Labor Law: Book V; Title VI Chapter II Unfair Labor Practice of Employers (Art. 259)

Book V

Labor Relations

Title VI

Unfair Labor Practice

Chapter II

Unfair Labor Practice of Employers

Art. 259

Q: What does "unfair labor practice" mean?

Q: Does it mean unfair acts of a labor group? 

Q: Does it refer to any unfair or unreasonable act? 

Art. 258. Unfair labor practices of employers. 

It shall be unlawful for an employer to commit any of the following unfair labor practices:

(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;

(b) To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs;

(c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization;

(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters;

(e) To discriminate in regard to wages, hours of work and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. 

Employees of an appropriate bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non-union members accept the benefits under the collective bargaining agreement: Provided, that the individual authorization required under Article 250, paragraph (o) of this Code shall not apply to the non-members of the recognized collective bargaining agent;

(f) To dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code;

(g) To violate the duty to bargain collectively as prescribed by this Code;

(h) To pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute; or

(i) To violate a collective bargaining agreement.

The provisions of the preceding paragraph notwithstanding, only the officers and agents of corporations, associations or partnerships who have actually participated in, authorized or ratified unfair labor practices shall be held criminally liable. 

Own Notes

• Unfair Labor Practices by Employers
1. Interference and Coercion
• interfere with, restrain or coerce employees in the exercise of their right to self-organization
2. Employment condition requirement
• require as a condition of employment not to join a labor organization or shall withdraw from one to which he belong
3. Contracting out
• contract out services or functions being performed by union members when interfering with their rights to self-organization
4. Interfere with Labor Organization
• initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including giving support to organizers or supporters
5. Discrimination
• in regard to:
• wages
• hours of work 
• other terms and conditions of employment
• in order to encourage or discourage membership 
• Requiring membership in a recognized collective bargaining agent as a condition for employment is allowed, except:
• employees who are already members of another union at the time of the signing of the collective bargaining agreement
• Non-members may be assessed a reasonable fee if such non-union members accept the benefits under the collective bargaining agreement
• individual authorization required shall not apply
6. Dismissal
• dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code
7. Violation of Duty
• violate the duty to bargain collectively
8. Payment of Settlement Fees
• pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute
9. Violate CBA
• violate a collective bargaining agreement.
• Criminally Liable
• only the:
• officers and agents of 
• corporations
• associations
• partnerships 
• who have actually:
• participated in unfair labor practices
• authorized unfair labor practices
• ratified unfair labor practices

Management Rights Regulated

• It is the prerogative of management to regulate, according to its discretion and judgment, all aspects of employment. 
• This flows from the established rule that labor law does not authorize the substitution of the judgment of the employer in the conduct of its business. 
• Such management prerogative may be availed of without fear of any liability so long as it is exercised in good faith for the advancement of the employers' interest and not for the purpose of defeating Or circumventing the rights of employees under special laws or valid agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite. (Wise and Co., October 13, 1989)
• But the law spurns anti-unionism and this legal policy is one of the potent limitations to the so-called management prerogatives.

ULP, A Matter of Facts and Evidence

• Any allegation of unfair labor practice has to be proved by facts and evidence. Necessarily, determining the validity of an employer's act involves an appraisal of the motives. 
• In these cases, motivations are seldom expressly avowed, and avowals are not always candid. 
• There, thus, must be a measure of reliance on the administrative agency. 
• It is for the CIR [NLRC now], in the first instance, to weigh the employer's expressed motive in determining the effect on the employees of management's otherwise equivocal act. (Republic Savings Bank, 21 SCRA 226, 236, citing NLRB vs. M & B Headwear Co. 349 F2 170)

Interference, Restraint, or Coercion

• Of the nine prohibitions in Article 259, the first is of the broadest scope.
• In fact, the remaining eight (except possibly the last) may be viewed as indications of interference, or restraint, or coercion.
• Interference, restraint or coercion by the employer may constitute ULP even when it is committed before the employees' union is formally formally registered.
• The law protects formation and not only existence of unions. 
• Indeed, if unions are not protected during the conception stage, their birth may not come at all.
• The following are examples of unlawful acts to discourage in a labor organization: 
• dismissal of union members upon their refusal to give up their membership, under the pretext of retrenchment due to reduced dollar allocations (Manila Pencil, 14 SCRA 953);
• dismissal of an old employee allegedly for inefficiency, on account of her having joined a union and engaging in union activities. (East Asiatic, 16 SCRA 820)

Totality of Conduct Doctrine

• An employer's expression of opinion about unionization may or may not amount to ULP, depending on combination of circumstances.
• The "totality of conduct doctrine" holds that the culpability of an employer's remarks is to be evaluated not only on the basis of their implications, but against the background of collateral circumstances. 
• Under this doctrine, expressions of opinion by an employer, though innocent in themselves, frequently are held to be culpable or objectionable because of the circumstances under which they are uttered.

