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A. Conditions of employment

1. Hours of work

a. Principles in determining hours worked and employees exempted or not covered

1) Time spent are considered hours worked in the following cases:

1) All hours are hours worked which the employee is required to give his employer, regardless of whether or not such hours are spent in productive labor or involve physical or mental exertion.

2) An employee need not leave the premises of the work place in order that his rest period shall not be counted, it being enough that he stops working, may rest completely and may leave his work place, to go elsewhere, whether within or outside the premises of his work place.

3) If the work performed was necessary, or it benefited the employer, or the employee could not abandon his work at the end of his normal working hours because he had no replacement, all time spent for such work shall be considered as hours worked, if the work was with the knowledge of his employer or immediate supervisor.

4) The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be considered working time either if the imminence of the resumption of work requires the employee’s presence at the place of work or if the interval is too brief to be utilized effectively and gainfully in the employee’s own interest. (Paragraph 1, Article 84, Labor Code; cf. Section 4, Rule I, Book III, Omnibus Rules Implementing the Labor Code)

2) Covered and exempted employees

a) Covered employees

The above-mentioned rules on hours of work apply to all employees, except those who are exempted as listed below.

b) Exempted employees

1) Government employees whether employed by the National Government or any of its political subdivision, including those employed in government-owned and/or controlled corporations;

2) Managerial employees, if they meet all of the following conditions:

a) Their primary duty consists of the management of the establishment in which they are employed or of a department or sub-division thereof;

b) They customarily and regularly direct the work of two or more employees therein; and

c) They have the authority to hire or fire employees of lower rank; or their suggestions and recommendations as to hiring and firing and as to the promotion or any other change of status of other employees, are given particular weight.

3) Officers or members of a managerial staff if they perform the following duties and responsibilities:

a) The primary duty consists of the performance of work directly related to management policies of their employer;

b) Customarily and regularly exercise discretion and independent judgment; and

c) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute, under general supervision, special assignments and tasks; and (iv) Who do not devote more than 20 percent of their hours worked in a work week to activities which are not directly and closely related to the performance of the work described in items (a), (b) and (c).

4) Domestic servants and persons in the personal service of another if they perform such services in the employer’s home which are usually necessary or desirable for the maintenance and enjoyment thereof, or minister to the personal comfort, convenience, or safety of the employer as well as the members of his employer’s household.

5) Workers who are paid by results, including those who are paid on piece-work, “takay,” “pakiao” or task basis, and other non-time work if their output rates are in accordance with the standards prescribed by regulations or where such rates have been fixed by the DOLE Secretary.

6) Non-agricultural field personnel if they regularly perform their duties away from the principal or branch office or place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. (Article 82, Labor Code; cf. Section 2, Rule I, Book III, Omnibus Rules Implementing the Labor Code)

b. Compensable Time

1) Compensable hours worked

1) All time during which an employee is required to be on duty or to be at the employer’s premises or to be at a prescribed workplace; and

2) All time during which an employee is suffered or permitted to work. (Section 3, Rule I, Book III, Omnibus Rules Implementing the Labor Code)

2) Short rest periods

Rest periods of short duration during working hours shall be counted as hours worked. (Paragraph 2, Article 84, Labor Code)

This includes coffee breaks running from five (5) to twenty (20) minutes, which shall be considered as compensable working time. (Paragraph 2, Section 7, Rule I, Book III, Omnibus Rules Implementing the Labor Code)

i. Normal hours of work

(1) In general

The normal hours of work of any employee shall not exceed eight (8) hours a day. (Article 83, Labor Code)

(2) Health personnel

Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case, they shall be entitled to an additional compensation of at least thirty percent (30%) of their regular wage for work on the sixth day. For purposes of this Article, “health personnel” shall include resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. (Paragraph 2, Article 83, Labor Code)

ii. Night shift differential

(1) Coverage

The rules on night shift differential pay shall cover all employee except those who are exempted as listed below. (Section 1, Rule II, Book III, Omnibus Rules Implementing the Labor Code)

(2) Excluded employees

1) Those of the government and any of its political subdivisions, including government-owned and/or controlled corporations;

2) Those of retail and service establishments regularly employing not more than five (5) workers;

3) Domestic helpers and persons in the personal service of another;

4) Managerial employees as defined in Book Three of this Code;

5) Field personnel and other employees whose time and performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. (Ibid.)

