Proof of Wage payment – ER has burden of proof The IRs require every ER to keep a payroll. Among other
things, it must show the length of time to be paid, the pay rate, the amt actually paid, and so on. AND the EE should sign the payroll.
ER cannot pay his workers by means of:
1. Promissory notes 2. Vouchers 3. Coupons 4. Tokens 5. Tickets 6. Chits
7. Any obj other than legal tender Even when expressly requested by the EE.
GR: Payment by legal tender
: Payment by check or money order may be allowed if the same is:
1. Customary on the date of effectivity of the LC;
2. Necessary because of special circs as determined by the Sec of Labor;
3. Stipulated in the CB; or
4. Where the ff conditions are met
a. There is a bank or other facility for encashment w/in 1km radius;
b. The ER, or any of his agents or reps, does not rcv any pecuniary benefit directly/indirectly from the arrangement;
c. The EEs are given reasonable time during banking hrs to withdraw their wages from the bank w/c time shall be considered as compensable hours worked if done during working hrs;
and
d. The payment by check is w/ the written consent of the EEs concerned if
there is no CBA authorizing the payment of wages by bank checks.
Art 103. TIME OF PAYMENT GR:
1. At least once every 2 weeks; or
2. Twice a month at intervals not exceeding 16 days.
:
1. In case of force majeure or other circs beyond the ER’s control, payment must be made immediately after such occurrence has ceased.
2. If engaged to perform a task w/c cannot be completed in 2 weeks and in the absence of CBA or arbitration award:
a. Payment shall be made at intervals not exceeding 16 days, in proportion to the amt of work completed;
b. That final settlement is made upon completion of work.
Art 104. PLACE OF PAYMENT
GR: At or near the place of undertaking
:
1. When payment cannot be effected at or near the place of work by reason of deterioration of peace & order conditions, or by reason of actual or impending emergencies caused by fire, flood or other calamity rendering paymt thereat impossible;
2. When the ER provides for free transpo to the EEs back and forth; and
3. Under any other analogous circs.
Prohibition: No ER shall pay his EEs in a bar, night or day club, drinking establishment, massage clinic, dance hall or other similar places or in places where games are played w/ stakes of money or thins representing money except in the case of persons employed in such places.
Requisites for Payment thru Banks (Wage Rationalization Act)
1. There must be written permission of the majority of the EEs concerned in an establishment;
2. The establishment must have 25/more EEs; and 3. The establishment must be located w/in 1 km
radius to the bank Requisites of Payment thru ATM
1. The ATM sys of paymt is w/ the written consent of the EE concerned;
2. The EEs are given reasonable time to withdraw their wages from the bank facility w/c, if done during working hrs, shall be considered as compensable hrs worked;
3. The sys shall allow the EE to rcv their wage w/in the period & the amt prescribed under the LC;
4. There is a bank/ATM facility w/in 1km radius from the workplace;
5. Upon the request of the concerned EE, the ER shall issue a record evidencing paymt of wages, benefits & deductions for a particular pd;
6. The ATM sys of paymt shall neither result in diminution of benefits & privileges of the EE nor shall the latter incur addt’l expenses in the process; and
7. The ER shall assume full responsibility in case the wage protection provisions of law &
regulations are not complied w/ under the arrangemt
Art 105. DIRECT PAYMENT OF WAGES
GR: Wages shall be paid directly to the workers to whom they are due.
: Exceptions
1. Payment through another person
a. In case of force majeure rendering such payment impossible provided said person is under written authority given by the worker for the purpose;
b. When authorized under existing law, including payments for insurance premiums of the EE and union dues where the R to check-off has been recognized by the ER in accordance w/
a CBA or authorized in writing by the indiv EEs concerned.
2. Payment through the heirs of the worker - in case the worker has died, ER may pay wages
of the deceased worker to the heirs of the latter w/o the necessity of intestate proceedings.
