Chapter 7 - Understanding the Legal Codes

Employment of Foreigners | Employing Filipino Workers | Recorking the Genie
Labor Disputes | Labor-Only Contracting

The Labor Code also governs the labor practices of a foreign company that is qualified to establish a branch in the Philippines. It is advisable for any foreign company contemplating sizeable local operations to hire a human resource manager or head of the personnel department before employing other staff. Such a person should be able to handle subsequent employment or contract requirements.

In his or her qualifications, the head of the personnel department must be fully aware of the labor laws in the Philippines, including its provisions on wages, benefits, privileges and rights of the workers whom the company is about to employ. The computation of wages and benefits for workers is usually the task of the accounting department.

Before employing workers, the personnel department usually places an advertisement in Sunday editions of widely circulated newspapers such as the Manila Bulletin. Applicants are normally asked to submit with their application letter, a resume or bio-data, transcript of records, a National Bureau of Investigation (NBI) clearance and items from their personal portfolio via mail, E-mail. Sometimes walk-in applications are accepted, if the demand for the position is urgent.

Screening of the application letters is usually followed by a written examination or trial task, which is scheduled and conducted by the personnel department. Such examination is academic and psychological in nature. Those who will pass the exam will then be scheduled for interview or another examination to be conducted by the head of the department to which the vacant position belongs.

The interview must clarify the expectations not only of the company but also of the applicant. It is during this process that wages, benefits and growth opportunities in the company are discussed.

It is wise to note that the forging of educational and other records is not uncommon in the Philippines and it is extremely unwise to make a decision on hiring solely on the basis of written statements or work samples.

Similarly, the employer is sometimes encouraged to circumvent the normal hiring process by taking on an employee recommended by an existing employee. Work is scarce in the Philippines and good jobs are highly competitive. Everybody knows somebody who is looking for a job. In such circumstances the best practice is simply to pass on the duty statement of the position and encourage an applicant to apply through the normal channels.

Fair Employment

The Labor Code promotes (in theory) equal opportunities for all, regardless of the applicants' sex, race or religious belief Preference for graduates of a certain school is discouraged, because the company will be deprived of skilled applicants from other universities or colleges. Hiring an applicant is usually based on his or her skills developed through years of experience rather than education.

Preference for male over female applicants is also discouraged. The law prohibits as a condition of employment that a woman employee shall not get married, or that a woman employee shall be deemed dismissed upon marriage. Minimum age of employment is 18 years for hazardous jobs, and 15 years for non-hazardous jobs. But a child below 15 may be employed by parents or guardians in a non-hazardous job provided the employment does not interfere with the child's schooling. In fact many children do not complete high school and under age employment is widespread in spite of the law.

The labor department defines hazardous jobs as being those that expose an employee to dangerous environmental elements, including contaminants, radiation, fire, poisonous substances, biological agents and explosives, or dangerous processes or equipment including construction, mining, quarrying, blasting, stevedoring, mechanized farming and operating heavy equipment.

While the Labor Code ensures the security of tenure of each worker, dismissal for work is allowed only after due process and with the presence of the following:

Just Cause
- Serious misconduct;
- Willful disobedience of employers' lawful orders connected with work;
- Goss and habitual neglect of duty;
- Fraud or willful breach of trust;
- Commission of crime or offense against the employer, family member/s or representative; and
- Other analogous cases

Authorized Cause
- Introduction of labor-saving devices;
- Redundancy of positions;
- Retrenchment to prevent losses;
- Closure or cessation of business.

Employers, however, have to observe due process before dismissing a worker or employee on a just cause. Such due process involves issuance of a notice to employee of intent to dismiss and grounds for dismissal; giving the employee an opportunity to explain his or her side; and issuance of a final notice to dismiss .In an authorized cause, due process means written notice of dismissal to the employee specifying the grounds, at least 30 days before the date of termination.

Workdays, Holidays, Overtime and Leave Entitlements

Most companies require their employees to work five days a week (Monday to Friday), but other firms (and especially factories) extend their operations until 12 noon on Saturday. Again factories sometimes require their employees to work full Saturdays although this is couched as "volunteering for duty." Each working day is equivalent to eight hours of work plus breaks or rest period. The rest period - for snacks or coffee - should not exceed one hour. Excluded from the computation of the eight-hour workday is the one-hour meal (12 noon to 1 p.m.).

