An understanding of existing labor law regulations and working conditions is essential for an investor to succeed in the personnel management of his enterprise in the Philippines. In the past, labor unrest (such as strikes and other concerted actions) has been blamed for closures and withdrawals of investments in the country. However, in most of these cases, management was ill prepared to handle industrial relations problem within the context of labor situation in the Philippines.
It is downright wrong for a foreign investor to assume that working conditions in Philippines are the same as in the home country. Philippine laws, culture, tradition, unionism, community relations among other factors must be considered. Once understood, harmonious industrial relations will be easy to establish in a company.
The main body of labor laws and social legislation is found in the Labor Code of the Philippines (Presidential Decree 442). Although employment laws are supposed to be balanced both for labor and management, such is not the case in the Philippines. Labor laws and procedures are tilted in favor of the worker under the social justice principle that those who have less in life should have more in law. For this reason, employers must act with caution in hiring, supervision, discipline and firing of workers.
State Policy on Labor
The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work.
Security of Tenure
Once hired, an employee enjoys security of tenure. An employee can be dismissed from service if there is (a) just cause and (b) after observance of due process by the employer. The absence of any one of these requisites will result to an illegal dismissal and the employee may sue for damages, back wages and reinstatement to his position without loss of seniority and privileges.
An employer may terminate employment in case of serious misconduct or willful disobedience, gross and habitual neglect, fraud or willful breach of trust, commission of a crime against the employer, and other offenses by the employee. Employment may also be terminated in case of disease contracted by the employee or in case of closure of business establishment and or reduction of personnel.
The employer must observe due process in disciplining employees or terminating their service. They must be given notice of the nature of offense or accusation (First Notice), be given an opportunity to be heard in a company-conducted investigation and be informed of the judgment after the investigation (Second Notice).
On the other hand, an employee may terminate employer-employee relationship even without a just cause by giving him a 30-day advance notice. There is no need for the advance notice in case the employer subjected the employee to serious insult, inhuman and unbearable treatment.
The right of the employee to security tenure applies even when he is on probationary status. A maximum probationary employment period of six months is provided. An employee who is allowed to work after a probationary period shall be considered a regular employee.