Labor Relations

Title 1. Policy and Definitions

Labor Relations is the interactions between employer and employees or their representatives and the
mechanism by which the standards and other terms and conditions of employment are negotiated,
adjusted and enforced.
Labor Relations Laws define the status, rights, and duties and the institutional mechanisms that govern
the individual and collective interactions of employers, employees or their representatives.

Note. Absent an employer-employee relationship, there is no labor relation to speak of. If there is no
employer-employee relationship between the parties, there is no basis for-organizing for purposes of
collective bargaining.
Labor Relations may be distinguished from Labor Standards in that the latter is that part of labor law
which prescribes the minimum terms and conditions of employment which the employer is required to
grant to its employees.

Labor relations policy under the labor code is embodied in Article 13; Section 3 of the 1987 Constitution
which guarantees to all workers their right, among others, to:
Self-organization
Collective Bargaining and negotiations
Peaceful and Concerted activities including the right to strike in accordance with law; and
Participate in policy and Decision-making processes affecting their rights and benefits as may be provided
by law.

Article 218. Declaration of Policy.

It is the policy of the State:
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;
To promote free trade unionism as an instrument for the enhancement of democracy and the promotion of
social justice and development;
To foster the free and voluntary organization of a strong and united labor movement;
To promote the enlightenment of workers concerning their rights and obligations as union members and
as employees;
To provide an adequate administrative machinery for the expeditious settlement of labor or industrial
disputes;
To ensure a stable but dynamic and just industrial peace; and
To ensure the participation of workers in decision and policy-making processes affecting their rights,
duties and welfare.

Parties to Labor Relations Cases:

Employee's organization;
Management
The public - always to be considered in dispute between labor and capital, and it has been held that the
rights of the general public are on paramount, and
The State.

"Note. Employer and employees are active parties while the public and the state are passive parties.

Article 1701 of the Civil Code, mandates that neither capital nor labor shall act oppressively against the
other or impair the interest and convenience of the public.

The constitutional policy to provide full protection to labor is not meant to be a sword to oppress
employers.
Article 218 of the Labor Code provides for the primacy of negotiation including conciliation, mediation and
voluntary arbitration as "alternative modes of settlement of labor dispute" instead of the more adversarial
strikes, lockouts or any mass concerted actions.
Arbitration is the submission of a dispute to an impartial person for determination on the basis of evidence
and arguments of the parties. The arbiter's decision or award is enforceable upon the disputants. This
may be either be voluntary or compulsory.

Employee-Employer relationship

Article 219. Definitions.

Employer is any person, natural or juridical, domestic or foreign, who carries on in the Philippines any
trade, business, industry, undertaking or activity of any kind and uses the services of another person who
is under his order as regards the employment except the Government and any of its political subdivisions,
branches or instrumentalities, including corporations owned or controlled by the Government: Provided,
That a self-employed person shall be both employee and employer at the same time.

Employer includes:
One who employs the services of others; one for whom employees. Work and who pays their wage's or
salaries; or
Any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor
organization or any of its officers or agents except when acting as employer.

Employee is any person who performs services for an employer in which either or both mental and
physical efforts are used and who receives compensation for such services, where there is an employer-
employee relationship.

Note. The mere fact that an entity is a labor union does not mean that it cannot be considered an
employer of the persons who work for it.

The law does not require an employer to be registered before he may come within the purview of the
Labor Code, consistent with the established rule in statutory construction that when the law does not
distinguish, we should not distinguish.

Employee includes:
One who has been Dismissed from work, but the legality of the dismissal is being contested in a forum of
appropriate jurisdiction.
Any individual whose work has Ceased as a result of or in connection with any current labor dispute or
because of any unfair labor practice if he has not obtained any other substantially equivalent and regular
employment; and
Any person in the Employ of an employer. The term shall not be limited to the employees of a particular
employer unless the Code so explicitly states.

Types of Employees under the Labor Code.

Managerial
Supervisory; and
Rank-and-file.
Managerial Employee is one who is vested with -powers or-prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, layoff, recall, discharge, assign or discipline
employees.

Supervisory Employees are those who, in the interest of the employer, effectively recommend such
managerial actions if the exercise of such authority is not merely routinary or clerical in nature but
requires the use of independent judgment.

All employees not falling within any of the above definitions are rank-and-file employees.

Elements of Employer-Employee Relationship or Four-Fold Test:

Selection and engagement of the employee;
Payment of wages;
Power of Dismissal; and
Power to Control.

Control Test
Refers to the employer's power or right to control the employee not only as to the result of the work to be
done but also as to the means and methods by which the same is to be accomplished.

