Labor Relations

Atty. Jennifer Asuncion

Labor Relations – deals with the relationship between employees and their employer which includes labor organizations

Purpose of Labor Relation

1. There is a need to adjust and align conflicting interest of labor and management
 There is distrust because of unequal footing. Through labor relations, it places the employees in equal
footing with the employer to avoid/remove distrust

HISTORY

1. From Spanish Regime to the Early American Regime

 There is no interference from the state. The relationship of employer-employee is based on a free
market system /Laissez Faire. This caused industrial conflict between the Management and Labor. This
includes the start of tenancy under the Agrarian reform due to the abuses of the landlords
2. Commonwealth Act No. 103
 Due to the enactment of CA 103, it gave the state the right to interfere with the relationship of
employees and employers. It also caused a lot of conflict since the state became pro-labor, and there
was no management right / prerogative. This was a period of strike / picketing which was favored by the
state. It created distrust because the government favored only one party.
3. Martial Law (1972-1973)
 Ferdinand Marcos –father of Labor Relations
 Codified the rights of workers
4. May 1, 1974
 Enactment of Labor Code of the Philippines
 Labor Code – Bill of Rights of workers
5. 1986 & 1987 Constitution
 This codified the provisions on Rights of Labor (Protection to Labor Clause – Article XIII)

Important Requirement of Labor Relations

 There must be an Employer-Employee relationship. If there is none, it is simply the ordinary civil law that
applies.

Employer-Employee Relationship Test

1. Economic Reality Test – must be based on economic facts

Case: Red V Coconut Products vs. Court of Industrial Relations
2. Control Test- it must pertain not only to the means / method, but also to the end / result
 Selection and engagement
 Payment of wages
 Power of dismissal
 Power of control

Kinds of employees (Statutory Classification)

A. Rank – for purposes of eligibility in forming, joining or assisting Labor Organizations / Union
a. Managerial
 Not eligible – they are representatives of the management
 They are vested with power and prerogative to decide, execute management policies, discipline
employees. And they have the discretion / independent judgment.
b. Supervisory
 Eligible to form their own labor organization. But cannot join labor organizations of Rank and
File Employees (Principle of Separation of Unions)
 They effectively recommend to managers/management.
 They are carrying out management policies
c. Rank and File
 Not managerial / supervisory employees
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  Cannot join Union of Supervisors. Reason: Supervisors and Managers are subject to stricter
norms
 May Form, join and assist union of Rank and File
B. Nature of Engagement – for the purpose of security of tenure
a. Regular employees – engaged to perform activities which are necessary or desirable in the usual
business/ trade of the employer
 There is security of tenure by express Provision of law
b. Non Regular Employees – engaged to work under the following conditions:
 Qualified Tenure – subject to just & authorized cause and due process
A. Project – under a specific project
B. Seasonal – particular season (e.g. farmers)
C. Fixed Term / Contractual – for fixed period
D. Probationary – under trial period
c. Casual Employees – performs activities not usually necessary or desirable in the usual business/ trade
 Service for at least 1 year of tenure – gives security of tenure of these employees. And
termination must be with just or authorized cause.

Constitution (Article XIII. Rights of Workers)

1. Right to a Living Wage

 Living Wage – adequate to make it economically feasible to maintain minimum standard of living
 Case to case basis
 Includes food, shelter, clothing, health, education, savings
2. Right to humane Conditions of Work
 In case of danger to health, illness, injuries
 Includes Philhealth, SSS, GSIS, ECC
3. Right to self-organization
4. Right to concerted Activities
 Peaceful and Concerted Activities
 Anti-Scab Law
5. Right to collective bargaining
 Prescribed Grievance Machinery – arbitration, mediation, conciliation
 Decision Process – as to matters affecting employees. However it is management prerogative if the
employees has no constitutional interest
6. Right to Security of tenure

Prerogatives of Management

Management Right – right of Employer, according to his discretion/judgment, are aspects of employment:

 Hiring, work Assignment, Methods of Work, Time of Work, Place and Manner or Work, Power of
Control, Supervision, Transfer (if there is no change in rank and no demotion), layoff, discipline,
dismissal, recall

Characteristics of Management Prerogative

1. Inherent – employee cannot object to the exercise of management

2. Exclusive – economic system of free market / Laissez Faire –
 GR: where the state should not interfere
 Exception: when it is exercised in 1. BAD FAITH and ; 2. There is ABUSE OF DISCRETION

Case:

 Cheryll Santos Leus vs. SSCW – under Magna Carta for Women, a female employee cannot be dismissed due to
pregnancy out of wedlock. Secular morality is different from religious morality.
 Peckson v. Robinsons Supermarket – Lateral reassignment cannot be considered as constructive dismissal. This
is a management Prerogative.

