Category Archives: Labor Laws

Can Employers Legally Forfeit Unused Leave Benefits for 2010?


Manigong Bagong Company grants vacation leave benefits to its workers of thirty (30) days, non-commulative, non-convertible to cash in excess of ten (10) days. In 2010, the company issues a memo requiring employees to use the VL in excess of 10 or it shall be deemed forfeited thereafter.

Ab Sintero, an employee for five years, has used only 15 of his 30-day VL. When the company converted his 10 VL to cash, he is left with only 5 days. He did not use the remaining 5 days hence, it was forfeited by the company on December 31, 2010. Ab Sintero protested arguing that under the Labor Code, leave benefits are convertible to cash.

Question: Is Ab Sintero correct?

When the Labor Code mentions about leave benefits, it pertains to Service Incentive Leave. Vacation leave and sick leave are

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How To Convert Unused Leave Benefits From Previous Year

Previously, we discussed the entitlement to unused leave benefits of Ab Sintero and established that he was only entitled to a maximum of 10 vacation leaves (VL) while the remaining balance of 5 days was validly forfeited by the management, Manigong Bagong Company.

            In this article, we will show how to compute the leave conversion of Mr. Ab Sintero under different scenarios and tackle as well the underlying legal  principles that must be observed by HR practitioners.

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When Early Retirement is Valid

Can a company retire its employees at an early age?

The compulsory age of retirement is at 65 while optional retirement may start at age 60.  This does not prevent the company and its employees, however, from entering into contracts or agreements such as a CBA or employment agreement with early retirement provisions below the minimum ages set by law.

But for an early retirement plan to be legally defensible, the employees must have freely or voluntarily consented to the early retirement provision; otherwise, the early retirement may be considered invalid later in court as a form of illegal dismissal. 

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Report Showing Compliance of 13th Month Pay Law

The Dept. of Labor has issued its Order No. 3 (Series of 2010) reminding all employers to comply with the 13th Month Pay Law (PD 851) and to submit a report showing compliance, not later than January 15 immediately following the year it must be paid. 

The 13th Month Pay is a mandatory benefit given to rank and file employees generally at the end of the year but an employer may choose to release 1/2 of this benefit in June and the rest on or before December 24 of the current year.  Click here to view a copy of the DOLE Order requiring a compliance report for the 13th Month Pay.

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Legality of Work on a Holiday

More holidays are coming up ahead.  Can an employee be required to work on a regular holiday and how much is his pay going to be?  Click here to read the legal answer to this question by lawyer, HR specialist and author Elvin Villanueva.

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Flexible Work Arrangements Allowed by DOLE

Companies that have been affected by adverse economic conditions are allowed to explore alternative schemes to cope with financial reverses or losses while minimizing the impact on their employees.

Under the “Guidelines on the Adoption of Flexible Work Arrangements” (Dept. Advisory No. 2, Series of 2009), employers may enter into any of the following arrangements with its employees:

  1. Compressed workweek:  Under this arrangement, the normal workweek is reduced to less than 6 days but the total number of working hours per week is still 48 hours. For this to be possible, each working day may have more than 8 hours but not more than 12 hours, without incurring overtime pay.
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Guide to Wage Order and Minimum Wage by Elvin Villanueva

Guide on Wage Order and Minimum Wage by Elvin Villanueva (Philippines)


LVS Publishing recently launched its latest labor law guide entitled “Guide on Wage Order and Minimum Wage”– a must-have for every employer, business owner, manager and HR specialist. 

This handy guide teaches you how to apply the latest minimum wage law in your current business. 

Find the answer to your most frequent questions:

- Who are covered employees?

-  How does the wage order affect existing terms of CBA?

-  What is wage distortion? See sample computations!

-  What happens to recent salary increases in the company?

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What You Need to Know About 13th Month Pay

When the last quarter or ‘-ber’ months of the year roll in, thoughts of 13th month pay enter the minds of both employers and employees.  This mandatory payment under a specific law (PD851) generally covers all rank and file employees who have worked for at least one (1) month during the calendar year.  (A calendar year is the period starting from January to December).

Who are not covered

Generally, all employers must pay their rank and file employees 13th month pay (under PD 851), except the following:

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Legal Labor Options for Distressed Companies

Balancing financial survival and the rights of employees during economic downtimes can be tricky for companies whose primary concern is to keep the business afloat for the benefit of everyone– shareholders, employees and clients.

Philippine labor laws are typically favorable to the employee with more rights and labor standards deemed by many foreigners doing business in the Philippines as obstacles to business growth.  But what can a company do to save itself from financial ruin considering strict laws on termination and other labor standards?

Philippine Legal Counseling’s Atty. Christine Florido offers some legal suggestions. Click here to view the related article.

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Can Company Lower Age of Retirement of Employees?

Yes, provided it is found in the existing employment agreement or contract between the employer and employee.

The retirement age is primarily determined by the existing agreement or employment contract.  Absent such an agreement, the retirement age under Article 287 of the Labor Code will apply.  Article 287 mentions the age of at least 60 years but not over 65 years old as the retirement age of employees when there is no retirement plan or contract provision on the matter.

In fact, in a recent case decided by the Supreme Court, it ruled that:

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