Forms of payment
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Where the employee alleges non-payment of wages and/or commission, the employer has the burden to prove payment.
Jimenez et al v. NLRC (1996) Facts:
Employee Juanatas sued for full payment of his 20% commission of the gross income. There were cash advances may by the employee as evidenced by a notebook presented by the employer.
Held:
Although the employer submitted a notebook showing the alleged vales, the same is inadmissible considering the it is not properly accomplished – undated, unsigned and is thus uncertain as to its origin and authenticity.
The employer has the burden of proof to establish full payment of wages.
The Implementing Rules require every employer to keep a payroll – showing length of time to be paid, the pay rate, amt actually paid, etc. The employee should sign the payroll
Art. 103. Time of Payment Art. 104. Place of Payment
Place of Payment
GR – should be near place of undertaking E -
1. Payment cannot be effected at or near the place of work:
a. bec of deterioration of peace & order b. by reason of actual or impending emergencies caused by fire, flood,
epidemic or other calamity
rendering payment thereat impossible;
1. When employer provides free transpo back & forth
2. Under any analogous circumstances, provided: a. Time spent by employee in collecting their wages shall be considered as compensable hours worked
No employer shall pay his employees in any bar, night or day club, drinking
establishment, massage clinic, dance hall or other similar places, or
in places where games are played with stakes of money or things representing money; except in the case of persons employed in said places 2. Payment through banks
Upon written permission of the majority of the employee or workers concerned,
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Entities with 25 or more employees and Located within 1 km radius to a bank
Shall pay wages & other benefits through any of said banks
Within period of payment of wages fixed by Labor Code
(Wage Rationalization act RA 6727) Whenever applicable and
Upon request of a concerned worker or union, Bank shall issue a cert of the record of payment of wages
Of particular worker/workers For a particular pay period.
(Wage Rationalization act RA 6727) Payment through ATM allowed.
(under a labor advisory dated Nov 25, 1996)
Art. 105. Direct Payment of Wages Art. 106. Contractor or Subcontractor Art. 107. Indirect Employer
Art. 108. Posting of Bond Art. 109 Solidary Liability Contractor of Subcontractor
1. Contracting and Subcontracting in general Co. A engaged in resto business concludes contract with const co. B which in turn hires the services of
another contractor C to handle certain aspect of construction project. B & C hires people.
GR -
Employer-employee relationship (see Art 82) Bet B and his workers
Bet C and his workers A is not an employer to B or C
to their respective groups of workers
E – employment arrangement unlawful A is indirect employer
D.O. 18-02
Contracting or subcontracting as an arrangement whereby a principal agrees to put out or farm out with a contractor or subcon the eprformance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal.
4 features of legit contracting
i. Parties – principal enters into a contract with subcon.
ii. Specific Job – performance or completion of a specific job, work or service
iii. Period – definite or predetermined period
iv Location – performed within or outside principal’s premises
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1.2 Trilateral relationship
3 parties – principal, contractor and contractual employees
Bet principal and contractor – Civil code & pertinent commercial law
Bet contractor & employee – Labor code and special labor laws
2. 1st set of prohibition – Labor only contracting (DO 18-02)
L.o.C = EE + (CE1 or CE2)
EE = essential element arrangement is merely to recruit, supply or place workers to perform a job, work or service for the principal
CE1 = confirming element 1 lack of substantial capital or investment and performance of
activities directly related to the principal’s main business
CE2 = confirming element 2 contractor does not exercise control over the performance of the employees
L.o.C. by presumption of law a full-pledged
legitimate labor contractor has to be registered with DOLE, otherwise he is presumed to be an L.o.C.
Substantial capital or investment – capitalization, tools, eqpt, implements, machineries and work premises, actually and directly used by the
contractor or subcon in performance or completion of the jobm work or service contracted out.
Neri v. NLRC (1993)
Law does not require both substantial capital and investment in the form of tools, eqpt, machineries, etc.
Filipinas Synthetic Fiber v. NLRC (1996) Where the contractor is a going concern duly registered with the SEC with substantial
capitalization of P1.6M, P400T of which is actually subscribed, such contractor cannot be considered as engaged in LoC being a highly capitalized venture. Control – right reserved to the person for whom the service of contactual workers are performed, to determine not only the end to be achieved but also the manner and means to be used in reaching that end.
Insular Life v. NLRC (1989)
The fact that the complainant worker was required to solicit business exclkusively for the alleged employer could hardly be considered as control in labor jurisprudence. Under the memo issued by the
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Insurance Commission, insurance agents are barred from serving more than 1 insurance company. AFP MBAI v.NLRC (1997)
Exclusive servicing does not necessarily mean being under the control, or employment of the entity being served.