BOOK V. Art. 211. Declaration of Policy.

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A. It is the policy of the State:

a. To promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration,
mediation and conciliation, as modes of settling labor or industrial disputes; (It is indispensable to national interest)

b. To promote free trade unionism as an instrument for the enhancement of democracy and the promotion of social
justice and development;

c. To foster the free and voluntary organization of a strong and united labor movement;

d. To promote the enlightenment of workers concerning their rights and obligations as union members and as
employees;

e. To provide an adequate administrative machinery for the expeditious settlement of labor or industrial disputes;

f. To ensure a stable but dynamic and just industrial peace; and

g. To ensure the participation of workers in decision and policy-making processes affecting their rights, duties and
welfare. (Limitation: Decision making only in terms that affects rights, duties and welfare)

B. To encourage a truly democratic method of regulating the relations between the employers and employees by means
of agreements freely entered into through collective bargaining, no court or administrative agency or official shall have
the power to set or fix wages, rates of pay, hours of work or other terms and conditions of employment, except as
otherwise provided under this Code.

(Only Regional Tripartite Wages and Productivity Board may fix wages and other conditions of work)

ART 253. Right to Self organization is guaranteed by Article XIII of the 1987 constitution to form, join or assist in the
formation of: 1. Labor organization – for collective bargaining; 2.Workers’ Association – for collective negotiation

Art. 253. Coverage and employees’ right to self-organization

1. All persons employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical, or
educational institutions, whether operating for profit or not – form labor organization for collective bargaining

2. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and those without any definite
employers – workers’ association for collective negotiation for their mutual aid and protection.

Qualified / Disqualified to Form, Join or Assist Labor organizations:

1. Managerial Employees (Under Article 255) – ineligible to form, join or assist

Reason: Conflict of Interest

Eng. Equipment vs. NLRC

 No subject to rigid compliance as to time

 There is consistent exercise of discretion and judgment in its performance output / result accomplished. It
cannot be standardized in a specific period of time
 They are paid based on qualification, experience or competency
2. Supervisory Employees – they are eligible to form, join or assist labor organizations as to themselves only. They
cannot form, join or assist Rank and File employees’ labor organization

Reason: Conflict of Interest

3. Confidential Employees – they are legible if:

 They have access to trade secrets, finances, technical matter and trust and confidence is reposed
 They are ineligible is they have access to information relating to labor relations – unions, federations and terms
and conditions of the CBA

Doctrine of Necessary Implication - The doctrine which states that what is implied in a statute is as much a part
thereof as that which is expressed
4. Employee-Members of Cooperative
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  Owners – Employee – members are prohibited from bargaining against themselves

5. Government Employees (Under Art 291) and GOCC’s –

 Subject to Civil Service Law

 GOCCs (Art 254) – if with original charter – they cannot form, join or assist labor organizations – they are
governed by Civil Service Law
 GOCCs (Art 254) – if established under the Corporation Law – they can form, join or assist labor organizations –
they enjoy the same right and privileges of employees under the Labor Code
 Government Employees – can form, join or assist workers association for mutual aid and support

Collective Negotiation (includes the following conditions)

 Schedule of vacation
 Work assignment of pregnant women
 Personal growth and development
 Communication system
 Provision for protection and safety
 Facilities for handicapped
 First aid medical services and supplies
 Physical fitness program
 Family planning services for married women
 Annual physical and medical examinations
 Recreational activities

6. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and those without any definite
employers

 prohibited to form, join or assist labor organizations for collective bargaining because they have no employer
 they may form workers association for mutual aid and protection

7. Independent Contractors

 e.g. security guards may FJA labor organizations of principal employer / establishment

8. Alien – may FJA labor organization

 Qualification:
o 1. Principle of Reciprocity – the country upon which the alien is a citizen also allows Filipinos to FJA labor
organizations
o Alien Employment Permit – certifies by the DFA