(3) Concept

An employee shall be paid night shift differential of no less than ten per cent (10%) of his regular wage for each hour of work performed any time from 10:00 p.m. to and 6:00 a.m. the following day. (Section 2, Ibid.)

(4) The benefit

(a) On a regular day

Where an employee is permitted or suffered to work on the period covered after his work schedule, he shall be entitled to his regular wage plus at least twenty-five per cent (25%) and an additional amount of no less than ten per cent (10%) of such overtime rate for each hour or work performed between 10 p.m. to 6 a.m. (Section 3, Ibid.)

(b) On a scheduled rest day / special holiday

An employee who is required or permitted to work on the period covered during rest days and/or special holidays not falling on regular holidays, shall be paid a compensation equivalent to his regular wage plus at least thirty (30%) per cent and an additional amount of not less than ten (10%) per cent of such premium pay rate for each hour of work performed. (Section 4, Ibid.)

(c) On regular holidays

For work on the period covered during regular holidays, an employee shall be entitled to his regular wage during these days plus an additional compensation of no less than ten (10%) per cent of such premium rate for each hour of work performed. (Section 5, Ibid.)

(5) Relation to agreements

Nothing in this Rule shall justify an employer in withdrawing or reducing any benefits, supplements or payments as provided in existing individual or collective agreements or employer practice or policy. (Section 6, Ibid.)

iii. Overtime work

(1) Concept

Work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime work, an additional compensation equivalent to his regular wage plus at least twenty-five percent (25%) thereof. (Article 87, Labor Code)

(2) The benefit

(a) In general

Any employee covered by this Rule who is permitted or required to work beyond eight (8) hours on ordinary working days shall be paid an additional compensation for the overtime work in the amount equivalent to his regular wage plus at least twenty-five percent (25%) thereof. (Section 8, Rule I, Book III of the Omnibus Rules Implementing the Labor Code)

(b) Premium and overtime pay for holiday and rest day work

Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent (30%) thereof. (Article 87, Labor Code)

Except for employees who are exempted, an employee who is permitted or suffered to work on special holidays or on his designated rest days not falling on regular holidays, shall be paid with an additional compensation as premium pay of not less than thirty percent (30%) of his regular wage. For work performed in excess of eight (8) hours on special holidays and rest days not falling on regular holidays, an employee shall be paid an additional compensation for the overtime work equivalent to his rate for the first eight hours on a special holiday or rest day plus at least thirty percent (30%) thereof. (Section 9 [a], Rule I, Book III of the Omnibus Rules Implementing the Labor Code)

(3) Overtime rules

(a) General rule: No overtime

No employee may be made to work beyond eight hours a day against his will, unless otherwise exempted by the rules. (Paragraph 2, Article 89, Labor Code; cf. Paragraph 2, Section 10, Rule I, Book III of the Omnibus Rules Implementing the Labor Code)

(b) Exceptions: Emergency/Compulsory overtime work

1) When the country is at war or when any other national or local emergency has been declared by Congress or the Chief Executive;

2) When overtime work is necessary to prevent loss of life or property, or in case of imminent danger to public safety due to actual or impending emergency in the locality caused by serious accident, fire, floods, typhoons, earthquake, epidemic or other disaster or calamities;

3) When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer or some other causes of similar nature;

4) When the work is necessary to prevent loss or damage to perishable goods;

5) When the completion or continuation of work started before the 8th hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer; or

6) When overtime work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon. (Paragraph 1, Article 89, Labor Code ; cf. Paragraph 1, Section 10, Rule I, Book III of the Omnibus Rules Implementing the Labor Code)

(c) No offsetting of undertime by overtime

Undertime work on any particular day shall not be offset by overtime work on any other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required in this Chapter. (Article 88, Labor Code)

(d) Computation of additional compensation

For purposes of computing overtime and night shift differential, the “regular wage” of an employee shall include the cash wage only, without deduction on account of facilities provided by the employer. (Article 90, Ibid.)

