There has been one particularly significant change in Philippine employment law in the last 12 months.
Requirements for Employment of Foreign Nationals
All foreign nationals who intend to perform services or render activities in the Philippines under an employer-employee relationship regardless of duration are required to secure an Alien Employment Permit (AEP) from the Department of Labor and Employment (DOLE), provided that there is no Filipino who is competent, able and willing at the time of application to perform the services for which the said foreign worker is desired, in accordance with Article 40 of the Labor Code.
DOLE Department Order No 221, series of 2021, effectively amended the provisions of DOLE Department Order No 186, series of 2017, on the issuance of employment permits to foreign nationals, thereby prescribing additional requirements to comply with Article 40 of the Labor Code. Among these requirements are proof of publication of the job vacancy with a notarised affidavit of any officer of the establishment, stating that no applications were received or no Filipino applicant was considered; and the conduct of a labour market test or a mechanism to determine the non-availability of a Filipino citizen to perform the services of which the foreign national is desired.
There have been a significant number of legislative actions and initiatives implemented to cope with COVID-19. The most relevant are detailed here.
Early Retirement Option under Republic Act No 11494
Section 5 of Republic Act No 11494, or the Bayanihan Recover as One Act, exempts from taxation on gross income those retirement benefits received by officials and employees of private firms from 5 June 2020 until 31 December 2020. Outside this period, tax exemption for retirement benefits apply only when an employee retires in accordance with the law, or upon reaching 60 years (but not beyond 65 years) and has served their employer for at least five years, upon reaching the mandatory retirement age of 65 years, or when the benefit is granted under a reasonable retirement plan and the employee is at least 50 years of age and has served the employer for at least ten years. RA No 11494 broadened the income tax exemption of retirement benefits as it did not impose any requirement as to retirement age or years of service.
The COVID-19 Vaccination Program Act of 2021
Republic Act No 11525, or the COVID-19 Vaccination Program Act of 2021, allows employers to procure COVID-19 vaccines for their employees through a multiparty agreement with the Department of Health (DOH) and the National Task Force against COVID-19 (NTF). The employer should prioritise inoculation of healthcare workers, senior citizens, economic frontliners, and essential workers.
Representatives of duly authorised private entities who are duly authorised to carry out and are actually carrying out the COVID-19 Vaccination Program will be immune from suit and liability under Philippine laws with respect to all claims arising out of the administration or use of a COVID-19 vaccine if done in accordance with the law.
Employers cannot compel employees to be vaccinated against COVID-19. The voluntary nature of participation in the vaccination program is emphasised in Labor Advisory No 08, Series of 2021.
COVID-19 as a Work-Related Disease
On 4 May 2021, the Employees’ Compensation Commission (ECC) issued Board Resolution No 21-04-14 prescribing the conditions for the compensability of COVID-19 under the ECC List of Occupational and Work-Related Diseases, found in Annex A of the Amended Rules on Employees’ Compensation. The issuance recognises that COVID-19 can be a work-related disease based on exposure at work, that essential workers are at high risk of getting infected, and that infection can be compensated based on the “increased risk theory”, which the ECC has applied in determining occupational diseases.
The amount received as ECC benefits are in the form of monthly income benefits, computed on the basis of salary credits vis-à-vis the employee’s income bracket. The computation thereof depends on whether the employee suffers from temporary, permanent, total, or partial disability or in the case of their death. These death or disability benefits are claimed under the Social Security System and, as such, the employee, to be eligible, must have registered therewith and paid their monthly contributions.
Infection is compensable if it is clinically diagnosed and consistent with the history, signs, and symptoms of COVID-19 and supported by diagnostic proof, and if the following conditions are present:
COVID-19 Flexible Work Arrangements and Work from Home
Flexible work arrangements/alternative work schemes are recognised as better alternatives to the outright termination of employees or the total closure of business due to COVID-19. These temporary work arrangements include:
Employers implementing flexible work arrangements/alternative work schemes are required to consult with their employees prior to implementation and notify the DOLE Regional/Provincial/Field Office that has jurisdiction over the workplace by submitting a completed RKS Form 5 (2020) at the soonest possible time.
Establishments are, when feasible, highly encouraged to adopt work-from-home or implement telecommuting arrangements. Employees on a work-from-home or telecommuting arrangement shall be provided with adequate support to perform the assigned task or job (DOLE Labor Advisory Nos 9, 11, 17, and 17-A Series of 2020).
Deferment of or Exemption from Payment of Holiday Pay
Employers may defer the payment of holiday pay for the April, May, June, July and 31 August 2020 holidays until such time that the COVID-19 emergency situation has been abated and normal operations are back in place.
However, employers that implemented a total closure or cessation of operations during the community quarantine period would instead be exempted from paying the holiday pay for the said holidays (DOLE Labor Advisory Nos 13-A, 15, 20, 22, 25 and 27, Series of 2020).
Exclusion of Quarantine Period in Determining the Probationary Period of Employees
For purposes of determining the six-month probationary period of employees, the period during which the enhanced or general community quarantine is enforced where the establishment has temporarily ceased or closed operations and/or the worker was temporarily not required to report for work on account thereof shall be excluded (DOLE Labor Advisory Nos 14 and 14-A, Series of 2020).
COVID-19 Testing of Employees
Employers may conduct COVID-19 testing for their employees, subject to a COVID-19 policy to be agreed upon between the employer and its employees.
Employers are not mandated to conduct COVID-19 testing for asymptomatic employees who are returning to work. Employers are, however, required to conduct COVID-19 real-time Reverse Transcription Polymerase Chain Reaction (RT-PCR) testing for employees who are manifesting symptoms and those who are close contacts.
