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of the Philippines Cebu, Inc.

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Labor Relations

Arlene I. Mante Trustee-In-Charge Arlene I. Mante Metro Retail Stores Group, Inc.
Atty. Jefferson Marquez Chairperson Atty. Jefferson Marquez ACCRA Law Offices
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MEMBERS: 

  1. Jojo Cinco
  2. Rosario Canillo

 

COMMITTEE OBJECTIVE(s):

  1. To provide venue for education, consultation and legal advice to PMAP members on matters pertaining to labor laws
  2. To maintain an active link with the Department of Labor & Employment where we can provide inputs for any labor policy reforms

 

Labor Bulletin

September 2017

Issue No. 7: DOLE D.O. No. 178, S.2017: Gender Equality on Occupational Safety & Health Matters


On September 9, 2017, the Department of Labor and Employment (“DOLE”) published D.O. No. 178, dated 25 August 2017, otherwise known as “Safety & Health Measures for Workers Who By the Nature of Their Work Have to Stand”. This issuance will cover retail and/or service employees, assembly line workers, teachers and security personnel and others, who by nature of their work, have to stand for long periods at work, or are frequently required to walk.

Quite notably, this latest DOLE Order does not refer to women workers alone. It is gender sensitive enough to include any employee and worker regardless of his/her sex, thereby, providing gender equality, so to speak. It is totally unlike the 1974 Labor Code provision whose scope is limited and which applies only to employment of WOMEN, thus: “provide seats proper for WOMEN and permit them to use such seats when they are free from work and during working hours, provided they can perform their duties in this position without detriment to efficiency.”

And what are some of these DOLE prescribed safety and health measures? For those which require their employees and workers to wear high-heeled female shoes and/or whose nature of work, requires standing for long periods, or frequent walking, they have to provide rest periods to break or cut the time spent on standing or walking, or perhaps, implement the use of footwear either flat or with low heels that must be wide-based or wedge type and no higher than one (1) inch to make standing or walking comfortable. In particular, where walking is frequent, these employers and establishments can install flooring or mats made of, say, rubber or wood in order to mitigate the impact and prevent fatigue. On the other hand, where standing is required for long hours, such security personnel, assembly line workers or sales ladies, they can provide tables or work surfaces with adjustable heights to allow these workers to alternately sit and stand while performing their tasks. Another measure may include providing accessible seats to these workers such as small foldable stools which can easily be stowed away so as not to hamper the work area. These workers may use these foldable stools during rest periods, or even during working hours, provided the employees can perform their duties in this position without detriment to efficiency.

The DOLE believes that standing at work for long periods, especially wearing high-heeled female shoes or frequent walking, causes considerable strain on the lower limbs; aching muscles; hazardous pressure on hip, knee and ankle joints; and sore feet. Thus, the need for appropriate control measures to address the risk to safety and health of workers. This Order requires all employers and establishments, to notify its respective DOLE regional offices not later than October 24, 2017 of its compliance with the DOLE prescribed safety and health measures. No one should ignore this Order; otherwise, the DOLE can visit the employer and establishment concerned in the exercise of its visitorial and enforcement powers. This power includes the authority of the DOLE to order stoppage of work or suspension of operations of any unit or department of such establishment when non-compliance therewith, poses grave and imminent danger to the health and safety of workers in the workplace.

(If you have any question, please feel free to contact Ms. Pinky Mante/Trustee-In-Charge, Atty. Jeff Marquez & Mr. Jojo Cinco, Chair & Co-Chair, respectively, 2017 LabRel Committee)

Past Issues

Issue No. Date Title
1 July 2016 Employee’s Resignation and Quitclaim Read
July 2016

Issue No. 1: Employee’s Resignation and Quitclaim


It is common for an employee to resign from his job, and later sue his employer before the arbitration branch of the NLRC and claim he was forced to do so. In such case, the employer is faced with an illegal dismissal case. The employee says he was forced to resign, while the employer says otherwise, on the other hand.

The question is, who has the burden to prove that the resignation was valid, and who has the burden to prove that it was not?

The basic rule of evidence is that he who claims, and not he who denies, has the burden of proof. Seemingly, it is the employee who claims he was forced to resign who has the burden to prove if the employer denies the same. However, if the employer claims in his defense that the employee voluntarily resigned, it is the employer who has the burden to prove that the resignation was voluntarily made. This may be cumbersome on the part of the employer. For how can he prove that the employee was not forced to resign and that he did it voluntarily?

One practice is for the employer to require the signing of a quitclaim when an employee resigns and more importantly, to have such quitclaim notarized before a notary public. By having it notarized, the quitclaim becomes a public document which cannot be impugned by mere self-serving allegations. The notarized quitclaim will enjoy the presumption of regularity, which will in effect, shift the burden to the employee to prove that he was forced to resign. Now in the absence of clear proof that the resignation was accompanied with force, coercion, threat or intimidation, the employee shall be considered to have resigned voluntarily.

(If you have any question, please feel free to contact Ms. Jen Macairan /Ms. Nesim Samontanez/Atty. Jeff Marquez, TIC, Chair and Co-Chair, respectively, PMAP-Cebu Committee on Labor Relations)

2 August 2016 Latest Employment Law on Trainees Read
August 2016

Issue No. 2: Latest Employment Law on Trainees


On July 1, 2016, Republic Act No. 10869 otherwise known as the “JobStart Philippines Act” was published in the newspaper. This law is intended to benefit young jobseekers who are unemployed, and aims to shorten school to work transition by enhancing the knowledge and skills these persons acquired in formal education or technical training. This law requires the regional office of the DOLE to establish a “JobStart unit” and create a program to enhance the employability of at-risk-youth to improve their integration into productive employment.