(a) Compressed work week

(i) Concept

Compressed workweek refers to one where the normal workweek is reduced to less than six (6) days but the total number of workhours of 48 hours per week shall remain. (Part III, No. 1, DOLE Department Advisory No. 4, Series of 2010)

(ii) 12 hours max

(iii) No overtime premium

The normal workday is increased to more than eight hours but not to exceed twelve hours, without corresponding overtime premium. (Ibid.)

(iv) Notice requirement

Prior to implementation, the employer shall notify the DOLE of the adoption of a compressed workweek. (Part V, Ibid.)

(b) Built-in overtime

(i) Concept

Built-in overtime refers to an arrangement whereby the employee regularly renders overtime hours with overtime pay integrated into his compensation (e.g. for a 10-hour workhour, the 2-hour overtime is paid and added into the employee’s salary).(See Engineering Equipment, Inc. v. Ministry of Labor, Aspera, G.R. No. L-64967, 23 September 1985)

(ii) Consent, required

Given that the overtime is regular (or every day), which may pose as a health hazard or risk, arrangements involving built-in overtime work requires the consent of the employees.

c. Non-compensable hours; when compensable

1) Lectures, meetings, training programs

Attendance at lectures, meetings, training programs, and other similar activities shall not be counted as working time if all of the following conditions are met: (a) attendance is outside of the employee’s regular working hours; (b) attendance is in fact voluntary; and (c) the employee does not perform any productive work during such attendance. (Section 6, Rule I, Book III, Omnibus Rules Implementing the Labor Code)

i. Meal break

(1) 60-minute meal break

Every employer shall give his employees, regardless of sex, not less than one (1) hour time-off for regular meals. (Paragraph 1, Section 7, Rule I, Book III, Omnibus Rules Implementing the Labor Code)

(2) 20-minute meal break

A meal period of not less than twenty (20) minutes may be given by the employer provided that such shorter meal period is credited as compensable hours worked of the employee: (a) where the work is non-manual work in nature or does not involve strenuous physical exertion; (b) where the establishment regularly operates not less than sixteen (16) hours a day; (c) in case of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or installations to avoid serious loss which the employer would otherwise suffer; and (d) where the work is necessary to prevent serious loss of perishable goods. (Paragraph 2, Ibid.)

ii. Power interruptions or brownouts

(1) General rule: To each his own loss

Where the failure of workers to work was not due to the employer’s fault, the burden of economic loss suffered by the employees should not be shifted to the employer. Each party must bear his own loss. (Durabuilt Recapping Plant & Company v. NLRC, Kapisanan ng mga Manggagawa sa Durabuilt, G.R. No. 76746, 27 July 1987)

(2) Exception: Contractually stipulated

The employees should also be compensated for the time they were prevented from working due to the brownout. The CBA enumerates some of the instances considered as “emergencies” and these are “typhoons, flood earthquake, transportation strike.” As correctly argued by respondent, the CBA does not exclusively enumerate the situations which are considered “emergencies.” Obviously, the key element of the provision is that employees “who have reported for work are unable to continue working” because of the incident. It is therefore reasonable to conclude that brownout or power outage is considered an “emergency” situation. (Supreme Steel Corporation v. Nagkakaisang Manggagawa ng Supreme Independent Union (NMS-IND-APL), G.R. No. 185556, 28 March 2011)

iii. Idle time

(1) Concept

The idle time that an employee may spend for resting and during which he may leave the spot or place of work though not the premises of his employer, is not counted as working time only where the work is broken or is not continuous. (National Development Company v. CIR, National Textile Workers Union, G.R. No. L-15422, 30 November 1862)

iv. Travel time

General rule: If travel time is work-related or required for work, the time during transit  is compensable working time, such as driving to a client or taking a taxi/bus to a location.