2.3 Consequence of LoC – Worker supplied by Agency becomes employee of client company
PBCOM v. NLRC (1986)
There is of course nothing illegal about hiring persons to carry out “a specific project or
undertaking the completion or termination of which (was) determined at the time of the engagement of the employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.
Given te circumstances of this case, CESI was engaged in LoC vis-à-vis the petitioner bank. The bank is liable to the employee as if the employee had been directly employed not only by CESI but also by the bank. But the bank may in turn proceed against CESI to obtain reimbursement of, or some contribution to, the amounts which the bank will have to pay to Orpiada.
2.4 Consequence of LoC – Agency hired employee becomes entitled to benefits under CBA of client company
Tabas v. California Manufacturing Co (1989)
The existence of an employer-empoyee relation is a question of law and being such, cannot be made the subject of agreement.
Employee is reinstated with the full status and rights of regular employees; all benefits as may be
provided by existing CBA or other relations or by law.
3. Summary of prohibited labor contracting
4. 2nd set of prohibitions – Arrangements that violate public policy (DO 18-02)
Not LoC but are likewise prohibited because they contravene public policy:
Prohibitions:
a) Contracting not done in good faith and not justified by the exigencies of the business and the same results in the termination of regular employees and reduction of work hours or reduction or splitting of the bargaining unit b) Contracting with cabo
c) Contracting with in house agency d) Contracting bec of strike or lockout
e) Contracting that constitutes ULP under Art 248
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5. 3RD set of prohibitions – Exploitative acts Taking undue advantage of the economic situation or lack of bargaining strength of the contractual employee or undermining his security of tenure or basic rights, or circumventing the provisions of regular employment, in any of the ff instances:
i) in addition to his assigned functions, requiring the contractual employee to perform functions done by regular employees
ii) Requiring him to sign as a precondition to employment/continuance: antedated resignation letter; blank payroll; waiver of labor standards incl min wage, social or welfare benefits; quitclaim
iii) Contract with period of employment
shorter than term of contract bet principal & contractor/subcon, unless contract is divisible into phases for w/c substantially different skills are reqd & this known to employee at time of engagement
6. Extent of employer’;s liability in invalid contracting and violation of other pohibitions Liability is immediately and directly imposed upon the principal, as if directly hired by the employer. (Broadway Motors v. NLRC)
Rosewood Processing
If the liability is in the nature of a penalty, such as backwages and separation pay because of a wrongful dismissal, the liabilithy should be solely that of the contractor if there is no proof that the principal conspired with the contractor in committing the wrongful dismissal of the contractor’s worker. 7. Legitimate Contracting – Independent
Contractor/Job Contracting
Legitimate when the ff circumstances concur: i) Contractor carries on a distinct and
independent business & undertakes to perform job, work or service on its own account and under its own resp, accdg to its own manner and method and free from the control and direction of the principal in all matter connected with the perf of work except as to the results thereof
ii) Contractor has substantial capital or investment
iii) Contractual agreement assures contractual employees entitlement to all labor,
occupational safety and health standards, right to self organization, security of tenure, social and welfare benefits.
In legitimate or valid contracting, what is contracted is the performance of a job and the contractor is an
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independent businessman capable of doing the job by his own means and methods. (Andovo v. MRR) An independent contractor is one who exercises independent employment and contracts to do a piece of work accdg to his own methods and without being subject to control of his employer except as to the result of the work. (Mafinco Trading v. Ople) To restate, the significant factor in determing the delationship of the parties is the presence or absence of supervisory authority to control the method and the details of performance of the service being rendered and the degree to which the principal may intervene to exercise such control (AFP MBAI v. NLRC).
7.1 Summary of Legitimate Labor Contracting Legitimate when:
i) contractor is a job contractor and not a labor only contractor
ii) properly registered in accordance with DO 18- 02
does not fall under Sec 5 or 6 of DO 18-02. 7.2 Examples of Independent Contractor Dealership
Mafinco Trading Corp v. Ople
Where the peddler shall have the right to employ his own workers, shall post a bond to protect the
manufacturer against losses, shall be responsible for damages caused to 3rd persons, shall obtain
necessary licenses and permits and bear the
expenses incurred in the sale of soft drinks is not a contract of employment. independent
contractors. Commission Agent Insular Life v. NLRC
Under the contract, Basiao is not an employee of Insular life but a commission agent, an independent contractor whose claim for unpaid commissions should have been litigated in an ordinary civil action.