Any employer which has a venue for training and placement of JobStart trainees may participate in this program by entering into a MOA with the DOLE and submitting a training plan for the latter’s approval. On the other hand, any individual person may register under this program as a “JobStart trainee”, provided that he/she meets the following qualifications: (i) Filipino citizen; (ii) 18 to 24 years old; (iii) has at least reached high school level; (iv) not be employed, studying or undergoing training; and (v) has no work experience or has less than one year of accumulated work experience.

The qualified “JobStart trainee” will undergo a training period consisting of three (3) phases, in the following chronological order: (i) JobStart life skills; (ii) JobStart technical training; and (iii) JobStart internship. The “JobStart internship” period is the most crucial part as this involves duties and obligations on the part of the participating employer, and violations thereof would entail administrative, civil or criminal liabilities. This internship period shall be up to three months or 600 hours, where the trainee will be working for the participating employer to acquire practical learning experience in a regular work environment.

For the internship period, the trainee shall be entitled from the participating employer to a daily stipend of not less than 75% of the prevailing minimum wage. Internship stipend, and not wage or salary, because the trainee is not an employee of the participating employer for the duration of the training period. This stipend is different from the daily training allowance which is paid by the DOLE thru the JobStart unit for the duration of the life skills and technical training period.

The total daily training hours shall be eight (8) hours and at least one (1) hour meal period shall be provided to the trainee. Absences shall not be paid, while tardiness or undertime incurred by the trainee shall be deducted. The internship period may go beyond eight (8) hours but an additional stipend equivalent to at least 25% of the daily internship stipend shall be paid. However, said overtime shall not exceed two (2) hours a day, and the time spent on overtime stay shall be duly credited to the trainee’s number of training hours. When the training falls on a night shift, the trainee shall be paid a night shift differential pay for each hour of training equivalent to not less than 10% of the daily stipend. On the other hand, when the training falls on a regular holiday, a ompensation twice the daily stipend must be paid. Training on such regular holiday will, however, require consent on the part of the trainee.

Notably, the law allows the participating employer to hire and employ the trainee. JobStart graduates shall be given preference in the hiring of workers. However, the law does not allow the employer to place the trainee under the usual six (6) months maximum period of probationary employment prescribed by the Labor Code if the trainee has successfully completed his internship including the technical training periods. We believe that the law already considers these two (2) last phases of the JobStart Training period as adequate enough for the employer to determine the fitness and qualification of the trainee for regular employment purposes. It is therefore advisable for every employer before it participates in this program, to make and prepare a comprehensive training plan which will already incorporate reasonable performance and/or behavioral standards that the trainee is expected to meet and qualify to become regular and permanent employee.

(If you have any question, please feel free to contact Ms. Jen Macairan/Ms.Nesim Samontanez/Atty.Jeff Marquez, TIC, Chair and Co-Chair, respectively, PMAP-Cebu Committee on Labor Relations)

3 August 2016 Anti-Age Discrimination in Employment Read
August 2016

Issue No. 3: Anti-Age Discrimination in Employment


Employers have always exercised their inherent prerogative to prescribe job qualifications including age requirements. However, prescribing age limitations or preferences have limited equal employment opportunities. To address this, Congress has enacted a national law, Republic Act No. 10911 otherwise known as the “Anti-Age Discrimination in Employment Act”. This law was published on August 1, 2016 and came almost four years after Ordinance No. 2339 otherwise known as “Cebu City Anti-Discrimination Ordinance” was passed by the Cebu City Council way back in 2012. Notably, one salient feature of this local ordinance which is now covered by the national law is about “ageism” where one is discriminated on the basis of his age.

RA 10911 is intended to promote employment of individuals on the basis of their abilities, knowledge, skills and qualifications rather than their age. It is designed to prohibit arbitrary age limitations in employment, and promote equality among employees and workers in terms of compensation, benefits, promotion, or training, regardless of their age. Violation of this law carries with it payment of fine, or imprisonment, or both at the discretion of the court, on the part of the guilty officer/s of the establishment. And the DOLE is empowered and tasked to investigate the erring employers.

In order to abide with the law, employers may have to make some adjustments in their hiring and employment procedures, processes and practices. The common practice of advertising job vacancy and prescribing employment age preferences, say between 20 to 25 years old is now prohibited, unless age is a bona fide occupational qualification reasonably necessary in the normal operation of a particular business or when a differentiation is made based on reasonable factors other than age. And it does not matter in what media the advertisement is made, whether in print or in the internet. In fact, even the publisher is punished if it would print or publish any notice of advertisement relating to employment suggesting such age preference.

An employer is also not allowed to require that a job applicant declare his age or birth date during the application process, or to deny the employment application because of one’s age. It is only when the job applicant is hired may he be required to declare his age or birth date as when for example, it is necessary to register him for membership in the SSS, PhilHealth, Pag-Ibig, etc.

Employers may also have to make some adjustments on their existing policy or practice providing or granting employment benefits if it factors in the individual’s age. For example, a company policy which entitles travel and training opportunity only to employees who belong to a certain age limit, say those below 60 years old may not passed judicial scrutiny. This is to avoid discrimination in terms of compensation, terms and conditions or privileges of employment on account of one’s age. On the other hand, employers can no longer use “old age” as a reasonable criterion in downsizing or right-sizing its organization. Forcibly laying off an employee or worker because of old age is now expressly prohibited. Neither is an employer allowed to impose early retirement on the basis of one’s age, unless the intent is to observe the terms of a bona fide employee retirement or a voluntary early retirement plan duly established under the law.

However, age limitations in employment may be prescribed by employers under certain instances, as when age is a bona fide occupational qualification reasonably necessary in the normal operation of a particular business or when the differentiation is based on reasonable factors other than age. Thus for example, age classification may be justified if it is reasonably shown to be necessary to the safe and proper performance of the job. It is also allowed if the intent is to observe the terms of a bona fide seniority system that is not intended to evade the purpose of the law, or the intent is to observe the terms of a bona fide employee retirement or a voluntary early retirement plan duly established under the law, or when the action is duly certified by the Secretary/DOLE in accordance with the law.