Employers shall be responsible for the testing kits to be used in testing employees (Department of Trade and Industry [DTI] and DOLE Interim Guidelines on Workplace Prevention and Control of COVID-19; DTI and DOLE Supplemental Guidelines on Workplace Prevention and Control of COVID-19).
Employer Liability for Medical Expenses
An employer is only legally obligated to shoulder the medical expenses relative to an employee becoming infected with COVID-19 if the said employee is not qualified to avail of the benefits provided by the Social Security System (SSS) and the Philippine Health Insurance Corporation (PhilHealth) due to the fault of the employer (DOLE Labor Advisory No 4, Series of 2020).
Employer Liability for Cost of COVID-19 Prevention and Control Measures
Employers are legally obligated to shoulder the cost of COVID-19 prevention and control measures; eg, testing, disinfection facilities, hand sanitisers, personal protective equipment, signages, and proper orientation and training of workers (DOLE Labor Advisory No 18, Series of 2020).
Reduction of Wages and Wage-Related Benefits
An employer and an employee may enter into an agreement concerning the adjustment of wages and wage-related benefits. The adjustments shall not exceed six months or the period agreed upon in the applicable collective bargaining agreement (CBA), if any, and may be renewed as may be agreed upon by the parties (DOLE Labor Advisory No 17, Series of 2020).
Duties of Employers
Employers are duty-bound to:
No Blue-Collar/White-Collar Workers
Philippine laws do not define or describe blue-collar workers and white-collar workers. It is generally understood, however, that blue-collar workers are those who typically perform manual labour and are paid a daily wage, while white-collar workers are those who perform work in an office or administrative setting and are paid a monthly salary. Nonetheless, regardless of whether an individual is a blue-collar worker or a white-collar worker, as long as they are considered an employee, they shall be generally entitled to such rights and entitlements under Presidential Decree No 442, otherwise known as the Labor Code of the Philippines (the "Labor Code"), and other labour laws.
Employees with Regular Status and Those Without
An employee’s status may either be regular (or with indefinite term) or non-regular. A probationary employee who hurdles the performance standards set for probation attains regular status and security of tenure, with an indefinite employment term. They may not be dismissed except for a just or an authorised cause. Conversely, the following have definite or prescribed terms:
Philippine laws and jurisprudence specifically recognise the following types of employment based on tenure:
Regular Employment and Casual Employment
Article 295 of the Labor Code provides for two types of employment, depending on the nature of the work the employee has been engaged to perform vis-à-vis the usual trade or business of the employer.
On the one hand, an employee who has been engaged to perform activities that are usually necessary or desirable in the usual business or trade of the employer is considered as a regular employee. On the other hand, if the work the employee has been engaged to perform is not usually necessary or desirable in the usual business or trade of the employer, the employee is deemed to be a casual employee. However, a casual employee who has performed their work for at least one year, whether continuous or intermittent, is deemed to have attained regular employment but only with respect to the work they have been engaged to perform.
Normally, an employee who is engaged for regular employment is required to first undergo probationary employment: an assessment period to determine whether the said employee is, in fact, fit for regular employment.
To provide probationary employees a fair chance in attaining regular employment, employers are legally mandated to inform their prospective probationary employees of the reasonable standards for regularisation at the time of engagement. Failure of an employer to do so shall mean that the employee shall instead be under regular employment from the outset.
Probationary employment may generally not exceed six months or 180 days. This period may, however, be extended by mutual agreement of the parties. An employee who is allowed to work beyond the period of their probationary employment shall already be considered to have attained regular employment by operation of law.
Project Employment and Seasonal Employment
Based on Article 295 of the Labor Code, an employee is deemed to be under project employment if they are assigned to carry out a specific project or undertaking, the duration or scope of which was specified at the time they were engaged for that project. Conversely, an employee is deemed to be under seasonal employment when they are engaged to perform work that is seasonal in nature and their employment is for the duration of the said season.
Fixed-term employment refers to an employment with a definite period. This type of employment is not found in the Labor Code but is recognised by jurisprudence. While the Supreme Court has recognised the validity of fixed-term employment contracts, it has consistently held that this is the exception rather than the general rule.
To be valid, a fixed-term employment must meet the following criteria:
Requirements Concerning Employment Contracts
In the Philippines, employment contracts are not ordinarily classified as definite or indefinite. Instead, the type of employment contract follows the type of employment under which the employee is classified (ie, regular, casual, probationary, project, seasonal, or fixed-term).
Since employees generally enjoy security of tenure, employment contracts may only be terminated for just or authorised causes under the Labor Code, or, in the case of probationary employment, should the employee fail to meet the reasonable performance standards for their regularisation. The employment contracts for project, seasonal and fixed-term employees, on the other hand, may be terminated upon the completion of the project, the end of the season, or the expiry of the term, as the case may be.
Philippine laws do not require that the employment contract be written, although written agreements are preferred. There are, likewise, no formal requirements for an employment contract to be valid and enforceable. As a matter of fact, the employment status of an employee does not rely solely on the stipulations in a written employment contract, as the grant and enforcement of employee rights are highly favoured. In this regard, Article 295 of the Labor Code provides that an employment shall be deemed to be regular where the employee has been engaged to perform activities that are usually necessary or desirable in the usual business or trade of the employer, subject to the exceptions provided therein, “the provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties.”
Further, the law does not prescribe particular details that must be included in employment contracts. However, the employment contracts covering project, seasonal, probationary, or fixed-term employment must contain the necessary details mentioned above. Otherwise, the employee will be deemed a regular employee.