Messengerial/Janitorial Service Rhone-Poulenc Phils v. NLRC
The respondents themselves admitted that they were selected and hired by CSI and were assigned to Union Carbide. [Union Carbide was bought by
Rhoune Poulenc.]
The janitors drew their salaries from CSI which exercised control over them. Moreover, CSI had the power to assign its janitors to various clients and to pull out.
Independent Operator Ushio v. NLRC
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Severino is one of those independent, free lance operators who offer services to customers of auto parts shops along Banawe.
The power to control the employee’s conduct is absent, with respect to the means and methods by which his work was to be accomplished.
Private respodent was free to offer his services to other stores along Banawe.
7.3 Judicial Notice of Job Contracting Neri v. NLRC
Judicial notice of general practice adopted in govt & privateinstitutions of hiring independent
contractings to perform special services – janitorial, security or even technical or other specific services. 8. A manpower company may be a LoC in one case
but an independent contractor in another Coca Cola Bottlers v. Hingpit
In 1st case, it failied to prove that Lipercon has substantial capital, investment, tools, etc. In present case, Lipercon established its character as an independent contractor.
Escario v. NLRC
In earlier case of Tabas v. CMC, Livi was determined to be an LoC. But reliance of Tabas case is
misplaced because Livi was a mere placement
agency that had simply supplied CMC with manpower
necessaru tp carry oiut the company’s merchandizing activity.
But in this case, applying the 4-fold test in
determining employer-employee relationship, the status of Admark as the true employer of the petitioners is further established.
9. Extent of Principal’s liability in legit contracting Contractor considered to be the employer of the contractual employee for purposes of enforcing the provisions of the Labor cCode and other Social legislation. (DO 18-02)
The principal shall be solidarily liable with the contractor in the event of any violation of the
provisions of the Labor Code, including failure to pay wages. (DO 18-02).
9.1 As to payment of wages/money claims When a contractor fails to pay the wages of his employees in accordance with the Labor Code, the employer who contracted out the job becomes jointly and severally liable with the contractor to the extent of the work performed under the
contract. as if such employer were the employer of the contractor’s employee. (PBCOM v. NLRC) Legislated wage increases are deemed amendments to the contract. (Rosewood Processing; also NFA)
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9.2 As to other violations
Under DO 18-02, Sec 7 par 1, indirect employer is solidarily liable.
Rosewood Processing v. NLRC
Liability does not extend to the payment of backwages and separation pay of employees who were constructively or illegally dismissed by thec ontractor – no showing that principal conspired in effecting illegal dismissal.
An order to pay backwages and separation pay is invested with a punitive character such that an indirect employer should not be made liable without a finding that it had committed ot conspired in the illegal dismissal.
Solidary Liability - Limitation – to extent of work performed under contract, to perf of any work, task job or project, to extent of their civil liability on payment of wages.
10. Rights of contractual employees
Contractual employees entitled to all rights and privileges due a regular employee as provided under labor code to include:
a) safe and healthgul working conditions b) Labor standards
c) Social security and welfare benefits
d) Self organizations, CBA, peaceful concerted action
e) Security of Tenure 10.1 Security of Tenure
In case of pre-termination of contract bet principal & contractor – governed by applicable laws
Expiration of contract bet principal & contractor – not entitled to separation pay
11. Registration of Contractors
Registration of contractor with DOLE regional office. An unregistered contractor is presumed to be a labor-only contractor.
Art. 110 Worker Preference in case of bankruptcy Worker preference in case of bankruptcy
Prereq- declaration of bankruptcy or judicial liquidation of employer’s business
Unpaid wages earned prior to declaration/liquidation shall be given 1st preference for payment, even ahead of claims of govt.
Preference even to claims of govt for taxes (DBP v. NLRC)
Coverage of Preference
Termination pay, separation pay, all other monetary claims.
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Art. 111 Atty’s Fees Attorney’s fees
1. Atty’s fees assessed”
a. cases of unlawful withholding of wages b. arising from CBA negotiations
(Reahs Corp)
2. Awarded Atty’s fee may not exceed 10%, but between lawyer and client quantum meruit may apply (TRB EU v. NLRC)
3. Non lawyers not entitled to atty’s fees (Five J Taxi v. NLRC)
4. Since the union president is not the lawyer for the workers, he cannot be allowed to share in the atty fees. (Amalgated Laborers Assoc v. CIR)
5. Pao Lawyers
PAO lawyers disqualified from being awarded atty fees (Lambo v. NLRC)
Chapter IV Prohibition Regarding Wages