In sum, RA 10911 is not only intended to promote the employment of older persons. It is one law that promotes equal employment opportunities regardless of one’s age, whether still young or already old as long as his employment is not prohibited by law. The law constitutes a valid and reasonable restriction or limitation on the prerogative of management to hire similar to the many other anti-employment discrimination laws already in place. It protects against age discrimination in many employment contexts, from “hiring to firing”.
(If you have any question, please feel free to contact Ms. Jen Macairan/Ms.Nesim Samontanez/Atty.Jeff Marquez, TIC, Chair and Co-Chair, respectively, PMAP-Cebu Committee on Labor Relations).

4 September 2016 Hiring Security Service Contractor or Private Security Agencies; What's New? Read
September 2016

Issue No. 4: Hiring Security Service Contractor or Private Security Agencies; What's New?


On April 14, 2016, DOLE D0 No. 150-16, S.2016 was published, expressly repealing D0 No. 14, S.2001 otherwise known as “Guidelines Governing the Employment and Working Conditions of Security Guards and Similar Personnel in the Private Security Industry.” This new DOLE regulation has the following salient features: :

A. It is not limited to security guards. It now expressly includes private security personnel such as private detectives, security consultants and security officers. .

B. It considers a security guard or other private security personnel, regular employee if he is allowed to work in the absence of a valid probationary contract. .

C. It requires that the service agreement between the principal and the security service contractor or private security agency, must conform to the DOLE standard computation and Standard Service Agreement that is prescribed under D0LE DO 18-A. .

D. It requires that the terms and conditions of the contracting arrangement shall include the standard administrative fee of not less than 20% of the total contract cost. .

E. It obliges the security service contractor or private security agency to post a bond only when its net financial contracting capacity (“NFCC”) is less than the total contract cost. .

F. It places upon the principal the obligation to shoulder the expenses of training it may require the security service contractor or private security agency, in addition to those required by the PNP.

G. It places upon the security guard the obligation to shoulder the expenses prescribed for pre-employment and continued employment, such as licensing, physical and neuro-psychiatric examination and drug test required by the PNP. However, any additional test shall be at the expense of the requesting party. .

H. It requires inclusion of the following in the cost distribution provision of the service agreement, to wit: :

i) 7 day yearly parental leave for solo parents; ;
ii) 10 day paid leave for women victim of violence; ;
iii) 2 months special leave benefit for women undergoing surgery due to gynecological disorder;
iv) separation pay if terminated for authorized cause including lack of service assignment for a continuous period of six (6) months, or lack of service assignment by reason of age. However, an assignment as reliever for less than one (1) month shall not be considered as an interruption of the six (6) month period; ;
v) benefits under the EC Act, SSS and PhilHealth; and and
vi) retirement pay, which shall be billable monthly to the principal/client . .

I. A retirement trust shall be created out of contributions from the principal if the security service contractor or private security agency decides to establish a retirement plan. .

J. It allows the security service contractor or private security agency to require its security guard and other private security personnel to post a cash bond for the use of firearms and other paraphernalia but only once, and provided, however, the amount thereof should not be more than 5% of the amount of the firearm issued. The bond shall be refunded to the security guard within 15 days from severance of employment. .

K. It reiterates the requirements of DOLE Labor Advisory No. 11, S.2014 as regards requiring security guards to make cash deposits to answer for loss or damage. .

L. It reiterates instances provided by DOLE D0 18-A, S.2011 as regards the solidary liability of the principal and the security service contractor or private security agency to the security guard as when there is “labor-only” contracting. .

M. It expressly requires the security service contractor or private security agency to submit to the DOLE regional office, a monthly report of all dismissal or termination including retirement effected during the month. This is for DOLE’s policy and statistical purposes. .

So, what happens now if your company has already an existing security service agreement? Do you need to amend this agreement to abide and conform with DO 150-16? Do you need to adjust, for example, the standard administrative fee to at least 20% of the total contract cost? Quite notably, the DOLE expressly states that the DO 150-16 shall serve as a guide in its administration and enforcement of applicable labor laws in the security service industry. We repeat; “a guide”. We, therefore, believe that this new regulation shall not and should not impair the rights or diminish the benefits being enjoyed by the parties to existing contracting or subcontracting arrangements
(If you have any question, please feel free to contact Ms. Jen Macairan/Ms.Nesim Samontanez/Atty.Jeff Marquez, TIC, Chair and Co-Chair, respectively, PMAP-Cebu Committee on Labor Relations or email to pmapcebu1976@gmail.com)

5 December 2016 IRR of the Data Privacy Act; Now Effective Read
December 2016

Issue No. 5: IRR of the Data Privacy Act; Now Effective


Do you ask job applicants to submit their personal and professional resume’, which would disclose their identity, address, birthplace, marital status, education, health, social security number, race or ethnic origin? And do you collect, hold, record, use, process, update, or store these data and information in a database or keep hard copies thereof, or dispose them?

If you do, you may need to know your legal duties and obligations under the recently promulgated Implementing Rules and Regulations (“IRR”) of Republic Act No. 10173 otherwise known as the “Data Privacy Act”, because under the law, employers cannot simply process and use the personal data of their employees without their consent. This IRR has been reportedly published in the Official Gazette on November 14, 2016, after almost four (4) years of waiting.

Thus, all HR Managers, Supervisors and Staff, or any officer or staff for that matter, whoever is/are designated and/or in charge with the collection, recording, processing, updating and storage of the personal information of job applicants and employees are now put to task to ensure faithful compliance with all the duties and obligations prescribed by law. The law is comprehensive enough to include major areas of human resource management and practice, which as everybody knows, includes recruitment and interview of job applicants, hiring and engagement of employees, payment of employees’ salaries and benefits, remittance of employees’ mandatory contributions to the SSS, Philhealth and Pag-ibig, filing of employees’ income tax returns, as well as payment of retirement pay, separation pay, among other things.

