1 Legal framework
1.1 Are there statutory sources of labour and employment law?
The Labour Code of the Philippines (Presidential Decree 442/1974), as amended and renumbered, is the main source of labour and employment law in the Philippines. The Labour Code also includes the Implementing Rules and Regulations that the Department of Labour and Employment (DOLE) crafted to properly implement the Labour Code and protect the rights of workers.
The DOLE also issues department orders, labour advisories and memorandum circulars that regulate employment in the country. These instruments, however, should not contradict the laws that they seek to implement.
There are special laws that govern mandatory contributions to different social programmes as an incident of the employer-employee relationship. The Social Security Law (Republic Act 11199) created the Social Security System (SSS). The SSS is a state-run insurance programme for workers in the private sector, providing death, funeral, maternity leave, permanent disability, retirement, sickness and involuntary separation/unemployment benefits.
The National Health Insurance Act (Republic Act 7875, as amended by Republic Act 10606 and Republic Act 11223) created the Philippine Health Insurance Corporation (PhilHealth). PhilHealth ensures the coverage of all Filipinos in the national health insurance programme of the country and provides inpatient and outpatient benefits. The Home Development Mutual Fund Law (Republic Act 9679) institutionalised the Home Development Mutual Fund, which serves as a national savings programme and provides affordable financing for housing.
1.2 Is there a contractual system that operates in parallel, or in addition to, the statutory sources?
The benefits and rights granted under statutory sources are merely the minimum that the employer must secure and provide. Philippine jurisprudence has already established that the law is read into every contract, and labour contracts are imbued with public interest and are subject to the police power of the state. Thus, benefits stated in an employment contract must not be lower than those granted by law. Nevertheless, the employer, at its own discretion, may provide for additional benefits not granted by law.
1.3 Are employment contracts commonly used at all levels? If so, what types of contracts are used and how are they created? Must they be in writing must they include specific information? Are implied clauses allowed?
Generally, the law does not mandate that employment contracts be in writing. However, for certain employees, the law may require a particular form for the employment contract. The Migrant Workers and Overseas Filipinos Act (Republic Act 8042, as amended) mandates that the Philippine Overseas Employment Administration (POEA) secure the best possible employment terms and conditions for overseas Filipino workers. To this end, the POEA issues standard employment contracts for Filipino workers seeking deployment abroad.
The Domestic Workers Act (Republic Act 10361) requires that the employment contract of domestic workers be executed in a language or dialect known to both the worker and the employer. The contract must specify the duties and responsibilities of the domestic worker, compensation and rest days, among other things.
DOLE Department Order 174-17 requires that in a job contracting agreement, the employment contracts of employees of a contractor/subcontractor must state:
- the specific description of the job or work to be performed by the employee; and
- the place of work and terms and conditions of employment, including a statement of the wage rate applicable to the individual employee.
In the Implementing Rules and Regulations of the Act Providing for the Elimination of the Worst Forms of Child Labour (Republic Act 9231), if the employer is in public entertainment, it must submit to the appropriate regional office of the DOLE:
- a certified true copy of its business permit or certificate of registration; and
- a written employment contract to be concluded between the employer and the child's parents or guardian and approved by the DOLE.
2 Employment rights and representations
2.1 What, if any, are the rights to parental leave, at either a national or local level?
The 105-Day Expanded Maternity Leave Law (Republic Act 1121) governs the maternity leave of all female workers in the government and private sector, regardless of their civil status or the legitimacy of their child.
The Paternity Leave Act (Republic Act 8187) provides for the paternity leave of all married male employees in the private and public sectors.
The Solo Parents' Welfare Act (Republic Act 8972) sets out the leave benefits for solo parents. The law provides for specific criteria before an employee can be considered as a solo parent and avail of the benefits provided thereunder.
2.2 How long does it last and what benefits are given during this time?
The 105-Day Expanded Maternity Leave Law provides women with 105 days' maternity leave with full pay and an option to extend for an additional 30 days without pay. If the woman is also considered as a solo parent under the Solo Parents' Welfare Act, she is granted an additional 15 days' maternity leave with full pay.
If a female worker has suffered a miscarriage or undergoes emergency termination of pregnancy, she is instead given 60 days' maternity leave with full pay.
The Paternity Leave Act affords married men paternity leave of seven days with full pay for the first four deliveries of the legitimate spouse with whom he is cohabiting.