Procedure
1) Claimants shall execute an affidavit attesting their relshp to the deceased and the fact that they are his heirs, to the exclusion of all others (Affidavit of Next of Kin);
2) In case of a minor heir, affidavit shall be executed on his behalf by his natural guardian or next of kin;
3) Affidavit shall be presented to the ER who shall make paymt through the Sec of Labor or his rep;
4) The rep shall act as referee in dividing the amt paid among the heirs; and 5) Payment of wages under this Art shall
absolve the ER of any further liability w/ respect to the amt paid.
3. Payment through a family member of the workers family
- where the ER is authorized in writing by the EE to pay his wages to a member of his family
Summary of Legal Prohibitions on Wages 1) Payment of wages in non-cash form;
2) Payment of wages in night and day clubs, bars
& other similar places;
3) Non-diminution of wages; and
4) Non-interference by the ERs in the EE’s disposition of their wages.
Summary of Rules on Payment of Wages What must
be paid
✓Legal Tender.
✗ promissory notes, vouchers,
coupons, tokens, tickets, chits, or any other obj other than legal tender When Once every 2 weeks, or
Twice a month at intervals of at least 16 days
Where At or near the place of undertaking How Directly to the EE
Art 106. CONTRACTOR OR SUBCONTRACTOR
Types of Contractors under the Law
1. Job Contracting or Subcontracting – an arrangement whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service w/in a definite or predetermined period, regardless or whether such job, work, or service is t be performed or completed w/in or outside the premises of the principal
Existence of Trilateral Relationship
-under this legitimate contracting the ff CONTRACTS exist:
a. Contract for specific job, work or service bet the principal & the contractor/subcontractor; and
b. Contract of ENT bet the
contractor/subcontractor and its workers.
Hence, the PARTIES involved are:
1. Principal;
2. Contractor/subcontractor; and 3. Contractual workers
Laws applicable between:
1. Principal & Contractor Civil Code &
pertinent commercial laws
2. Contractor & his EEs Labor Code &
special labor laws
3. Principal & contractor’s EEs no EE-ER Relationship
BUT ER-EE Relship will exist bet the Principal &
the Workers where the contracting arrangement is not legitimate, as in labor-only contracting
Elements of Independent Contractor Job Contracting 1. The sub/contractor carries on a distinct and
independent business and undertakes to perform the job on his own account and under his own responsibility, according to its own manner and method and free from the control
& direction of the principal in all matters connected w/ the performance of the work except to the results thereof;
2. The sub/contractor has substantial capital or investment in tool, equipment and machineries, work premises and other materials necessary in the conduct of his business;
3. The agreement bet the principal and sub/contractor assures the contractual EEs entitlement to all labor & health standards, free exercise of the R to self-org, security of tenure and social & welfare benefits;
4. Must be properly registered as such in accordance w/ DO #18-02. (The absence of
registration only gives rise to the presumption that the contractor is engaged in labor-only contracting a presumption that can be refuted.) 2. Labor-only Contracting – an arrangement where the sub/contractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and ANY of the ff ELEMENTS is present:
a. Lack of substantial capital/investment AND performance of activities directly related to the principal’s business (confirming element); or b. The contractor does not exercise the right of
control over the performance of the contractual EE (confirming element);
c. The arrangement is merely to recruit, supply or place workers to perform a job, work, or service for a principal (Essential Element)
LOC = Essential Element + either or both confirming element/s
Labor-only contracting is wrong & prohibited bcoz it is an attempt to evade the obligs of an EEr:
a) To respect EE’s R to unionize;
b) R to ENT standards;
c) R to security of tenure
Substantial capital – capital stocks and subscribed capitalization in the case of corps, tools, equipment, implements, machineries and work premises, actually & directly used by the sub/contractor in the performance or completion of the job, work or service contracted out.
- the law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc.
Right to control – refers to the right reserved to the person for whom the service of the contractual workers are performed, to determine not only the end to be achieved, but also the manner & means to be used in reaching that end
Insular life v NLRC: “exclusive servicing” esp springing from a regulation issued by the Insurance Commission, and not from an intention by the alleged ER, does not necessarily mean being under the control or ENT of the entity being served. The relship may still be classified as independent contractorship because the element of control is absent.
