Labor Code: Book III — Conditions of Employment; Title I — Working Conditions and Rest Periods; Chapter I — Hours of Work (September 12, 2023)

  Book III — Conditions of Employment

Title I — Working Conditions and Rest Periods

Chapter I — Hours of Work

Art. 82

Q: What facts make a person an employee? an employer?

Q: What are the working conditions or employment benefits compulsorily required by law?

Q: Who are entitled to those benefits and who are not?

Q: Is a supervisor entitled to overtime pay? to holiday pay? What about a manager's secretary?

Q: Is travel time considered work time?

Art. 82. Coverage. 

The provisions of this Title shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.

As used herein, “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” shall refer to 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.

Notes:

Not applicable to:

1. government employees
2. managerial employees
3. field personnel
4. members of the family of the employer who are dependent on him for support
5. domestic helpers
6. persons in the personal service of another
7. and workers who are paid by results

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

shall refer to 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.

Eight Minimum Employment Benefits Under Article 82 through 96

• We should carefully note that this Book III of the Code has three "Titles".

• Title I WORKING CONDITIONS AND REST PERIODS
• Title II WAGES
• Title III WORKING CONDITIONS FOR SPECIAL GROUPS OF EMPLOYEES
• Article 82 refer only to the 15 articles under Title One.
• The 15 articles are about hours of work and eight statutory employment benefits.

Minimum Employment Benefits

granted by the Labor Code to all employees in profit or non-profit firms in private sector: OMNR-AHSS

1. overtime pay
2. meal break
3. night shift differential 
4. rest day
5. additional pay for working on rest days or special holiday
6. holiday pay
7. service incentive leave
8. share in service charges

Legal coverage for these benefits starts at first day of employment for every employee, either temporary or permanent, except for seven excluded groups:

The seven excluded groups are: GMFM-DPA

1. government employees
2. managerial employees
3. field personnel
4. members of the family of the employer who are dependent on him for support
5. domestic helpers
6. persons in the personal service of another
7. and workers who are paid by results

• Further exemption under Art. 94 (holiday pay) and Art. 95 (service incentive leave). 
• These two basic benefits are not extended to employees of retail and service establishments regularly employing less than 10 workers.

Additional Benefits

• To these eight basic benefits must be added the "compensation benefits" under Book IV of the Code for sickness, injury or death if it is work-related. 
• Further addition to these basic codal benefits in Books Three and Four are the employment benefits under special labor laws that are not physically part of the Labor Code. Entitlement to these additional employment benefits is governed by the special applicable laws. 
• Ex: thirteenth month pay (P.D. No. 851), paternity leave (RA. No. 8187), the SSS benefits, etc.

Statutory vs. Voluntary Benefits

The employment benefits required by law, such as this Title One, are referred to as statutory or mandatory benefits. 

Voluntary Benefit

• A benefit originated and governed by policy or practice initiated by the employer 

Voluntary Contractual Benefit

• lf a non-statutory benefit is based on and governed by negotiated stipulations whether in individual or collective contract

A statutory benefit may be enhanced and improved by voluntary policy or by contract.

Determinants of Employee-Employer Relationship (EMREL)

The 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 on the means and methods by which the work is accomplished.

Brotherhood Labor Unity Movement of the Phil. v. Zamora (January 7, 1987)

• Brotherhood Labor Unit Movement of the Philippines (BLUM) filed a complaint against San Miguel Corporation and its officers for unfair labor practices and illegal dismissal.
• San Miguel Corporation argued that the complainants were not its employees but employees of an independent contractor and that the complainants were estopped from claiming employment with the company.
• The petitioners argued that they were indeed employees of San Miguel Corporation and were dismissed for unionism, constituting unfair labor practice.

WoN an employee-employer relationship existed between Brotherhood Labor Unit Movement of the Philippines (BLUM) and San Miguel Corporation. YES.

