The Labor Code and The Dynamics Between Employees and Employers

ATTY. J. OSWALD B. LORENZO

Former Labor Arbiter, NCR-NLRC; Professor of Law and Pre-Bar Reviewer; NCRPrePresident, The Center for Law Advocacy and Specialized Studies (CLASS); former Assistant Secretary, DENR and POEA Director for Licensing and Past President, National Association of Labor Arbiters (NALA), Inc.

SOCIAL SECURITY SYSTEM

(RA1161 as amended by RA 8282)

COVERAGE:  Compulsory:  Compulsory upon all employees not over 60 years of age and their employers  In case of domestic helpers, their monthly income should not be less than one thousand pesos  Compulsory upon such self- employed selfpersons as may be determined by the Commission including but not limited to the following (Sec 9-A): A):
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All self employed professionals  Partners and single proprietors  Actors and actresses directors, scriptwriters and news correspondents who do not fall within the definition of the term employee in Section 8 (d) of this Act  Professional athletes, coaches, trainers, and jockeys  Individual farmers and fishermen


Limitation: Sec. 9 (a)  Any benefit already earned by the employees under private benefit plans existing at the time of the approval of the Act shall not be discontinued, reduced or otherwise impaired
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Voluntary: Voluntary:  Spouses who devote full time to managing the household and family affairs, unless they are also engaged in other vocation or employment which is subject to mandatory coverage, may be covered by coverage, the SSS on a voluntary basis. basis.  Filipinos recruited by foreign based employers for employment abroad may be covered by the SSS on a voluntary basis  Employees separated from employment may continue to pay contributions to maintain his right to full benefits (Sec. 11) (Sec. 11)  Self-employed with no income (11-A) Self115

BY AGREEMENT: Any foreign government, international organization, or their wholly-owned whollyinstrumentality employing workers in the Philippines, may enter into an agreement with the Philippine government for the inclusion of such employees in the SSS except those already covered by their respective civil service retirement systems (Sec.8 (j (4). (Sec.

EXCLUDED EMPLOYMENT (SEC. 8 (J)): (SEC. (J)): Employment purely casual and not for the purpose of occupation or business of the employer  Service performed on or in connection with an alien vessel by an employee if he is employed when such vessel is outside the Philippines. Philippines.  Service performed in the employ of the Philippine government or instrumentality or agency thereof. thereof.  Service performed in the employ of a foreign government, international organization, or their wholly owned instrumentality; instrumentality;  Services performed by temporary employees, which may be excluded by regulation of the commission. commission.

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EFFECTIVE DATE OF COVERAGE:



Employer: Employer: It shall take effect on the first day of his operation Employee: Employee: On the day of his employment Self-employed: Self-employed: It shall take effect upon his registration with SSS
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Definition of Terms  EMPLOYER Any person natural or juridical, domestic or foreign, who carries on in the Philippines, any trade business, industry undertaking or activity of any kind and uses the services of another person who is under his orders as regards the employment except the Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or controlled by the Government  Self- employed person shall be both the employer Selfand employee at the same time
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EMPLOYEE Any person who performs services for an employer in which either or both mental and physical efforts are used and who receives compensation for such services, where there is an employer- employee relationship. employerrelationship.


SelfSelf- employed person shall be both the employer and employee at the same time
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DEPENDENTS: DEPENDENTS:

The legal spouse entitled by law to receive support from the member The legitimate, legitimated or legally adopted and illegitimate child who is unmarried, not gainfully employed and has not reached 21 years of age or if 21 years of age, he is congenitally incapacitated or while still a minor has been permanently incapacitated and incapable of self- support, physically and selfmentally and The parent who is receiving regular support from the member
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BENEFICIARIES  The dependent spouse until he or she remarries, the dependent legitimate, legitimated or legally adopted and illegitimate children who shall be the primary beneficiaries of the member  PROVIDED that the dependent illegitimate children shall be entitled to 50% of the share of the legitimate, legitimated or legally adopted children.
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PROVIDED FURTHER in the absence of the legitimated, legally adopted or legitimate children, illegitimate children shall be entitled to 100% of the benefits. 100% benefits.  IN THEIR ABSENCE, the dependent ABSENCE, parents who shall be the secondary beneficiaries. beneficiaries.  IN THE ABSENCE OF ALL of the foregoing, any person designated by the covered employee as secondary beneficiary. beneficiary.

