BOOK FIVE

LABOR RELATIONS

Title I
POLICY AND DEFINITION
Chapter I

POLICY
Art. 218. DECLARATION OF POLICY
A. It is the policy of the State:
a. To promote and emphasize the
primacy of free collective bargaining
and
negotiations,
including
voluntary arbitration, mediation, and
conciliation, as modes of settling
labor or industrial disputes;
b. To promote free trade unionism as
an instrument for the enhancement
of democracy and the promotion of
social justice and development;
c. To foster the free and voluntary
organization of a strong and united
labor movement;
d. To promote the enlightenment of
workers concerning their rights and
obligations as union members and as
employees;
e. To provide adequate administrative
machinery
for
the
expeditious
settlement of labor or industrial
disputes;
f. To ensure a stable but dynamic and
just industrial peace; and
g. To ensure the participation of
workers in decision and policy
making processes affecting their
rights, duties and welfare.
B. To encourage a truly democratic method of
regulating the relations between the
employers and employees by means of
agreements freely entered into through
collective
bargaining,
no
court
or
administrative agency or official shall have
the power to set or fix wages, rates of pay,
hours of work, or other terms and
conditions of employment, except as
otherwise provided under this Code.
OVERVIEW AND VIEWPOINT
Labor Standards the minimum terms and
conditions (T and C) of employment to which
employees are legally entitled and with which
employers must comply.
Labor Relations the interactions between the
employer
and
the
employees
or
their
representatives and the mechanism by which
the standards and other T and C of employment
are negotiated, adjusted and enforced.

Policy objective: to attain social justice

through industrial peace and progress
progress of both the enterprise and its people. A
key element of the progress is employees
participation signified in collective interactions
between employer and employees.
Collective labor relations process starts when
workers organize themselves into a union or
some other form of association.
The
labor
organization
itself
must
be
democratically governed and should be free
from employers interference.
NOTE: If the employer tries to interfere with the
workers organizational rights, he commits
UNFAIR LABOR PRACTICE (UPL).
Main objective of the union is to represent to the
employer the needs and interests of the
employees, the employees should speak in one
voice, hence they need to select only one union
as their representative.
Work stoppage is not favored by law. It is
recognized as a legal right but regulated as to
the purpose and manner of doing it. Work
stoppage, because it is counterproductive, is and
has to be considered a measure of last resort.
Known as strike by employees
Known as lockout by the employer
Collective Bargaining Agreement (CBA)
the agreement reached embodied in a labor
contract.
It must be ratified by the employees
It must be registered with DOLE
NOTE: If unregistered, it is valid
and binding between the parties;
it is the law between them.
Its
economic
provisions
are
renegotiated not later than three
years, while the union representation
stays undisturbed for five years.
With
or
without
CBA,
labormanagement relations in the private
sector is essentially interparty. This
means than employer and employees
themselves must deal with their problems
in a manner most comfortable to them.
The inter-party relations is the reason the legal
policy prefers voluntary instead of compulsory
modes of dispute settlement. The government
steps in only when the parties themselves
fail to reach an agreement, or when one
disregards the defined rights of the other.
Grievance machinery an in-house problem
solving structure required in CBAs.
If the machinery fails, the parties
themselves are free to select any third
party, called voluntary arbitrator, to
resolve their differences.
If the parties are observing the legal
boundaries, the government, if not
invited in, is an intruder.
Notes on Labor Relations by Terence Valdehueza

When the dispute violates the rights of

others or is accompanied by violence or
other illegal acts, then the injunctive
power of the State may be invoked.
Art. 1700 of the New Civil Code provides, The
relations between capital and labor are not
merely contractual. They are so impressed with
public interest that labor contracts must yield to
the common good.
Art. 19 of the New Civil Code provides, Every
person must, in the exercise of his rights and in
the performance of his duties, act with justice,
give everyone his due, and observe honesty and
good faith.

WORKERS ORGANIZATION
Labor or Trade Union a combination of
workmen organized for the ultimate purpose of
securing through united action the most
favorable conditions as regards wages, hours of
labor, conditions of employment, etc., for its
members.
While every labor union is a labor organization,
not every labor organization is a labor union. The
difference is one of organization, composition
and operation.
WHY WORKERS ORGANIZE
The basic urge which leads workers to organize
is
the
human
drive
toward
selfadvancement.
One of the basic purposes of a labor union is to
eliminate competition among employees in
the labor market. Labor union seeks to
exercise the power of a monopolist.
Other human desires should be noted among the
forces that led workers to organize:
1. Desire for job security
2. Employees wished to substitute what
we should term the rule of law for the
arbitrary and often capricious exercise
of power by the boss.
3. Unions helped to give employees a
sense of participation in the business
enterprises of which they are part a
function of labor unions which became
important as organizations spread into mass
production industries.
The union is the recognized instrumentality and
mouthpiece of the laborers. Only through the
union can the laborers exercise the right of
collective bargaining and enjoy other privileges.
WORKERS PARTICIPATION IN POLICY-MAKING
Employee participation is the constitutional right
of workers to participate in policy and decisionmaking processes affecting their rights and
benefits as may be provided by law.
Participatory or consultative management is not
just a theory or variety of management style. It

is a matter of law because the right of

employees to participate in policy- or decisionmaking on matters affecting their rights, duties,
benefits or welfare is guaranteed in the
Constitution and reinforced in the Labor Code
and Supreme Court rulings.
CHAPTER II