The Solo Parents' Welfare Act provides parental leave of seven working days every year to any qualified solo parent employee who has rendered service of at least one year.
2.3 Are trade unions recognised and what rights do they have?
The Philippine Constitution recognises the rights of workers in both the private and public sectors to self-organise and to collectively bargain. However, certain employees are excluded from forming or joining unions. In the private sector, the Labour Code prohibits top and middle management employees and confidential employees from joining, forming or assisting unions. Supervisory employees are not eligible for membership in unions formed by rank-and-file employees, and may only join and form unions of their own.
Executive Order 180/1987 states that in the public sector, the following are not allowed to form unions:
- high-level employees whose functions are normally considered as policy making or managerial, or whose duties are of a highly confidential nature;
- members of the Armed Forces of the Philippines;
- members of the Philippine National Police;
- fire fighters; and
- jail guards.
The Labour Code defines a ‘legitimate labour organisation' as any union that is duly registered with the Department of Labour and Employment. Such legitimate labour organisations have the following rights:
- to act as the representative of its members for the purpose of collective bargaining;
- to be certified as the exclusive representative of all employees in an appropriate collective bargaining unit for the purposes of collective bargaining;
- to be furnished by the employer, upon written request, with its annual audited financial statements, including the balance sheet and the profit and loss statement;
- to own property, real or personal, for the use and benefit of the labour organisation and its members;
- to sue and be sued in its registered name; and
- to undertake all other activities designed to benefit the organisation and its members, including cooperative, housing welfare and other projects not contrary to law.
2.4 How are data protection rules applied in the workforce and how does this affect employees' privacy rights?
The Philippine Data Privacy Act and its implementing rules provide for the data protection of employees. The law mandates that personal information may be collected and processed only for legitimate and specific purposes and when the employee has given his or her consent. The information collected may be retained only for as long as is necessary to fulfil the purpose for which it was obtained.
The employee can also request that the information collected be corrected or removed upon discovery that the information is:
- unlawfully obtained;
- used for unauthorised purposes; or
- no longer necessary for the purposes for which it was collected.
The employer is mandated to secure the integrity of the information collected and may be found criminally and civilly liable if there was:
- unauthorised processing; or
- improper disposal, malicious disclosure or breach of the information collected.
2.5 Are contingent worker arrangements specifically regulated?
The Labour Code explicitly recognises the following contingent worker arrangements:
- project; and
Jurisprudence recognises another arrangement, which is the fixed-term arrangement.
Casual employment contemplates the performance of work which is incidental to the usual trade or business of the employer, where the employee is not considered a regular employee, project employee or seasonal employee.
Project employment is an arrangement where the employment has been fixed for a specific project and the employee's services are coterminous with the completion of the project.
Seasonal employment is an arrangement whereby an employee is engaged to render work for a season. The seasonal employee engages in work that is seasonal or periodic in nature, and employment is for the duration of the season.
Fixed-term employment is an arrangement whereby both the employer and employee voluntarily and knowingly agree on a definite period of employment, and the employment terminates after the expiry of the specified period.
Department Order 174-17 regulates job contracting and subcontracting arrangements. Job contracting and subcontracting arrangements involve a trilateral relationship between the principal, the contractor and the contractor's workers. In this arrangement, the principal farms out to the contractor or subcontractor the performance or completion of a specific job, within a pre-determined period.
3 Employment benefits
3.1 Is there a national minimum wage that must be adhered to?
There is no standard minimum wage that encompasses the entire country. The Wage Rationalisation Act (Republic Act 6727) mandates that minimum wage rates for agricultural and non-agricultural workers are set per region by the Regional Tripartite Wages and Productivity Board.
The regional minimum wages are established via wage orders and are based on minimum standards of living necessary for the employees within a given region.
3.2 Is there an entitlement to payment for overtime?
The Labour Code mandates that rank-and-file employees in the private sector – except domestic workers, workers paid by results and non-agricultural field personnel – are entitled to overtime pay for work done beyond eight hours a day. Overtime pay is equivalent to the regular hourly rate of the employee plus 25% of the hourly rate, if the overtime work is done on a regular workday. If the overtime work is done on a holiday or a rest day, then overtime pay is equivalent to the regular hourly of the employee plus 30% thereof.