Uncontroverted is the fact that for an average of seven (7) years, each of the petitioners had worked continuously and exclusively for the respondent company's shipping and warehousing department. Considering the length of time that the petitioners have worked with the respondent company, there is justification to conclude that they were engaged to perform activities necessary or desirable in the usual business or trade of the respondent, and the petitioners are, therefore regular employees.

Employee

• natural person who is hired, directly or indirectly, by a natural or juridical person to perform activities related to the business of the "hirer", who, directly or through an agent, supervises or controls the work performance and pays the salary or wage of the "hiree"
• person who renders work to another for a wage computed on time or nontime basis.

Strongest Determinant: Control over Conduct and Work Performance

• In the absence of the power to control the employee with respect to the means and methods by which his work was to be accomplished, there is no employer-employee relationship between the parties.

Continental Marble Corp. vs. NLRC (May 9, 1988)

• Rodito Nasayao filed a complaint with the National Labor Relations Commission (NLRC) in  claiming to be the plant manager of Continental Marble Corporation with a monthly 
• The petitioners argued that it was a joint venture, not an employer-employee relationship, and Nasayao was responsible for machinery and securing contracts.

WoN an employee-employer relationship existed between Rodito Nasayao and Continental Marble Corp. NO.

The petitioners had no control over the conduct of Rodito Nasayao in the performance of his work. He decided for himself on what was to be done and worked at his own pleasure. He was not subject to definite hours or conditions of work and, in turn, was compensated according to the results of his own effort. He had a free hand in running the company and its business.

Absent the power to control the employee with respect to the means and methods by which his work was to be accomplished, there was no employer-employee relationship between the parties. Hence, there is no basis for an award of unpaid salaries or wages to Rodito Nasayao.

• Not every form of control has the effect of establishing Emrel.
• A line should be drawn between:
• rules that merely serves as guidelines, which only promotes the result
• does not create Emrel
• rules that fix the methodology and bind or restrict the party hired to the use of such means or methods. These address both the result and the means employed to achieve the desired result.
• creates Emrel (Insular Life Assurance Co., November 15, 1989)

• A truck driver who, in the entire course of his employment did not have the freedom to determine where he would go what he would do and how he would do it, was an employee, not a partner. (Sy, February 27, 2003)
• The taxi or jeepney drivers under the "boundary" system are employees of the taxi or jeepney owners/ operators; so also are the passenger bus drivers and conductors. (Jardin, February 23, 2000) 
• In contrast, caddies are not employees of the golf club. They work there by toleration of the club, without obligation to observe working hours, free to leave as they please and stay away as long as they like. (Manila Golf and Country Club, 237 SCRA 207 [1994])
• A labor union or even an unregistered association may be considered a an employer of the persons working for it. (Bautista, March 16, 1988; Orlando Orlando Farm Growers, November 25, 1998)

Evidence of Being an Employee

The following may serve as evidence of employee status: 

• Appointment letters
• employment contracts
• payrolls
• organization charts
• SSS registration
• personnel lists 
• testimony of co-employee
• subjection to company rules of
  conduct

• If there is no employer-employee relationship, there is no compulsory coverage under the Social Security law. Also admissible evidence of employee

Inconclusive Determinants of EMREL

CPKPL

A. Contract Not Controlling

• Stipulations are relevant, but not conclusive, evidence of employment relationship. 
• The existence of an employer-employee relationship cannot be avoided simply by repudiating it in the employment contract. 
• It cannot say that the employee is an independent contractor" when the terms of the agreement clearly show otherwise. 
• The employment status of a person is defined and prescribed by law and not by what the parties say it should be.
• In determining the status of the worker, the "four-fold test" on employment, mentioned above, has to be applied.

B. Basis of Pay

• The kind of compensation agreement does not decide whether a worker is an employee or not. 
• The compensation may be determined according to the time spent on the job or the result of the effort. (See Art. 101)
• Either method is applicable to the employee or a non-employee, such as a practising independent professional.

• A handicraft worker paid under "þakyaw" basis may be classified as an employee. (Dy Keh Beng, 90 SCRA 161 [1979))
• While a person paid a huge amount of talent fee monthly may be considered an independent contractor. (Sonza, June 10, 2004)
• Compensation arrangement, therefore, is not a definitive test of the presence or absence of employment relationship.

