Discuss the following: the control and/or direction operation of the principal; or

1. Job Only Contracting - of the principal in all matters (b) The contractor does not exercise the
2. Labor-Only Contracting- where the person supplying workers to an employer does connected to the right to control over the performance of
not have substantial capital or investment in the form of tools, equipment, performance EXCEPT as to the work of the employee.
machineries, work premises, among others, and the workers recruited and placed the result
by such persons are performing activities which are directly related to the 4. The Service Agreement Note: There is labor-only contracting even
principal business of such employer. ensures compliance with all if only one of the two (2) elements above is
the rights and benefits for all present.
Refers to the arrangement where the contractor or subcontractor merely recruits, the employees of the
supplies or places workers to perform a job or work for a principal, and the contractor under labor laws If the contractor is not registered with the
elements enumerated in Section 5 hereunder are present. DOLE, the contractor is presumed to be a
labor-only contractor
What are the EFFECTS of labor-only contracting? DISTINCTIONS
1. The labor only contractor will be treated as the agent or intermediary of the principal. Since JOB CONTRACTING LABOR-ONLY CONTRACTING
the act of an agent is the act of the principal, representations made by the labor-only No employer-employee relationship exists Employer-employee relationship is created
contractor to the employees will bind the principal. between the contractual employees of the by law between the principal and the
2. The principal will become the direct employer as if it directly employed the workers job contractor and the principal employees supplied by the labor-only
supplied by the labor-only contractor to undertake the contracted job or service. The contractor
principal will be responsible to them for all their entitlements and benefits under labor laws. Principal is considered only and indirect Principal is considered the direct employer
3. The principal and the labor-only contractor will be solidarily treated as the direct employer of the employees supplied by the labor-
employer.
only contractor
Principal is not responsible for any claim Principal becomes solidarily liable with the
DISTINCTION BETWEEN JOB CONTRACTING AND LABOR-ONLY CONTRACTING made by the contractor’s employees labor-only employees directly hired by
him/her
JOB CONTRACTING LABOR-ONLY CONTRACTING
Elements 1. The Contractor is engaged in Absence of any of the requisites of job
a distinct and independent contracting makes it a labor-only
business which undertakes contracting arrangement. 3. Wage distortion
to perform the job or work WAGE DISTORTION is that brought about where an increase in the prescribed wage
2. The contractor has THIS IS NOT ALLOWED BY LAW rates results in the elimination or severe contraction of intentional quantitative
substantial capital to carry differences in wage or salary rates between and among employee groups in an
out the job farmed out by (a) The contractor does not have either
establishment as to effectively obliterate the distinctions embodied in such wage
the principal on his own (i) SUBSTANTIAL CAPITAL or
ACCOUNT, MANNER AND (ii) INVESTMENTS in the form of tools, rates based on skills, length of service and other logical bases of differentiation.
METHOD, INVESTMENT in equipment, machineries, supervision, work
the form of tools, premises, among others, AND the How wage distortion settled?
equipment, machinery and contractor's employees recruited and A. If there is a CBA, a dispute arising from wage distortions shall be resolved
supervision placed are performing activities which are through GRIEVANCE MACHINERY provided in the CBA. If remains unresolved,
3. The contractor is free from directly related to the main business through VOLUNTARY ARBITRATION.
 B. If there is no CBA, the employers or workers shall endeavor to correct such
distortions. Any dispute arising therefrom shall be settled through the National
Conciliation and Mediation Board and if remains unresolved after ten (10) days
of conciliation, the dispute is referred to the appropriate branch of the NLRC.
4. Rule on payment of wages
How is it often being paid?
Answer: Wages shall be paid once every two (2) weeks or twice a month at intervals
not exceeding sixteen (16) days. If on account of force majeure or circumstances
beyond the employer’s control, payment of wages on or within the time herein
provided cannot be made, the employer shall pay the wages immediately after such
force majeure or circumstances have ceased.
How shall they be paid?
Wages shall be paid in legal tender (legal currency) and use of tokens, promissory
notes, vouchers, coupons, or any other form alleged to represent legal tender is
absolutely prohibited even when so requested by the employee.
Where payment is given?
Answer: As a general rule, the place of payment shall be at or near the place of
undertaking. Payment shall be deemed to be near the place of undertaking only
when it is within a distance of one (1) kilometer from the premises of such
undertaking EXCEPT when payment cannot be effected at or near the place of work
because rendering payment thereat is impossible; when the employer provides free
transportation to the employees back and forth; and that the time spent by the
employees in collecting their wages shall be considered as compensable hours
worked.
