, the recruitment or placement agency in the Philippines be made to share in the employer's responsibility. Stronghold Insurance Co. v. CA, 205 SCRA 605 (1992)

The surety bond required of recruitment agencies is intended for the protection of our citizens who are engaged for overseas employment by foreign companies. The purpose is to insure that if the rights of these overseas workers are violated by their employers, recourse would still be available to them against the local companies that recruited them for the foreign principal. The foreign principal is outside the jurisdiction of our courts and would probably have no properties in this country against which an adverse judgment can be enforced. This difficulty is corrected by the bond, which can be proceeded against to satisfy that judgment.

Liability of surety

In a surety bond, the surety unequivocally bound itself to answer for all liabilities which the POEA may adjudge or impose against the principal in connection with the recruitment of Filipino seamen

Stronghold Insurance Co. v. CA, 205 SCRA 605 (1992)

The surety agreed to answer for whatever decision might be rendered against the principal, whether or not the surety was impleaded in the complaint and had the opportunity to defend itself. There is nothing in the stipulation calling for a direct judgment against the surety as a co-defendant in an action against the principal.

Power to suspend or cancel any license or authority to recruit employees for overseas employment is concurrently vested with the POEA and the Secretary of Labor.

The penalties of suspension and cancellation of license or authority are prescribed for violations of the above quoted provisions, among others. And the Secretary of Labor has the power under Section 35 of the law to apply these sanctions, as well as the authority, conferred by Section 36, not only to 'restrict and regulate the recruitment and placement activities of all agencies,' but also to 'promulgate rules and regulations to carry out the objectives and implement the provisions' governing said activities. Pursuant to this rule-making power thus granted, the Secretary of Labor gave the POEA on its own initiative or upon filing of a complaint or report or upon request for investigation by any aggrieved

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person, (authority to) conduct the necessary proceedings for the suspension or cancellation of the license or authority of any agency or entity' for certain enumerated offenses including

1. the imposition or acceptance, directly or indirectly, of any amount of money, goods or services, or any fee or bond in excess of what is prescribed by the Administration 2. any other violation of pertinent provisions of

the Labor Code and other relevant laws, rules and regulations.

The Administrator was also given the power to 'order the dismissal of the case or the suspension of the license or authority of the respondent agency or contractor or recommend to the Minister (now Secretary) the cancellation thereof.

3. Contracts

Freedom to Stipulate

Vir-Jen Shipping v. NLRC, 115 SCRA 347 (1992); 125 SCRA 577 (1983)

The form contracts approved by the National Seamen Board [now POEA] are designed to protect Filipino seamen not foreign shipowners who can take care of themselves. The standard forms embody the basic minimums which must be incorporated as parts of the employment contract. They are not collective bargaining agreements or illimitable contracts which the parties cannot improve upon or modify in the course of the agreed period of time.

Terms and conditions and other benefits not provided by the minimum requirements are valid if the whole employment package is more beneficial to the worker than the minimum. But the stipulations should not contradict law, public policy and morals.

Minimum Provisions for Contract

1. Guaranteed wages, for regular working hours and overtime pay for services rendered beyond regular work hours in accordance with the standards established by the Administration 2. Free transportation from point of hire to site of

employment and return

3. Free emergency medical and dental treatment and facilities

4. Just causes for the termination of the contract or of the services of the workers

5. Workmen’s compensation benefits and war hazard protection

6. Repatriation of workers remains and properties in case of death to the point of hire, or if this is not

possible under the circumstances, the proper disposition thereof, upon prior arrangement with the worker’s next-of-kin and the nearest Embassy or Consulate through the Office of the Labor Attache

7. Assistance in the remittance of worker’s salaries, allowances or allotments to his beneficiaries 8. Free and adequate lodging facilities or

compensatory food allowance at prevailing cost of living standards at the jobsite

4. Dispute Settlement

Regulatory power – DOLE Secretary shall have the

power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this Title and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of this Title.

Jurisdiction of the POEA

Original and exclusive jurisdiction to hear and decide: a. all cases, which are administrative in character,

involving or arising out of violations of rules and regulations relating to licensing and registration of recruitment and employment agencies or entities

b. disciplinary action cases and other special cases, which are administrative in character, involving employers, principals, contracting partners and Filipino migrant workers

Money Claims of OFWs

A worker dismissed from overseas employment without just, valid or authorized cause as defined by law or contract, is entitled to:

a. full reimbursement of the placement fee with interest at 12% per annum PLUS

b. his salary for unexpired portion of his employment contract OR salary for 3 months for every year of the unexpired term, WHICHEVER IS LESSER

3-months option available ONLY IF the employment contract is for at least one year. If the contract is shorter than that, the salary paid should be that for the unexpired portion.