DEFINITIONS
Art. 219. DEFINITIONS
xxx
e. Employer any person acting in the interest of
an employer, directly or indirectly. The term shall
not include any organization or any of its officers
or agents except when acting as employer.
f. Employee any person in the employ of an
employer. The term shall not be limited to the
employees of a particular employer, unless the
Code so explicitly states. It shall include any
individual whose work has ceased as a result of
or in connection with any current labor dispute
or because of any unfair labor practice if he has
not obtained any other substantially equivalent
and regular employment.
g. Labor organization any union or association
of employees which exists in whole or in part for
the purpose of collective bargaining or of dealing
with employers concerning T and C of
employment.
h. Legitimate labor organization any labor
organization
duly
registered
with
the
Department of Labor and Employment, and
includes any branch or local thereof.
i. Company union any labor organization whose
formation, function or administration has been
assisted by any act defined as unfair labor
practice by this Code.
j. Bargaining representative a legitimate
labor organization whether or not employed by
the employer.
k. Unfair labor practice any unfair labor
practice as expressly defined by the Code.
l. Labor dispute any controversy or matter
concerning terms and conditions of employment
or the association or representation of persons in
negotiating, fixing, maintaining, changing or
arranging the terms and conditions of
employment,
regardless
of
whether
the
disputants stand in the proximate relation of
employer and employee.
m. Managerial employee is one who is vested
with the powers or prerogatives to lay down and
execute management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge,
assign or discipline employees. Supervisory
employees are those who, in the interest of the
employer,
effectively
recommend
such
managerial actions if the exercise of such
authority is not merely routinary or clerical in
Notes on Labor Relations by Terence Valdehueza

n.

1.
2.
3.

4.

5.

nature but requires the use of independent

judgment. All employees not falling within any of
the above definitions are considered rank-andfile employees for purposes of this Book.
Voluntary Arbitrator any person accredited
by the Board as such or any person named or
designated
in
the
Collective
Bargaining
Agreement by the parties to act as their
Voluntary Arbitrator, or one chosen with or
without the assistance of the National
Conciliation and Mediation Board, pursuant to a
selection procedure agreed upon in the
Collective Bargaining Agreement, or any official
that may be authorized by the Secretary of
Labor and Employment to act as Voluntary
Arbitrator upon the written request and
agreement of the parties to a labor dispute.
Strike any temporary stoppage of work by the
concerted action of employees as a result of an
industrial or labor dispute.
Lockout any temporary refusal of an employer
to furnish work as a result of an industrial or
labor dispute.
Internal union dispute includes all disputes
or grievances arising from any violation of or
disagreement over any provision of the
constitution and by laws of a union, including
any violation of the rights and conditions of
union membership provided for in this Code.
Strike-breaker any person who obstructs,
impedes, or interferes with by force, violence,
coercion, threats, or intimidation any peaceful
picketing affecting wages, hours or conditions of
work or in the exercise of the right of selforganization or collective bargaining.
Strike area the establishment, warehouses,
depots, plants or offices, including the sites or
premises used as runaway shops, of the
employer struck against, as well as the
immediate vicinity actually used by picketing
strikers in moving to and fro before all points of
entrance to and exit from said establishment.

EMPLOYER-EMPLOYEE
RELATIONSHIP
(EER)
ESSENTIAL
The existence of EER is determined by the following
elements:
a. Selection and engagement of the employee;
b. Payment of wages;
c. Power to dismiss; and
d. Power to control the employees conduct.
WHO ARE EMPLOYEES
The term employee:
1. Shall include any employee;
2. And shall not be limited to the employee of
any particular employer unless the Act
explicitly states otherwise; and
3. Shall include any individual:

a. Whose work has ceased as a

consequence of, or in connection
with, any labor dispute; and
b. Who
has
not
obtained
any
substantially equivalent and regular
employment.
Employee (as defined in DO No. 40-03 in the IR
of Book V of the Labor Code) is any person
working for an employer. It includes one whose
work has ceased in connection with any current
labor dispute or because of any unfair labor
practice and one who has been dismissed from
work but the legality of the dismissal is being
contested in a forum of appropriate jurisdiction.
Employer (as defined in the same DO No.)
refers to any person or entity who employs the
services of others, one for whom employees
work and who pays their wages or salaries. The
term includes any person directly or indirectly
acting in the interest of an employer. It shall also
refer to the enterprise where a labor
organization operates or seeks to operate.
The nature of labor dispute does not require
that the disputants should stand in the
proximate relation of an employer and
employee, with consequent protection of
concerted activities carried out by many persons
belonging to several employers.