3.3 Is there an entitlement to annual leave? If so, what is the minimum that employees are entitled to receive?
The Labour Code provides that every rank-and-file employee who has rendered at least one year of service, whether continuous or broken, is entitled to service incentive leave (SIL) of five days with pay.
3.4 Is there a requirement to provide sick leave? If so, what is the minimum that employees are entitled to receive?
Philippine labour laws do not require that sick leave be granted to employees. The minimum granted by law is SIL, as stated in question 3.3. Sick leave may be granted by the employer as an added benefit or secured through a collective bargaining agreement.
However, under the Social Security Act, employees are entitled to sickness and disability benefits.
3.5 Is there a statutory retirement age? If so, what is it?
Under the Labour Code, an employee may retire upon reaching the retirement age stated in the collective bargaining agreement or the employment contract.
In the absence of a retirement plan or an agreement providing for the retirement of employees, upon reaching the age of 60, an employee is eligible for retirement benefits under the law, provided that he or she has rendered at least five years of service to the employer. The compulsory retirement age in the Philippines is 65. For underground miners, however, the mandatory retirement age is 60.
4 Discrimination and harassment
4.1 What actions are classified as unlawfully discriminatory?
Unless the employer can show that the following are bona fide occupational qualifications needed to perform the job, Philippine law and jurisprudence protect employees from discrimination with respect to the terms and conditions of their employment simply because of their:
- marital status;
- national origin;
- actual or perceived HIV status; or
- union membership.
4.2 Are there specified groups or classifications entitled to protection?
Workers in the Philippines are guaranteed security of tenure by the 1987 Constitution and the Labour Code. However, certain classes of workers enjoy additional protection in their employment. Under the Migrant Workers and Overseas Filipino Act, if a migrant Filipino worker is terminated from employment without just, valid or authorised cause, he or she is entitled to:
- full reimbursement of his or her placement fee; and
- salaries for:
- the unexpired portion of his or her employment contract; or
- three months for every year of the unexpired term, whichever is less.
The Solo Parents' Welfare Act provides that no employer shall discriminate against any solo parent employee with respect to terms and conditions of employment. The Magna Carta for Persons with Disability (Republic Act 7277, as amended by Republic Act 9442) provides that no entity – whether public or private – may discriminate against a qualified disabled person by reason of disability in regard to:
- job application procedures;
- the hiring, promotion or discharge of employees;
- employee compensation;
- job training; and
- other terms, conditions and privileges of employment.
The Philippine HIV and AIDS Policy Act (Republic Act 11166) specifically prohibits the discrimination of an individual in the workplace solely or partially on the basis of actual, perceived or suspected HIV status (ie, the rejection of job application, termination of employment or other discriminatory policies in hiring, provision of employment and other related benefits, promotion or assignment).
The Indigenous Peoples' Rights Act (Republic Act 8371) prohibits discrimination against Indigenous peoples with respect to recruitment and conditions of employment on account of their descent.
4.3 What protections are employed against discrimination in the workforce?
The Department of Labour and Employment (DOLE) is empowered to review company policies on recruitment and selection. The DOLE may also inspect company premises and documents to determine compliance with various anti-discrimination laws.
Employers are also encouraged to conduct seminars and training to address various forms of discrimination in the workplace.
4.4 How is a discrimination claim processed?
The Migrant Workers and Overseas Filipinos Act, the Magna Carta for Persons with Disability, the Philippine HIV and AIDS Policy Act and the Indigenous Peoples' Rights Act provide for civil and criminal liability in case of violations. Thus, a complaint may be filed by the affected employees with the appropriate court to seek redress for their rights.
In addition, the laws mentioned in question 4.2 form part of labour standards. Department Order 183/2017 strengthens the investigatory and enforcement powers of the DOLE under the Labour Code to facilitate stricter compliance with labour laws and labour standards. An employee who has suffered discrimination in the workplace may file a complaint with the DOLE. The DOLE will then:
- conduct an inspection of the company premises;
- examine employment records; and
- interview employees to determine compliance with labour laws and social legislation.
4.5 What remedies are available?
Depending on the law that prohibits the specific discrimination, the employer and its officers and agents who actually participated, authorised or ratified the discriminatory acts may be held criminally and/or civilly liable. Under DOLE Department Order 183/2017, the DOLE may also issue a compliance order and/or work stoppage order against the employer's business to remedy its non-compliance with anti-discriminatory laws.