Foremost, the IRR mandates the duty and obligation of the company’s designated controllers and processors of employees’ personal information to adopt separately and independently, an organizational, physical and technical security measures. As this process entails complexities, a one (1) year period is prescribed by the IRR from its effectivity for industries, businesses and offices to register with the National Privacy Commission their data processing systems or automated processing operations. For example, it is imperative that employers must come up with a written policy on data protection, and designate a compliance officer to ensure its implementation. Access to where the employees’ data are kept or stored must be made limited and restricted, and safeguards must be established to prevent their loss or destruction. Computer networks must be fully protected to ensure the integrity of the employees’ data and ensure the confidentiality thereof. Notably, the law allows an employee to demand the withdrawal, removal or destruction of his personal information upon substantial proof that the information is no longer necessary for the purpose for which it is/was collected.

It is therefore important that we start studying the law and its IRR, identify potential issues that may be brought up in the workplace, and put in place the necessary policies and measures. The responsibility may be enormous and may even entail legal costs to hire lawyers. But we just have to begin evaluating our existing information management processes and control, change and manage the way we handle employees’ data, and avoid unauthorized access, use or misuse, and unlawful disclosure of such information. Definitely, knowledge about these data will be useful to identify specific compliance requirements prescribed by the IRR.  (If you have any question, please feel free to contact Ms. Jen Macairan/Ms.Nesim Samontanez/Atty.Jeff Marquez, TIC, Chair and Co-Chair, respectively, PMAP-Cebu Committee on Labor Relations)

6 December 2016 Employment of Out-of-School Youth, and Dependents of Displaced Workers this Christmas Season Read
December 2016

Issue No. 6: Employment of Out-of-School Youth, and Dependents of Displaced Workers this Christmas Season


Give love on Christmas day. This is what we hear all the time. With the onset of the Yuletide season, students who are presently enrolled in high school, or in the tertiary, vocational or technical education, will not have money allowances from their parents during this Christmas break as the schools will be temporarily closed. But no worries. Students who are poor but deserving, 15 years old and above but not more than 30 years old, may be hired by any person or private establishment employing at least 10 persons. The duration of employment of those in high school level is limited from 10 to 15 days this Christmas season, while those students in tertiary, vocational or technical education shall be from 20 to 78 working days. These establishments are allowed to pay a student 60% of his wages in cash, and the balance of 40% by the government. The government keeps a budget for this purpose. According to statistics, the program had benefited thousands of students-workers all over the country.

Notably, the 2016 recent amendment introduced by Republic Act No. 10917 to Republic Act No. 9547, as amended (“Special Program for Employment of Students”) effective last August, has expanded the coverage of the law. It now includes out-of-school youth and dependents of displaced or would be displaced workers due to business closures or work stoppages, or natural calamities, intending to enroll in any secondary, tertiary or technical-vocational institutions.

For example, if there are workers who were retrenched due to work stoppages early or middle of this year, the dependents of these workers who lost their jobs may well qualify under this amendatory law provided they are 15 to 30 years old, and their parents’ combined income, together with their own, if any, do not exceed the annual regional poverty threshold level for a family of six (6) for the preceding year as may be determined by National Economic and Development Authority (NEDA).

Any private employer who wishes to participate under this amendatory law may directly coordinate with the Public Employment Service Office (“PESO”) as this government agency is likewise tasked to facilitate the application and employment of qualified individuals. The PESO matches the individual person’s qualifications with the requirements of participating employers. These individuals may work in various fields ranging from office and administrative duties to field work, with pay amounting to not less than the prevailing minimum wage in the region. Note that a participating employer is able to save 40% on labor cost as the employer is required only to pay 60% of the employee’s wage in cash.

Let us do our share. In the spirit of the Christmas season, let us provide these less fortunate individuals temporary employment opportunities, to enable them to earn money on their own to help themselves and their families, and also enjoy the Yuletide Season. Indeed, the full implementation of the amendatory law will make a 1significant impact on the lives of thousands of Filipinos who need help in their pursuit of education

(If you have any question, please feel free to contact Ms. Jen Macairan/Ms.Nesim Samontanez/Atty.Jeff Marquez, TIC, Chair and Co-Chair, respectively, PMAP-Cebu Committee on Labor Relations)

1 January 2017 Issue No. 1: Is Labor “Contractualization” About to End Soon? What's the update? Read
January 2017

Issue No. 1: Issue No. 1: Is Labor “Contractualization” About to End Soon? What's the update?


Many news items have come out on labor contracting, the most controversial area of labor laws after the election of President Rodrigo R. Duterte. In fact, many, if not all, from labor have supported the intense campaign of the President against illegal “contractualization”including the infamous “Endo”. Various sectors lauded the effort of the Department of Labor and Employment (“DOLE”) to carry out the administration’s policy direction while some were alarmed. Even our own organization has been involved in consultations. However, we remained firm that our members are generally labor law compliant, and if there is any labor malpractices somewhere, these are mere isolated and arose out of legal inadequacies in the proper interpretation of law and the rules applicable.

 

If one would read some of the senate and house bills now pending regarding “contractualization”, DO 18-A that we have right now, is more than adequate to address the issue against illegal contractualization if only this regulation was fully and effectively enforced. In fact, most of the senate bills have adopted some major provisions of DO 18-A.  For example.  Senate President Aquilino Pimentel’s bill  reiterated the definition on “labor-only” contracting. His proposed bill simply increased the prescribed capitalization from Php3M to Php5M.  Senator Miguel Zubiri, on the other hand, made “labor-only” contracting clearer by emphasizing that if the principal employer exercises control over the contractor’s employees, there is “labor-only” contracting, which concept is already embodied in DO 18-A.  For Senator Risa Baraquel, she merely emphasized that if any of the elements of labor-only contracting that is already spelled out in DO 18-A is present, it is sufficient to establish “labor-only” contracting.