Jurisdiction over Money Claims

Labor Arbiters have jurisdiction over all monetary claims of Overseas Filipino Workers arising from employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment, including claims for actual, moral, exemplary and other forms of damages.

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are needed to see this picture. C. EMPLOYMENT OF ALIENS

Requisites for Employment of Non-Resident Aliens

1. working permit from DOLE

2. certification that there is no available Filipino willing and competent to do the job for the employer

3. alien must train at least two Filipino understudies for such undertaking

4. FOR ENTERPRISES REGISTERED IN PREFERRED AREAS OF INVESTMENT – employment permit issued upon recommendation of government agency charged with the supervision of said registered enterprise

Exemption from Permit

1. All members of Diplomatic Services and foreign government officials accredited with the Phil. Government

2. Members of international organizations with which the Phil. Government is a cooperating member (i.e. ADB, IRRI)

3. Missionaries actually engaged in missionary work 4. All aliens granted exemption by special laws and all those whose employment in the Phil. Have been determined by the Sec. of Labor to be beneficial to national interest.

Duration of Permit

Valid for 1 year from date of issuance, unless sooner revoked by the Secretary of Labor

Renewable upon showing of good cause Non-transferable

Other Prohibitions

Aliens shall not transfer to another job or change his employer without prior approval of the secretary of labor

Non-resident alien shall not take up employment in violation of the provisions of the Code.

D. HUMAN RESOURCES & MANPOWER DEVELOPMENT 1. Government Machinery

Policy

It is the policy of the State to provide relevant, accessible, high quality and efficient technical education and skills development in support of the development of high-quality Filipino middle-level manpower responsive to and in accordance with Philippine development goals and priorities.

Power and Functions of TESDA

Responsible for formulating, continuing, coordinating, and fully integrating technical education and skills development policies, plans and programs

2. Apprenticeship and Learnership

Learners Apprentices

What Persons hired as

trainees in semi-skilled and other industrial occupations Non-apprenticeable May be learned through practical training on the job in a relatively short period of time

Shall not exceed 3 months Practical training on the job Supplemented by related theoretical instruction Covered by a written apprenticeship agreement with an individual employer or entity Needs DOLE approval Shall not exceed 6 months When may be hired No experienced workers available Prevent curtailment of employment opportunities Not to create unfair competition in labor costs and lower working standards Only in highly-technical industries Only in apprenticeable occupations List of learnable trades provided by TESDA At least 14 years old Possesses vocational aptitude and capacity for tests Ability to comprehend Ability to follow

oral and written instructions Any form of employment requiring beyond 3 mos. practical

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training on the job supplemented by related theoretical instruction No list

Requisites for a Valid Apprenticeship

1. qualifications of apprentice are met

2. the apprentice earns not less than 75% of the prescribed minimum salary

3. apprenticeship agreement duly executed and signed

4. apprenticeship program approved by the Sec. of Labor; otherwise, the apprentice shall be deemed as a regular employee

5. period of apprenticeship not exceed 6 months At the termination of the apprenticeship, the

employer is not required to continue the employment.

Employer may not pay wage if the apprenticeship is

• a requirement for graduation • required by the School

• required by the Training Program Curriculum • requisite for Board examination

Venue of Apprenticeship Programs

The plant, shop, premises of the employer or firm concerned if the apprenticeship program is organized by an individual employer or firm. The premises of one or several firms designated

for the purpose by the organizer of the program if such organizer is an association of employers, civic groups and the like.

DOLE training center or other public training institutions with which the Bureau has made appropriate arrangements.

Contents of Learnership Agreement

1. names and addresses of employer and learner 2. occupation to be learned and the duration of the

training period which shall not exceed 3 months 3. wage of the learner which shall be at least 75%

of the applicable minimum wage

4. commitment to employ the learner, if he so desires, as a regular employee upon completion of training

A learner who has worked during the first two months shall be deemed a regular employee if training is terminated by the employer before the end of the stipulated period thorough no fault of the learner.

V. WORKING CONDITIONS Coverage

Book III of the Labor Code provides the conditions or standards of employment. These standards apply only if there exists EER.

Excluded Employees

1. Government employees whether employed by the National Government or any of its political subdivisions, including those employed in GOCCs

2. Management employees. If they meet ALL of the following conditions:

i. Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof

ii. They customarily and regularly direct the work of two or more employees therein

iii. They have authority to hire or fire other employees of lower rank; or there suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight

3. Officers or members of managerial staff if they perform the following duties and responsibilities i. Primary duty consists of performance of work

directly related to management policies of employer

ii. Customarily and regularly exercise discretion and independent judgment

iii. (a) Regularly and directly assist a proprietor or a managerial employee; (b) Execute under general supervision work along specialized or technical lines requiring special training, experience or knowledge; (c) execute under general supervision special assignments and tasks; and

iv. who do not devote more than 20% of their hours worked in a workweek to activities which are not directly and closely related to the performance of work in i-iii above.