Maximum Working Hours per Day/Week
Article 83 of the Labor Code provides that the normal hours of work of an employee must not exceed eight hours per day. Based on an ordinary working week of six days, an employee is thus understood to have a maximum of 48 hours of work per week. After every six consecutive normal workdays, employees are entitled to a rest period of not less than 24 consecutive hours, in accordance with Article 91 of the Labor Code.
Flexible Work Arrangements
Based on DOLE Advisory No 02-2009 and No 04-2010, the adoption of flexible work arrangements must be anchored on a voluntary agreement between the employer and the employees and may only be temporary in nature.
One such flexible work arrangement is a compressed workweek (CWW). In a CWW, the normal workday is increased to more than eight hours but does not exceed twelve hours, without the corresponding overtime premium. The normal working week is then reduced to less than the usual number of workdays in a week, but the total number of working hours per week shall remain.
Other flexible work arrangements include:
There are no specific terms required for part-time contracts, except for the exact hours of work expected to be rendered in a day or during the working week. It must be emphasised, however, that employees who render part-time work are also entitled to the benefits mandated under the law, proportionate to the duration of the services rendered vis-à-vis those granted to regular employees.
Overtime Rules and Regulations
Under Article 87 of the Labor Code, work may be performed beyond eight hours a day, provided that the employee is paid for the overtime work. While employees may not generally be compelled to render overtime work, they may be required to render emergency overtime work under the circumstances provided in Article 89 of the Labor Code, such as when there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer or when the work is necessary to prevent loss or damage to perishable goods.
The rates of overtime pay vary depending on the day when the overtime work is performed, viz:
Memorandum Circular No 1, Series of 2004, as adopted in the 2020 Handbook on Workers’ Statutory Monetary Benefits, both issued by the DOLE, sets forth the rules to be followed for the payment of overtime premiums during a regular holiday, special day, or an employee’s rest day.
An employer is mandated to pay an employee a daily wage not less than the prevailing minimum wage rate in the region based on the most recent wage order promulgated by the Regional Tripartite Wages and Productivity Board (RTWPB). Employers who pay their employees below the minimum wage may be subject to punishment. In the capital Metro Manila region, the latest Wage Order (NCR No 22) prescribes a minimum daily wage of PHP537.00.
Thirteenth-month pay is an additional income given to rank-and-file employees who have worked for at least one month during the calendar year and is equivalent to one 12th of the basic salary within a calendar year. While the employer is required to pay its qualified employees their 13th-month pay not later than the 24th day of December every year, the employer may opt to pay half of the 13th-month pay before the opening of the regular school year and the other half on or before the 24th day of December.
Bonuses are generally granted to an employee as an act of generosity on the part of the employer. As a rule, therefore, an employee cannot claim entitlement to their bonuses. However, when a bonus is stipulated in a contract or a CBA or is given unconditionally, it shall form part of an employee’s wage and must therefore be given to them as a matter of right.
Government Intervention in Compensation/Increases
Other than setting minimum wages per region, the government allows employers and employees to agree on compensation levels and other terms and conditions of employment. Where there are unions representing the employees in a specified bargaining unit, the government allows these unions to collectively bargain with the employer with respect to wages, hours of work, and all other terms and conditions of employment.
Service Incentive Leave
Under Article 95 of the Labor Code, an employee who has rendered at least one year of service is entitled to a Service Incentive Leave (SIL) of five days with pay, which may be used for vacation and sick leave purposes. The unused SIL is commutable to its money equivalent at the end of the year. Other than the five-day SIL, an employer is not obliged to provide other vacation leaves, whether paid or unpaid, of the same import.
Pursuant to Republic Act No 11210, or the Expanded Maternity Leave Law, all female employees are entitled to a maternity leave benefit of 105 days with full pay, with an option to extend for an additional 30 days but without pay, regardless of whether the birth of the child is via caesarean section or natural delivery. Female employees who qualify as a solo parent under Republic Act No 8972, or the Solo Parents’ Welfare Act, are entitled to an additional maternity benefit of 15 days. However, in the case of a miscarriage or an emergency termination of pregnancy, the maternity leave benefit shall only be 60 days with full pay.
A female employee entitled to maternity leave benefits may allocate up to seven days of the said benefits to the child’s father. In the case of death, absence or incapacity of the father, the allocation may be provided to an alternative caregiver, who may be a relative within the fourth degree of consanguinity or the current partner of the female employee sharing the same household.
Section 2 of Republic Act No 8187, or the Paternity Leave Act, provides that every married male employee is entitled to a paternity leave benefit of seven working days with full pay for the first four deliveries of his legitimate spouse with whom he is cohabiting.
Section 18 of the Solo Parents’ Welfare Act grants a special leave benefit of not more than seven working days every year to a solo parent who has rendered at least one year of service.
Leave for female victims of violence
Section 43 of Republic Act No 9262, or the Anti-Violence Against Women and Their Children Act, provides that a female employee who is a victim of the crime of violence against women and their children is entitled to a paid leave benefit of up to ten days per year, which shall be extendible when the need arises, as specified in the protection order.
Leave due to gynaecological surgery
Section 18 of Republic Act No 9710, or the Magna Carta of Women, grants a female employee who has rendered continuous aggregate service of at least six months for the last 12 months a special leave benefit of two months with full pay based on their gross monthly compensation following surgery caused by gynaecological disorders.
Limitations on Confidentiality, Non-disparagement Requirements
In accordance with the principle of autonomy of wills under contract law, there are no limitations as to confidentiality or non-disparagement clauses found in an employment contract. An employer may perpetually prohibit an employee from divulging confidential information that they received in the course of their employment. Similarly, an employer may prohibit an employee from taking any action that may impact its business or reputation. Confidentiality or non-disparagement clauses typically impose penalties for violating the same in the form of liquidated damages, the amount of which may be tempered by the courts if found to be unreasonable in relation to the breach.