 

As we await for these pending bills to be passed into law, what do the management and labor sectors have right now? As we write this article, we only have a working draft from the DOLE on labor contracting in spite of the expectations of many that a new DOLE regulation will be issued before the end of last year.

 

Now, will the new DOLE regulation end labor “contractualization” or not? Definitely, it will not end absolutely if we consider the working draft of the DOLE which our Committee intends to provide an overview presentation during our forthcoming General Membership Meeting on January 26.  At most, the DOLE will only restrict labor contracting and perhaps, limit or provide conditions when a principal can validly outsource the performance or completion of its core operations.

 

For now, we emphasized that our present Labor Code expressly allows permissible labor “contractualization”, so to speak. In fact, even the Supreme Court has said that “labor contracting is not illegal per se; it is illegal only when it constitutes “labor-only” contracting.”  Thus, no amount of new DOLE regulation can entirely change the law. A DOLE regulation is only valid and binding as long as it is promulgated within the scope and authority of it quasi-legislative power.  The DOLE must still recognize permissible job contracting, and differentiate it from “labor-only” contracting which has long been prohibited by law.

 

Note that way back in 1997, we had DO 10, where the DOLE spelled out the areas of permissible contracting. While DO 10 was repealed in 2001 by DO 3, the DOLE, however, in its primer did not expressly prohibit labor contracting as long as the Labor Code is dutifully complied with.  In fact, the Supreme Court in one case affirmed as valid the hiring of contractual workers in order to meet abnormal increase in the production as long as the employer acts in good faith. Because of this, many establishments continued to outsource part of its core operations. When DO 18-A was issued, it still recognizes permissible job contracting as long as there is good faith and whenever required by the exigency of the business. DO 18-A likewise recognizes “Endo” when it expressly allows the contractor to place its workers under a contract of employment that is co-extensive with the service agreement.

 

In other words, management can still rely on the Labor Code which still allows labor contracting.  To quote the Supreme Court, “it is management prerogative to farm out any of its activities, regardless of whether such activity is peripheral or core in nature, the only limitation being that, it must be made to an independent contractor because the rules expressly prohibit “labor-only contracting”. Contracting out of services is an exercise of business judgment or management prerogative. Absent proof that management acts in a malicious or arbitrary manner, the court will not interfere with the exercise of judgment by an employer. And until and unless the Labor Code is amended, we still believe that permissible job contracting will still remain (If you have any question, please feel free to contact Ms. Pinky Mante/Atty. Jeff Marquez/Mr. Jojo Cinco, TIC, Chair and Co-Chair, respectively, PMAP-Cebu Committee on Labor Relations)

 

2 February 2017 Issue No. 2: Legal Effects of the New Daily Minimum Wage in Region VII Read
February 2017

Issue No. 2: Issue No. 2: Legal Effects of the New Daily Minimum Wage in Region VII


After several months of deliberation, the wage order which our local Regional Tripartite Wages & Productivity Board has approved in mid of February was finally published in the newspaper last February 23. This new wage order otherwise referred to as “Wage Order No. R0VII-20” which will take effect 15 days after its publication, fixes the daily minimum wage for non-agricultural from Php353 to Php366, or a daily increase of Php13, in the cities of Cebu, Mandaue and Lapu-lapu City. The other wage rates in the other areas of the Region are also provided.

The Php13 wage adjustment was a far cry from the Php150 daily wage proposal of some labor groups in Central Visayas. But definitely, this new wage increase or adjustment while it may not be too substantial will still make a significant economic impact on the minimum wage workers’ daily compensation because of its ripple effect on the wage-related benefits, such as overtime pay, holiday pay, premium pay, night shift pay, etc. In fact, even the 13th month pay of the rank-and-file workers will enjoy an adjustment since this year-end bonus is computed based on the worker’s total basic salary earned during the calendar year.

Employers are, therefore, expected to abide with the new wage order once it takes effect. An application for wage exemption is expressly disallowed by the wage order except for establishments which may be adversely affected by calamities. Failure or refusal on the part of the employer carries with it both civil and criminal liabilities. Thus, an employer may be sued for underpayment of wages and may be held liable for double indemnity. Double indemnity refers to the payment to a concerned employee of the prescribed increases or adjustments in the wage rates, which was not paid by an employer equivalent to twice the unpaid benefits owing to such employee. The basis for the computation of double indemnity shall be limited to the unpaid benefits, which refer to the prescribed wage rates which the employer failed to pay upon the effectivity of the wage order exclusive of other wage-related benefits.  Aside from this, an employer may also face a fine ranging from Php25,000 to Php100,000, or imprisonment from two (2) years to four (4) years, or both if a criminal action is filed against its erring officers, which may include the President, Vice-President, CEO, or GM. No probation is allowed for anyone found guilty..

It must be emphasized that while there is a mandated increase in the daily minimum wage, only the daily minimum wage earners will be mainly benefited. Those workers who are receiving daily wages more than the prescribed wage increase or adjustment are not covered and the employer is not mandated to grant a similar increase or adjustment to these workers and all the other workers in the establishment. A possible wage distortion may therefore arise where there will be a significant change in the salary rate of the lower pay class without a concomitant increase in the wage rate of the higher pay class, thereby eliminating the distinction between these groups of workers. The management and the workers must address any such issue amicably, before it becomes a labor dispute.
For an employer who farms out to a contractor the performance of a job, work or services, the obligation to pay the increase or adjustment in the daily minimum wage is ultimately the responsibility of the said employer, without any right to demand reimbursement from his contractor. Thus, the employer must adjust the labor cost item in the parties’ service agreement to cover the wage increase or adjustment mandated by the wage order so that the contractor may, on the other hand, be able to pay his workers the corresponding new wage rates.  It is no excuse that a service agreement has already been concluded between the parties when the new wage order becomes effective as it is the law itself that will amend any such existing agreement(If you have any question, please feel free to contact Ms. Pinky Mante/Atty. Jeff Marquez/Mr. Jojo Cinco, TIC, Chair and Co-Chair, respectively, PMAP-Cebu Committee on Labor Relations)

3 March 2017 Issue No. 3: The newly signed DOLE D.O. No. 157, S.2017 on Labor "Contractualization and ENDO" Read
March 2017

Issue No. 3: Issue No. 3: The newly signed DOLE D.O. No. 157, S.2017 on Labor "Contractualization and ENDO"


After several months of waiting, DOLE Secretary Honorable Silvestre H. Bello III finally signed a new department order on labor contracting. In his press conference, Sec. Bello, however, emphasized that his office cannot totally prohibit all forms of contractualization as it is not within his power and authority to do so, and it is Congress which has the legislative power to do so. He further explained that his pronouncement was still congruent with the campaign of President Rodrigo Roa Duterte which was actually only against illegal “contractualization”and illegal “Endo”.