4. domestic servants and persons in the personal service of another if

i. they perform such services in the employer’s home which are usually necessary or desirable for the maintenance and enjoyment thereof, or

ii. minister to the personal comfort, convenience, or safety of the employer as well as members of the employer’s household

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5. workers paid by results, including those who are paid on piece-work, takaw, pakyaw or task basis 6. non-agricultural field personnel if they regularly

perform their duties away from the principal or branch office of place of business and whose actual hours of work in the field cannot be determined with reasonable certainty.

Managerial Employees – refer to those whose

primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff

Field Personnel – non-agricultural employees who

regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty

Mercidar Fishing Corp. v. NLRC, 297 SCRA 440 (1998)

Fishermen are not field personnel since throughout the duration of their work, they are under the effective control and supervision of the employer. Autobus Transport Systems Inc. v. Bautista, GR No. 156367, 16 May 2005)

It is of judicial notice that along the routes that are plied by bus companies, there are its inspectors assigned in strategic places, mandatory once-a-week car barn or shop day, drivers/conductors must be at a specific place at a specific time, as they generally observe prompt departure and arrival from their point of origin to their point of destination. They are under the constant supervision while in the performance of this work. Thus, drivers/conductors are not field personnel.

B. HOURS OF WORK

Work hours shall not exceed 8. Thus, part-time work, or a day’s work of less than 8 hours, not prohibited.

Work Day – 24-hr period commencing from the time

an employee regularly starts to work regardless of whether the work is broken or continuous

Calendar Day – 24-hr. period commencing at 12

midnight and ending at 11:59 p.m.

Compressed Work Week (CWW)

Resorted to by the employer to prevent serious losses due to causes beyond his control, such as when there is substantial slump in demand for his

goods and services or when there is lack of raw materials.

Instead of working 6 days a week, the employees will be regularly working for less than 6 days but each workday exceeds 8 hrs. For the hours exceeding 8 in a workday, the employees waive their OT pay because, in return, they will no longer incur transport and other expenses. Allowed on condition that it is freely agreed upon

between the employer and majority of the employees. Further, the arrangement should not diminish the employees’ monthly or daily pay or their established employment benefits.

Extended workday in CWW should not exceed 12 hrs. Work exceeding 12 hrs. in a day or 48 hrs. in a week should be considered OT.

Should the work shift revert to 8 hrs., the reversion shall not constitute a diminution of benefits.

Hours of Work of Hospital and Clinic Personnel; Coverage

1. all hospitals and clinics situated in cities or municipalities with a population of 1 million or more

2. all hospitals and clinics with a bed capacity of at least 100

Hospitals and Clinics – place devoted primarily to

maintenance and operation of facilities for the diagnosis, treatment, and care of individuals suffering from illness, disease, injury or deformity or in need of obstetrical or other medical and nursing care

Regular Working Hours and Days of Hospital and Clinic Personnel

Not more than 8 hrs. in any one day and not more than 40 hrs. in any one week

Not more than 5 days in a work week. The workweek may begin at any hour and on any day

Overtime Work of Hospital and Clinic Personnel

May be scheduled to work for more than 5 days or 40 hrs. a week, provided employee is paid for overtime work

Overtime: additional compensation of regular wage + at least 30% thereof

Considered as Compensable Hours Worked

1. All time during which an employee required to be on duty or to be at the employer’s premises or to be at a prescribed work place; and

2. All time during which an employee suffered or permitted to work.

3. Rest periods of short duration during working hours.

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are needed to see this picture. Principles in Determining Hours Worked

1. All hours are hours worked which the employee is required to give to his employer, regardless of whether or not such hours are spent in productive labor or involve physical or mental exertion 2. An employee need not leave the premises of the

workplace in order that his rest period shall not be counted, it being enough that he stops working, may rest completely and may leave his workplace

3. If the work performed was necessary or it benefited the employer, or the employee could not abandon his work at the end of his normal working hours because he had no replacement, all time spent or such work shall be considered as hours worked, if the work was with the knowledge of his employer or immediate supervisor.

4. The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be considered working time either if a. the imminence of the resumption of work

requires the employee's presence at the place of work; or

b. if the interval is too brief to be utilized effectively and gainfully in the employee's own interest.