- EEs may resign from their jobs to become contractors to their former ER, but the latter should cease controlling the means & method of doing the work allegedly contracted, otherwise, the result is LOC.
Summary of Prohibited Labor Contracting 1. Labor-only contracting;
2. Contracting that terminates the ENT of regular EEs, or reduces their work hrs, or reduces/splits
a bargaining unit, if such contracting out is not done in GF & not justified by business exigencies;
3. Contracting w/ a Cabo – person/s or labor group w/c, in the guise of a labor org, supplies workers to an ER w/ or w/o any monetary or other consideration whether in the capacity of an agent of the ER or as an ostensible independent contractor;
4. Contracting w/ in-house agency;
5. Contracting because of a strike/lockout;
6. Contracting that constitutes ULP under Art 248.
JOB CONTRACTING LABOR-ONLY CONTRACTING The ER/principal is
merely an indirect ER, by operation of law, of his contractor’s EEs
The ER/principal is treated as direct ER of the contractor’s EEs in all instances (contractor is deemed agen of the ER) The law creates an ER-EE
relshp for a limited purpose, i.e. to ensure that the EEs are paid their wages
The statute creates an ER-EE relshp for a comprehensive purpose, i.e. to prevent a circumvention of labor laws
The principal becomes solidarily liable w/ the contractor in the even the latter fails to pay the EEs wages and for violation of labor standard laws. The liability, however does not extend to the paymt of backwages or separation pay of EEs who are illegally dismissed
The principal becomes solidarily liable w/ the contractor not only for unpaid wages but also for all the rightful claims of the EEs under the LC AND ANCILLARY LAWS
Permissible Prohibited by law Presence of substantial
capital or investment
None
Note: The principal shall be SOLIDARILY liable w/ the contractor in the event of any violation of any provision of the LC, including failure to pay wages.
This will not prevent the principal from claiming reimbursement from the contractor.
Note: The principal shall be deemed the ER of the contractual EE in any of the ff cases as declared by competent authority:
1. Labor-only contracting; and
2. Contracting arrangement falling w/in the prohibitions
Art 107. INDIRECT ER – any person, partnership, assoc or corp w/c not being n ER, contracts w/ an independent contractor for the perf of any work, task, job or proj.
4 Features of Legitimate Contracting
1. Parties – a principal (contractee) enters into a contract w/ a contractor, or if the principal is
himself a contractor, he enters into contact w/
a sub-contractor. A contracted job may be subcontracted, partly or wholly, unless prohibited in the contract.
2. Specific job – the contract calls for the performance or completion of a specific job, work or service;
3. Period – such job, work or service is to be performed or completed w/in a definite or predetermined period; and
4. Location – the contracted job, work or service may be performed or completed inside or outside the premises of the principal
An independent contractor is one who exercises:
1. Independent ENT;
2. Contracts to do a pc of work accdg to his own methods; and
3. Is not subj to control of ER result
The labor contractor is legit if:
1. He is a job contractor; and
2. Is properly registered w/ DOLE as the same Judicial Notice of Job Contracting
- The Court has already taken judicial notice of the general practice adopted in several gort &
private institutions and industries of hiring independent contractors to perform special services. These services range from janitorial, security and even technical or other specific services. While these services may be considered directly related to the principal business of the ER, nevertheless, they are not necessary in the conduct of the principal business of the ER.
A manpower company may be a LOC in one case but an independent contractor in another.
Coca-cola Bottlers Ph v Hingpit: Lipercon was adjudged to be a LOC in a previous case (Guarin v Lipercon), for lacking the substantial capital. But not so in the present case, where it has been able to establish its characted as an independent contractor. Aside form hiring its own EEs and paying the workers their salaries, it also exercised supervision & control over them, w/c is the most important aspect in determining ER-EE Relshp.
Art 108. POSTING OF BOND
- An ER or indirect ER may require the sub/contractor to furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due the EEs should the sub/contractor, as the case may be fail to pay the same.