To the employer
An employee’s liability to their employer for loss or damage may be enforced through deposits and wage deductions, albeit at very stringent standards.
Under Article 114 of the Labor Code, an employer may require its employees to make deposits from which deductions shall be made for the reimbursement of loss or damage to tools, materials, or equipment supplied by the employer only under the following circumstances:
In this regard, Article 115 of the Labor Code and DOLE Labor Advisory No 11, Series of 2014 provides that no deduction from the deposits of an employee for the actual amount of the loss or damage shall be made unless the employee has been heard thereon, and their responsibility has been clearly shown. In no case shall the deduction exceed 20% of the employee’s wages in a week.
To third persons
As regards an employee’s liability to third persons, Article 2180 of the Civil Code of the Philippines provides that employers shall be liable for the damages caused by their employees acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry.
Non-compete clauses may be included in Philippine employment contracts, especially if substantial investment in the employees is involved. According to Philippine jurisprudence, while there is no hard and fast rule to determine the validity or enforceability of a non-compete clause, it may be stricken down when, based on the circumstances, the restriction is unreasonable so as to unduly restrain trade (ie, time, place, scope of trade), when it is contrary to the public welfare, and when the restriction is greater than is necessary to afford a fair and reasonable protection to the party in whose favour it is imposed.
Non-compete clauses may be enforced by filing a civil case with the regular courts of competent jurisdiction within ten years from the time the right of action accrues, as stated in Article 1144 of the Civil Code. The extent of the liability depends on the stipulation in the contract and/or the damages that may be proven arising from the breach. Typically, however, non-compete clauses include the imposition of a penalty in the form of liquidated damages pegged at a fixed amount. While the employer may stipulate any amount, courts may still temper the same upon judicial review if the amount is found to be unconscionable or iniquitous in light of the circumstances.
Similar to non-compete clauses, non-solicitation clauses, whether with regard to employees or customers, may be enforced by filing a civil case with the regular courts within ten years from the time the right of action accrues. There are no set standards for the validity or enforceability of such clauses, except as to their reasonableness. The Civil Code allows the parties to a contract to agree on such terms as they may deem convenient, provided that they are not contrary to law, morals, good customs, public order, or public policy. Further, there are no substantial distinctions as to the enforceability or validity of non-solicitation clauses in reference to customers compared to those for employees.
Republic Act No 10173, otherwise known as the Data Privacy Act, and its Implementing Rules and Regulations generally apply to employment relationships. An employee may be considered as a data subject, whose personal, sensitive personal, or privileged information may be processed by their employer in accordance with and under the circumstances provided under Sections 12 and 13 of the Data Privacy Act.
Pursuant to Section 20 of the Data Privacy Act, employers, being personal information controllers of their employees’ personal information, are required to implement reasonable and appropriate organisational, physical and technical measures to protect the personal information in their custody. These measures must be comprehensive enough to protect the personal data from both natural dangers (eg, accidental loss or destruction) and human dangers (eg, unlawful access, fraudulent misuse, unlawful destruction, alteration and contamination).
Article 40 of the Labor Code provides that a non-resident foreign national may only be engaged to perform services in the Philippines under an employment arrangement if there is no person in the country who is competent, able and willing at the time of application to perform the services for which the said foreign worker is desired.
Article 40 of the Labor Code also provides that any foreign national seeking admission to the Philippines for employment purposes and any domestic employer who desires to engage him or her for employment in the Philippines shall obtain an employment permit from the DOLE. According to DOLE Department Order No 221, Series of 2021, the permit required is otherwise known as the AEP, which is valid for one year, unless the employment contract or other modes of engagement provide otherwise, which in no case shall exceed three years.
Conversely, under Joint Guidelines No 1, series of 2019, issued by the DOLE, Department of Justice, Bureau of Immigration, and Bureau of Internal Revenue, a foreign national who intends to perform activities or render services in the Philippines outside of an employment arrangement must, instead of an AEP, secure a Special Work Permit (SWP) from the BI. An SWP may be secured for an initial period of three months and is renewable for the same period thereafter.
The right to self-organisation guaranteed under the Philippine Constitution covers the right to form, join, or assist labour organisations or unions for the purpose of collective bargaining or for dealing with employers concerning terms and conditions of employment.
Jurisprudence provides that a union obtains the right to bargain collectively with the employer upon registration and after being recognised as the exclusive bargaining representative of a group of employees, otherwise known as a bargaining unit. Conversely, dealing with the employer concerning terms and conditions of employment is a generic description for interacting with the employer concerning grievances, wages, working hours, and other terms and conditions of employment.
While the right to self-organisation, more often than not, connotes unionism, the said right may likewise pertain to other employee representative bodies. Workers may also form or join workers’ associations as well as labour management councils.
A workers' association refers to an organisation of workers formed for the mutual aid and protection of its members or for any legitimate purpose other than collective bargaining. The existence of an employer-employee relationship is not mandatory in the formation of a workers' association. What the law simply requires is that the members of the workers' association, at the very least, share the same interest.
A labour management council is a body composed of representatives from both the employer and the employees. The employees’ representatives shall be elected by at least a majority of all employees in the establishment. The purpose of a labour management council is to allow employees to participate in policy and decision-making processes of the establishment where they are employed in so far as said processes will directly affect their rights, benefits and welfare.
A CBA refers to the negotiated contract between the exclusive bargaining representative and the employer concerning terms and conditions of employment in a bargaining unit. Similar to ordinary contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they deem convenient, provided that these are not contrary to law, morals, good customs, public order, or public policy. A CBA serves as the law between the parties, and they are obliged to comply with its provisions.