The control test merely calls for the existence of the right to control the manner of doing the work, not the
actual exercise of the right.

Note. The issuance by the principal of guidelines does not establish control by principal.

Not every form of control will have the effect of establishing the Employer-Employee relationship. The line
should be drawn between:
Rules that merely serve as guidelines towards the achievement of mutually desired results without
dictating the means or methods to be employed in attaining it. (These aim only to promote the result. In
such case, no Employer-Employee relationship exists); and
Rules that control or fix the methodology and bind or restrict the party hired to the use of such mean's
(These address both the result and the means used to achieve it and hence, Employer-Employee
relationship exists).

Two-tiered Test:
The putative employer's power to control the employee with respect to the means and methods by which
the work is to be accomplished; and
The underlying economic realities of the activity or relationship.

Economic Dependence or Economic Reality Test.

Refers to whether the worker is dependent on the alleged employer for his continued employment in that
line of business.

Existence of Employer-Employee Relationship.

Existence of employer-employee relationship is determined by law, not by contract. Hence, even if the
parties call their contract a 'Contract of Lease of Service", the factual existence of an Employer-Employee
relationship will still prevail.

Evidence of Employment.
No particular form of evidence is required to prove the existence of Employer-Employee relationship. Any
competent and relevant evidence to prove the relationship may be admitted. A claimant's allegation of
Employer-Employee relationship which the employer does not deny is admitted.

Absence of Name in the Payroll

Where the Employer-Employee relationship between the parties was sufficiently proved by testimonial
evidence, the
absence of time sheet, time record, or payroll has become inconsequential.

Note. The presence or absence of Employer-Employee relationship is not determined by the basis of
employee's compensation.

Jurisdiction.
If a complaint is brought before the Department of Labor and Employment to give effect to the labor
standards provisions of the Labor Code or other labor legislation, and there is a finding by the Department
of Labor and Employment that there is an existing employer-employee relationship, the Department of
Labor and Employment exercises jurisdiction to the exclusion of the National Labor Relations
Commission.
If the Department of Labor and Employment finds that there is no employer-employee relationship, the
jurisdiction is properly with the National Labor Relations Commission. The law accords a prerogative to
the National Labor Relations Commission over a claim when the employer-employee relationship has
terminated, or such relationship has not arisen at all.

If a complaint is filed with the Department of Labor and Employment, and it is accompanied by a claim for
reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art 224(3) of the Labor Code.

If a complaint is filed with the National Labor Relations Commission, and there is still an existing
employer-employee relationship, the jurisdiction is properly with the Department of Labor and
Employment: The findings of the Department of Labor and Employment, however, may still be questioned
through a petition for certiorari under Rule 65 of the Rules of Court.

Where Employer-Employee Relationship Exists.

Jeepney drivers on boundary basis
Drivers or helpers of salesmen are employees of the company
Employees of unregistered association
Street-hired kargador
Workers in movie projects
Salaried insurance agents as distinguished from registered agents on commission basis
Tailors, seamstresses, servers, - basters, plantsadoras paid on piece-rate basis
In-house lawyer as distinguished from an outside retainer
Resident physicians
University professors and instructors
Taxi drivers and barber
Security guards with respect to the security agency
Pakiao workers
Truck drivers

Cases where there is no Employer-Employee Relationship:

Farm workers are not employees of the sugar central
Caddies are not employees of the golf club
Working scholars are not employees of the schools
Collecting agents on commission basis
Shoeshine boys
Independent contractors selling soft drinks; and
Commission salesman
Referees are independent contractors; and
A residency or resident physician position in a medical specialty is never a permanent one.

Note. A contract of perpetual employment deprives management of its prerogative to decide whom to
hire, fire and promote, and renders inutile the basic precepts of labor relations. An absolute and
unqualified employment for life equal to perpetual employment is contrary to public policy and good
customs, as it unjustly forbids the employer from terminating the services of an employee despite the
existence of a just or valid cause. It likewise compels the employer to retain an employee despite the
attainment of the statutory retirement age, even if the employee has become a "non-performing asset" or,
worse, a liability to the employer.

Importance of Determining Existence of Employer-Employee Relationship

Generally, labor standards and conditions apply only if there is Employer-Employee relationship.
However, in some instances, even if there is no Employer-Employee relationship, the Labor Code may
still be invoked, e.g., indirect employer's liability, illegal recruitment and misuse of Philippine Overseas
Employment Administration license

Article 220 to 231. National Labor Relations Commission.

(Refer to the discussion on National Labor Relations Commission, under Jurisdiction and Remedies).
Article 232 to 239. Bureau of Labor Relations.
(Refer to the discussion on Bureau of Labor Relations under Jurisdiction and Remedies)