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A.

Definition of terms

1. Social Legislation consists of statutes, regulations, jurisprudence governing the relations between
capital and labor, by providing for certain employment and a legal framework for negotiating, adjusting
and administering those standards and other incidents of employment.

2. Labor Law - a law relating to the rights and responsibilities of workers, is an economic equalizing force
it exists to reduce, if not eliminate, the peoples poverty. Labor Law should not obstruct economic
progress, without economic justice is no progress at all.

3. Law on Labor Standards - defined more specifically by jurisprudence, are the minimum requirements
prescribed by existing laws, rules and regulations relating to wages, hours of work, cost-of-living
allowance, and other monetary and welfare benefits, including occupational, safety, and health standards.

4. Law on Labor Relations defines the status, rights and duties, and the institutional mechanisms that
govern the individual and collective interactions of employers, employees or their representatives.

5. Management Prerogatives (see p. 27 Azucena book) - The law recognizes the employers highly
discretionary right to manage all aspects of employment. Management prerogative is that wide freedom
of the management to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time, place and manner of work,
processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay off of workers and discipline, dismissal and recall of workers.[1]

This right is tempered only by these limitations: that it must be exercised in good faith and with due regard
to the rights of the employees.[2] So long as the latter two are observed, the employer has the right to
regulate every aspect of employment.

Management prerogative is generally exercised by managers. Managerial employees are those vested
with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees.[3]

To be considered managers by law, the managerial employees have to meet all of the following
conditions:[4]

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

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

They have the authority to hire or fire other employees of lower rank; or their suggestions and
recommendations as to hiring and firing and as to the promotion or any other change of status of other
employees are given particular weight
Management prerogative may be exercised by the employer and his representatives, including managerial
employees.

6. Workers Rights

Basic rights of the workers as provided in the constitution:

1. to organize themselves

2. to conduct collective bargaining/negotiation w/ mgt;

3. to engage in peaceful concerted activities, including to strike in accordance w/ law; and

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 maybe
provided by law.

Other rights:

1. Right to weekly rest day

2. Right to Holiday Pay

3. Right to incentive leave

C. Employment

1. Employer-Employee Relationship

The law generally defines an employer as any person acting in the interest of an employer, directly or
indirectly.[1] It does not include a labor organization or any of its officers or agents unless they are acting
as an employer.[2]

On the other hand, an employee is likewise broadly defined as any person in the employ of another.[3]
The definition includes any individual whose work has ceased as a result of or in connection with any
current labor dispute or because of any unfair labor practice if he has not obtained any other substantially
equivalent and regular employment.[4] It is not limited to employees of a particular employer, except if
so explicitly stated by law.[5]

To give context to the definitions given above, the four-fold test of employment is taken into consideration
to establish whether there is an employer employee relationship. The elements to the test are: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employers power to control the employees conduct. The most important element is the employers
power of control of the employees conduct, the expected results of the work to be done, as well as the
means and methods to accomplish it

a. Four-fold Test

Four-fold test elements

The usual test used to determine the existence of employer-employer relationship is the so-called four-
fold test. In applying this test, the following elements are generally considered:

1. Right to hire or to the selection and engagement of the employee.


2. Payment of wages and salaries for services.
3. Power of dismissal or the power to impose disciplinary actions.
4. Power to control the employee with respect to the means and methods by which the work is to
be accomplished. This is known as the right-of-control test.

b. Kinds of Employment

Regular and Casual Employment


Pursuant to Article 280 of the Labor Code of the Philippines (Labor Code), the primary standard that
determines regular employment is the reasonable connection between the particular activity performed
by the employee and the usual business or trade of the employer; the emphasis is on the necessity or
desirability of the employees activity. Thus, when the employee performs activities considered necessary
and desirable to the overall business scheme of the employer, the law regards the employee as regular.
In addition, the Labor Code also considers as regular employment a casual arrangement when the casual
employees engagement has lasted for at least one year, regardless of the engagements continuity. The
controlling test in this arrangement is the length of time during which the employee is engaged. (See
Universal Robina v. Acibo, G.R. No. 186439, 15 January 2014)

according to the Supreme Court, and based on the above, there is casual employment where an
employee is engaged to perform a job, work, or service which is merely incidental to the business of the
employer, and such job, work or service is for a definite period made known to the employee at the time
of engagement. (Conti v. NLRC, G.R. 119253, April 10, 1997).

In other words then, casual employment exists when the position occupied by the employee is not
usually necessary or desirable in the usual trade or business of the employer.

What is meant though, by "usually necessary or desirable?" If it is a necessary and desirable position, it
refers to a position that is needed, and without which an employer would not be able to operate his
business. One example would be a cook in a restaurant. Obviously, a cook is usually necessary or
desirable when one operates a restaurant. One cannot serve food, much less cook anything, if there is
no cook.
Another example, according to a textbook writer (Atty. Villanueva), is a software development firm. A
programmer in such a firm would be considered necessary and desirable because without the
programmer, there would be no software for the firm to sell.