Grounds for Termination of Employment
Instead of motivation, a just or authorised cause is necessary to terminate employment. Unlike in other countries that adopt an “at-will employment” arrangement, Philippine labour law reinforces an employee’s right to security of tenure, as guaranteed by the Philippine Constitution. Accordingly, before an employee could be meted the supreme penalty of termination from employment, their employer must first comply with both substantive and procedural due process.
Substantive due process requires the termination to be based on a just or authorised cause. Just causes are causes attributable to the employee’s fault or negligence, while authorised causes are those attributable to a management decision to terminate an employee for business reasons or their affliction with a disease.
Just Causes for Termination
The just causes for termination are provided under Article 297 of the Labor Code:
Authorised Causes for Termination
The authorised causes for termination are provided under Articles 298 and 299 of the Labor Code:
Procedural Requirements for Termination
The procedural requirements for just causes are different from those for authorised causes, as will be explained in 7.2 Notice Periods/Severance. In sum, terminations due to just causes follow the two-notice rule (involving a notice to explain, an ensuing administrative investigation, and a notice of the employer’s decision). In terminations due to authorised causes, a 30-day advance notice is required to be served on the affected employees and the DOLE. Procedural requirements must be complied with before an employee can be dismissed for just or authorised cause(s). Failure to comply with the procedural requirements will not invalidate the dismissal, if based on sufficient substantive grounds, but will entitle the employee to an award of nominal damages.
In the Philippines, there is no threshold for a redundancy to be considered as a collective redundancy.
According to jurisprudence, redundancy generally exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position may be the outcome of a number of factors, such as over-hiring of workers, decreased volume of business and dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. Redundancy may also be validly resorted to as a cost-cutting measure and to streamline operations so as to make them more viable, because the employer has no legal obligation to keep on its payroll more employees than are necessary for the operation of its business.
In the event of redundancy, the affected employees are entitled to receive separation pay of at least one month's pay or one month's pay per year of service, whichever is higher. Where there are employees similarly situated, the employer must have applied fair and reasonable selection criteria to determine who among the employees are to be made redundant. In addition, they are entitled to an advance notice of at least 30 days prior to the effective date of separation.
Just Causes for Termination
For termination due to just causes, procedural due process consists of the following.
Authorised Causes for Termination
For termination due to authorised causes, notice is a statutory and regulatory requirement. This consists of service of two separate written notices on both the affected employees and the appropriate Regional or Field Office of the DOLE at least 30 days before the termination becomes effective, specifying the ground or grounds for termination.
In the case of termination due to disease, in addition to the service of the separate written notices on the affected employees and the DOLE, there should be a certification by a competent public health authority that the disease is of such nature or at such stage that it cannot be cured within six months even with proper medical treatment. It must be noted, however, that the Supreme Court has ruled in several cases that employees who are dismissed due to disease must have also been served the notices required for termination due to just causes as stated above.
In the case of termination for authorised causes, the affected employees are entitled to separation pay. The separation pay shall be in an amount equivalent to one month's pay or at least one month's pay for every year of service, whichever is higher, if the termination is due to the installation of labour-saving devices or redundancy, or one month's pay or at least half a month's pay for every year of service, whichever is higher, in cases of retrenchment to prevent losses, closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, and disease. A fraction of at least six months shall be considered as one whole year. Monthly pay consists of the employee’s monthly basic pay plus any guaranteed monthly allowances received by him regularly without any condition.
The payment of separation pay and the service of one month's notice are required by the law. Payment in lieu of notice is not allowed.
Separation pay is not required for termination due to just causes or resignations, although the two notices mentioned above are indispensable for purposes of complying with procedural due process.
External Advice or Clearance
No other external advice or authorisation is required to carry out terminations for just or authorised causes. Similarly, no prior clearance is required from the DOLE before any termination may be effected.
Philippine laws do not allow summary dismissal regardless of the nature or gravity of the just cause. The requirements of procedural due process must always be observed in terminations for just causes. However, the law allows an employer to place an employee on preventative suspension for a maximum period of 30 days, if the employer finds the employee to be a serious threat to the life or property of the employer or their representatives, or of their co-employees.
The procedural requirements for dismissal due to just causes are discussed in 7.2 Notice Periods/Severance.
Should an employee be summarily dismissed – ie, the requirements of procedural due process are not observed – the dismissal per se is not invalid should the same be based on sufficient grounds. However, this may entitle the employee to an award of nominal damages.
In the Philippines, termination agreements are permissible but imply a voluntary resignation on the part of the employee. In this regard, while there is nothing to prohibit the employer and employee from agreeing upon the conditions of an employee’s resignation, the employer must ensure that such an agreement may be proven as having been freely and voluntarily entered into by the parties. This is because once an employee questions the validity of such termination agreements before the labour courts, the same may be construed as a forced resignation and, consequently, constructive dismissal.
Constructive dismissal exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay and other benefits. Constructive dismissal may likewise exist if an act of clear discrimination, insensibility or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by them except to forgo their continued employment. Once found to have been constructively dismissed, an employee will be adjudged to be entitled to reinstatement, backwages and even moral or exemplary damages.
Releases and Quitclaims
There are no statutory requirements for releases. While law and jurisprudence look with disfavour upon releases and quitclaims by employees who are merely pressured into signing them, a legitimate waiver representing a voluntary settlement of an employee’s claim should be respected by the courts as an agreement between the parties. Jurisprudence provides the following requisites for a valid (release waiver and) quitclaim:
Protection for Certain Categories of Employees
No particular category of employees is immune from termination from employment if, based on the circumstances, their acts warrant the imposition of the supreme penalty of dismissal. To impose upon an employer the retention of an employee when the latter does not deserve the same is to violate the employer’s management rights or prerogative.
