Labor Code - Relevant Laws and Jurisprudence

TO DETERMINE THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP:
In determining the existence of employer-employee relationship, the

elements that are generally considered comprises the so-called "four-fold test"
namely:
a) the selection and engagement of the employee;
b) the payment of wages;
c) the power of dismissal; and
d) the employer’s power to control the employee with respect to the
means and methods by which the work is to be accomplished. It is the
so-called "control test" that is the most important element.
1. It is important to determine whether an employment relationship exists

because this has an effect on the applicability of the Labor Code.
2. Generally, if there is employer-employee relationship, the Labor Code applies.
Hence, labor courts have jurisdiction. Also generally, if there is no employment
relationship, the Labor Code does not apply and labor courts have no
jurisdiction.
3. Selection and engagement refers to the "choice" of the employer to hire the
services of a worker and his commitment to keep the latter as his employee.
4. "Payment" refers to the compensation that an employee gets for work
performed.
5. "Dismissal" is a component of the employer's power to move or organize
employees. It is a management prerogative whom to hire and/or fire.
"Dismissal" is an act of labor force movement done by the employer that
results in the termination of employment relationship. However, it must be
noted that, for purposes of the Labor Code, simply because the disputants
stand not in the proximate relations of employer and employee does not mean
that there is no labor dispute. In fact, a worker dismissed from employment is
still an employee under the law until and unless his dismissal is declared valid
and final by proper authority.
6. "Control" refers to the employer's power to regulate how the work is done.
This is the most important aspect of the four-fold test.
JUST CAUSES FOR TERMINATION OF EMPLOYMENT AND PROPER TERMINATION
OF EMPLOYMENT:
Article 282 of the Labor Code of the Philippines (“Labor Code”) provides the
following just causes for termination of employment:
• Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his
work;
• Gross and habitual neglect by the employee of his duties;
• Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative;
• Commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly
authorized representatives; and
• Other causes analogous to the foregoing.
In a termination for just cause, due process involves the two-notice rule:
a) A notice of intent to dismiss specifying the ground for termination, and

giving said employee reasonable opportunity within which to explain his or
her side;
b) A hearing or conference where the employee is given opportunity to

respond to the charge, present evidence or rebut the evidence presented
against him or her;
c) A notice of dismissal indicating that upon due consideration of all the

circumstances, grounds have been established to justify termination.
The employer should furnish the employee with two written notices
before the termination of employment can be effected: a first written notice
informs the employee of the particular acts or omissions for which his or her
dismissal is sought, and a second written notice which informs the employee of
the employer’s decision to dismiss him. In considering whether the charge in the
first notice is sufficient to warrant dismissal under the second notice, the
employer must afford the employee ample opportunity to be heard. (See Sang-an
v. Equator Knights Detective and Security Agency, Inc., G.R. No. 173189, 13
February 2013)
The requirements of substantive and procedural due process must be
complied with in order for the termination of employment to be valid, and to
avoid any liability on the part of the employer.
PERMISSIBLE DEDUCTIONS FROM WAGES
Under Article 113 of the Labor Code, no employer, in his own behalf or in
behalf of any person, shall make any deduction from the wages of his
employees, except for the following cases:
1. 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;
2. 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
3. In cases where the employer is authorized by law or regulations issued by
the Secretary of Labor and Employment.
Article 114 of the Labor Code also allows deductions on employee’s wages
in case of loss or damages to tools, materials or equipment supplied by the
employer to the employee where the employer is engaged in trade, occupation or
business where practice of making deductions or requiring deposits is recognized.
Article 259 (e) of Labor Code also allows deductions on employee’s wages with
regard to payment of agency fees for non-union members who accept the
benefits from the Collective Bargaining Agreement (CBA) negotiated by the
bargaining union.
Also, under the Rules implementing the Labor Code (IRR of Labor Code),
particularly Book 3 on Conditions of Employment, deductions on wages are
allowed if employer received a written authorization from the employee for
payment to a third (3rd) person. This is valid only when the employer did not
receive any pecuniary benefit directly or indirectly from the transaction (Rule VIII,
Book 3, Section 10 (b) of IRR).
Deductions on wages based on the value of meals and facilities are also
allowed as long as the acceptance of the employee is voluntarily made (Rule VII-A,
Book 3, Section 7).
Other Laws
Under Republic Act No. 8282, the law implementing the Social Security
System (SSS) on Social Security Program Contribution, Presidential Decree No.
1752, the law implementing Pag-IBIG or Home Development Mutual
Fund and Republic Act 7875, the law implementing PhilHealth in relation to the
National Health Insurance Program contribution, salary deductions based on the
said laws respectively are also allowed.
The payment of withholding tax mandated under the National Internal
Revenue Code (NIRC), where the withholding tax is deducted and withheld from
the salary of the employees, are also considered as allowable deductions on
salary.
Under Articles 1706 and 1708 of the New Civil Code, withholding of wages
because of the employee’s overdue debt to the employer and deductions made
pursuant to a court judgment against the worker for payment of debts incurred
for food, clothing, shelter and medical attendance are allowable deductions.
Salary deductions on the basis of Article 59 of Republic Act. No. 6938 or the
Cooperative Code of the Philippines on cooperative membership or contributory
fees are allowable deductions.
I found no clear provision in law authorizing salary deduction for

Employee Training Bonds. It is a general rule that no employer shall make any
deduction from the wages of his employees, except authorized by law.
There was one case where case (NIA Jewelry Manufacturing of Metal
Arts, Inc. v. Montecillo, G.R. No. 188169, 28 November 2011) where cash bonds
required of jeweler employees to cover in case of loss of tools and materials
from their workplace was ruled to be illegal. It was ruled there that the posting
of cash bonds should be proven as a recognized practice in the jewelry
manufacturing business, or alternatively, the petitioners should seek for the
determination by the Secretary of Labor through the issuance of appropriate
rules and regulations that the policy the former seeks to implement is necessary
or desirable in the conduct of business.
However the cash bond mentioned in the NIA Jewelry case above is very
different from Training Bonds, where I found no law or case covering it yet.
See https://www.youtube.com/watch?v=IZlwyLZXRSI, here, Atty. Jericho

Del Puerto discussed the effects of the employees’ refusal to Training Bond. He
mentioned here that training bonds are valid in general.
I believe that the thing that should be considered first, before the issue of
the validity of the Training Bonds, is the validity of the dismissal of the
employee and whether the proper procedure is observed on his/her
termination. Most labor cases are focused on this subject.

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TO DETERMINE THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP:

In determining the existence of employer-employee relationship, the

1. It is important to determine whether an employment relationship exists

a) A notice of intent to dismiss specifying the ground for termination, and

b) A hearing or conference where the employee is given opportunity to

c) A notice of dismissal indicating that upon due consideration of all the

PERMISSIBLE DEDUCTIONS FROM WAGES

I found no clear provision in law authorizing salary deduction for

See https://www.youtube.com/watch?v=IZlwyLZXRSI, here, Atty. Jericho

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