9. Working Children – they may FJA labor organization

Implication of Right to self-organization

1. Right to abstain from joining a union

2. Right to choose which union he would join
3. Right to cancel membership with the union – Art III, Sec 8

 General Rule: Right to self-organization

 Exc.: They may abstain, choose or cancel membership
 Limitation: Union Security Agreement (USA)
o If labor union and employer in CBA agreed in a union security agreement
o USA – stipulation in CBA that requires employees covered by Collective Bargaining unit to become union
members or to maintain their union membership in good standing as a condition for continued
employment
o It can be a ground for dismissal / termination of employment

Collective Bargaining Agreement

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Life span: 5 years

Political life: 3 years – term of officer union/representation

Economic Life: 5 years – after 5 years there is renegotiation of CBA

When can you cancel membership? During Freedom period- 60 days from expiration of CBA

Validity:

 It is a contractual obligation protected by the Constitution – Non-impairment of contract

Article 259, Par (e)

Exc. To Exc: Union Security Agreement

Exc. To Exc. To Exc: Limitation on applicability of union security agreement:

1. Already members of another union at the time of the signing of the CBA
2. Those who were refused admission by the union itself without any reasonable grounds
3. Members of religious sect which prohibits their members from joining a labor organization – Freedom of religion
prevails over contractual rights

Purpose of Union Security Agreement:

1. For Protection of Labor Organization

2. Benefits – coercing membership will enlarge membership
3. Self-preservation – strengthens union by selective membership (based on loyalty)

Types of Union Security Agreement

1. Closed Shop Agreement – agreement whereby employer binds himself to hire only members of the contracting
union who must continue to remain as members to keep their jobs
2. Union shop Agreement – employer is allowed to hire non-members of the contracting union on the condition
that they should join the contracting union within a specified period of time
3. Maintenance of Membership Agreement – require those who are members of Contracting Union at the time of
the execution of the CBA to maintain their membership in good standing during the lifetime of CBA
4. Preferential Hiring Agreement – members of the contracting union are given preference in engagement
provided that they maintain their membership in good standing during the lifetime in the CBA
5. Agency Shop – not required to be a member of the contracting union but you employees should extend support
to activities or dues (Art 259 (e))
6. Modified Union Shop – contract which requires all new employees to become members to join contracting
union but does not require present employees to join
7. Closed Shop with a Close Union – a form of closed shop where entry is limited. Entry of new members is
restricted. It is exclusive and restricts hiring of new members or entries
8. Closed shop with an open union – a form of closed shop where union membership is open and entry of new
members is unlimited
9. Percentage Union Shop – contract between union and employer, whereby the employer agrees that a certain
percentage of his employees shall become union members in good standing
10. Union Recognition Clause / Doctrine of Union Monopoly / Exclusive Bargaining Rights Rule – employer
recognizes the majority union as the exclusive bargaining agent / unit
11. Check off agreement – allows employer to withhold or deduct union dues from member’s pay to money directly
for union shop

Instances that curtail self-organization (ULP)

Effects of inclusion of members of employees outside the Bargaining unit

1. Rank & file 2. Supervisory

 R&F (A) member joins R&F (B) – union has different interests – it is not a ground for cancellation
 R&F member joins Supervisory union – ground for cancellation

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Unfair Labor Practices – act or an employer or a union or their agents which violates the right of self-organization

 It coerces, restricts, violates the right to self-organization

 Art 259 – committed by Employer
 Art 260 – committed by Labor Org / Union

3 aspects of ULP

1. Administrative Aspect
– file before labor Arbiter (NLRC)
– violation of the labor Code
– Burden of Proof: Substantial Evidence
2. Civil Aspect
– file before the proper courts
– violation of New Civil Code – claims for damages / injury
– Burden of Proof: Preponderance of Evidence
– Must wait admin decision before filing civil case – jurisdictional purpose
3. Criminal Aspect
– file before the proper courts
– violation of RPC (Art 305 – prescription, Art 303 – penalty)
– burden of Proof: Proof beyond reasonable doubt
– 1 year from date of accrual – suspended to wait for administrative case decision for jurisdictional purposes
(condition sine qua non) – can be dismissed on the ground of prematurity
– Admin case – no effect in criminal case – not for the purpose of determining acquittal or conviction

Scope of ULP (expressed in Art 259 & 260 of the LC)

Requirement:

1. There must be employer-employee relationship

2. They must be member of labor organization
3. They must be eligible to FJA of labor organizations
 Can be committed against employee

Burden of Proof (admin): Substantial Evidence – 1. Direct; or 2. Circumstantial

Complainant may file against: Officers/agents of business, Union members who participated or represented the
employer or Union

Art 259: Committed by Employer (Exclusive)