Exception: Waiting at an airport or at an analogous place, it is not compensable working time. The reason being is that the employees are not engaged around this time and thus they may use this for personal time.

v. Commuting time

1) Personal commute to work

Personal commute to work or time spent traveling from home to work is not compensable working time.

2) Work-related commute

If work requires commuting, the time spent traveling is compensable working time.

vi. Waiting time

1) Rules on waiting time

Waiting time spent by an employee shall be considered as working time if waiting is an integral part of his work or the employee is required or engaged by the employer to wait. (Section 5[a], Rule I, Book III, Omnibus Rules Implementing the Labor Code)

An employee who is required to remain on call in the employer’s premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose shall be considered as working while on call. An employee who is not required to leave word at his home or with company officials where he may be reached is not working while on call. (Section 5[b], Rule I, Book III, Ibid.)

2) Engaged to wait v. Waiting to be engaged

1) If an employee is engaged to wait (i.e. and thus on-duty or part of the job requires waiting for a result, e.g. a driver whose job is to wait for a manager complete a job), the idle time spent is compensable working time.

2) If the employee is waiting to be engaged (and thus not on-duty or on personal time), the idle time spent is not compensable working time.

3) The key is whether the employee is “engaged” and thus on-duty such that the time is dedicated to work, and cannot be utilized for personal use.

2. Rest periods

a. Short breaks

1) 5 to 20-minute rest period

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time. (Section 7, Rule I, Book III, Omnibus Rules Implementing the Labor Code)

b. Weekly rest day

1) Coverage

This Rule shall apply to all employers whether operating for profit or not, including public utilities operated by private persons. (Section 1, Rule III, Ibid.)

2) Business on Sundays/Holidays

All establishments and enterprises may operate or open for business on Sundays and holidays provided that the employees are given the weekly rest day and the benefits as provided in this Rule. (Section 2, Rule III, Ibid.)

3) Weekly rest day

It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest period of not less than 24 consecutive hours after every 6 consecutive normal work days. (Paragraph 1, Article 91 [a], Labor Code; cf. Section 3, Rule III, Book III, Omnibus Rules Implementing the Labor Code)

a) Schedule of rest day

The employer shall determine and schedule the weekly rest day of his employees subject to collective bargaining agreement and to such rules and regulations as the Secretary of Labor and Employment may provide. (Article 91 [b], Labor Code)

However, the employer shall respect the preference of employees as to their weekly rest day when such preference is based on religious grounds. (Ibid.)

b) Implementation

1) Where the weekly rest is given to all employees simultaneously, the employer shall make known such rest period by means of a written notice posted conspicuously in the work place at least one week before it becomes effective. (Section 5 [a], Rule III, Book III, Omnibus Rules Implementing the Labor Code)

2) Where the rest period is not granted to all employees simultaneously and collectively, the employer shall make known to the employees their respective schedules of weekly rest through written notices posted conspicuously in the work place at least one week before they become effective. (Section 5 [b], Rule III, Book III, Ibid.)

4) Preference of employee

The preference of the employee as to his weekly day of rest shall be respected by the employer if the same is based on religious grounds. The employee shall make known his preference to the employer in writing at least seven (7) days before the desired effectivity of the initial rest day so preferred. (Paragraph 1, Section 4, Rule III, Book III, Ibid.)

a) Religious grounds

Where, however, the choice of the employee as to his rest day based on religious grounds will inevitably result in serious prejudice or obstruction to the operations of the undertaking and the employer cannot normally be expected to resort to other remedial measures, the employer may so schedule the weekly rest day of his choice for at least two (2) days in a month. (Paragraph 2, Section 4, Rule III, Book III, Ibid.)