Closure; "Successor Employer" Doctrine

• Where the sale of a business enterprise was attended with bad faith, there is no need to consider the applicability of the rule that labor contracts, being in personam, are not enforceable against the transferee. 
• The latter is in the position of tortfeasor (or a wrongdoer), having been a party likewise responsible for the damage inflicted on the members of the aggrieved union and therefore cannot justly escape liability. (See Cruz vs. PAFLU, October 29 1971.)
• Closure is likewise not legal and the employees cannot be separated if, in fact, there is no closure because the "closed" department or company reappeared under a new name. If the "new" or take-over company is, for instance, engaging in the same business as that of the closed company or department, or is owned by the same people, and the "closure" is calculated to defeat the workers' organizational right, then, the closure may be declared a "subterfuge" and the doctrine of successor employer will be applied. 
• Under this doctrine, the new company will be treated as a continuation or successor of the "new" firm because in the first place they should not have been separated at all. 

Piercing the Corporate Veil

• The "successor employer" ruling is an enforcement of the legal recourse called "piercing the veil of corporate entity." 
• This means that the legal fiction that the corporation has a legal personality separate from that of the stockholders will be disregarded if the separateness of personalities is being used to escape corporate obligations. 
• The corporate veil will be lifted, so to speak, and the people covered by the veil will be identified and exposed, and be made answerable for the corporate liabilities.

Run-away Shop

• A "run-away shop" as ULP is defined as an industrial plant moved by its owners from one location to another to escape union labor regulations, or state laws. 
• The term is also used to describe a plant removed to a new location in order to discriminate against employees at the old plant because of their union activities.
• It is one wherein the employer moves its business to another location or it temporarily closes its business for anti-union purposes. 
• A "run-away shop' in this sense is a relocation motivated by anti-union animus rather than business reasons.
• Where the alleged run-away shop was not set up merely for the purpose of transferring the business but in fact was already existing as an independent company at the time the labor dispute arose, it cannot be said that the temporary closure and subsequent transfer of business were for anti-union purposes
• The Union should have shown that the primary reason for the closure of the establishment was due to the union activities of the employees. (See Complex Electronics Employees Association, July 19, 1999.)

"Yellow Dog" Contract

• The "yellow dog" contract is a promise exacted from workers or prospective employees that they will not belong to, or form, a union during their employment.
• Unless the promise is given:
• the worker will not be hired, or
• if already hired, will lose his job.
• The act of obtaining the promise is considered ULP.

Subcontracting

• Contracting work out by an employer is an unfair labor practice when it is motivated by a desire to prevent his employees from organizing and selecting a collective bargaining representative. 
• So also, if the motive is:
• to rid himself of union men, or 
• to escape his statutory duty to bargain collectively with his employees' bargaining representative.
• On the other hand, an employer is not guilty of an unfair labor practice in contracting work out for business reasons. These may refer to:
• a decline in business
• the inadequacy of equipment, or 
• the need to reduce cost, even if the employer's estimate of his cost is based on a projected increase attributable to unionization.
• In such a case, the real issue is not whether the employer's business reasons are good or bad, but whether they actually motivated the contracting out. 
• The (US) NLRB cannot substitute its business judgment for that of the employer in determining whether the contracting out out was illegally motivated. 
• For instance, it is grave abuse of discretion of the Secretary of Labor to require the management to consult the union before implementing a job contracting out that would last for six months or more. The existing legal limitations to contracting out should suffice. (See Manila Electric, January 27, 1999.)