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Benefits:  Monthly pension  Dependents pension

 Retirement

benefits

SUSPENSION OF MONTHLY PENSION: PENSION: Upon the re-employment or resumption of selfreselfemployment of a retired employee who is less than 65 years old. old.
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Death Benefits Permanent disability benefits Funeral Benefit A funeral grant equivalent to Twelve thousand pesos (P12, 000.00) shall be paid, (P12, 000.00) in cash or in kind, to help defray the cost of funeral expenses upon the death of a member, including permanently totally disabled member or retiree. retiree. Sickness benefit
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Maternity Leave Benefit It shall be paid to a female employee who has paid at least 3 monthly contributions in the twelve month period immediately preceding the semester of her childbirth or miscarriage PROVIDED:  That the employee shall have notified her employer of her pregnancy and the probable date of her childbirth which notice shall be transmitted to the SSS.  The full payment shall be advanced by the employer within 30 days from the filing of the maternity leave application
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Payment of daily maternity benefits shall be a bar to the recovery of sickness benefits  The maternity benefits provided under this section shall be paid only for the first 4 deliveries or miscarriages  The SSS shall immediately reimburse the employer 100% of the benefits advanced by the 100% latter  If no contributions were remitted by the employer or no notice was given to SS, the employer shall be liable for damages equivalent to the benefits which said employee member would otherwise have been entitled to. to.

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 Non-transferability Non-

of benefits (Sec. 15) Such benefits are not transferable and no power of attorney or other document executed by those entitled thereto, in favor of any agent, attorney or any other person for the collection thereof on their behalf shall be recognized, except when they are physically unable to collect personally such benefits. benefits.
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Remittance:  It shall be remitted within the first 10 days of each calendar month following the month for which they are applicable or within such time as the Commission may prescribe. prescribe.


For self-employed they shall remit their selfcontributions quarterly on such dates and schedules as the Commission may require. require.
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GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) RA 8291

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COMPULSORY MEMBERSHIP (Sec. 3) (Sec. Compulsory for all employees (as defined in Section 2 (d) of GSIS Law) receiving compensation who have not reached the compulsory retirement age, irrespective of employment status, EXCEPT MEMBERS OF THE ARMED FORCES AND THE PNP, subject to the condition PNP, that they must settle first their financial obligations with the GSIS and contractuals who have no employer and employee relationship with the agencies they serve. serve.
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EXCEPT FOR THE MEMBERS OF THE JUDICIARY AND CONSTITUTIONAL COMMISSIONS WHO SHALL HAVE LIFE INSURANCE ONLY, all members of ONLY, the GSIS shall have life insurance, retirement and all other social security protection such as disability, survivorship, separation and unemployment benefits. benefits.

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Definition of Terms:  Employer: The national government, its political subdivisions, branches, agencies or instrumentalities including GOCCs and financial institutions with original charters, the constitutional commissions and the judiciary  Employee or Member: Member: Any person receiving compensation while in the service of an employer as defined herein, whether by election or appointment, irrespective of status appointment,
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Dependents: Dependents:  The legitimate spouse dependent for support upon the member or pensioner  The legitimate, legitimated legally adopted child, including the illegitimate child who is: is:  unmarried,  not gainfully employed,  not over the age of majority,  or is over the age of majority but incapacitated and incapable of self-support due to a mental or selfphysical defect acquired prior to age of majority  Parents dependent upon the member for support
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Primary Beneficiary: Beneficiary: The legal dependent spouse until he/she remarries Secondary Beneficiary: Beneficiary: The dependent parents and subject to the restrictions on dependent children, the legitimate descendants Disability: Disability: Any loss or impairment of the normal functions of the physical and/or mental faculty of a member which reduces or eliminates his/her capacity to continue with his/her current gainful occupation or engage in any other gainful occupation. occupation.
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Total Disability Permanent Total Disability Temporary Total Disability Permanent Partial Disability

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Benefits: Benefits:  SEPARATION BENEFITS (SEC. 11): (SEC. 11) Separation benefits are given to the: the:  The member resigns or separates from the service after he has rendered at least three (3) years of service but less than fifteen (15) years or 15)  The member resigns or separates from office after he has rendered at least fifteen (15) years of service and is below sixty 15) (60) years of age at the time of resignation 60) or separation. separation.
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Separation benefits likewise include:  UNEMPLOYMENT OR INVOLUNTARY SEPARATION BENEFITS (Sec. 12): shall (Sec. 12) be paid to a permanent employee who is involuntarily separated from the service due to the abolition of his office or position usually resulting from reorganization PROVIDED that he has been paying integrated contributions for at least one (1) year prior to separation. separation.

