(Question X, Labor Law, 2017 Bar Exam)
The labor sector has been loudly agitating for the end of labor-only contracting, as distinguished from job contracting. Explain these two kinds of labor contracting, and give the effect of a finding that one is a labor-only contractor. Explain your answers. (4%)
What are the grounds for validly terminating the services of an employee based on a just cause? (5%)
Give the procedure to be observed for validly terminating the services of an employee based on a just cause? (4%)
A. Permissible or legitimate job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed or completed within or outside the premises of the principal.
On the other hand, there is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer.
If there is a finding of labor-only contracting, the labor-only contractor shall be considered merely as an agent of the principal who shall be considered as the employer and who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.
B. The grounds for just cause termination are as follows:
1) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
2) Gross and habitual neglect by the employee of his duties;
3) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
4) 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
5) Other causes analogous to the foregoing.
C. The following is the procedure for just cause termination:
Step 1: Issuance of 1st Written Notice
Step 2: Observance of Ample Opportunity to Explain
Step 3: Issuance of 2nd Written Notice
For Step 1, the 1st Written Notice to the employee should contain the following:
1) The specific causes or grounds for termination as provided for under the Labor Code, as amended, employment contract, and company policies, if any.
2) Detailed narration of facts and circumstances that will serve as basis for the charge against the employee. A general description of the charge will not suffice.
3) A directive that the employee is given opportunity to submit a written explanation within a reasonable period, which should be at least (5) calendar days.
For Step 2, the ample opportunity to explain is satisfied by either giving the employee the chance to defend himself/herself via: (a) a written explanation; or (b) a formal administrative hearing.
For Step 3, the employer shall issue a 2nd Written Notice to the employee after evaluating all available pieces of evidence and the explanation of the employee, if any. If the employee is innocent, the 2nd written notice will indicate so. This is often referred to as a Notice of Results. If the employee is guilty, the 2nd written notice shall state that all circumstances involving the charge against him/her have been considered and grounds have been established to justify the imposition of a penalty. This is often referred to as a Termination Notice.
(Notice: The suggested answers simulate those that a bar examinee may provide, and thus specific citations are not provided. Notwithstanding, in the reviewers, the bar exam question is answered under the appropriate topic which discusses the concepts and principles, as well as provide for specific citations. Accordingly, please refer to it on the reviewer or in the Library.)
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