• In a case where the truck driver was paid on "per trip" basis, this arrangement did not negate the fact that he was an employee even if he was working under a "contract of service. He was an employee considering that the truck he was driving belonged to the employer and was used exclusively to deliver the employer's products from Bataan to Manila according to the order of priority indicated in the routing of the slips issued by the employer. The employer's control over the performance of the job was evident. Finally, the employee had been doing the job for the same company for a continuous period of ten years. (Chavez, January 17, 2005)
• If the worker's pay is time-based, he may be daily-paid or monthly paid:
• "daily-paid"
• if the worker is paid only for the day or days actually worked
• hence, no-work-no-pay; 
• "monthly-paid"
• if the compensation covers all the days of the month,
• including rest days and holidays. 
• In either case, the minimum wage law must be observed.

C. Kind of Work

• The worker's work may be vital, necessary, or desirable in the business of the enterprise. Or it may be none of these. 
• The work may be a core or a peripheral activity in the business. 
• None of these possibilities serves as adequate basis of determining whether employer-employee relationship exists between the hirer and the worker. 
• A person doing even a vital function may or may not be an employee depending on whether his performance of the work is controlled or not controlled by the hirer. 
• Where he is thus controlled, he is most probably an employee; or else, he is not. 
• An accountant or a lawyer, for instance, is not always an employee despite his important function in a business.

D. Place of Work

• Neither is the place of work a sure indicator of employment relationship.
• An employee may do his work away from the premises of the business, or a non-employee may be performing work within the office or factory of the firm.
• Neither fact by itself adequately proves the absence or existence of employee status.

E. Length of Service

• The length of time a person is associated with a business firm does not necessarily make him its employee. 
• Some other closer ties, showing subjection to the rules and regulations governing employees' conduct or direct supervision over the performance of work, have to be shown to prove the employment arrangement.

Employee's Tenure; Kinds of Employment

• Where the employer-employee relationship exists, the other question that frequently occurs is the tenure of employment, i.e, the length of time, the duration, the employee remains employed. 
• Regular (or "permanent") employee 
• stays on the job is for an indefinite period.
• Temporary employee
• employed for a definite period designated and agreed at the time of hiring
• the temporariness of employment may be due to the temporariness of the work
• or the situation that affects the work
• Ex: Project, Seasonal, Probationary employees

Tenures of employment and their termination are taken up in Articles 294 to 301 of this Code.

Contractor

• If the hirer does not control the work performance of the hiree, then the latter is more likely not an employee. Perhaps he is a:
• contractor
• co-owner
• partner
• suitor
• helpful volunteer.
• A contractor is not an employee. 
• He is self-employed, maybe an expert professional, or a businessman with capital of his own, who operates independently from his client or principal (i.e., the person with whom he enters into a contract), to accomplish a job, work, or service. 
• The principal's control is over the desired result of work, not over the conduct at work.
• The big difference is that an employee is covered by the Labor Code; the contractor is not.
• But if the contractor hires other workers to do the job, they are his employees and not those of the principal. 
• The contractor becomes employer and his hirees are employees covered by the Labor Code. 
• But then an the arrangement between them may not be "employment" but "contracting" or "subcontracting." 
• Indeed, the nature of relationship can vary from one hiring to another, or between one hirer and a hiree.
• A contractor is not necessarily a corporation or partnership. 

• An individual, the court noted, may be engaged as a contractor because of his peculiar skills and talent such as those possessed by a TV host or radio broadcaster:. As a contractor, unlike an ordinary employee, he is free to perform the services he undertook to render in accordance with his own style. The benefits conferred on skilled or expert individual may be very much higher than those ordinarily given to an employee, such as staggering talent fee of P317,000 monthly. (Sonza, June 10, 2004)

"Labor-only contractor"

• If the so-called contractor is not bona fide because merely recruits and supplies workers to do a job, work or service for and under control of the principal, then he is not a job contractor. 
• Since he only supplies labor to the principal, his business or his commitment is not to accomplish jobs or projects but to gather people and send them to the job owner.
• He makes business out of joblessness of people.
• It is even wrong to call him a "contractor" because he does not undertake to perform or complete a job, work, or service within a definite or predetermined period.
• He is not a contractor because the people he hires do not work for and under him; they work for and under the supervision and control of the principal.
• The principal, therefore, is deemed the employer and the so-called contractor is considered merely as an agent, a representative, of the businessman-principal.