Implications for Employee Representatives
Officers of a union that has been certified as the exclusive bargaining representative are not particularly immune from dismissal and/or disciplinary action. However, if found to be unjustified under the circumstances, the dismissal of a union officer may be considered as union-busting. This, in turn, may be considered as an unfair labour practice, which is a ground for the conduct of a strike and even criminal prosecution.
An employee may file a wrongful dismissal claim before the National Labor Relations Commission (NLRC) if their dismissal was not due to either a just or authorised cause, or the dismissal is otherwise contrary to law.
If a wrongful dismissal claim is found to be meritorious, by virtue of Article 294 of the Labor Code, the employee may be awarded with reinstatement without loss of seniority rights and other privileges, or payment of separation pay in lieu thereof, plus full back wages, inclusive of allowances, and other benefits or their monetary equivalent. If the dismissal is carried out in malice or bad faith, the employer may also be held liable for moral or exemplary damages.
Grounds for a Claim of Discrimination
Pursuant to the state’s policy under Article 3 of the Labor Code, all employers are enjoined to prevent discrimination in the workplace on account of sex, race or creed. Providing lesser compensation to a particular employee as against another for work of equal value or favouring one employee over another with respect to promotion, training opportunities, study and scholarship grants solely on account of a difference in sex, race, or creed are examples of such acts of discrimination.
The following provisions and statutes likewise aim to curb discrimination in the workplace:
Burden of Proof in Discrimination Cases
There are no laws, rules or regulations that categorically establish the burden of proof in discrimination cases. Thus, the general rule that “the party who alleges a fact has the burden of proving it” should be followed. However, if the discrimination issue is raised in a case for illegal dismissal, it would be incumbent upon the employer to prove by substantial evidence that the dismissal was based on valid grounds, in accordance with Articles 297 and 298 of the Labor Code.
Penalties and Relief in Discrimination Cases
Discrimination against women
Under Article 303 of the Labor Code, employers who are found to have wilfully discriminated against women may be penalised with a fine ranging from PHP1,000.00 to PHP10,000.00, or imprisonment for between three months and three years, or both, at the discretion of the court.
Discrimination against disabled persons
Section 46 of the Magna Carta for Disabled Persons, on the other hand, provides that “any person who violates any provision of [the Magna Carta of Disabled Persons] shall suffer the following penalties: for the first violation, a fine of not less than [PHP50,000.00] but not exceeding [PHP100,000.00], or imprisonment of not less than six months but not more than two years, or both, at the discretion of the court; and for any subsequent violation, a fine of not less than [PHP100,000.00] but not exceeding [PHP200,000.00], or imprisonment for less than two years but not more than six years, or both, at the discretion of the court.”
Discrimination on account of age
The Anti-Age Discrimination in Employment Act penalises any violation of the said law with a fine of PHP50,000.00 to PHP500,000.00, or imprisonment for three months to two years, or both, at the discretion of the court.
Discrimination against persons with mental health conditions
Section 44 of the Mental Health Act provides that any person who discriminates against a person with a mental health condition shall be punished by imprisonment for not less than six months, but not more than two years, or a fine of not less than PHP10,000.00, but not more than PHP200,000.00, or both, at the discretion of the court.
Foreign nationals, corporations, trusts, and other entities
Common to the above statutes are provisions stating that any foreign national found guilty may be summarily deported after serving their sentence. Likewise, if the offence is committed by a corporation, trust, firm, partnership, association or any other entity, the penalty is imposed upon the guilty officers of such corporation and/or entity.
Separate action for damages
Apart from the penal statutes, an aggrieved employee may likewise file an action for damages in a separate action before the regular courts.
Specialised Employment Forums
Disputes between employees and their employers involving labour standards benefits (eg, normal hours of work, meal periods, night shift differential, overtime premium pay, weekly rest period, holiday pay and service incentive leave) are cognisable by the DOLE Regional Offices.
On the other hand, the Labor Arbiters of the NLRC shall have original and exclusive jurisdiction to appear and decide the following cases:
Decisions of the Labor Arbiters may be appealed to the NLRC within ten days from receipt upon the posting of a bond equivalent to the amount of the judgment award in favour of the employee. In the event of a judgment of illegal dismissal, the Labor Code mandates either actual or payroll reinstatement pending appeal. Decisions of the NLRC may, in turn, be reviewed on certiorari proceedings by the Court of Appeals and, eventually, in the proper case by the Supreme Court.
Employment Class-Action Claims
Since a particular employment is treated differently from another despite a common cause of action, each and every employee must be considered as an individual litigant when filing claims, thus negating the possibility of a class-action suit. One employee may have a different set of entitlements and/or accountabilities from another or may have particularities in the case that would aggravate or mitigate the employer’s liability to him, if any. Thus, the disposal of a class-action suit with a blanket and identical relief for all employees of an employer may not be available in labour cases.
Nonetheless, where there are two or more cases or complaints pending before different Labor Arbiters in the same Regional Arbitration Branch involving the same employer and common principal causes of action, or the same parties with different causes of action, the subsequent cases or complaints may be consolidated with the first to avoid unnecessary costs or delay. The consolidated case will then be disposed of by the Labor Arbiter to whom the first case was assigned.
Appearance/Representation before the Labour Arbiter and the NLRC
Section 6 of Rule III of the 2011 NLRC Rules of Procedure, as amended, provides that a lawyer appearing for a party is presumed to be properly authorised for that purpose.
Conversely, a non-lawyer may appear in any of the proceedings before the Labor Arbiter or the NLRC only under the following conditions:
Voluntary arbitration is possible, especially in a unionised setting, pursuant to the provisions of a CBA, which should provide for a grievance machinery and a voluntary arbitration procedure. This is mandated in cases where the dispute involves the interpretation, implementation or enforcement of a CBA.