The normal working period is between 8 a.m. to 5 p.m. or 9 a.m. to 6 p.m. although some companies extend the workday from 8am to 6pm without paying additional benefits. Employees working later than 10 p.m. or earlier than 6 a.m. are entitled to night shift pay, which is 10 percent higher than the daytime wage. Employers are required to give overtime pay to employees working for more than 8 hours a day. Managers, secretaries or assistants and non-regular employees are exempted from overtime pay.

The law states that no employee may be forced to work overtime except during war, emergencies, disasters or calamities; when urgent repairs need to be undertaken; when work is necessary to preserve perishable goods, avoid serious obstruction or prejudice to the employer's business; or take advantage of favorable weather conditions.

The Minimum Wage Rationalization Act or Republic Act No. 6727 provides a minimum daily wage for workers in each of the country's 16 regions. For example the minimum daily wage in Metro Manila is about P280.The rate is lower in other regions. It should be noted however that the minimum daily wage generally applies only to laborers and unskilled workers.

Overtime pay is normally about 25 percent higher than the regular hourly rate. Payment for service extended during a holiday is twice the regular rate; special rest day, 50 percent higher; and special day, 30 percent higher. A rest day is usually a Sunday or Saturday.

The law also requires employers to give their workers an annual bonus equivalent to a 13th Month salary. It is usually given in the fourth quarter of the year and usually given as a Christmas bonus.

The following are the legal holidays and special days in the Philippines:

Regular Holidays
- New Year's Day: January 1
- Maundy Thursday: movable dates
- Good Friday: movable dates
- Araw ng Kagitingan (Day of Valor): April 9
- Labor Day: May 1
- Independence Day: June 12
- National Heroes Day: last Sunday of August
- Bonifacio Day: November 30
- Christmas Day: December 25
- Rizal Day: December 30

Special Days
- All Saint's Day: November 1
- Last day of the year: December 31

The president of the Philippines has the authority to declare other special non-working days such as Black Saturday and Holy Wednesday (during Holy Week), the EDSA People's Power Revolution anniversary (February 25), All Soul's Day (November 2), and the eve of Christmas Day (December 24).

Main Types of Worker Leave

Under the law employees are entitled each year to a minimum of five days vacation leave and five days sick leave.

The following are the main categories of leave:

1. Service Incentive Leave (SIL). This refers to a five-day leave with pay to which an employee is entitled after one year of service. Unused SIL may be converted to cash at the end of each year of service, and the computation shall be the salary rate at the time of conversion.

2. Maternity Leave. This refers to the leave granted to the occasion of childbirth, abortion of miscarriage of a female member of the SSS who has paid at least three monthly contributions in the 12-month period immediately preceding her childbirth or miscarriage. During her maternity leave, the female employee shall be paid an allowance equivalent to her average monthly salary credit for 30 days in case of normal childbirth, abortion or miscarriage, or for 78 days in case of caesarian delivery. This allowance shall be advanced by the employer, subject to reimbursement from the SSS.

3. Paternity Leave. This allows a male employee to take leave of seven days with full pay when his legitimate spouse gives birth or suffers miscarriage. According to the law it shall be enjoyed by the employee for the first four deliveries of his legitimate spouse.

Social Benefits

Among the social benefits provided for Filipino workers by Philippine laws are:

- Income substitutes in case employees suffer contingencies resulting in temporary or permanent loss of earning capacity;

- Rehabilitation assistance for work-related disability;

- Financial assistance or allowance for death or sickness;

- Old age pensions in case of retirement;

- Credit access for social needs;

- Retirement benefit equivalent to 22.5 days salary for every year of service for optional retirement at 60 under Republic Act No. 7641 or under applicable agreement or for compulsory retirement at age 65.

For underground mine employees, the optional retirement is 50 years of age and compulsory retirement is 60 under R.A. 7641 as amended by R.A.8558.




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