Project Employment
Project employment contemplates an arrangement whereby the employment has been fixed for a
specific project or undertaking whose completion or termination has been determined at the time of the
engagement of the employee. (Article 280, Labor Code of the Philippines)
Since the employees services are coterminous with the project, the services of the project employees are
legally and automatically terminated upon the end or completion of the project.
Seasonal Employment
Seasonal employment applies where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season. (Article 280, Labor Code of the Philippines)
Season employees may also be considered regular employees, thus: [f]arm workers generally fall under
the definition of seasonal employees. We have consistently held that seasonal employees may be
considered as regular employees. Regular seasonal employees are those called to work from time to time.
The nature of their relationship with the employer is such that during the off-season, they are temporarily
laid off; but reemployed during the summer season or when their services may be needed. They are in
regular employment because of the nature of their job,and not because of the length of time they have
worked. (Gapayao v. Fulo, et al., G.R. No. 193493, 13 June 2013)
Fixed-Term Employment
Fixed-term employment is valid when:
(a) the fixed period of employment was knowingly and voluntarily agreed upon by the employer and
employee without any force, duress, or improper pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent; or
(b) it satisfactorily appears that the employer and the employee dealt with each other on more or less
equal terms with no moral dominance exercised by the former or the latter. (See Caparoso, et al. v. Court
of Appeals, G.R. No. 155505, 15 February 2007)
Probationary Employment
Probationary employment exists when the employee, upon his engagement is made to undergo a trial
period where the employee determines his fitness to qualify for regular employment, based on
reasonable standards made known to him at the time of engagement. The employer shall make known to
the employee the standards under which he will qualify as a regular employee at the time of his
engagement. Where no standards are made known to the employee at that time, he shall be deemed a
regular employee. (See Section 6(d), Implementing Rules of Book VI, Rule VII-A of the Labor Code)
c. Job Contracting and Labor Contracting

1. When is there Job Contracting?


Ans. Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees
to put out or farm out to 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. A person is considered
engaged in legitimate job contracting or subcontracting if the following conditions concur:

(a) The contractor or subcontractor carries on a distinct and independent business and undertakes to
perform the job, work or service on its own account and under its own responsibility according to its own
manner and method, and free from the control and direction of the principal in all matters connected
with the performance of the work except as to the results thereof;

(b) The contractor or subcontractor has substantial capital or investment; and

(c) The agreement between the principal and contractor or subcontractor assures the contractual
employees entitlement to all labor and occupational safety and health standards, free exercise of the right
to self-organization, security of tenure, and social and welfare benefits.

2. Articales 106-109 Labor Code/dole Department Order No. 18-A;Cept Circular 01-12

Article 106. Contractor or subcontractor. Whenever an employer enters into a contract with another
person for the performance of the formers work, the employees of the contractor and of the latters
subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to
such employees to the extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only contracting and job contracting as
well as differentiations within these types of contracting and determine who among the parties involved
shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
Article 107. Indirect employer. The provisions of the immediately preceding article shall likewise apply to
any person, partnership, association or corporation which, not being an employer, contracts with an
independent contractor for the performance of any work, task, job or project.
Article 108. 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.
Article 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every
employer or indirect employer shall be held responsible with his contractor or subcontractor for any
violation of any provision of this Code. For purposes of determining the extent of their civil liability under
this Chapter, they shall be considered as direct employers.

3. When is there Labor Contracting?

Ans. labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor
merely recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only
contracting, the following elements are present:

(a) The contractor or subcontractor does not have substantial capital or investment to actually perform
the job, work or service under its own account and responsibility; and

(b) 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.

4. Conditions that must concur in legitimate job contracting

a. the contractor or subcontractor carries on a distinct and independent business and undertakes to
perform the job, work or service on its own account and under its own responsibility, according to its own
manner and method, and free from the control and direction of the principal in all matters connected
with the performance of the work except as to the results thereof;

b. the contractor or subcontractor has substantial capital or investment;

c. The agreement between the principal and the contractor or subcontractor assures the contractual
employees entitlement to all occupational safety and health standards, free exercise of the right to self-
organization, security of tenure, and social and welfare benefits.

5. Effects in finding that there is Labor-only contracting

a. The subcontractor will be treated as the agent of the principal. Since the act of an agent is the act of
the principal, representations made by the subcontractor to the employees will bind the principal.

b. The principal will become the employer as if it directly employed the workers engaged to undertake
the subcontracted job or service. It will be responsible to them for all their entitlements and benefits
under the labor laws.

c. The principal and the subcontractor will be solidarily treated as the employer.

d. The employees will become employees of the principal, subject to the classifications of employees
under Article 28 of the Labor Code.

If the labor-only contracting activity is undertaken by a legitimate labor organization, a petition for
cancellation of union registration may be filed against it, pursuant to Article 239(e).
New provision DO 174 2017

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