To recall, in our labor bulletin issue this January, we were emphatic that a new DOLE regulation will not end labor “contractualization”. At most, the DOLE will only restrict labor contracting and perhaps, limit or provide conditions therein. And we were right.  After all, our present Labor Code expressly allows permissible labor “contractualization”. In fact, even the Supreme Court has said that “labor contracting is not illegal per se; it is illegal only when it constitutes “labor-only” contracting.”

What do we have now under the new DOLE order?

As it was before, “labor-only” contracting is still prohibited which means the principal is not allowed to exercise control on the contractor’s workers as regards the means and manner by which the latter perform their job or work. This mirrors the bill of Senator Miguel Zubiri now pending in the Senate which emphasized that if the principal employer exercises control over the contractor’s employees, there is “labor-only” contracting, a concept which, by the way, is not new even under the current DO 18-A.
To further disallow “fly by night” contractors, the new department order has notably increased the capitalization requirement for registration of contractors from Php3Million to Php5Million. This amendment is consistent with Senate President Aquilino Pimentel’s bill now pending in the Senate. The new regulation has also increased the registration fee including the renewal fee from Php25th to Php100,000, and has also reduced the validity of the certificate of registration from three (3) years to two (2) years.

On the other hand, job contracting is still allowed but subject to certain prohibitions as in the current DO 18-A.  Thus, “repeated” hiring of a worker under an employment contract of short duration is prohibited; and so is requiring a worker to sign an employment contract for a period that is shorter than the service agreement. The reiteration of these prohibitions will address the so-called illegal “ENDO” which is used by some unscrupulous contractors who place their workers under a “non-regular” employment status ad infinitum even if these workers had already been working for more than one year, and performing the same job or work all over again. Notably, the current DO 18-A which expressly allows the contractor to place its workers under a contract of employment that is co-extensive with the service agreement has been notably deleted under the new regulation, the intent being to make, or eventually make the employment status of these contractor’s workers regular. In fact, the new regulation made it clear that the expiration of the service agreement between the principal and the contractor does not terminate the employment of the contractor’s workers who are regular employees. It then follows that if these contractor’s workers are regular employees, the contractor will have to keep these workers in their employ and assign them to other principals, and if not, to pay them separation pay including retirement benefits whenever they are entitled to under the law or the service agreement as the case may be. The new DOLE regulation therefore strengthens the worker’s rights to security of tenure.

Another salient prohibition although likewise found in the current DO 18-A is requiring the workers to perform the same functions that are currently performed by the regular workers of the principal. Definitely, this prohibition will address contractors who merely recruit and supply labor or “human bodies” to the principal without any degree of specialization, skill or expertise whatsoever in the job or work contracted out.

To have a more comprehensive analysis and discussion on the new DOLE regulation, PMAP-Cebu will be holding a tripartite labor forum on March 31, 2017, Friday, where representatives from the DOLE, the management and the ALU-TUCP are expected to attend and share with us their invaluable insights on the matter as well as on the recent wage increase and other labor-related issues. This forum will be held simultaneous with PMAP-Cebu 2nd General Membership Meeting cum Special Meeting (If you have any question, please feel free to contact Ms. Pinky Mante/Atty. Jeff Marquez/Mr. Jojo Cinco, TIC, Chair and Co-Chair, respectively, PMAP-Cebu Committee on Labor Relations)

4 May 2017 Issue No. 4: Monthly Wage Increase for Kasambahay Read
May 2017

Issue No. 4: Issue No. 4: Monthly Wage Increase for Kasambahay


On March 29, 2017, Wage Order No. R0VII-D.W. 01 issued by the local Regional Tripartite Wages and Productivity Board (RTWPB) was published in the newspaper, increasing the monthly minimum wage to Php3,000 from Php2,000 for domestic workers in cities and first class municipalities in Central Visayas and from Php1,500 to Php2,500 for other municipalities.

This is the first wage increase made by the local RTWPB since the publication of the “Domestic Workers Act” otherwise known as “Batas Kasambahay” on January 25, 2013. In fact, the local RTWPB took three (3) years before it decided on the wage adjustment. And while this increase may have no direct and material bearing to HR organizations, we must remember, however, that most, if not all of us, who are HR members and practitioners are employers as we have domestic workers in our respective households.

It is therefore important that we are reminded of the employment benefits that our general house help, yaya, cook, gardener, or laundry person are legally entitled to under the law.

To begin with, the monthly wages of the Kasambahay shall be paid in cash at least once a month. Payment in kind is not allowed. The payment must be evidenced by a payslip containing the amount paid in cash every pay day, and indicating all deductions made, if any.  Aside from the cash wage, the Kasambahay must be provided at least three (3) adequate meals a day. The Kasambahay is also entitled to an aggregate daily rest period of eight (8) hours a day. This would mean that the maximum hours of work must not, in effect, exceed sixteen (16) hours a day. During free time, the Kasambahay shall be granted access to outside communication. The hours of work will vary if the Kasambahay is below eighteen (18) years of age but fifteen (15) and above as he/she is considered a working child. In the latter case, the employer must not violate the law against child labor which is a criminal offense. Employing any person below fifteen (15) years of age is unlawful. So, is terminating or dismissing a Kasambahay by reason of pregnancy and marriage.