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RETIREMENT BENEFITS PERMANENT DISABILITY BENEFITS

PERMANENT PARTIAL DISABILITY (Sec. 17) (Sec. 17)

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IN THE ABSENCE OF PRIMARY BENEFICIARIES, THE SECONDARY BENEFICIARIES SHALL BE ENTITLED TO: TO:


Cash payment equivalent to 100% of his average 100% monthly compensation for each year of service he paid contributions, but not less than P12,000 12, PROVIDED that the member is in service at the time of his death and has at least 3 years of service. service. In the absence of secondary beneficiaries , the benefits under this paragraph shall be paid to the legal heirs
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FUNERAL BENEFITS: BENEFITS: It shall not be less than twelve thousand pesos (P12,000.00) PROVIDED that it shall (P12,000.00) be increased to at least eighteen thousand pesos (P18,000.00) after five years and shall (P18,000.00) be paid upon death. death.

LIFE INSURANCE BENEFITS: All employees except members of the AFP and the PNP shall be compulsorily covered with life insurance. insurance.
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Adjudication of Claims and Disputes



PRESCRIPTION OF CLAIMS Claims for benefits under the Act except for life and retirement shall prescribe AFTER 4 YEARS FROM THE DATE OF THE CONTINGENCY. CONTINGENCY. JURISDICTION GSIS shall have the exclusive and original jurisdiction to settle any dispute arising under the Act and any other laws administered by the GSIS. GSIS. Appealable under Rule 43 and 45 Of the 1997 Rules of Civil Procedure. The appeal shall not stay the execution of Procedure. the order or award unless ordered by the Boards, CA, or SC and the appeal shall be without prejudice to the special civil action of certiorari when proper. proper.
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13TH MONTH PAY LAW (P.D. 851)

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SEC. SEC. 2.

DEFINITION OF CERTAIN TERMS

"THIRTEENTH-MOTH PAY" - shall mean one THIRTEENTHPAY" twelfth (1/12) of the basic salary of an employee 12) within a calendar year; year; "BASIC SALARY" - include all remunerations or SALARY" earnings paid by an employer to an employee for services rendered but may not include: include:  Cost-of-living allowances Cost-of Profit-sharing payments, and Profit All allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 16, 1975. 1975.
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WHAT CAN BE CONSIDERED AS 13TH MONTH PAY: Christmas bonus  Midyear bonuses  Cash bonuses


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SEC. 3. EMPLOYERS COVERED - The Decree shall apply to all employers except to: a. Distressed employers, - such as:  those which are currently incurring substantial losses; losses; or  in the case of non-profit institutions and nonorganizations, where their income, whether from donations, contributions, grants and other earnings from any source, has consistently declined by more than forty (40%) percent of their normal income for 40% the last two (2) years, subject to the provision of Section 7 of this issuance; issuance; b. The Government and any of its political subdivisions, including GOCCs except those corporations operating essentially as private subsidiaries of the Government
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c. Employers already paying their employees 1313month pay or more in a calendar year of its equivalent at the time of this issuance; issuance; d. Employers of household helpers and persons in the personal service of another in relation to such workers; workers; and e. Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which piececase the employer shall be covered by this issuance insofar as such workers are concerned. concerned.
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WORKERS PAID ON PIECE-RATE BASIS PIECErefer to those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same. same. "ITS EQUIVALENT" (as used in paragraph c) hereof) shall include: include:  Christmas bonus  mid-year bonus mid profit-sharing payments and profit38

other cash bonuses amounting to not less than 1/12th of the basic salary but shall 12th not include cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employee, as well as non-monetary nonbenefits. benefits. Where an employer pays less than 1/12th of the employees basic salary, the 12th employer shall pay the difference. difference.
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SEC. 4. EMPLOYEES COVERED Except as provided in Section 3 of this issuance, all employees of covered employers shall be entitled to benefit provided under the Decree who are receiving not more than P1,000 a month, regardless of their position, designation or employment status, and irrespective of the method by which their wages are paid, provided that they have worked for at least one month during the calendar year. year. WHO ARE EXCLUDED FROM COVERAGE:  government employees  household helpers  employees paid purely on commission basis  employees already receiving 13th month pay
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SEC. 5. OPTION OF COVERED EMPLOYERS A covered employer may pay one-half of onethe 13th-month pay required by the Decree 13thbefore the opening of the regular school year and the other half on or before the 24th day of 24th December of every year. year. In any establishment where a union has been recognized or certified as the collective bargaining agent of the employees therein, the periodicity or frequency of payment of the 13th 13th month pay may be the subject of agreement. agreement.
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SEC. 7. EXEMPTION OF DISTRESSED EMPLOYERS Distressed employers shall qualify for exemption from the requirement of the Decree upon prior authorization by the Secretary of Labor. Labor.