Waiting Time

Waiting time spent by an employee shall be considered as working time if

1. waiting is an integral part of his work or 2. the employee is required or engaged by the

employer to wait.

Working while on call - an employee who is required to remain on call in the employer's premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose. Travel Time Travel From Home to Work Travel that is All in Days Work Travel Away from Home

Normal travel from home to work which is not work time Time spent by an employee in travel as part of his principal activity, like travel from jobsite to jobsite during the workday Travel that keeps an employee away from home overnight

GR: not Compensable Work time

compensable because it is a normal incident of employment Exceptions: 1. where employee made to work on an emergency call and travel is necessary in proceeding to the workplace 2. travel is done through a conveyance provided by the employer 3. travel is done under the supervision and control of the employer 4. travel is done under vexing and dangerous circumstances and counted as hours worked when it cuts across an employee’s workday because it substitutes for the hours the employee should have been in the office

Univ. of Pangasinan Faculty Union v. Univ. of Pangasinan, 127 SCRA 691 (1984)

Semestral break of teachers is compensable hours worked for it is a form of interruption beyond their control. Applies only for regular full-time teachers.

Rada v. NLRC, 205 SCRA 69 (1992)

The fact that he picks up employees at certain specified points in EDSA in going to the project site and drops them off at the same time on his way back from the field office going home to Marikina is not merely incidental to petitioner’s job as a driver.

Said transportation arrangement had been adopted not so much for the convenience of the employees, but primarily for the benefit of the employer. Since the assigned task of fetching and delivering employees is indispensable and consequently mandatory, then the time required of and used by petitioner in going from his residence to the field office and back should be paid as overtime work.

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 NOT considered working time if ALL the following conditions are met:

1. Attendance is outside of the employee's regular working hours

2. Attendance is in fact voluntary 3. The employee does not perform any

productive work during such attendance.

Meal and Rest Periods

GR: not less than 1 hour time-off for regular meals –

non-compensable

Except: meal period of not less than 20 mins. in the

following cases – compensable hours worked:

1. Where the work is non-manual work in nature or does not involve strenuous physical exertion 2. Where the establishment regularly operates not

less than 16 hours a day

3. In case of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or installations to avoid serious loss which the employer would otherwise suffer

4. Where the work is necessary to prevent serious loss of perishable goods

 Rest periods or coffee breaks – running from 5 to 20 mins. considered as compensable working time.

To shorten meal time to less than 20 mins, is not allowed. If the so-called “meal time” is less than 20 mins., it becomes only a rest period.

Sime Darby Pilipinas v. NLRC, 289 SCRA 86 (1998)

The employer may change the meal break from 30 mins. fully paid to 60 mins. without pay.

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. Since the employees are no longer required to work during this 1-hour lunch break, there is no more need for them to be compensated for this period.

Overtime Pay (OT) – work exceeding eight hours

within the worker’s 24-hour workday. Work within the E’ee’s shift is not overtime.

OT on a Regular Day: regular wage + at least 25% thereof

OT on a Holiday/E’ee’s Rest Day: rate of 1st

8 hrs. on holiday/rest day + at least 30% thereof. Since the OT work is considered hourly, the pay

rate is computed also on per hour basis. The

daily wage is divided by 8 to get the hourly base rate.

If employee is paid on a monthly salary basis, the daily rate is obtained by the following formula: Daily Rate = monthly salary x 12_____

Total no of days considered paid in a year

Permissible for the employer to stipulate that the employee’s monthly salary constitutes payment for all the days of the month, including rest days and holidays, where the employee’s monthly salary, when converted by the increased divisor into its daily equivalent, would still meet minimum wage.

Regular Wage – includes the cash wage only,

without deduction on account of facilities provided by the employer

Conditions to be entitled to OT pay

1. Actual rendition of OT work

2. Submission of sufficient proof that said work was actually performed

3. OT work is with the knowledge and consent of the employer

Compulsory OT Work (provided employee paid the additional compensation required)

1. Country at war/National or Local Emergency 2. Completion of work started before the 8th hour

and is necessary to prevent serious obstruction or prejudice to the business

3. Urgent work to be performed on Machines to avoid serious loss or damage to employer

4. Necessary to Prevent loss of life/property or Imminent danger to public safety

5. Necessary to prevent loss or damage to perishable goods

6. Necessary to avail of favorable weather or environmental condition

Undertime NOT Offset by OT – an employee’s

regular pay rate is lower than the OT rate. Offsetting the undertime hours against the OT hours would result in undue deprivation of the employee’s extra pay for OT work.

Right to OT pay cannot be waived. But when the alleged waiver of OT pay is in consideration of benefits and privileges which may even exceed the OT pay, the waiver may be permitted.