Contractorship and the effect of principal-contractor arrangement, regarding payment of wages, are taken up under Articles 106 up to 109. 

Excluded Employess

• Managerial Staff
• A supervisor is a part of the managerial staff and therefore not entitled to overtime pay and other benefits under Articles 83 through 96. (National Sugar Refineries Corp., March 24, 1993)

National Sugar Refineries Corp. v. NLRC & NBSR Supervisory Union, March 24, 1993:

• Private respondent union represents former supervisors at the Batangas refinery of National Sugar Refineries Corporation (NASUREFCO).
• NASUREFCO implemented a Job Evaluation (JE) Program in 1988.
• Prior to the JE Program, union members were treated like rank-and-file employees and received overtime, rest day, and holiday pay. After the JE Program, union members were re-classified as managerial staff and received increased basic pay, among other benefits.
• Union members filed a complaint for non-payment of overtime, rest day, and holiday pay.
• The labor arbiter ruled in favor of the union members, finding that the benefits had ripened into a contractual obligation.The National Labor Relations Commission (NLRC) affirmed the labor arbiter's decision, stating that the union members were not managerial employees and were entitled to the benefits.

WoN supervisory employees, should be considered as officers or members of the managerial staff under Article 82, and hence are not entitled to overtime, rest day and holiday. YES.

Article 212(m), Book V of the Labor Code on Labor Relations reads:

‘Managerial employee’ is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharged, assign or discipline employees. Supervisory employees are those who, in the interest of the employer effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of those above definitions are considered rank-and-file employees of this Book.

The court agreed with NASUREFCO, stating that the union members met the criteria as defined in Section 2, Rule I, Book III of the aforestated Rules to Implement the Labor Code to be considered as officers or members of the managerial staff and were therefore not entitled to the benefits. The court also rejected the argument that the benefits had ripened into a contractual obligation, as the union members were promoted and no longer met the criteria for the benefits.

• Another definition of "managerial employee" is found in Article 219 in connection with labor relations. That definition does not include managerial staff; hence, a supervisor is not barred from union activities (See Art. 255), but the same supervisor is denied the benefits under Articles 83 through 96. 
• The exclusion in this Article 82 is therefore broader than the scope of disqualification from union membership under Book V of the Code. In effect, more people are excluded by law from economic benefits than from unionization right.

• Field Personnel
• Another excluded group are employees whose work or service hours are not or cannot be effectively monitored by the employer.
• Where the usage of work hours is constantly checked by supervisors, the worker is not a field personnel as in the case of passenger bus drivers and conductors whose work time is checked is checked by dispatchers and inspectors. (Auto Bus Transport, May 16, 2005)

• Workers Paid by Result
• Their pay is dependent on unit of product finished or work completed and not on time spent in working. (See Article 101 with Notes)

• Government Employees
• It refers only to employees of government agencies, instrumentalities or political subdivisions and of government corporations that are not incorporated under the Corporation Code. 
• By jurisprudence, employees of government corporations incorporated under the Corporation Code are covered by the Labor Code. 
• But even as regards the excluded government employees, it must be noted that, as a whole, GSIS-covered employees are not excluded from the 0employee's compensation program under Title I, Book IV of the Labor Code.

Personal/Family Driver 

Q: If a family driver works more than eight hours in a day, is he entitled by law to overtime pay (Article 87, Labor Code)? 

If he is required to drive on a holiday, can he demand holiday pay under Article 94 of this Code?