One whose work has ceased

Cessation of work due to strike or lockout, or to
dismissal or suspensions consisting unfair labor
practices, does not itself affect the employee
status, in the sense that the rights and benefits
of the employee are protected as though there
had been no interruption of service, effective
upon the actual return to work.
LABOR ORGANIZATION (LOrg) AS AN EMPLOYER
LOrg may be deemed as an employer when it is
acting such in a relation to persons rendering
services under hire, particularly in connections
for profit or gain. An organization may ostensibly
be a labor union, but it may attain the status of
an ordinary business concern in the pursuit of a
particular line of business.
LABOR DISPUTE
Test whether a labor controversy comes within
the definition of a labor dispute depends on
whether it involves or concerns terms,
conditions
of
employment
or
representation.
Even the question of EER can be considered a
labor dispute.
LABOR DISPUTES AND REMEDIES: A SUMMARY
Definition
Labor Dispute includes any controversy or
matter concerning T and C of employment or the
association or representation of persons in
Notes on Labor Relations by Terence Valdehueza

negotiating, fixing, maintaining, changing or

arranging the T and C of employment, regardless
of whether the disputants stand in the proximate
relation of employer and employee.

6.

Tests or Criteria of Labor Dispute

A. Nature: Dispute arises from EER, although the
disputants need not be proximately employee or
employer of the other.
B. Subject Matter: Dispute concerns:
1. Terms or conditions of employment;
2. Association or representation of persons
in negotiating, fixing, maintaining, or
changing
terms
or
conditions
of
employment.
Kinds of Labor Dispute
A. Labor Standard Disputes:
1. Compensation
2. Benefits
3. Working conditions
B. Labor Relations Disputes
1. Organizational right dispute/ULP
2. Representation disputes
3. Bargaining disputes
4. Contract Administration/Personnel Policy
disputes
5. Employment tenure disputes
C. Remedies in Labor Disputes
1. Grievance
procedure

in-house
adjustment complaint, problem or dispute
following the steps prescribed in the CBA
or company policy.
2. Enforcement or compliance order an act
of the Secretary of Labor (SOL) in the
exercise of his visitorial or administrative
authority under Article 128 to enforce
labor laws, policies, plans or programs, or
rules and regulations.
3. Certification
of
bargaining
representatives determination of which
contending
unions
shall
represent
employees in collective bargaining.
4. Assumption jurisdiction an authority
vested by law to the SOL or the President
to decide a dispute causing or likely to
cause a strike or lockout in an industry
indispensable to national interest.
5. Certification to NLRC an action of the
SOL empowering NLRC to compulsorily
arbitrate a dispute causing or likely to
cause a strike or lockout in an industry
indispensable to national interest.
NOTE:
Either
assumption
or
certification automatically enjoins
an ongoing or impending strike or
lockout. A return-to-work order is
issued to strikers; at the same time
the
employer
is
ordered
to
immediately resume operations and
readmit all workers under the same

7.
8.

9.

T and C prevailing the strike or the

lockout.
Injunction an extraordinary remedy
which is not favored in labor law. A
writ of injunction is issued to stop or
restrain
an
actual
or
threatened
commission of prohibited or unlawful acts
or to require the performance of an act,
which if not restrained or performed
forthwith, may cause grave or irreparable
damage to any party or render ineffectual
any decision in favor of such party.
NOTE: As a rule, an injunction or an
order to prevent or stop an act is
avoided in labor dispute.
Judicial action complaint filed with
regular court in cases falling under its
jurisdiction.
Appeal the process by which an order,
decision, or award is elevated to a higher
authority on specified grounds, so that
the order, decision or award may be
modified or set aside and a new one
issued.
NOTE:
Administrative
remedies
should be availed of, as a rule,
before aggrieved part may go to
court. This is the legal rule known as
EXHAUSTION OF ADMINISTRATIVE
REMEDIES.
Review by court no law allows appeal
from a decision of the SOL or of the NLRC,
or of a Voluntary Arbitrator. In these
cases, a petition for certiorari, prohibition,
or mandamus may be lodged with the SC
or the CA. The grounds for petition of
certiorari and/or prohibition are
abuse of discretion, or lack or excess
of jurisdiction.

ALTERNATIVE DISPUTE RESOLUTION (ADR) MODES

Conciliation, Mediation and Arbitration are
ADR modes. ADR is different from litigation
since the latter is characterized by adversarial
formal presentation of evidence and arguments
in trials before a court of law.
The overriding aim of ADR is expeditious
resolution of the dispute to bring the parties
back to a constructive, preferably harmonious
relationship.
Conciliation consists in the efforts of a third
party to assist the parties to end their dispute
perhaps by condoning each others fault or
finding a give-and-take compromise.
Mediation, is also conciliation, but involves a
mediator, with an authority to have more an
active role than a conciliator in searching for and
formulating a solution.
Arbitration is a dispute resolution mode more
determinative than conciliation or mediation but
less formalistic or technical than litigation.
Notes on Labor Relations by Terence Valdehueza

NOTE: A decision of an arbitrator, often

referred to as an arbitral award, bind the
disputants as a court verdict does.

Notes on Labor Relations by Terence Valdehueza