Company-Domination of Union

• Domination of a labor union, another instance of ULP, usually manifests in the following forms:
• Initiation of the company union idea.
• This may further occur in three styles: 
1. outright formation by the employer or his representatives;
2. employee formation on outright demand or influence by employer; and 
3. managerially motivated formation by employees.
• Financial support to the union.
• An employer commits unfair labor practice if he defrays the union expenses or pays the fees of the attorney who drafted the union's constitution and by-laws.
• Employer encouragement and assistance. 
• Immediately granting the union exclusive recognition as a bargaining agent without determining whether the union represents the majority of employees is an illegal form of assistance amounting to unfair labor practice.
• Supervisory assistance. 
• This takes the form of soliciting membership permitting union activities during working time or coercing employees to join the union by threats of dismissal or demotion. (Philippine American Cigar, 7 SCRA 375)

Discrimination

• What the law prohibits under this Article is discrimination to encourage or discourage membership in a labor organization. Thus, where the purpose is to influence the union activity of employees, the discrimination is unlawful. 
• But discrimination is not the same as differentiation or classification. 
• For instance, management classifies jobs and grant them varying levels of pay or benefits. They are valid differentiations that recognize differences in job requirements or contributions. They are not necessarily discrimination constituting ULP.
• To determine whether or not a discharge is discriminatory, the underlying reason for it should be established. 
• The fact that a lawful cause for discharge is available is not a defense where the employee is actually discharged because of his union activities. 
• Conversely, if the discharge is actually motivated by a lawful reason, the fact that the employee is engaged in union activities at the time will not lie against the employer and prevent him from the exercise of his business judgment to discharge an employee for cause. (NLRB vs. Ace Comb Co., 342 F. 2841)
• The American case, Ace Comb, upholds the dismissal of union officers. Hence, it does not support a union's contention that necessarily the employer should be found guilty of ULP because it dismissed employees who were union officers. In other words, dismissing a union officer does not necessarily amount to ULP. (Cainta Catholic School, May 4, 2006)

Valid Discrimination; Union Security Clause

• "Union security" clause is a term applied to any form of agreement within CBA which imposes upon employees the obligation to acquire or retain union membership, at the expense of their employment if they fail to do so.
• The objective is to assure continued existence of the union through enforced membership. 
• In a sense, there is discrimination when certain employees are obliged to join a particular union. But it is discrimination favoring unionism; it is a valid kind of discrimination. 
• Union security clauses are varied. 
• "Union shop" clause 
• allows employment of non-union members but compels membership after some period of time since hiring. 
• "MM" or maintenance of membership 
• authorizes a union to demand employment termination of one that ceases being a member. 
• "Agency shop" 
• does not compel membership but requires payment of a certain fee usually equal to a member's dues. 
• This is the type referred to in Article 259 (e).
• "Closed shop"
• bars the hiring of non-union members
• most prized by unions
• All employees in the bargaining unit covered by a "closed shop agreement" are subject to its terms, i.e they should be union members, except the following:
1. any employee who at the time the "closed shop" agreement takes effect is a bona bona fide member of a religious organization which prohibits its members from joining labor unions on religious grounds; 
2. employees already in the service and already members of a union other than the majority at the time the "closed-shop" agreement took effect; and
3. employees excluded from the "closed shop" by express terms of the agreement.
• These exclusions apply as well  to other types of union security agreements, such as the agency shop. (National Brewery, 8 SCRA 805 [1963])
• Confidential employees, because they are not part of the rank-and-file bargaining unit, are necessarily outside the coverage of the union security clause, as already discussed under Article 255. For the same reason, they may not be required to pay agency fee.
• Union security shop arrangements are binding even if the employees are not aware of such agreement. Ignorance of or dissatisfaction with the terms does not justify breach of such an arrangement and the subsequent formation of a new union. (Manalang, 21 SCRA 561)
• Union shop, like closed-shop stipulation, should be strictly construed.
• In the case of Confederated Sons of Labo, promulgated on April 29, 1960, the Supreme Court, noting the potency of a union or closed-shop agreement, ruled that to validly dismiss an employee because of a union shop or closed-shop provision, there should be a clear and unequivocal statement that loss of good standing in the union would be a cause for dismissal.
• Furthermore, the employer must observe due process. 
• The employee must be given ample opportunity to defend himself. 
• This right of an employee to be informed of the charges against him and to have reasonable opportunity to present his side in a controversy with either the company or his union, is not wiped away by a union security clause or a union shop clause in a CBA. (Ferrer, July 5, 1993) 
• Even on the assumption that the federation had valid grounds to expel the local union officers, due process requires that these union officers be accorded a separate hearing by the [employer] company. (Malayang Samahan ng mga Manggagawa, February 28, 2000)
• A union security clause, moreover, is subject to the application of the law on "freedom period." 
• During this period, union members may move over to other unions. This is discussed under Article 268 on employee representation.