NO. Because the family driver is a "person in the personal service of another" which is among the group of workers exempted or excluded from Title 1 of Book III of the Labor Code that covers Articles 82 to 96. Hence, all those employment benefits from Articles

82 to 96 are not legally claimable by a family driver (Atienza vs. Saluta G.R. No. 233413, June 17 2019). If he is to be entitled to any or all of these benefits, it is because of a binding agreement between the driver and his employer, or because of Article 100, if applicable relating to non-diminution of benefits that are being given through long established practice.

Q: Is a family driver a househelper? 

NO. Under the Labor Code the before passage of the Kasambahay Law, in 2013, a family driver was covered in the term "domestic or household service" under Article 141 of the Labor Code. But this article no longer exists because the Kasambahay Law expressly repealed this chapter on "Employment of Househelper" from Article 141 to 152 (Atienza vs. Saluta G.R. No. 233413, June 17 2019). (R.A. 10361 was approved on January 18, 2013).

Q: Does it follow that a family driver is covered by the Kasambahay Law?

NO. The Kasambahay Law does not include family drivers among the workers covered by the law. Moreover, Section N of the Implementing Rules and Regulations of the law specifically mentions family drivers among the workers "not covered."

This exclusion by the IRR, says the Supreme Court, "is accorded great respect and and ordinarily controls the construction of the courts." Hence, neither the Labor Code nor the Kasambahay Law applies to family drivers.

Q: What Law Covers Family Drivers?

We quote in full the Court's explanation (through Justice Reyes Jr.) in Atienza vs. Saluta, June 17, 2019:

Due to the express repeal of the Labor Code provisions pertaining to househelpers, which includes family drivers, by the Kasambahay Law; and the non-applicability of the Kasambahay Law to family drivers, there is a need to revert back to the Civil Code provisions, particularly Articles 1689, 1697 and 1699, Section 1, Chapter 3, Title VIII, Book IV thereof. The Articles provide:

SEC. 1 — Household Service.

ART. 1689. Household service shall always be reasonably compensated. Any stipulation that household service is without compensation shall be void. Such compensation shall be in addition to the [househelper's] lodging, food, and medical attendance.

x x x x

ART. 1697. If the period for household service is fixed neither the head of the family nor the [househelper] may terminate the contract before the expiration of the term, except for a just cause. If the [househelper] is unjustly dismissed, he shall be paid the compensation already earned plus that for fifteen days by way of indemnity. If the [househelper] leaves without justifiable reason, he shall forfeit any salary due him and unpaid, for not exceeding fifteen days.

x x x x

ART. 1699. Upon the extinguishment of the service relation, the [househelper] may demand from the head of the family a written statement on the nature and duration of the service and the efficiency and conduct of the [househelper].

The reason for reverting back to the Civil Code provisions on household service is because, as discussed earlier, Section 44 of the Kasambahay Law expressly repealed Articles 141 to 152 of the Labor Code which deals with the rights of family drivers. Obviously, an expressly repealed statute is not anymore binding for it has no more force and effect.

On the other hand, Article 302 of the Labor Code, its repealing clause, which provides:

ART. 302. Repealing clause. - All labor laws not adopted as part of this Code either directly or by reference are hereby repealed. All provisions of existing laws, orders, decrees, rules and regulations inconsistent herewith are likewise repealed.

did not repeal the said Civil Code provisions since they are not inconsistent with the Labor Code. Besides, repeals by implication are not favored as laws are presumed to be passed with deliberation and full knowledge of all laws existing on the subject, the congruent application of which the courts must generally presume.

Since what were expressly repealed by the Kasambahay Law were only Articles 141 to 152, Chapter III of the Labor Code on Employment of Househelpers; and the Labor Code did not repeal the Civil Code provisions concerning household service which impliedly includes family drivers as they minister to the needs of a household, the said Civil Code provisions stand. To rule otherwise would leave family drivers without even a modicum of protection. Certainly, that could not have been the intent of the lawmakers.