Under Article 274 of the Labor Code, the parties to the CBA may resort to voluntary arbitration by DOLE-accredited arbitrators if no settlement is achieved through a grievance machinery system provided for in the CBA. These voluntary arbitrators have original and exclusive jurisdiction over cases relating to the interpretation or implementation of CBAs, or the enforcement of an employer’s personnel policies. Under Article 275 of the Labor Code, the parties may vest upon the voluntary arbitrators the jurisdiction to hear and decide all other labour disputes, including unfair labour practices and bargaining deadlocks.
Pre-dispute arbitration agreements are enforceable. These agreements are usually embodied in CBAs, wherein the parties may agree to resort to voluntary arbitration in the event that settlement through the grievance machinery process is futile. These provisions in the CBA may be enforced.
In labour cases, attorney's fees partake of the nature of an extraordinary award granted to the employee as an indemnity for damages. Philippine jurisprudence provides that attorney's fees may be recovered in labour cases involving the following:
Based on Article 111 of the Labor Code, the maximum amount of attorney’s fees the employee may recover is set at 10% of the monetary award.
Employment-Related Issues Concerning the Adoption of Hybrid Work Arrangements by Philippine Employers
There has not been a more disruptive force in the modern workplace than the COVID-19 pandemic. Over the past year, the pandemic made a mess of workplaces across the globe and forced employers, large and small, to be creative in order to maintain the viability and profitability of their businesses and, at the same time, ensure the safety and well-being of their employees. In doing so, employers, to the extent possible, adopted remote working arrangements where employees can perform their duties and responsibilities outside their employers’ premises such as in the comfort of their homes.
However, in a recent study conducted by industry trade group Worldwide ERC, it appears that the remote working arrangement will more or less be a permanent fixture in the modern workplace even as the globe transitions into the new normal. In fact, according to the study, a substantial percentage of Senior HR Leaders, Corporate HR Mobility Specialists, and Global Mobility Service Providers anticipate that employers are expected to grant more flexibility to their employees in terms of working remotely or at more traditional workplaces within the employers’ premises. In other words, the study shows that hybrid work arrangements (ie, a combination of office work and working remotely or from home) are here to stay.
Considering that the Philippines is not exempted from this trend, it is relevant to highlight some employment-related legal issues that may crop up as employers begin to contemplate the adoption of hybrid work arrangements and make their way into the new normal.
Discrimination against employees who have not been vaccinated
The adoption of hybrid work arrangements does not mean that there is no longer a need for employees to return to their traditional workplaces. Even as the hybrid work arrangement becomes more and more popular, employees are still expected to physically report to their offices albeit less frequently. As a result, one of the most contentious legal issues brewing today is whether employers can require their employees to be vaccinated against COVID-19 presumably as a precondition for entering their employers’ premises.
In this jurisdiction, work-related discrimination is generally frowned upon. In fact, there is yet no law, rule, or regulation giving preferential treatment to persons who have been vaccinated. Instead, in a Labor Advisory issued by the Department of Labor and Employment (DOLE) last March 2021, it states that “any employee who refuses to or fails to be vaccinated shall not be discriminated against in terms of tenure, promotion, training, pay and other benefits, among others, or terminated from employment. No vaccine, no work policy shall not be allowed.”
However, contrary to the said Labor Advisory, jurisprudence has long recognised the right of an employer to impose discriminatory policies in cases where are bona fide occupational qualifications (BFOQs) for doing so.
As a matter of fact, in one case, the Supreme Court upheld the termination of a flight attendant for being overweight which was in violation of the airlines’ weight standards. In another case, the Supreme Court upheld the policy of a pharmaceutical company prohibiting its employees from marrying employees of a competitor. In both these cases, it was found that the implementation of discriminatory policies was reasonable under the circumstances because of the presence of BFOQs.
Relevantly, the Supreme Court emphasised that, to establish the existence of BFOQs, the employer must be able to prove:
Mandatory vaccinations already exist
The passage of laws requiring persons to be vaccinated or immunized against certain diseases is not novel. The Mandatory Infants and Children Health Immunization Act of 2011 mandates that infants and children of up to five years of age be immunized against vaccine-preventable diseases such as tuberculosis, diphtheria, tetanus, measles, mumps, hepatitis, and the like.
In connection with this, on 26 April 2021, a law was proposed in Congress entitled “Mandatory COVID-19 Immunization Act of 2021.” Under this proposed legislation, unless exempted by the Department of Health, it is mandatory for individuals to be vaccinated against COVID-19 and such vaccination shall be given for free at any government hospital or health centre. However, this proposal is still pending before the House of Representatives and has not been enacted into law.
In view of the foregoing, despite the recent Labor Advisory issued by the DOLE, if the presence of BFOQs is established, it may nonetheless be legally defensible for employers to impose discriminatory policies against employees who have not been or refuse to be vaccinated against COVID-19. Moreover, it is worthwhile to keep abreast of developments as regards the proposed law requiring individuals to be vaccinated given that its enactment would not only render the DOLE’s Labor Advisory moot but would have far-reaching implications in the workplace.
Data privacy concerns in hybrid work arrangements
The trend favouring hybrid work arrangements has pushed employers to enhance or improve their respective information technology and/or business technology infrastructures so that employees can adequately perform their duties and responsibilities remotely through their mobile devices such as laptop computers, tablets, and mobile phones.
However, in doing so, employers should be mindful of their compliance with the Data Privacy Act and its Implementing Rules and Regulations (IRR) especially with respect to the adoption of security measures for the protection of personal data.