The Kasambahay is also entitled to at least twenty four (24) consecutive hours of rest in a week. If he/she has rendered at least one (1) year of service, the Kasambahay shall be entitled to an annual service incentive leave (SIL) of at least five (5) days with pay.  Any unused leaves shall not be convertible to cash, and shall not be cumulative or carried over to the succeeding years.  And if the Kasambahay has rendered at least one (1) month of service, the Kasambahay must be enrolled by the employer to the SSS, ECC, Philhealth and Pag-IBIG as employee, and must be paid not later than December 24, his/her 13th month pay, which shall not be less than one twelfth (1/12) of his/her total basic salary earned in a calendar year.

Note that an employer has the obligation to furnish a copy of the employment contract to the Kasambahay and to the Office of the Punong Barangay in the barangay where the employer resides. The Punong Barangay shall designate a Registration/Kasambahay Desk in the Barangay Hall to accommodate continuous registration by the employers. He must maintain and update the Kasambahay Master list (If you have any question, please feel free to contact Ms. Arlene Mante/Atty. Jefferson Marquez/Mr. Josefino Cinco, Jr, TIC, Chair and Co-Chair, respectively, PMAP-Cebu Committee on Labor Relations).

5 June 2017 Clarificatory Order on DOLE D0 No. 174, S.2017 on "Labor Contracting“ Read
June 2017

Issue No. 5: Clarificatory Order on DOLE D0 No. 174, S.2017 on "Labor Contracting“


The Department of Labor and Employment (“DOLE”) came up with Department Circular No. 01, S. 2017, clarifying the applicability of DOLE D.0. No. 174, S. 2017 on “Labor Contracting”. This Circular takes effect on the same date that DOLE D.O. No. 174, S. 2017 took effect on April 2, 2017 as it is meant only to clarify the applicability and non-applicability of the main rules and regulations.

However, this clarificatory circular is not new.  It simply reiterated Department Circular No. 01, which then Labor Secretary Rosalinda Baldoz issued five (5) years ago.

It may be recalled that in 2012, DOLE Secretary Baldoz issued a Circular excluding  information technology-enabled services involving an entire business processes (for example, business process outsourcing, knowledge process outsourcing, legal process outsourcing, hardware and/or software support, medical transcription, animation services, back office operations/support) from the coverage of then DOLE D.O. 18-A.  For DOLE Secretary Baldoz, IT-enabled services involved vendor-vendee relationship, and not trilateral relationship as in the case of contracting/subcontracting arrangement. Hence, DOLE Secretary Baldoz then concluded that these companies engaged in business processes may hire employees in accordance with applicable laws and maintain these employees based on business requirements.

In that same 2012 Circular, DOLE Secretary Baldoz likewise clarified that contracting or subcontracting arrangements in the Construction Industry under the licensing coverage of the Philippine Contractors Accreditation Board (PCAB) shall continue to be governed by DOLE D.O. No. 19, S. 1993 among other rules. Thus, the DOLE shall not require these PCAB licensed contractors to register under then DOLE D.0. No. 18-A.

So what’s new with this latest Department Circular No. 01, S.2017?

Now DOLE Secretary Silvestre Bello III says that for contracting or subcontracting arrangements in the private security industry, the registration of security agencies and contractors shall be governed by DOLE 174, S. 2017. This notwithstanding the contrary position of the Philippine Association of Detective and Protective Agency Operators Inc., (PADPAO) that private security agencies are outside the ambit of the DOLE as they are licensed, regulated and supervised by the Philippine National Police pursuant to Republic Act No. 5487, and hence, belong to an industry similar to the Construction Industry.

DOLE Secretary Bello III likewise clarifies that other contractual relationships, such as in contract of sale or purchase, contract of lease, contract of carriage, contract growing/growership agreement, toll manufacturing, contract of management, operation and maintenance and such other civil contracts are not covered by DOLE D.O. No. 174, S. 2017. Obviously, while the relationships are still contractual, they are not trilateral as in the case of contracting or subcontracting arrangements.

Finally, the DOLE likewise clarifies that a person who practices his profession, such as a doctor, lawyer, or architect, or a talent, say an actor, actress, TV host, etc., is not likewise covered by the labor contracting rules. Evidently,  there is likewise no trilateral relationship involved here but one of free artisanship, which is governed by our civil laws.

It is therefore important that when agreements are entered into between the parties involving the performance or completion of a job or service, the terms and conditions thereof must be carefully studied to determine whether the contractual relationship created is one within or outside the coverage of DOLE D.O. No. 174, S.2017.

The performance of services by one for another does not by that fact alone, make the relationship fall under labor contracting as the completion of these services may be merely incidental to the object of such contract. The determination of the right contractual relationship will define the rights, duties and obligations of the parties, and the applicability or non-applicability of the Labor Code (If you have any question, please feel free to contact Ms. Pinky Mante/Atty. Jeff Marquez/Mr. Jojo Cinco, TIC, Chair and Co-Chair, respectively, PMAP-Cebu Committee on Labor Relations)

6 July 2017 Voluntary Regularization of Employees under DOLE Labor Advisory No. 06, S.2017 Read
July 2017

Issue No. 6: Voluntary Regularization of Employees under DOLE Labor Advisory No. 06, S.2017


The Department of Labor and Employment (“DOLE”) posted in its website Labor Advisory No. 06, S. 2017 otherwise known as “Guidelines in the Conduct of Voluntary Regularization of Employees”.

This latest Advisory must have been issued to guide the principal and its contractor or /subcontractor who are admittedly engaged in “labor-only” contracting.

It must be recalled that “labor-only” contracting is declared prohibited under Labor Advisory No. 10, S. 2016 as it was in all previous DOLE department orders. “Absolutely”, “totally” prohibited in the words of DOLE Hon. Secretary Silvestre Bello III who issued DOLE D.O No. 174, S. 2017, the latest issuance on “labor-only” contracting.