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

 Totality of conduct doctrine – culpability of employer is evaluated not only on the basis of implication
 Economic Interference Coercion – offering additional benefits to stop strike
 Deadlock – if there is no agreement during the negotiation process of CBA
o Lock out – caused by the employer
o Strike – caused by the union / employees

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

 Violation against membership

 Yellow dog contract ( Coward/Subservient) –
o 1. Declare that he is not a member
o 2. Refrain from joining Labor Organizations
o 3. Withdraw membership / quit employment upon joining Labor organization

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

 GR: Contracting Out – Management Prerogative

 Exc: Result to Coercion, Restriction, violation or interference to self-organization
 De Ocampo v. NLRC (213 SCRA 652) – management prerogative – dismissal was due to redundancy not their
membership in the Labor organization

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

 Company / Captive Unionism – Company Dominated Union – Sweetheart Contract – representative of the union
is sleeping with the employer – union forge personal relationship with the employer
 Form:
o 1. Initiation of company Union Ideas (e.g. company chooses union officers)
o 2. Financial support to union – accepting all terms and conditions because of gratitude
o 3. Passivity of the union – Union accepts even blue sky agreement (Employer cannot interfere with
affairs of union)
 Company Type Union – kind of labor organization composed of employees in the same company – it is not
prohibited

Par (e). To discriminate in regard to wages, hours of work and other terms and conditions of employment in order to
encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the
parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except
those employees who are already members of another union at the time of the signing of the collective bargaining
agreement. Employees of an appropriate bargaining unit who are not members of the recognized collective bargaining
agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized
collective bargaining agent, if such non-union members accept the benefits under the collective bargaining agreement:
Provided, that the individual authorization required under Article 242, paragraph (o) of this Code shall not apply to the
non-members of the recognized collective bargaining agent;

 Forms of Discrimination
o 1. Dismissal or layoff – GR: Management Prerogative, Exc: Reason is membership of Union
o 2. Rehiring / Delayed reinstatement – condition of withdrawing from membership of union
o 3. Transfer – officers / president of the union
o 4. Retrenchment of members of the union

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

 Testimony must relate to matters involving right to self-organization

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

 Refusal to bargain:
o 1. Surface bargaining – no intention to negotiation
o 2. Take it or leave it bargaining – proposal cannot be countered
o 3. Blue sky bargaining – impossible provisions

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

 The relationship must be under an atmosphere of freedom and mutual respect

Par (i). To violate a collective bargaining agreement.

 Flagrant, malicious refusal to comply with the economic provisions (Pacta Sun Servandum)
o Economic provisions – labor standards and other benefits
o Political Provisions – public interest

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Art 260: Committed by Labor Organization

"Art. 250. Unfair labor practices of labor organizations. — It shall be unlawful for a labor organization, its officers, agents
or representatives to commit any of the following unfair labor practices: chanrobles virtual law library

"(a) To restrain or coerce employees in the exercise of their right to self-organization: Provided, That the labor
organization shall have the right to prescribe its own rules with respect to the acquisition or retention of membership;

 EXAMPLE
 Preventing employees who do not desire to join strike from going to or from work
 Sanction employee if he resigns or joins another union exc. Freedom period
 Member is expelled because he petitions an audit of union fund

"(b) To cause or attempt to cause an employer to discriminate against an employee, including discrimination against an
employee with respect to whom membership in such organization has been denied or terminated on any ground other
than the usual terms and conditions under which membership or continuation of membership is made available to other
members;

 In close shop agreement – if there is refusal to accept as member without justifiable ground, it becomes a cause
of dismissal (ULP)

"(c) To violate the duty, or refuse to bargain collectively with the employer, provided that it is the representative of the
employees;

 Refusal to Bargain

"(d) To cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or other things of
value, in the nature of an exaction, for services which are not performed or not to be performed, including the demand
for a fee for union negotiations;

 Feather bedding activities / Make Work Activities

"(e) To ask for or accept negotiation or attorney's fees from employers as part of the settlement of any issue in
collective bargaining or any other dispute; or

 Removes atmosphere of freedom and mutual respect

 Sweetheart contract
 Top Down contract – agreement without regard to the welfare of union members

"(f) To violate a collective bargaining agreement.

 Blue sky
 Surface Bargaining

"The provisions of the preceding paragraph notwithstanding, only the officers, members of governing boards,
representatives or agents or members of labor associations or organizations who have actually participated in,
authorized or ratified unfair labor practices shall be held criminally liable."

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