- Where the ER fails to require the contractor to post a bond, the ER must answer for whatever liabilities the contractor may have incurred to his EEs. This is w/o prejudice to its seeking reimbursement from the contractor for whatever amt it will have to pay the EEs.
Art 109. SOLIDARY LIABILITY
The provision of existing laws to the contrary notwithstanding, every ER or indirect ER shall be held responsible w/ his sub/contractor for any violation of any provision of the LC. For purposes of determining the extent of their civil liability under this Ch, they shall be considered as direct ERs.
The existence of ER-EE Relshp is a precondition to entitlement to labor standards & labor relatios Rs.
Extent of Principal’s Liability in Legitimate Contracting - solidarily liable in the event of any violation of
any provisions of the LC
1. For wages and money claims – if the sub/contractor fails to pay the wages of his EEs in accdance w/ the LC, the ER shall be jointly & severally (solidarily) liable w/ his contractor to such EEs to the extent of work performed under the contract, in the same manner & extent that he is liable to EEs directly employed by him.
He cannot escape this liability even if he has paid the workers’ wage rate in accordance w/ the contract w/ the contractor. The EEs are not privy to the contract. Also, the labor standard legislations are considered written in every contract. Similarly, legislated wage increases are deemed amendments to the contract.
Thus, ERs cannot hide behind their contracts in order to evade their or their contractor’s liability for noncompliance w/ the statutory min wage, w/o prejudice to his R to recover whatever amount he paid from the contractor.
2. a) Reimbursement – the joint & several liability of the contractor & the principal under Arts 106, 107 & 109 of the LC is mandated to assure compliance of the provisions including the statutory min wage.
The contractor is made liable by virtue of his status as the direct ER; and the principal is made the indirect ER of the contractor’s EEs for purposes of paying the EEs their wages should the contractor fail to do so.
- where no ER-EE Relshp exists bet the parties, as to reimbursement bet the principal & the contractor, the RTC has jurisdiction
b) Payment before Reimbursement – but one may seek reimbursement only AFTER it has paid the EEs.
c) For Other Violations – qualified or limited liability; if the liability is for failure to pay the min wage, or the SIL, or other benefits derived from or provided for by law, the principal is equally liable w/ the contractor as if the principal were the direct ER.
BUT, if the liability is invested w/
punitive character, such as an award for backwages & separation pay because of an
illegal dismissal of the contractor’s EE, the liability should be solely that of the contractor in absence of proof that the principal conspired w/ the contractor in the commission of the illegal dismissal.
Rights of Contractual EEs (EEs of a legitimate contractor) 1. Safe & healthful working conditions;
2. Labor standards such as SIL, rest days, OT Pay, holiday pay, 13thMP, & separation pay;
3. SS & welfare benefits;
4. Self-orgs, CB and peaceful concerted action;
and
5. Security of tenure.
Certain conditions required expressly stipulated in the ENT Contract
1. Specific description of the job, work or service to be performed by the contractual EE;
2. The place of work and terms & conditions of ENT, uncluding a statement of the wage rate applicable to the indiv contractual EE; and 3. The term/duration of ENT, w/c shall be
coextensive w/ the contract of the principal &
contractor or w/ the specific phase for w/c the contractual EE is engaged, as the case may be.
The sub/contractor shall inform the contractual EE of the foregoing terms & conditions on or before the 1st day of his ENT.
Security of Tenure:
a. in cases of termination of ENT prior to the expiration of the contract bet the principal &
the sub/contractor, the R of the contractual EE to separation pay or other related benefits shall be governed by applicable laws & jurisprudence on termination of ENT.
b. Where the termination results from expiration of contract bet the principal & the contractor, or from completion of the phase of the job for w/c the EE is engagednot entitled to separation pay. however, this shall be w/o prejudice to completion bonuses or other emoluments, incl retirement pay as may be
b. Where the termination results from expiration of contract bet the principal & the contractor, or from completion of the phase of the job for w/c the EE is engagednot entitled to separation pay. however, this shall be w/o prejudice to completion bonuses or other emoluments, incl retirement pay as may be