Pursuant to Article 1697 of the Civil Code, respondent shall be paid the compensation he had already earned plus that for 15 days by way of indemnity if he was unjustly dismissed. However, if respondent left his employment without justifiable reason, he shall forfeit any salary due him and unpaid for not exceeding 15 days. Given that there is neither dismissal nor abandonment in this case, none of the party is entitled to claim any indemnity from the other. Verily, in a case where the employee's failure to work was occasioned neither by his abandonment nor by a termination, the burden of economic loss is not rightfully shifted to the employer; each party must bear his own loss. Otherwise stated, the respondent's act of not reporting to work after a verbal miscommunication cannot justify the payment of any form of remuneration.

Atienza vs. Saluta G.R. No. 233413, June 17 2019

• Respondent Noel Sacramento Saluta claimed he was hired as a company driver by CRV Corporation and was assigned to drive for the petitioner Celia R. Atienza, receiving a monthly salary of ₱9,000.
• A vehicular accident occurred on December 11, 2014, and the respondent was required to pay ₱15,000.00 for the damages. His driver's license was confiscated, and he was issued a Temporary Operator's Permit (TOP).
• On December 23, 2014, the respondent requested time off to renew his expired license, but the petitioner allegedly refused, leading to a misunderstanding. The respondent believed he had been verbally terminated when the petitioner said that "kung hindi ka makakapag-drive ngayon, mabuti pa maghiwalay na tayo." 
• Respondent filed a complaint against CRV Corporation and the petitioner, claiming illegal dismissal and other labor-related issues.
• The petitioner argued that the respondent abandoned his job and was not an employee of CRV Corporation but her personal/family driver. She contended that he left work without notice.

Respondent is the personal/family driver of the petitioner.

The respondent failed to provide competent evidence to prove his employment with the company. He did not present documents such as an employment contract, company identification, or pay slip that would demonstrate his inclusion in the company's payroll. The respondent also failed to show how the company exercised control over his work.

Respondent was not dismissed from employment.

Respondent's bare claim of having been dismissed from employment by the petitioner, unsubstantiated by impartial and independent evidence, is insufficient to establish such fact of dismissal. Bare and unsubstantiated allegations do not constitute substantial evidence and have no probative value.

The Civil Code shall govern the rights of family drivers.

Labor Code provides that family drivers are covered in the term domestic or household service. But due to the express repeal of the Labor Code provisions pertaining to househelpers, which includes family drivers, by the Kasambahay Law; and the non-applicability of the Kasambahay Law to family drivers, there is a need to revert back to the Civil Code provisions, particularly Articles 1689, 1697 and 1699, Section 1, Chapter 3, Title VIII, Book IV thereof. 

Given that there is neither dismissal nor abandonment in this case, none of the party is entitled to claim any indemnity from the other. Verily, in a case where the employee's failure to work was occasioned neither by his abandonment nor by a termination, the burden of economic loss is not rightfully shifted to the employer; each party must bear his own loss.

Petitioner is not liable for wage differentials, holiday pay, 13th month pay and service incentive leave pay.

As found by the Labor Arbiter, the ₱9,000.00 salary respondent receives a month is reasonable and in accordance with Article 1689 of the Civil Code. Hence, petitioner may not be made to pay the respondent wage differentials.

Management, Generally, Decides Employment Conditions

Q: What are working conditions and who determines them? Working conditions refer to the terms and circumstances affecting the employment of an employee, including policies, programs, and and regulations governing his employment status, work and work relationships, as well as salary and benefits. The working conditions, as a rule, are determined by the employer. 

• This authority of management is also called, quite loosely, "management prerogative."
• Realistically, the business owners and managers are rule-makers within the enterprise, but the regulations or the rules they make must conform with the laws of the land.
• It has been ruled that, except as limited by special laws, an employer is free to regulate, according to his own discretion, all aspects of employment.
• These include hiring, work assignments, working methods, time, place and manner of work, etc. So long as a company's prerogatives are 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 under valid agreements, the prerogatives will be upheld. 
• Management "prerogatives" are subject to restrictions by special laws, by contract, and by the basic principles of equity and fair play.