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Frequently Asked Questions (FAQs) on Philippine Labor and Employment We present below a listing of questions that are commonly asked by potential investors about the labor and employment laws applicable to Philippine business. I. Management vis-à-vis Labor Rights: Q: In case of doubt, how and in whose favor are provisions of the Philippine Labor Code interpreted? A: According to Article 4 of the Philippine Labor Code, all doubts in the implementation and interpretation of its provisions, including its implementing rules and regulations, shall be resolved in favor of labor. However, it should not be presumed that every labor dispute will be decided in favor of labor. Management has rights recognized by law and jurisprudence as well. The age-old rule remains that justice is for the deserving, to be dispensed in the light of the facts and the applicable law or doctrine. Q: What rights are customarily afforded to Management? A: Apart from those rights granted under Article III of the Philippine Constitution, Management is generally afforded so-called management prerogatives. The Philippine Supreme Court has ruled: “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, layoff of workers and the discipline, dismissal and recall of workers.” ¹ However, it should be noted that the right to manage is not absolute as it is governed by laws, contracts, as well as the basic principles of equity and fair play. II. Jurisdiction over money claims arising from employer-employee relations: Q: Which government body or agency has jurisdiction over simple money claims arising from employer-employee relations? A: The Regional Director of the Department of Labor and Employment (DOLE), or any of the duly authorized hearing officers of the Department, is empowered to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an employee, provided, (a) the complaint does not include a claim for reinstatement; (b) the aggregate money claims do not exceed Five Thousand Pesos (P5,000). Any decision or resolution of the Regional Director or hearing officer may be appealed to the National Labor Relations Commission (NLRC). Q: Which government body or agency has jurisdiction over money claims arising from employer-employee relations exceeding Five Thousand Pesos (P5,000)? A: The Labor Arbiters of the National Labor Relations Commission have the original and exclusive jurisdiction to hear and decide money claims arising from employer-employee relations exceeding Five Thousand Pesos (P5,000), including, unfair labor practice cases, termination disputes, cases involving wages, rates of pay, hours of work and other terms and conditions of employment with claim for reinstatement, claims for damages arising from the employer-employee relations, questions involving the legality of strikes and lockouts, and, all other claims arising from employer-employee relations, including those of persons in domestic or household service involving an amount exceeding five thousand pesos (P5,000), whether or not accompanied with a claim for reinstatement. The National Labor Relations Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. III. Employment of Non-Resident Aliens: Q: What is required to employ or be employed as a non-resident alien? A: According to Article 40 of the Philippine Labor Code, any alien seeking admission to the Philippines for employment purposes and any employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the DOLE. This is apart from the pre-arranged employment visa that is required by the Bureau of Immigration. Q: On what basis shall the DOLE issue an Alien Employment Permit (AEP)? A: An AEP may be issued to a non-resident alien or to the applicant employer after a determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of the application to perform the services for which the alien is desired. For an enterprise registered in preferred areas of investments, said employment permit may be issued upon recommendation of the government agency charged with the supervision of said registered enterprise. Q: What restriction comes with the issuance of an AEP? A: After the issuance of an AEP, the alien shall not transfer to another job or change his employer without prior approval of the Secretary of Labor. Any violation of this provision shall be punished with a fine of not less than One Thousand Pesos (P1,000.00) nor more than Ten Thousand Pesos (P10,000.00) or imprisonment of not less than three months nor more than three years, or both such fine and imprisonment at the discretion of the court.² In addition, the alien worker shall be subject to deportation after service of his sentence. IV. Conditions of Employment: Q: What are normal hours of work? A: According to Article 83 of the Philippine Labor Code, normal hours of work of any employee shall not exceed eight (8) in a day. Part-time work does not exceed eight (8) hours a day, hence, it is not violative of Article 83. Q: What are compensable hours worked? A: Article 83 of the Philippine Labor Code requires compensation for (a) all time during which an employee is required to be on duty or to be at a prescribed workplace, and (b) all time during which an employee is suffered or permitted to work. Rest periods of short duration during working hours shall be counted as hours worked. On the other hand, according to Article 85, it shall be the duty of every employer to give his employees not less than sixty minutes time-off for their regular meals, which shall not be compensable. If the meal break is less than 60 minutes because a portion thereof is devoted to work, a meal period of 60 minutes should be paid. Q: What premium is given to employees for each hour of work performed between ten o'clock in the evening and six o'clock in the morning? A: Article 86 of the Philippine Labor Code provides for a night shift differential of no less than ten percent of his regular wage for each hour of work performed between ten o'clock in the evening and six o'clock in the morning. Q: How is overtime work compensated? A: Article 87 of the Philippine Labor Code compensates work performed beyond eight hours (overtime work) with an additional compensation equivalent to his regular wage plus at least twenty-five percent thereof. According to Article 88, undertime work on any particular day shall not be offset by overtime work on any other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation for overtime work. Q: How is work performed beyond eight (8) hours on a holiday or rest day compensated? A: Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate for the first eight hours on a holiday or rest day plus at least thirty percent thereof. Q: What is the statutory rest day? A: Article 91 of the Philippine Labor Code requires every employer to provide each of his employees a rest period of not less than twenty-four consecutive hours after every six consecutive normal work days. The employer shall determine and schedule the weekly rest day of his employees, subject to collective agreement, and shall respect the preference of employees as to their weekly rest day when such preference is based on religious grounds. Q: How is work performed on a rest day, Sunday or Holiday compensated? A: According to Article 91 of the Philippine Labor Code, where an employee is made or permitted to work on his scheduled rest day, he shall be paid an additional compensation of at least thirty percent of his regular wage. An employee shall be entitled to such additional compensation for work performed on Sunday only when it is his established rest day. Work performed on any legal holiday shall be paid an additional compensation of at least thirty percent of the regular wage of the employee. Where such holiday work falls on the employee's scheduled rest day, he shall be entitled to an additional compensation of at least fifty percent of his regular wage. Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a higher premium pay than that prescribed under this Article, the employer shall pay such higher rate. Q: What is Holiday Pay? A: Article 94 of the Philippine Labor Code requires every worker to be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten workers. An employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate. Q: What are the regular holidays? A: According to Executive Order No. 203, the following are regular holidays: New Year’s Day - January 1 Maundy Thursday - Movable date Good Friday - Movable date Araw ng Kagitingan - April 9 (Bataan and Corregidor Day) Labor Day - May 1 Independence Day - June 12 National Heroes Day - Last Sunday of August Bonifacio Day - November 30 Christmas Day - December 25 Rizal Day - December 30 The following are Nationwide Special days: |