Prohibited? Yes, because in “labor-only” contracting, the contractor’s workers cannot expect anything from their direct employer as the latter merely acts as “agent” for the principal/client without any adequate capital or investment at all. In most cases, these “labor-only” contractors cannot pay their workers the right wages and labor standards, and do not care about their workers’ security of tenure. Thus, in order to protect these contractor’s workers, the law itself implies or establishes an employer-employee relationship between the employer/principal/client and the contractor’s employees, for a comprehensive purpose: to prevent any violation or circumvention of the Labor Code.  In effect, the law holds the employer/principal/client directly responsible to the contractor’s employees as if such employees had been directly employed by them. Consequently, the law entitles these contractor’s employees to all the wages, benefits and rights appurtenant to regular employment.

As he is empowered by the Labor Code itself, the DOLE Regional Director has the authority to declare the existence of “labor-only” contracting, where the workers of the “labor-only” contractor/subcontractor are considered employees of the principal. However, such DOLE declaration must faithfully abide with due process of law. It should give the parties an opportunity to question such declaration made, including to appeal the same to the DOLE Secretary, and from the latter, to the Court of Appeals on certiorari and to the Supreme Court on pure question of law. Now, this process is tedious and will take a lot of time.

This latest DOLE Labor Advisory must have been intended to allow voluntary compliance by erring principals and their contractors/subcontractors. These employers can submit to the DOLE Regional Director a letter of voluntary commitment. A DOLE LLCO will be then authorized to conduct a joint assessment in the employer’s establishment, come up with a notice of results, and assist the erring employer in preparing a voluntary commitment plan (VCP) of the workers to be regularized. The effectivity of regularization must retroact from the date of deployment to the principal, subject to the rules of probationary employment if the workers had worked for less than six (6) months. The VCP shall be signed by both the employer and workers’ representatives and acknowledged before a notary public, and needs express approval from the DOLE Regional Director. Once the VCP is approved, the DOLE Regional Director shall issue a VCP Compliance Order, which must indicate the period of regularization of the workers and a monthly status of the VCP including submission of employment contracts, and payroll which shall include the names of regularized workers among other things. The Compliance Order shall become final if there is failure of compliance with the VCP or submission of monthly report on the status of the VCP.

Now whether these latest guidelines would effectively work or not would depend on the cooperation of the erring parties and on how strong is/are the evidence to support the findings of the DOLE. Erring employers may still opt to litigate, exhaust all available legal remedies, and await the outcome of their actions rather than making a voluntary compliance. Perhaps, a compromise settlement would have been a better alternative rather than a voluntary commitment which has all the features of an enforced decision (If you have any question, please feel free to contact Ms. Pinky Mante/Atty. Jeff Marquez/Mr. Jojo Cinco, TIC, Chair and Co-Chair, respectively, PMAP-Cebu Committee on Labor Relations)

7 September 2017 DOLE D.O. No. 178, S.2017: Gender Equality on Occupational Safety & Health Matters Read
September 2017

Issue No. 7: DOLE D.O. No. 178, S.2017: Gender Equality on Occupational Safety & Health Matters


On September 9, 2017, the Department of Labor and Employment (“DOLE”) published D.O. No. 178, dated 25 August 2017, otherwise known as “Safety & Health Measures for Workers Who By the Nature of Their Work Have to Stand”. This issuance will cover retail and/or service employees, assembly line workers, teachers and security personnel and others, who by nature of their work, have to stand for long periods at work, or are frequently required to walk.

Quite notably, this latest DOLE Order does not refer to women workers alone. It is gender sensitive enough to include any employee and worker regardless of his/her sex, thereby, providing gender equality, so to speak. It is totally unlike the 1974 Labor Code provision whose scope is limited and which applies only to employment of WOMEN, thus: “provide seats proper for WOMEN and permit them to use such seats when they are free from work and during working hours, provided they can perform their duties in this position without detriment to efficiency.”

And what are some of these DOLE prescribed safety and health measures? For those which require their employees and workers to wear high-heeled female shoes and/or whose nature of work, requires standing for long periods, or frequent walking, they have to provide rest periods to break or cut the time spent on standing or walking, or perhaps, implement the use of footwear either flat or with low heels that must be wide-based or wedge type and no higher than one (1) inch to make standing or walking comfortable. In particular, where walking is frequent, these employers and establishments can install flooring or mats made of, say, rubber or wood in order to mitigate the impact and prevent fatigue. On the other hand, where standing is required for long hours, such security personnel, assembly line workers or sales ladies, they can provide tables or work surfaces with adjustable heights to allow these workers to alternately sit and stand while performing their tasks. Another measure may include providing accessible seats to these workers such as small foldable stools which can easily be stowed away so as not to hamper the work area. These workers may use these foldable stools during rest periods, or even during working hours, provided the employees can perform their duties in this position without detriment to efficiency.

The DOLE believes that standing at work for long periods, especially wearing high-heeled female shoes or frequent walking, causes considerable strain on the lower limbs; aching muscles; hazardous pressure on hip, knee and ankle joints; and sore feet. Thus, the need for appropriate control measures to address the risk to safety and health of workers. This Order requires all employers and establishments, to notify its respective DOLE regional offices not later than October 24, 2017 of its compliance with the DOLE prescribed safety and health measures. No one should ignore this Order; otherwise, the DOLE can visit the employer and establishment concerned in the exercise of its visitorial and enforcement powers. This power includes the authority of the DOLE to order stoppage of work or suspension of operations of any unit or department of such establishment when non-compliance therewith, poses grave and imminent danger to the health and safety of workers in the workplace.

(If you have any question, please feel free to contact Ms. Pinky Mante/Trustee-In-Charge, Atty Jeff Marquez & Mr. Jojo Cinco, Chair & Co-Chair, respectively, 2017 LabRel Committee)

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