Retaliation

• Like Article 259(e), the subject of Article 259(f) is discrimination. 
• But, unlike Article 259(e) where the employer's motive is to discourage or encourage union membership, in Article 259(f) the employer's motive is immaterial.
• The bare fact that he dismisses or otherwise discriminates against an employee simply because the employee is testifying is enough to constitute a ULP act.
• The employer may or may not have been motivated by an anti-union attitude, in fact, there may be no union at all; or the employee's testimony may or may not be true and may or may not relate to union matters. 
• These are not issues under Article 259(f). 
• The ULP act there consists in the employer's retaliation against the employee, regardless of the employer's purpose and regardless of the nature or subject matter of the employee's testimony.

Q: What are the nine unfair labor practices committed by employers under art 259 of the Labor Code? Briefly explain each and briefly explain an illustrative case, if applicable, per practice. 

The following are the unfair labor practices committed by employers:

1. Interference, Restraint and Coercion 
• It occurs when an employer interferes with, restrains or coerces employees in the exercise of their right to self-organization.
• Illustrative case: An employer who dismissed employees who are planning to form a labor organization. 
2. “Yellow Dog” Condition
• It occurs when an employer requires as a condition of employment not to join a labor organization or to withdraw his membership from one. 
• Illustrative case: An employer who rejected an applicant who refused to withdraw his membership from a labor organization. 
3. Contracting Out
• It occurs when an employer contracts out services or which are performed by union members who are exercising their rights to self-organization.
• Illustrative case: An employer who hired contract workers to replace employees who are engaging in a strike. 
4. Company-Domination of Union 
• It occurs when an employer interferes with the formation or administration of any labor organization, including giving support. 
• Illustrative case: An employer who motivated employees to form a union by giving them incentives. 
5. Discrimination
• It occurs when an employer discriminates in regard to labor standards and terms and conditions of employment to encourage or discourage membership
• Illustrative case: An employer who gave salary increase to non-union members employees on the sole account of them being non-union members.
6. Retaliation
• It occurs when an employer discriminates against an employee for having giving testimony under this Code. 
• Illustrative case: An employer who dismissed an employee who testified against the unfair labor practices in the company. 
7. Violation of Duty 
• It occurs when an employer violates the duty to bargain collectively.
• Illustrative case: An employer who refused to observe good faith in bargaining by not participating in the deliberation of agreement. 
8. Paid Settlement
• It occurs when an employer pays negotiation or attorney’s fees to the union to settle of any issue in collective bargaining. 
• Illustrative case: An employer who paid the union members in as part of the settlement in a dispute. 
9. Violation of the CBA
• It occurs when an employer violates the duty a collective bargaining agreement.
• Illustrative case: An employer who failed to comply with the provision in a CBA against changes in working conditions of the employees.

Q: What is the totality of conduct doctrine?

The totality of conduct doctrine provides that an employer’s remarks about unionization may not constitute to Unfair Labor Practice based only on their implications, but the circumstances under which they are uttered must also be considered.

Q: What is a runaway shop? 

A run-away shop is a relocation of an industrial plant in order to evade union regulations or labor laws, or to discriminate employees because of their union activities. A run-away shop is a relocation with motivations of anti-union intention. 

Q: What is the successor-employer doctrine?

A successor-employer doctrine provides that when a sale of company is with bad faith, and the new company engages in the same business and owned by the same people, the new company will be considered as the continuation or successor of the former company as if there was no closure at all. 

Q: What is the test of employer discrimination as a form of ULP?

The test of employer discrimination is the establishment of the underlying reason to establish the discrimination. The act of the employer must be motivated by bad faith and unlawful reason in order to be discriminatory. 

Q: Enumerate kinds of Union security arrangements? Briefly explain each. 

The following are the kinds of Union security arrangements: 

1. Union Shop 
• It permits hiring non-union members but mandates membership after a certain duration of employment.
2. Maintenance of membership 
• It grants the union the authority to request the termination of employment for individuals who cease their membership. 
3. Agency Shop
• It does not enforce compulsory membership but requires fee equivalent to a member's dues.
4. Closed Shop 
• It prohibits hiring of non-union members. 

Q: Who are exempted from compulsory coverage of a closed shop clause in a CBA? Briefly describe each exempted group. 

The following are exempted from compulsory coverage of a closed shop clause in a CBA: 

1. Bona fide members of a religious organization
• These are employees who faithfully adheres to the teachings of their religions which prohibits affiliation with unions. 
2. Employees already in the service and already members of a union 
• These are employees who are already members of a union at the time the closed shop clause was implemented.
3. Confidential Employees 
• These are employees who act in confidential capacity and have access to confidential matters of the management. 
4. Excluded by express terms of agreement 
• These are employees who are expressly excluded from the closed shop clause,