5) Rules on rest day work

General Rule: No employee shall be required against his will to work on his scheduled rest day except under circumstances provided in this Section: Provided, However, that where an employee volunteers to work on his rest day under other circumstances, he shall express such desire in writing, subject to the provisions of Section 7 hereof regarding additional compensation. (Article 92, Labor Code; cf. Paragraph 2, Section 6, Rule III, Book III, Omnibus Rules Implementing the Labor Code)

Exceptions:

Emergency rest day work

An employer may require any of his employees to work on his scheduled rest day for the duration of the following emergencies and exceptional conditions:

i) In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic or other disaster or calamity, to prevent loss of life or property, or in cases of force majeure or imminent danger to public safety;

ii) In case of urgent work to be performed on machineries, equipment or installations to avoid serious loss which the employer would otherwise suffer;

iii) In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be expected to resort to other measures;

iv) To prevent serious loss of perishable goods;

v) Where the nature of the work is such that the employees have to work continuously for seven (7) days in a week or more, as in the case of the crew members of a vessel to complete a voyage and in other similar cases; and

(vi) When the work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon. (Paragraph 1, Section 6, Rule III, Book III, Omnibus Rules Implementing the Labor Code)

6) Compensation on rest day, Sunday, holiday

1) Except those employees who are exempt, an employee who is made or permitted to work on his scheduled rest day shall be paid with an additional compensation of at least 30% of his regular wage. An employee shall be entitled to such additional compensation for work performed on a Sunday only when it is his established rest day. (Section 7 [a)] Rule III, Book III, Ibid.)

2) Where the nature of the work of the employee is such that he has no regular work days and no regular rest days can be scheduled, he shall be paid an additional compensation of at least 30% of his regular wage for work performed on Sundays and holidays. (Section 7 [b], Rule III, Book III, Ibid.)

3) Work performed on any special holiday shall be paid with an additional compensation of at least 30% of the regular wage of the employees. Where such holiday work falls on the employee’s scheduled rest day, he shall be entitled to additional compensation of at least 50% of his regular wage. (Section 7 [c], Rule III, Book III, Ibid.)

4) Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a higher premium pay than that prescribed under this Section, the employer shall pay such higher rate. (Section 7 [d], Rule III, Book III, Ibid.)

3. Service Charge

a. Covered establishments

This rule shall apply only to establishments collecting service charges such as hotels, restaurants, lodging houses, night clubs, cocktail lounge, massage clinics, bars, casinos and gambling houses, and similar enterprises, including those entities operating primarily as private subsidiaries of the Government. (Section 1, Rule VI, Book III, Omnibus Rules Implementing the Labor Code)

b. Distribution

All service charges collected by hotels, restaurants and similar establishments shall be distributed completely and equally among the covered workers except managerial employees. (Paragraph 1, Article 96, Labor Code, as amended by R.A. 11360)

c. Covered employees

This rule shall apply to all employees of covered employers, regardless of their positions, designations or employment status, and irrespective of the method by which their wages are paid except to managerial employees. (Paragraph 1, Section 2, Rule VI, Book III, Omnibus Rules Implementing the Labor Code)

1) Managerial employees

For purposes of service charges, managerial employees refer to any person vested with powers or prerogatives to lay down and execute management policies or hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or to effectively recommend such managerial actions. (Paragraph 4, Article 96, Labor Code, as amended by R.A. 11360; cf. Paragraph 2, Section 2, Rule VI, Book III, Omnibus Rules Implementing the Labor Code)

All employees not falling within this definition shall be considered rank-and-file employees. (Paragraph 2, Section 2, Rule VI, Book III, Omnibus Rules Implementing the Labor Code)

d. Frequency of distribution

The shares referred to herein shall be distributed and paid to the employees not less than once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days. (Section 4, Rule VI, Book III, Ibid.)

e. Integration of service charges

In case the service charges is abolished the share of covered employees shall be considered integrated in their wages. The basis of the amount to be integrated shall be the average monthly share of each employee for the past twelve (12) months immediately preceding the abolition of withdrawal of such charges. (Section 5, Rule VI, Book III, Ibid.)

f. Increase of minimum wage

In the event that the minimum wage is increased by law or wage order, service charges paid to the covered employees shall not be considered in determining the employer’s compliance with the increased minimum wage. (Paragraph 2, Article 96, Labor Code, as amended by R.A. 11360)

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