To whom it was given ?
Answer: Direct payment shall be made to the employee. Payment made to another
person is allowed under the following circumstances:
1. Where the employee authorizes his employer in writing to pay his wages to a
member of his family;
2. When payment to another person is authorized by law;
3. Payments for insurance premium of the employee and union dues where the
right to check-off has been recognized by the employer in accordance with a
collective bargaining agreement or when such payment is authorized in writing
by the individual-employees concerned or
4. In case of death of the employee.
OTs exception.
5. What are the deductions in terms of wages?
• Payment of wages:
1. To whom paid. - It should be made on time directly to the Kasambahay to whom
they are due in cash at least once a month.
2. Deductions, prohibition; when allowed. - The employer, unless allowed by the
Kasambahay through a written consent, shall make no deductions from the wages
other than that which is mandated by law such as for SSS, PhilHealth or Pag-IBIG
contributions.
3. Mode of payment. - It should be paid in cash and not by means of promissory
notes, vouchers, coupons, tokens, tickets, chits, or any object other than the cash
wage as provided for under this Act.
4. Pay slip. – The employer shall at all times provide the Kasambahay with a copy of
the pay slip containing the amount paid in cash every pay day, and indicating all
deductions made, if any. The copies of the pay slip shall be kept by the employer for
a period of three (3) years.
5. Prohibition on Interference in the disposal of wages. – It shall be unlawful for the
employer to interfere with the freedom of the Kasambahay in the disposition of
his/her wages, such as:
(a) Forcing, compelling, or obliging the Kasambahay to purchase merchandise,
commodities or other properties from the employer or from any other person; or
(b) Making use of any store or services of such employer or any other person.
6. Prohibition against withholding of wages. – It shall be unlawful for an employer,
directly or indirectly, to withhold the wages of the Kasambahay. If the Kasambahay
leaves without any justifiable reason, any unpaid salary for a period not exceeding
fifteen (15) days shall be forfeited. Likewise, the employer shall not induce the
Kasambahay to give up any part of the wages by force, stealth, intimidation, threat
or by any other means whatsoever.
PROHIBITIONS REGARDING WAGES (See Articles 112 to 119 of the Labor Code)
(1) NON-INTERFERENCE BY EMPLOYER IN THE DISPOSAL BY EMPLOYEES OF THEIR
WAGES.
Article 112 of the Labor Code - No employer is allowed to limit or otherwise
interfere with the freedom of any employee to dispose of his wages and no
employer shall in any manner oblige any of his employees to patronize any store or
avail of the services offered by any person.
(2) WAGES NOT SUBJECT TO EXECUTION OR ATTACHMENT; EXCEPTION.
The general rule is that laborer’s wages are not subject to execution or attachment.
The exception is when such execution or attachment is made for debts incurred for
food, shelter, clothing and medical attendance.
(3) PROHIBITION ON DEDUCTIONS FROM WAGES.
• May employer deduct from wage of employees?
The general rule is that an employer, by himself or through his representative, is
PROHIBITED from making any deductions from the wages of his employees. The
employer is not allowed to make unnecessary deductions without the knowledge or
authorization of the employees.
• Are there EXCEPTIONS to this rule? Yes.
(a) In cases where the worker is insured with his consent by the employer, and the
deduction is to recompense the employer for the amount paid by him as premium
on the insurance; (b) For union dues, in cases where the right of the worker or his
union to check-off has been recognized by the employer or authorized in writing by
the individual worker concerned; and (c) In cases where the employer is authorized
by law or regulations issued by the DOLE Secretary. (d) Deductions for loss or
damage under Article 114 of the Labor Code; (e) Deductions made for agency fees
from non-union members who accept the benefits under the CBA negotiated by the
bargaining union. This form of deduction does not require the written authorization
of the non-bargaining union member concerned; (f) Deductions for value of meal
and other facilities; (g) Deductions for premiums for SSS, PhilHealth, employees’
compensation and Pag-IBIG; (h) Withholding tax mandated under the National
Internal Revenue Code (NIRC); (i) Withholding of wages because of the employee’s
debt to the employer which is already due; (j) Deductions made pursuant to a court
judgment against the worker under circumstances where the wages may be the
subject of attachment or execution but only for debts incurred for food, clothing,
shelter and medical attendance; (k) When deductions from wages are ordered by
the court;
(4) PROHIBITION AGAINST DEPOSIT REQUIREMENT.
Article 114 of the Labor Code prohibits the employer to require that workers should
make a deposit from which deductions shall be made for the reimbursement of loss
of tools, materials or equipment supplied by him, or any damages thereto.