Significantly, the Data Privacy Act is the law that primarily governs the processing and protection of personal information owned by individuals or data subjects. In the context of this law, an employer may be characterised as a “personal information controller.” A personal information controller generally refers to a person or organisation who controls the collection, holding, processing, or use of personal information, including a person or organisation who instructs another to collect, hold, process, use, transfer, or disclose personal information on their behalf.
According to the Data Privacy Act and its IRR, employers falling within the definition of personal information controller are required to implement reasonable and appropriate organisational, physical, and technical security measures for the protection of personal data. These security measures must be comprehensive enough to protect personal data from both natural dangers (eg, accidental loss or destruction) and human dangers (eg, unlawful access, fraudulent misuse, unlawful destruction, alternation, and contamination). In addition, the employer must likewise take steps to ensure that its employees or other persons acting under its authority who have access to personal data do not process them, except upon the instructions of the employer or as required by law.
Imposing and revising security measures
In imposing organisational security measures, employers are generally required to appoint a data protection officer, put in place data protection policies, and ensure all of their employees who have access to personal data are educated on how to process personal data, among others. In imposing physical security measures, employers are expected to set up workspaces for employees who have access to personal data to ensure that personal information is protected and kept confidential. Lastly, in imposing technical security measures, employers are required to protect the computer systems used in the processing and storage of personal data, and ensure and maintain the confidentiality, integrity, availability, and resilience of its processing systems and services. In doing so, employers may make use of encryption devices/programs, authentication devices/programs, and other such measures that control and limit access to personal data to specific employees.
Thus, in adopting hybrid work arrangements, it may be in the employers’ best interest to revisit or revise their existing security measures or policies to ensure compliance with the Data Privacy Act. Otherwise, their responsible officers, including the data privacy officer, may be held liable for violation of the law.
Telecommuting vs work-from-home
Undoubtedly, even before the pandemic, it was already within the employers’ prerogative to adopt remote work arrangements in pursuit of their respective businesses. Due to the pandemic, however, the need to adopt such remote work arrangements became a matter of life and death insofar as many employees are concerned. For this reason, the idea of the work-from-home (WFH) and telecommuting arrangements have become quite the buzzwords.
At first glance, these two arrangements seem to be synonymous. Nonetheless, a closer examination of these arrangements will show that they have differences which may seem innocuous but are actually important to consider. Accordingly, to help employers formulate the appropriate hybrid work arrangements, a comparative discussion of the WFH and telecommuting arrangements is necessary.
Telecommuting arrangements are expressly governed by law — that is, the Telecommuting Act. Under this law, telecommuting is defined as “a work arrangement that allows an employee in the private sector to work from an alternative workplace with the use of telecommunication and/or computer technologies.” In adopting telecommuting arrangements, the law also emphasises that it should be done on a voluntary basis and upon such terms and conditions that the employer and employee may mutually agree upon, provided that said terms and conditions shall not be less than the minimum labour standards prescribed by law. It also goes without saying that the telecommuting arrangement should not result in the undue diminution of the telecommuting employees’ salaries and other employment-related benefits.
Fair treatment and data protection
The Telecommuting Act also stresses the importance of fair treatment and data protection insofar as implementing telecommuting arrangements is concerned.
Under the principle of fair treatment, the law states that employers should ensure that telecommuting employees are given the same treatment as similarly situated employees working at the employers’ premises with respect to rates of pay, other monetary benefits, rest days, holidays, workload, performance standards, access to training and career development opportunities, and the like.
Conversely, under the principle of data protection, the law makes reference to the Data Privacy Act and obliges employers to be responsible for taking the appropriate measures to ensure the protection of personal data used and processed by the telecommuting employees for professional purposes.
Lastly, according to a Department Order issued by the DOLE, employers should notify the DOLE of the adoption of telecommuting work arrangements by submitting a duly accomplished report form (ie, Report on the Adoption of Telecommuting Work Arrangement) to the nearest field, regional, or provincial office of the DOLE having jurisdiction over the area where their principal offices and/or branches or operational units are located.
Alternatively, while no longer a novel concept, the WFH arrangement officially made its way into the legal firmament as a result of the COVID-19 pandemic.
Unlike telecommuting arrangements which are based on law, the WFH arrangement is based on a series of Labor Advisories issued by the DOLE to advise employers on what steps to take in response to the adverse effects of the pandemic on the workplace.
Also, unlike telecommuting arrangements, it is not necessary in WFH arrangements that the employee works remotely with the use of telecommunication and/or computer technologies.
Implementing WFH arrangements
In contrast to the voluntary nature of telecommuting arrangements, WFH arrangements need not arise from any mutual agreement between the employer and employee. In other words, an employer may unilaterally adopt WFH arrangements in the reasonable exercise of its management prerogative.
Furthermore, in WFH arrangements, the relevant Labor Advisories issued by the DOLE do not make any reference to the principles of fair treatment and data protection. Nonetheless, it does not mean that employees on WFH arrangements should be unfairly treated and that data protection can be dispensed with. Instead, employees under a WFH arrangement may rely on the current legal landscape which generally prohibits the imposition of discriminatory policies against similarly situated employees, the principle of non-diminution of benefits, and the Data Privacy Act. As a matter of fact, according to one of said Labor Advisories, employees on WFH or telecommuting arrangements should be “provided with adequate support to perform the assigned task or job.”
Similar to telecommuting arrangements, employers are also required to notify the DOLE of the adoption of WFH arrangements. In this case, however, employers are merely required to submit the duly accomplished report form (ie, an establishment report) to the field, regional, or provincial office of the DOLE having jurisdiction over the employer’s principal place of business.
Accordingly, in deciding what appropriate work arrangement to adopt, employers should be aware of the aforementioned differences between telecommuting and WFH arrangements.