4.6 What protections and remedies are available against harassment, bullying and retaliation/victimisation?
The Anti-Sexual Harassment Act (Republic Act 7877) penalises a person in authority or with influence in the workplace for seeking sexual favours from a subordinate in exchange for employment benefit or as a condition for the hiring or continued employment of an employee.
The Safe Spaces Act (Republic Act 11313) criminalises gender-based sexual harassment in the workplace. This includes acts involving any unwelcome sexual advances, requests or demand for sexual favours or any act of sexual nature, whether done verbally, physically or through the use of technology. Also penalised is conduct of a sexual nature and other conduct based on sex that affects the dignity of a person and is unwelcome, unreasonable and offensive to the recipient, whether done verbally, physically or through the use of technology.
As of the time of writing, there is no law yet that directly addresses bullying in the workplace.
5 Dismissals and terminations
5.1 Must a valid reason be given to lawfully terminate an employment contract?
Under Philippine law, an employee may be lawfully terminated only for just or authorised cause. Under the Labour Code, the following constitute just cause for termination:
- serious misconduct or wilful disobedience;
- gross and habitual neglect of duties;
- fraud or wilful breach of trust;
- commission of a crime or offence by the employee against his or her employer, the employer's immediate family or a duly authorised representative; and
- other causes analogous to the foregoing. Based on Philippine jurisprudence, examples of such analogous causes include:
- theft committed by an employee against a person other than his or her employer, if proven by substantial evidence;
- gross incompetence or inefficiency, such as failure to achieve a reasonable work quota which was fixed by the employer in good faith;
- failure to meet the standards of a bona fide occupational qualification; and
- severe failure to comply with company rules and regulations.
Under the Labour Code, the following are authorised causes for termination:
- installation of labour-saving devices;
- retrenchment to prevent losses;
- closure or cessation of business; and
- disease that is not curable within six months as certified by the competent public authority, where continued employment of the employee is prejudicial to his or her health or to the health of his or her co-employees.
5.2 Is a minimum notice period required?
Notice is always required for terminations effected by the employer of any employee, regardless of classification. The notice requirements, however, depend on whether the termination is due to just or authorised cause.
For just cause, the twin notice and hearing rule must be observed. This requires the employer to:
- serve the employee with written notice containing the specific grounds of termination, and giving him or her the opportunity to explain within at least five calendar days of receipt;
- conduct a hearing to allow the employee to put forward his or her defence, present evidence and rebut the evidence presented against him or her; and
- serve the employee with written notice of termination indicating that all circumstances involving the charge against him or her have been considered and the grounds to justify the severance of his or her employment.
For authorised cause, the minimum notice period is one month prior to the intended date of termination, which must be given both to the worker and to the appropriate Department of Labour and Employment regional office.
5.3 What rights do employees have when arguing unfair dismissal?
Employees may be dismissed only for just or authorised cause, as discussed in question 5.1. If there is no just or authorised cause for the termination of the employee, the termination will be considered an illegal dismissal.
Under the Labour Code, an illegally dismissed employee is entitled to the following relief:
- reinstatement without loss of seniority rights and other privileges;
- full back-pay, inclusive of regular allowances; and
- other benefits or their monetary equivalent.
Separation pay in lieu of reinstatement may also be awarded if:
- reinstatement proves impossible; or
- the continued relationship between the employer and the employee is no longer viable due to strained relations and antagonism between them.
5.4 What rights, if any, are there to statutory severance pay?
Under the Labour Code, statutory severance pay is given only in case of dismissal due to authorised cause.
If the authorised cause is the installation of labour-saving devices or redundancy, the separation pay is equivalent to one month's pay or one month's pay for every year of service, whichever is higher. If the authorised cause is the retrenchment, closure or cessation of business, or an incurable disease, the separation pay is equivalent to one month's pay or one-half month's pay for every year of service, whichever is higher.
On the other hand, if the dismissal is due to just cause, no severance pay is required by law to be given to employees.