PERMISSIBLE DEDUCTIONS FOR LOSS OR DAMAGES.
If the employer is engaged in a trade, occupation or business where there is such
practice of making deductions or requiring deposits to answer for the
reimbursement of loss of or damage to tools, materials or equipment supplied by
the employer to the employee.
(5) PROHIBITION ON WITHHOLDING OF WAGES.
Article 116 of the Labor Code prohibits any person, whether employer or not,
directly or indirectly, to withhold any amount from the wages of a worker. Under
Article 1706 of the Civil Code, withholding of the wages, except for a debt due, is
not allowed to be made by the employer. Moreover, under Article 1709 of the same
Code, the employer is not allowed to seize or retain any tool or other articles
belonging to the laborer.
(6) KICKBACKS.
Article 116 of the Labor Code also prohibits “kickback” which consists in the act of
any person, whether employer or not, directly or indirectly, to induce a worker to
give up any part of his wages by force, stealth, intimidation, threat or by any other
means whatsoever, without the worker’s consent.
(7) PROHIBITION AGAINST DEDUCTION TO ENSURE EMPLOYMENT.
Article 117 of the Labor Code prohibits any person, whether the employer himself
or his representative or an intermediary, to require that a deduction be made or to
actually make any deduction from the wages of any employee or worker, for the
benefit of such employer or his representative or an intermediary, as consideration
of a promise of employment or, when already employed, for the continuation of
such employment or retention therein.
(8) RETALIATORY ACTIONS BY EMPLOYER.
Article 118 of the Labor Code prohibits the employer: (a) to refuse to pay the wages
and benefits of an employee; or
(b) to reduce his wages and benefits; or (c) to discharge him from employment; or
(d) to discriminate against him in any manner;
on account and by reason of said employee’s: (1) act of filing any complaint or
institution of any proceeding under Title II [Wages], Book III of the Labor Code; or
(2) act of testifying in said proceedings or when he is about to testify therein.
(9) FALSE STATEMENT, REPORT OR RECORD.
Article 119 of the Labor Code prohibits any person, whether employer or not, to
make any false statement, report or record required to be filed or kept in
accordance with and pursuant to the provisions of the Labor Code, knowing such
statement, report or record to be false in any material respect.
Examples: Payrolls, time records, employment records and production records,
among others.
Wages; Money Claims (1998)
An explosion in a mine site resulted in the death of fifty (50) miners. At the time of
the accident The Mining Company has not yet paid the wages, overtime, holiday and
rest day compensation of the deceased miners; the deceased miners owed the
Miners Cooperative Union sums of money;
The Mining Company was served by a sheriff Writs of Garnishment of Wages of
some of the deceased miners by virtue of final Judgments in several collection suits.
After the accident, the wives, paramours, brothers, sisters and parents of the
deceased miners filed their claims for unpaid wages, overtime, holiday and rest day
compensation. The Company has acknowledged its obligations. However, it is in a
quandary as to how to adjudicate the conflicting claims; and whether it can deduct
from the monies due the miners their unpaid debts with the credit union. How will
you advise the mining company on the following: 1) Can the Mining Company defer
payment of the money claims until an appropriate court has ruled on the conflicting
claims? [3%] 2) Can the Mining Company deduct from the amount due to each
miner an amount equivalent to their debt and remit the same to the Credit
Union?'(2%] SUGGESTED ANSWER: 1. I will advise the Mining Company to pay to the
respective heirs of the deceased miners whatever were the unpaid wages, overtime,
holiday and rest day compensation of said deceased miners without the necessity of
intestate proceedings. The claimants, if they are all of age shall execute an affidavit
attesting to their relationship to the deceased and the fact that they are his heirs, to
the exclusion of all other persons. If any of the heirs is a minor, the affidavit shall be
executed on his behalf by his natural guardian or next of kin. The affidavit shall be
presented to the employer who shall make payment through the Secretary of Labor
or his representative. The representative of the Secretary of Labor shall act as
referee in dividing the amount paid among the heirs. {See Art. 105 (b) of the Labor
Code) 2. I will advise the Mining Company not to deduct from the amount due to
each miner the amount equivalent to his debt to the Credit Union. The debts of a
deceased worker to the Credit Union is not one of the allowable deductions under
the Labor Code, or any rules and regulations of the Department of Labor and
Employment. (See Art. 113 of the Labor Code) ANOTHER SUGGESTED ANSWER: Yes,
if pursuant to CBA provision or authorized by worker in writing; otherwise. No.