SEC. 9. ADJUDICATION OF CLAIMS NonNon-payment of the thirteenth-month pay thirteenthprovided by the Decree and these rules shall be treated as money claims cases and shall be processed in accordance with the Rules Implementing the Labor Code of the Philippines and the Rules of the National Labor Relations Commission. Commission.
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SEC. 10. PROHIBITION AGAINST REDUCTION OR ELIMINATION OF BENEFITS Nothing herein shall be construed to authorize any employer to eliminate, or diminish in any way, supplements, or other employee benefits or favorable practice being enjoyed by the employee at the time of promulgation of this issuance. issuance.
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PRIVATE SCHOOL TEACHERS Private school teachers, including faculty members of colleges and universities, are entitled to 1/12 of their annual basic pay regardless of the number of months they teach or are paid within a year. year. OVERTIME PAY Overtime pay, earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13-month pay. 13pay.
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Is it necessary that a woman be impregnated by her legitimate spouse? No. it is immaterial who the father is. Every pregnant woman in the private sector, whether married or unmarried, is entitled to the maternity leave benefits.

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EXTENSION OF MATERNITY LEAVE [ART 133 (b)] [ART (b)] the maternity leave shall be extended without pay on account of illness medically certified to arise out of the pregnancy, delivery, abortion, or miscarriage, which renders the woman unfit for work , unless she has earned unused leave credits from which such extended leave may be charged. charged.
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PATERNITY LEAVE (RA 8187 , July 5,1996)

Grants paternity leave of 7 days with full pay, consisting of basic salary, to all married male employees in the public and private sector. sector. Available only for the first 4 deliveries of the legitimate spouse with whom the husband is cohabiting; cohabiting; the term delivery includes childbirth, miscarriage or abortion. abortion. In the event that such leave was not availed of, said leave shall not be convertible to cash. cash.
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PURPOSE: to enable the husband to lend support to PURPOSE: his wife during the period of recovery and/ or in the nursing of the newly born child. child. CONDITIONS FOR ENTITLEMENT: ENTITLEMENT:  He is an employee at the time of the delivery of his child; child;  He is cohabiting with his spouse at the time she gives birth or suffers a miscarriage; miscarriage;  He has applied for paternity leave with his employer; employer;  His wife has given birth or suffered a miscarriage; miscarriage; the term wife refers to the lawful wife which means the woman who is legally married to the male employee concerned. concerned.
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APPLICATION OF LEAVE: LEAVE: Must be made: made:  within a reasonable time from the expected date of delivery by the pregnant spouse. spouse.  within such period as may be provided by company rules & regulations or CBA. CBA.  prior application for leave shall NOT be required in case of miscarriage. miscarriage.
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EMPLOYMENT OF MINORS

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ART. 139. MINIMUM EMPLOYABLE AGE GENERAL RULE: No child below 15 shall be employed. CONDITIONS ON THE EMPLOYMENT OF A CHILD BELOW 15:


When the child works directly under the sole responsibility of his/her parents or legal guardian who employs members of his/her family only under the following conditions: conditions:
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employment does not endanger the childs life, safety, health and morals; morals; employment does not impair the childs normal development; and development; the parent/legal guardian provides the child with the primary and/or secondary education prescribed by DECS. DECS.
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Where the childs employment or participation in public entertainment or information through cinema, theater, radio, or television is essential, provided that: that:  employment does not involve advertisements or commercials promoting alcoholic beverages, intoxicating drinks, tobacco and its byby-products or exhibiting violence; violence;
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There is a written contract approved by the DOLE; and DOLE;  The conditions prescribed for the employment of minors {above stated} are met. met.  Any person between the ages of 15 and 18 may be employed in any nonnon-hazardous work. work.

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NONNON-HAZARDOUS WORK OR UNDERTAKING one where the employee is not exposed to any risk which constitutes an imminent danger to his safety and health. health. HAZARDOUS WORKPLACES: WORKPLACES:  where the nature of the work exposes the workers to dangerous environmental elements, contaminants or work conditions; conditions;
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where the workers are engaged in construction work, logging, fire-fighting, mining, quarrying, fireblasting, stevedoring, dock work, deep-sea deepfishing, and mechanized farming; farming;  where the workers are engaged in the manufacture or handling of explosives and other pyrotechnic products; products;  where the workers use or are exposed to heavy or power-driven machinery or equipment; and powerequipment;  where the workers use or are exposed to powerpowerdriven tools

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END
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