6 Employment tribunals
6.1 How are employment-related complaints dealt with?
The Department of Labour and Employment (DOLE) is the umbrella organisation with primary jurisdiction to hear and adjudicate employment-related complaints. The relevant tribunals under the DOLE and their general powers are as follows:
- The National Labour Relations Commission (NLRC): The NLRC, through the labour arbiters, has exclusive jurisdiction to hear cases involving:
- unfair labour practices;
- illegal dismissal cases;
- money claims exceeding PHP 5,000; and
- claims for actual, moral, exemplary and other forms of damage arising from employer-employee relations.
- The Bureau of Labour Relations (BLR): The BLR hears appeals of decisions of med- arbiters regarding:
- inter-union disputes; and
- intra-union disputes.
- The National Conciliation and Mediation Board (NCMB): The NCMB handles the settlement of labour disputes through conciliation and mediation, and promotes other forms of voluntary labour dispute settlement.
- The Philippine Overseas Employment Administration (POEA): The POEA has jurisdiction over cases involving violations of recruitment laws and violations of conditions set out in a licence to recruit workers for overseas employment.
- The secretary of labour and employment (SOLE): Though not a tribunal per se, the secretary has the power to assume jurisdiction over labour disputes affecting industries that are indispensable to the national interest and to suspend the effects of termination.
6.2 What are the procedures and timeframes for employment-related tribunals actions?
In cases falling under the jurisdiction of the NLRC, labour arbiters have 30 calendar days to decide a case after it has been submitted for decision. However, cases involving overseas Filipino workers will be decided within 90 calendar days of filing of the complaint. Where the decision of the labour arbiter is appealed to the NLRC, the NLRC has 20 calendar days to decide the appeal upon filing of the last pleading.
In the BLR, med-arbiters have 20 calendar days to decide intra-union and inter-union disputes. On appeal, the BLR has 20 calendar days from receipt of the entire records of the case to decide the appeal.
In the NCMB, if the issue is subject to voluntary arbitration, the decision of the voluntary arbitrator must be rendered within the period agreed upon by the parties and the arbitrator. However, this period must not exceed 20 calendar days from submission of the case for decision.
In the POEA, the overseas employment adjudicator will submit his or her findings and recommendations in the form of a draft order within six months of the date of filing of the complaint. The POEA will then render a decision within two months of receipt of the findings and recommendations.
For cases involving industries that are indispensable to the national interest, the DOLE has 30 calendar days from the date of assumption of jurisdiction to resolve the dispute.
7 Trends and predictions
7.1 How would you describe the current employment landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
As of the time of writing, there are no planned changes to the labour law legal framework in the Philippines. However, discussions are ongoing on the impact of the COVID-19 pandemic on employment in the country.
A report issued by the Philippine Statistics Authority revealed that in February 2021, the unemployment rate in the Philippines had risen to 8.8%. This rate is equivalent to 4.2 million jobless Filipinos. In an effort to mitigate the economic pressure resulting from the COVID-19 pandemic, the COVID-19 Vaccination Programme Act (Republic Act 11525) was passed to hasten the procurement of vaccines and the vaccination of the population.
The Department of Labour and Employment (DOLE) and other relevant government agencies are expected to provide more guidance on how the impact of COVID-19 on the Philippine economy can be mitigated.
The DOLE has also issued Guidelines for the Implementation of Mental Health Workplace Policies and Programmes for the Private Sector (Department Order 208/2020), which encourages employers to:
- promote mental health in the workplace; and
- develop and implement programmes that address factors which contribute to the decline of mental health in the workplace.
8 Tips and traps
8.1 What are your top tips for navigating the employment regime and what potential sticking points would you highlight?
Employment is highly regulated in the Philippines, and recently the Department of Labour and Employment has stepped up its efforts to ensure that employers are and remain compliant with the labour laws. Therefore, employers should keep abreast of developments in Philippine labour law. Recent and/or usual issues encountered by employers in the Philippines include the following:
- guidelines issued in response to the COVID-19 pandemic, to assist employers and employees in the implementation of various alternative work arrangements in lieu of the outright termination of employment or the total closure of business establishments;
- compliance with the Occupational Safety and Health Standards Law (Republic Act 11058), which provides for the imposition of a hefty fine of up to PHP 100,000 per day on employers that fail or wilfully refuse to comply with the requisite occupational safety and health standards;
- compliance with various regulations governing aliens working in the Philippines;
- international transfers of employees between affiliates and subsidiaries; and
- treatment of workers in the gig economy, as there is no specific law as yet that governs these kinds of workers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.