Wages; Money Claims; Attorney’s Fees; Damages (2001) (a) Eduardo Santiago, a
project worker, was being assigned by his employer, Bagsak Builders, to Laoag,
Ilocos Norte. Santiago refused to comply with the transfer claiming that it, in effect,
constituted a constructive dismissal because it would take him away from his family
and his usual work assignments in Metro Manila. The Labor Arbiter found that there
was no constructive dismissal but ordered the payment of separation pay due to
strained relations between Santiago and Bagsak Builders plus attorney's fees
equivalent to ten percent (10%) of the value of Santiago's separation pay. Is the
award of attorney's fees valid? State the reasons for your answer. (2%). SUGGESTED
ANSWER: No, the award of attorney's fees is not valid. According to the Labor Code
(Art. 111 (a)), attorney's fees may be assessed in cases of unlawful withholding of
wages which does not exist in the case. The worker refused to comply with a lawful
transfer order, and hence, a refusal to work. Given this fact, there can be no basis
for the payment of attorney's fees. (b) Could the labor arbiter have validly awarded
moral and exemplary damages to Santiago instead of attorney's fees? Why? (3%).
SUGGESTED ANSWER; No, moral and exemplary damages can be awarded only if
the worker was illegally terminated in an arbitrary or capricious manner. (Nueva
Ecija Electric Cooperative Inc., Employees Assn., us. NLRC, G.R. No. 116066, January
24, 2000; Cruz us. NLRC, G.R. No. 116384, February 7, 2000; Phil. Aeolus etc., vs.
NLRC, G.R. No. 124617
2. Regulatory and visitorial powers of the Department of Labor and Employment
(DOLE) Secretary
Art 36; REGULATORY POWER – The Secretary of Labor shall have the power to
restrict and regulate the recruitment and placement activities of all agencies within
the coverage of this Title and is hereby authorized to issue orders and promulgate Regional Director to order and enforce compliance with labor standard laws can be
rules and regulations to carry out the objectives and implement the provisions of exercised even when the individual claim exceeds P5,000.00. (5%) SUGGESTED
this title. ANSWER: TRUE. The visitorial and enforcement power of the DOLE Regional Director
Art 37; VISITORIAL POWER - The Secretary of Labor or his duly authorized to order and enforce compliance with labor standards laws can be exercised even
representatives may, at any time, inspect the premises, books of accounts and when the individual claims exceeds P5,000.00 the authority under Article 128 may
records of any person or entity covered by this Title, require it to submit reports be exercised regardless of the monetary value involved. Under Article 129, however
regularly on prescribed forms and act in violations of any provisions of this Title. the authority is only for claims not exceeding P5,000.00 per claimant.
DOLE Regional Director; Visitorial and Enforcement Power; Compliance Order (2008)
No. III. c. Savoy Department Store (SDS) adopted a policy of hiring salesladies on
five-month cycles. At the end of a saleslady's five-month term, another person is
hired as replacement. Salesladies attend to store customers, were SDS uniforms,
report at specified hours, and are subject to SDS workplace rules and regulations.
Those who refuse the 5-month employment contract are not hired. The day after
expiration of her 5-month engagement, Lina wore her SDS white and blue uniform
and reported for work but was denied entry into the store premises. Agitated, she
went on a hunger strike and stationed herself in front of one of the gates of SDS.
Soon thereafter, other employees whose 5-month term had also elapsed, joined
Lina's hunger strike. Assume that no fixed-term worker complained, yet in a routine
inspection a labor inspector of the Regional Office of the Labor Code's security of
tenure provisions and recommended to the Regional Director the issuance a
compliance order. The Regional Director adopted the recommendation and issued a
compliance order. Is the compliance order valid? Explain your answer. (3%)
SUGGESTED ANSWER: No, the compliance order is not valid. The Regional Director
exercises only visitorial and enforcement power over the labor standard cases, and
the power to adjudicate uncontested money claims of employees. The Regional
Director has no power to rule on SDS‘s 5-month term policy. ALTERNATIVE ANSWER:
Yes, the Compliance Order is valid because the Secretary of Labor and
Employment or his duly authorized representatives has the power to issue
compliance orders to give effect to the labor standards based on the findings of
labor employment and enforcement officers or industrial safety engineers made
during inspection. The Secretary ot his duly authorized representatives may issue
writs of execution to the appropriate authority for the enforcement of their orders
(Art. 128, Labor Code; V.L. Enterprises and/or Visitacion v. CA, G.R. No. 167512,
March 12, 2007). DOLE Regional Director; Visitorial and Enforcement Power;
Money Claims (2009) No. I. a. The visitorial and enforcement powers of the DOLE